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When Michael Molinet launched his first entrepreneurial venture, it required him — like most other entrepreneurs — to learn on the go and build on the fly. Now, his experience as the founder of Branch Metrics, Inc. has enabled him to learn how to shift his priorities.
Rather than focusing on the product, Molinet has learned the value of investing in people first. Today, his hard-earned expertise and advice help new entrepreneurs avoid common pitfalls and build their own ventures more quickly.
“This time, my focus is building the right team,” he says. “A good team needs to have diverse skill sets and knowledge backgrounds. Once the team is in place, developing the product, taking it to market, and scaling the business is much easier. If you find the right team members, all the other pieces fall into place.”
Step 1: Get started
Molinet says the best advice he can offer any new entrepreneur is to simply start building a venture using their vision for it. “Your first idea probably isn’t going to lead to a million-dollar company, but it will put you on the path toward discovery,” he says. “That idea will breed better ideas and new opportunities, but most importantly, it will train you to take advantage of those ideas and opportunities when they come.”
After getting started, Molinet encourages new entrepreneurs to build fast and iterate. He favors a lean startup methodology in which businesses can rapidly build a minimum viable product, get it into the hands of customers, listen to their feedback, and respond to it accordingly.
“Ideas are cheap, and lots of people have them,” Molinet explains. “The real value is in iteration and execution. Successful companies learn to execute like machines. They master the cyclical process of iterating, testing, and learning.”
Step 2: Research your target market
Molinet advises new entrepreneurs to begin with market research. This can be as simple as having an idea that solves a problem and talking about it with people who have that problem. But before new entrepreneurs quit their day jobs, design logos, or build websites, they need to find out whether their idea has mass appeal.
Once an entrepreneur decides that their idea can solve a big enough problem for enough customers for it to be profitable, Molinet stresses they analyze the market opportunity for the idea. Large and growing markets can generate many potential avenues for revenue, but in more stagnant industries, it’s much more challenging to make money.
For example, in 2013, Molinet focused his efforts on mobile devices, and it turned out to be a good bet. “Our thesis and market research led us to believe that mobile phones and devices would grow, surpass desktop sales, and become the dominant market for the future,” he says. “I like to say, ‘If you fall, make sure you face-plant into a pile of cash.’ In other words, choose a market that’s growing so quickly that even if your idea is not exactly on target, you will eventually succeed in that space.
Step 3: Funding
The next step to launching a venture is raising enough capital to fund it. Molinet says entrepreneurs can best obtain warm intros to investors by finding common ground.
“Interested venture capitalists are usually willing to talk, especially if someone vouches for you,” he observes. “A warm intro goes a long way, but at the end of the day, everything comes down to your product, your team, your timing, and your market opportunity.”
If entrepreneurs require broader networks to access investors, Molinet advises them to start following investors on LinkedIn. “VC firms typically have a couple of thousand followers,” he says. “Do your research, see who is active on LinkedIn, and engage with their posts. When you’ve established a relationship, you can reach out and make your pitch.”
Avoiding risks and common mistakes when launching a new business
As Molinet prepares to launch his second business, he anticipates far lower risk than with his first. Though he acknowledges the difficulty in starting a business during an economic downturn, he sees the overall climate as less threatening.
While today’s scarcity of capital and heightened scrutiny make gaining traction more challenging, it also decreases overall risk for both the entrepreneur and their investors. Several years ago, when it was easier to procure funding, entrepreneurs frequently obtained capital for companies that lacked sound fundamentals and received overstretched valuations.
“We will start to see some of those companies go out of business,” Molinet predicts. “The unfortunate truth is that some of those businesses never should have been funded. Today’s heightened scrutiny means it is harder to raise money, but if you can pull it off, it means you probably have a great idea.”
Molinet believes today’s entrepreneurs not only have greater access to affordable talent, but he also anticipates a likelihood of fewer competitors in the market, which means lower risk in the entrepreneurial space. Although, despite this decreased risk, pitfalls can easily ensnare new entrepreneurs — and often do. The most common mistake Molinet sees from new founders is a lack of focus on their market niche.
“As a new founder listening to feedback, you may find yourself attempting to build everything for everybody,” Molinet explains. “When you lose sight of your niche, you can fail to find market fit. In marketing to everyone, you actually end up marketing to no one. Especially in the first year, focus on your first market segment.”
Molinet also frequently sees entrepreneurs losing focus thanks to insignificant details. “It’s a delicate balance,” he admits. “Without an eye for detail, founders let important things fall between the cracks. But when you focus on the wrong details, you become bogged down by things that don’t matter and lose sight of the things that do.”
Despite the present economic fluctuation, now is still a good time to launch a new business. Entrepreneurs with a strong idea, who conduct sound market research, possess a willingness to learn, and stay focused on their business niche will be well-equipped to blaze a path with their first venture.
