What Does Success Mean To You?
Despite all of the promotion for “do what you love”, most people automatically think about money when they hear the term success. Being the great equalizer, revenue still seems to be the primary factor when judging company success. But that's not the only measure, and I believe it's only half of the equation. In fact, more revenue alone rarely corresponds to more success by my measure. Let’s see how many entrepreneurs out there agree.
My Definition Of Success
Drawing on all of my experience working for others, working for myself, and searching for happiness, I have some very specific ideas about what it means to be successful. Some of it stems from the business books I have read during our startup journey, and some of it comes from a more holistic view of success and life in general. I’ll first offer my definition of success for a startup:
A company becomes successful when it fulfills it’s core purpose in a sustainable way.
NOTE: I wrote an article a while back about core purpose, so I won’t dive too deeply into that topic. I’ll summarize by saying that a company’s core purpose is related to what makes its founders happy and the activities they enjoy.
Being Sustainable Means Having Net Profit
Successful businesses make revenue, pay expenses and salaries, and then have some net profit left over for expansion. There’s no getting around this. If your company allows you to “do what you love” but does not generate net profit, it is not successful. At best, it is a great hobby.
Getting to profitable means a lot of things must go right, and it often takes some time to find the right formula. Founders need to find a good balance between effort spent and revenue generated to make it happen. Working on anything for 12–16 hrs per day will drain a person physically, and burnout will take over at some point (even if founders are doing what they love). So being sustainable also means the right formula for net profit has been discovered, and it can be applied over the long term.
A Note About Validation: we all have a psychological need for validation. It’s very difficult to feel successful if nobody ever tells us we’re doing a good job. This is one of the reasons why revenue is so important. It tells us that other people find value in what we do, and they’re willing to pay for it. Having net profit tells us we’re doing a good job with the money coming in.
Fulfilling The Company’s Core Purpose Is 50% Of Success
If your startup is not accomplishing what it started out to do, it is not succeeding. This seems pretty obvious, but why is it so often left out of the equation? Our tendency to think that revenue solves all the problems is why. We think that once we start making a little more money, we can sort out the things that we’d like to change. Unfortunately, those things are often driving revenue directly or indirectly, and sorting them out kills the balance.
This is why “do what you love” is such a popular response to questions about starting a business. Many founders, like myself, have started and re-started a few times figuring out that being passionate about something drives everything. However, the thing that many of us forget while being passionate is that executing a plan for revenue should be front and center to achieve sustainability at the same time.
More Evidence In Support
In his book “Good To Great”, Jim Collins talks about three components of success being passion (what you love), skill (what you’re good at), and economy (what pays you). When you find where they intersect, you’ve reached success. I tend to think that skill is a necessary component of economy, and is a big part of why customers are willing to pay for goods and services. However, the basic principle is the same — both passion and revenue are equal components of success, and one cannot stand alone!
The Lean Startup Model To Build Success
We love the lean startup model, and we encourage our clients to embrace the combination of purpose, solution, and the revenue model right from the start. Getting to successful is much easier when you focus on all the right components, and then measure progress against them as you go.