Seth Sternberg, CEO of Meebo, had a very relevant guest post at TechCrunch last week  focusing on the traits of successful startups in the consumer internet business.  He stresses two key characteristics:

1. Establish a great founding team.
2. Focus on the product, forget everything else.

Last night I went out to dinner with a friend who is getting the itch to start his own startup.  There were two main points I tried to reiterate: establishing a great founding team and concentrating on the product.  For most MBA types who come from financial/consulting backgrounds, there’s a common misconception tied to the consumer internet business.  It’s the notion that all you need is an idea to create a successful online enterprise - the rest can be outsourced.  I would estimate that 95% of the time, those that take this route fail.  I learned that the hard way with Inside New York.  Outsourcing your core product is a bad idea (good hackers usually won’t want to work with other developers’ code, especially if it’s shitty code from across the globe). Fortunately, I had a great safety net and was able to produce a successful turnaround.  These are lessons that are hard to understand without getting your feet wet, but if you can learn from other people’s mistakes you’re all the better for it.

Startups need a solid founding team.  You have someone with an idea (a developer or a business-oriented entrepreneur), and you begin to create.  If you’re not a hacker, you need to find someone who is - someone you can work with on a daily basis who shares the same interests, values, and vision (granted your vision will evolve).  Tumblr is a perfect example (and I’m not just saying that because I work here).  You couldn’t ask for a much better team than David and Marco.  They’re both extremely talented hackers who have shared a common goal since day one: to make it as easy as possible for themselves (and others) to share the things they love and create online.

This leads to point number two: focus on the product.  When Tumblr was just an idea with nothing but a little bit of code to show for it, the focus wasn’t immediately on raising capital - it was on creating a minimum viable product, user-adoption, and iterative and incremental developments.  When you are ready to raise capital, it will be driven and valued by how useful your product is.  Seth puts it quite nicely:

Get your product out the door. No office. No phone system. No hiring. No press. No legal muck. No raising money. No looking for partnerships (who’s going to partner with you anyway?). The success or failure of the adoption of your product is what will create 99% of the initial value of your company. If no one ever uses your product, you have no value…forget everything else and focus on what matters – getting an alpha of your product out the door and into the hands of your friends and family. Use some URL like www.mygreatstartup.com/shhh.html. Then, once you’ve fixed the initial bugs and incorporated a feature or two that everyone requested, go live. Remember: keep it simple. The initial product you build is for you – you don’t know what features everyone else wants. Launch fast and light, and listen to your users for feedback. In the product, always have a way to ask for user feedback.

This isn’t to say that the only way to start a successful startup is to be a hacker.  Seth did a good job for himself as he noted in his post.  Tumblr President John Maloney also did a hell of a job and became quite the successful entrepreneur (see UrbanBaby).  The difference is that initially you’ll mainly be dealing with the administrative side of things - networking, dealing with lawyers, and doing some light marketing and PR with your users and the blogosphere.

If I were to start a startup, I would find a hacker who I knew or was introduced to me by someone I trusted wholeheartedly, agree on a fair stake in the company, and develop, develop, develop.  I’d also bring on another hacker with serious designing chops for a  minimal living salary and a specified stake if he was deemed a good fit.  The fact of the matter is that the consumer internet space is a place conducive to talented hacker-entrepreneurs, but there’s still plenty of room for those with only ideas - they just need to execute them efficiently.