How to Start a Startup: Advice From Reddit and Spanx Founders

A startup is a company in the early stages of development, founded by entrepreneurs with an idea for a new product or service. Often startup companies lack a traditional business plan or funds to grow and require outside investment from several sources, such as venture capitalists, angel investors, lenders, or crowdfunding.

Get your business idea off the ground with tips from legendary startup founders Sara Blakely (Spanx), Alexis Ohanian (Reddit), and more:

1. Find Your Big Idea
“Ideas are gifts from the universe,” Spanx founder Sara Blakely says. “Every time I have them, I capture them right then. . . If you are in search of an idea and you spend one week in your life with a notebook writing down everything that bothers you, give it a minute,” Sara says. “And then write down what you think the solution should be. You’ll come up with an idea.”

Reddit cofounder Alexis Ohanian agrees: “I’m definitely guilty of carrying around—back in the day it was a notepad, now it’s just a notes section of my smartphone—full of things that piss me off because chances are, if you’re upset by something, there is a good business opportunity there.” Your big idea comes from finding a unique solution.

“As a startup founder, just identifying a problem is not good enough. You have to have a solution mindset.” — Alexis Ohanian

2. Build Your Support Network
Just as in any other area of life, a support network can make a big difference. “As an entrepreneur, there’s going to be so many ups and downs. That’s just the name of the game,” Sara Blakely says. “It’s really important when you’re starting out as an entrepreneur to create a board of advisors that’s your support system.”

This isn’t a formal board: “I’m talking about the people that make you feel good, that can give you the energy and the pep talks that you need,” Sara adds. Having this support system in the early stages will protect your sanity.

“They didn’t even really know they were on my board of advisors, but they were. And they were the people when I was hitting the valleys—which happened often as an entrepreneur—the times I wanted to give up, or the times that I thought I cannot do this anymore, I would pick up the phone and call them. Surround yourself with that kind of content and support during the ups and downs, and you’ll make it through it.” — Sara Blakely

Alexis Ohanian similarly advises finding this circle. “Draft up what looks like a personal board of advisors,” Alexis says, “and choose people—three, four, five of them—who you know will always be there as a source of unvarnished truth, who’s looking out for your best interests, and who makes you want to be a better person.”

3. Study Existing Businesses—And Then Do Your Own Thing
Before you start operations, learn everything you can about the industry you’re about to enter. “Be a sponge and talk to every peer that you can find that has started a business and both succeeded and failed,” Starbucks CEO Howard Schultz says. “I think you gotta be the best student in the world on every single company that is directly and indirectly related to your product or category.”

However, it’s important to find a balance. “The danger with focusing too much on your competition is that you’re not actually spending time innovating and actually solving problems,” Alexis Ohanian says. “You should maybe pay attention to what [your competitors are] doing, and more importantly, pay attention to what their customers say about what they’re doing. But don’t obsess over them, because if you do, you’re not going to be creating anything new. You’re going to be too busy copying the things that they’re doing.”

“Competition is an inevitable byproduct of starting a business. And the sooner you accept that, the better. I know I personally took all of my competition way too personally for years when starting Reddit because it felt like an attack on my kid. Now that I have a kid, I realize starting a startup is definitely not the same as having a kid. But those feelings are totally reasonable.” — Alexis Ohanian

4. Validate Your Idea
Many industries, especially technological industries, expect you to validate your startup idea with an MVP before seeking funding. “MVP is a weird acronym clearly created by people who are not into sports,” Alexis Ohanian says. “It does not mean most valuable player. It means minimum viable product . . . in startup land, this is the idea of the most basic version of your product that solves a problem. That’s what makes it viable.”

Your MVP might be a pared-down version of your app or a low-cost prototype. You can achieve validation by asking for customer feedback, using focus groups, and consulting other industry professionals.

“That aha! moment that a great MVP provides is everything.” — Alexis Ohanian

5. Find Your Funding
Once you have validated your idea, you’ll need to raise money for your company. This is the trickiest part of starting a startup, but don’t let that deter you. “Today, the ways to get fundraising are rapidly changing,” Alexis Ohanian says. “And as the cost of getting started gets cheaper and cheaper, as the opportunities and methods to receive funding get easier and easier, you’re going to have more and more ways to kick things off.” Cryptocurrency is one option. “One of the really cool things we’ve seen with Web3 with tokens is using incentive systems,” crypto investor Chris Dixon says.

Chris uses the cell service industry as an example: “There hasn’t been a startup cell phone provider in many decades because the only way to do that is to go raise literally tens of billions of dollars,” he says. “Technologists a few years ago said, ‘You know, this could be a really interesting application for tokens.’”

A startup incentivized users to place networking devices on their roofs in exchange for tokens. “They’ve built almost complete coverage of the US with this incentive system,” Chris says. “The hope is that [tokens] will be a powerful new mechanism where a whole bunch of networks of people who’ve been trying to kind of bootstrap for many years can now be built using tokens.”

