There are three key checkpoints for turning a concept into 7-figures: the groundwork, the breakthrough, and the impact. I sat down with Co-Founder and CEO of Halo Neuroscience, Dr. Daniel Chao to discuss how entrepreneurs can succeed in these three stages. With an MS in neuroscience and an MD from Stanford, Dr. Chao went on to help raise $250 million at a medical startup. He is set to achieve similar success with his latest innovation, Halo Sport: a neurostimulating headset used by the military, elite athletes, and musicians to achieve peak performance. Here are his three lessons for entrepreneurs to succeed:
1. The Groundwork
Successful startups are born out of frustration with the status quo. However, Dr. Chao says a big mistake is to make the pursuit of frustrations a conscious and primary goal in your work. The accumulation of relevant skills and experiences should be number one; then becoming a keen observer of industry shortcomings is a natural byproduct.
One of the best things a budding entrepreneur can do is join a company as an early employee — capturing as much of the business process from concept to production. Learning comes through osmosis; and innovation comes as a byproduct of learning. The grind leads to the insights. Learning is the grind, innovation is the insight. Make the accumulation of knowledge the priority over seeking innovative solutions.
2. The Breakthrough
There are two sides to a breakthrough: finding a solution to a frustration, and then getting the concept off the ground. Chao says his breakthrough boils down to this — the trust factor. Your track record will speak louder than your elevator pitch. After leading a research lab as a young scientist, Chao cut his business teeth as a pharmaceutical and medical consultant at McKinsey, then started as an early employee at a successful medical device company. With over decade of experience, investors didn’t just invest in his idea, they invested in him.
Anyone can come up with an idea, but not everyone can turn ideas into products. Your track record — the accumulation of personal skills and industry experiences — translates into your trust factor. And that trust is what attracts potential investors and early employees. What you have been capable of indicates what you can be capable of. Here’s one way to measure your trust factor: if your early employees want equity over cash, that’s showing confidence in what you’re capable of doing. Build your résumé before pursuing relationships.
3. The Impact
“Are you really moving the needle?” Dr. Chao says that’s the question entrepreneurs need to ask themselves. When it comes to distribution, companies rely on two metrics: the net profit you earn from a customer (Customer Lifetime Value, or CLV) must exceed the amount you spend to acquire a new customer (Customer Acquisition Cost, or CAC). These metrics place profits over people. If you want to make a significant impact and move the needle with your company, you must realize that the two work in tandem — focusing on people will fuel your profits. Your motivation and success will be equal to the mission of your company; if the mission is just to increase the bottom line, your impact will be shallow.
To sum up entrepreneurial success, in the groundwork stage: innovation comes as a byproduct of learning; in the breakthrough stage: trust, momentum, and key relationships come as a byproduct of your track record; in the impact stage: profits come as a byproduct of focusing on people.