Angel insights: Dave McClure shares success strategies for technology startups
500 Startups founder Dave McClure recently brought a group of startups, investors and executives to Southeast Asia during his “Geeks on A Plane” tour. The outgoing investor landed in Bangkok last week to study the country’s startup ecosystem as well as to share constructive advice and some inspirational quotes with Thai entrepreneurs.
The Thai startup scene is still in an embryonic stage, compared to the US’s iconic Silicon Valley, where McClure incubated hundreds of companies such as Markerly, myGengo, Udemy and RidePal. But as the region’s tech industry is steadily growing, McClure decided to inaugurate Geeks on A Plane Southeast Asia to find international opportunities.
He expressed interest in working with startups in Southeast Asia and cited the region’s large population and the fact that local people are very social as the area’s two greatest strengths.
But the region is not without its challenges as well. One of the most pressing issues is lack of capital and financing, which is why McClure is stepping in.
But before giving out seed money, McClure emphasized two fundamental questions that a startup needs to answer at the pre-screenings: whether or not a product has a function that works, and if someone is interested in using it. Marketing plans, financial analysis, and product development will follow shortly thereafter.
McClure believes that Thai businesses in the fields of education and transportation could be attractive to investors.
“It’s not always so much based on technology,” McClure said. “In fact, a lot of things that you are going to do are just making existing businesses a little bit more efficient.”
In McClure’s eyes, a startup should move fast and try to change a minor functional area that a big business doesn’t do well.
“Most businesses suck at innovation. They don’t know technology. They don’t know how to code, how to do internet marketing and any of these socials. And in most cases, they’re probably very slow to change and to take advantages of all these.”
McClure illustrated his point using Tony Stark – Iron Man’s fictional alter ego.
“You don’t have to be Tony Stark,” McClure wrote in his PowerPoint presentation. “Just copy or use the stuff that Tony Stark makes.”
McClure’s 99:1 idea is that a startup should utilize all the existing infrastructure and platforms, such as Facebook and Twitter for social, and innovate only on the remaining 1% from there. Subsequently, they should try to develop 1% more every month.
McClure added that building a startup at the moment is easier than in the past. With online technology becoming far-reaching, startups can save time in the research process. Instant feedback allows them to improve and fix their products live, without having to rebuild them from scratch. But with that being said, the most important factor contributing to success is a startup’s willingness to start doing something.
500 Startups’ main strategy is to make a lot of little bets, instead of heavily investing in only a handful of brilliant companies. This reflects a piece of common knowledge in the tech industry: the majority of startups will fail. However, to the optimistic McClure, who has been in the industry for two decades, a failed attempt means a learning opportunity.
“Even if these startups fail, it is probably educational for the entrepreneurs and the market to see that happen,” he pointed out.
McClure also has a curious, convincing way of viewing failure.
“All those people who are spending hundreds of thousands of dollars going to MBA programs to read about other startups’ success,” McClure said. “They should spend that time and money trying to build their own startup. It’s probably better for people to fail at building their own little startup than it is to read about someone else’s success. The time and money you are spending maybe not getting to success at your startup is going to be educational for you.”
Photos: Praj Kiatpongsan