“There is not a single founder, there’s not a single CEO out there, who has not been told ‘no’ more times than ‘yes.’ And that’s the nature of startup investing. It’s the nature of fundraising. And it’s the nature of being an entrepreneur, which is getting really comfortable hearing ‘no.’” —Alexis Ohanian

6. Improve Your Product
“Execution is everything,” Alexis Ohanian says. “And that’s not just doing the work. It’s doing the right work.” Once you have your MVP and some initial funding, it’s time to improve your product.

“As an entrepreneur, figuring out what your edge is in terms of understanding how to continuously improve the product—whether it’s an edible product or whether it’s software—is the most important thing you could spend your time on in those first six months, that first year,” Alexis says. Your ability to accept feedback and adapt will impress investors and help you secure additional funding.

7. Build Your Team
“For a lot of folks who might be great product creators, great visionaries, great designers, great community-builders, they may have no experience whatsoever in hiring or management,” Alexis Ohanian says. “And so hiring becomes a skill that a lot of first-time CEOs will need to learn.”

Hiring for a startup can be different than hiring for other jobs. “An ideal hire needs to be willing to help build the plane while you’re flying it,” Alex says. “Everything is everyone’s responsibility, because everyone is wearing too many hats. That’s the nature of it.”

Alex recommends using a holistic application process when building your startup’s team: “We don’t ask founders for their résumés. Why should we ask members of our own team?” When you skip the traditional CV, “you see this kind of creativity that doesn’t just show up on a résumé,” Alex says, “because you’re asking questions that . . . actually push applicants to go a little further to talk about the ‘why’ in their own lives and their own stories.”

“Of . . .1,200 applicants [to our venture capital firm, Seven Seven Six], over 82 percent considered themselves underrepresented in tech. And I think this really speaks to the power of hiring for a broader purpose, and being willing to break from the common examples of expertise or credentials, and actually getting to talent that is going to have an approach that’s unorthodox, that’s unconventional, but exactly what you need in a business like this.” — Alex Ohanian

8. Make It Official
You’ll need to acquire federal, state, and, in some cases, city business licenses or permits before you can begin operations. If you plan to file taxes as a business or open business bank accounts or credit cards, you also need to register your company with the Internal Revenue Service (IRS) and secure an Employer Identification Number (EIN).

The government regulates some industries, especially those that require the handling of food or dangerous substances. Be sure you understand the city, state, and federal regulations about your business before you go public.

9. Choose Your Location
Depending on your business, you may need physical location, office space or simply a business address. “If you don’t happen to live in Silicon Valley, it doesn’t matter,” Alexis says. “And I know that because I didn’t start Reddit in Silicon Valley; I started it in Charlottesville, Virginia.”

“Post-COVID, we’ve seen more and more people realize, thanks to the internet, that they can do their work from just about anywhere they have an internet connection. And, more importantly . . . they can start their business from just about anywhere. There are limitless cities all over, not just the United States, but all over the world, that are going to found the next billion-dollar startup.” — Alexis Ohanian

10. Get Online
“For almost two decades, I’ve been telling people that online communities are just as real as offline communities,” Alexis says. Whether you’re building a tech startup or a brick-and-mortar store, your customers will likely expect some form of online presence, such as e-commerce, an informational website, or blog entries.

Many people find new products or businesses through search engines, so investing in search engine optimization (SEO) will benefit almost any startup.

11. Market Your Brand
“When I first created Spanx,” Sara Blakely says, “I always thought of everything through the consumer lens. So when I’m making a packaging, I’m thinking, ‘What package would I buy and why? What am I looking for in a package? How do I wanna be talked to?’”

A marketing strategy helps you define how you will reach customers and make them aware of your company. A good marketing plan establishes your brand and how you will attract new customers (such as through advertising, social media, promotions, loyalty programs, or deals for referrals). Get Sara Blakely’s tips for marketing a product.

12. Build Your Customer Base
Every startup business relies on a loyal customer base to keep the company growing. You want customers to feel that your company provides reliable, fair service so they’ll return and refer friends to your business through word of mouth. You may want to invest in market research to ensure a solid product-market fit for potential customers.

“Anyone who’s willing to give you a little bit of their attention is a superhero, so do the work to build that community early.” —Alexis Ohanian

13. Be Flexible
Every small business goes through growing pains. You’ll learn what works best as you go, so let your company evolve and change as necessary. “Failing fast is a crucial requirement of starting a startup,” Alexis Ohanian says. “If something’s not working, you have to recognize that quickly and try something else.”

“What I wish someone had told me when I was starting Reddit, was that it’s the biggest advantage in the world to be starting out because you can fail one hundred times and no one’s going to care because no one’s going to know.” — Alexis Ohanian

To build a successful startup, you must first find a problem to solve and learn how to counter the competition. Sign up for a MasterClass Annual Membership to discover Alexis Ohanian’s approach to thinking creatively, being resourceful, finding funding, and nailing your execution.