The Startup Genome Report: What Makes a Startup Tick?

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The first Startup Genome Report, created by blackbox, sets forth a new framework for assessing startups and determining the drivers of entrepreneurial performance.

The report, examining 600+ internet startups in Silicon Valley, details six stages of entrepreneurship, the four major types of internet startups, and assesses the critical lessons a startup should learn.

Read to learn what purpose defines each stage of the six stages, the competitive advantages at each stage, and the level of funding each stage requires.

Startups that move through these six stages steadily tend to pivot faster, hire more, and find more funding.  

Learn about the four basic types of internet startup, what different rates of development, team styles, target markets, approaches to funding, and revenue streams characterize these types.

Is it more important to have a technology-heavy team, or a business-heavy team? It depends what kind of startup you are.

Download the report here.

A Summary of the Startup Genome's Key Advice

Advice for Startups:

Learn & Iterate

- Founders that learn are more successful: Startups that have helpful mentors, track metrics effectively, and learn from startup thought leaders raise 7x more money and have 3.5x better user growth.

- Startups that pivot once or twice times raise 2.5x more money, have 3.6x better user growth, and are 52% less likely to scale prematurely than startups that pivot more than 2 times or not at all.

Get a Good Mentor Outside of your Investor

- Investors who provide hands-on help have little or no effect on the company's operational performance. But the right mentors significantly influence a company’s performance and ability to raise money. (However, this does not mean that investors don’t have a significant effect on valuations and M&A)

Balance your team & Include business-savvy individuals

- Solo founders take 3.6x longer to reach scale stage compared to a founding team of 2 and they are 2.3x less likely to pivot. 6. Business-heavy founding teams are 6.2x more likely to successfully scale with sales driven startups than with product centric startups.

- Balanced teams with one technical founder and one business founder raise 30% more money, have 2.9x more user growth and are 19% less likely to scale prematurely than technical or business-heavy founding teams.

Have the Right Motivation

- Most successful founders are driven by impact rather than experience or money.

Don't scale too quickly

- Premature scaling is the most common reason for startups to perform worse. They tend to lose the battle early on by getting ahead of themselves.

Learn from best practice

- Companies that follow startup thought leaders like Steve Blank, Paul Graham, etc. are 80% more likely to raise money. Almost all companies that raised money had helpful mentors. Companies without helpful mentors almost always failed to raise funding.

Listen to customer feedback

- Companies that are tracking metrics average a monthly growth rate that is 7x companies that are not tracking metrics and are 60% more likely to raise funding than companies that don't track metrics.

Act on feedback

Companies that fail to listen and act on feedback tend to scale without validating the size and interest of the market. These companies tend to either pivot not at all or more than 2 times. They also have a harder time raising money and growing the team.

Advice for VCs:

- Taking a snapshot of just a few data points such as team, traction and market, amount of money raised, and unfair competitive advantages, is not the best metric for assessing startup success.

- Better performing VCs draw conclusions based on more subtle data points such as the team's pace of learning, why they made certain pivots, the body language between the founders and stage-specific metrics.

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