We talk to startups and investors, you get the value.
It is quite funny to spectate how, despite a great variety of educational videos, struggles of accelerators and incubators, startuppers keep falling into the same trap over and over again. It is like a learning process: you hear a smart thought, you hear it again, you do everything vice versa, you fuck up and do everything correctly.
We talk to startups and investors, you get the value.
Our startup THEFANDOME is a few years old already, but the very third year has become the most productive, talking about gaining experience perspective. Each month we were summarising what we had done so far, and every time we had one single thought at the end of the day: “Why didn’t we do it right away, they hinted us multiple times already…”.
I do even have a theory that you cannot share the experience; you only can understand the experience after processing mistakes in your life.
Thus, I want to shortly define questions, which are always on the surface, on the first pages of the books for startuppers. I want to give answers to these questions as honestly as possible, so those words would get straight to the brain, passing by the “I know everything better” zone.
Disclaimer. Described below pieces of advice can be used to the most of the startup, however, in some situations, they do not work out with products for the entertainment and biotechnologies fields, also with complicated Research and Development. If you are working in these fields, then I can only say my condolence and wish you good luck. Your path will be hard and thorny.
Answer: Start with the team.
It’s not about an idea and not about the product creation, and for Heaven’s Sake not from the investor scouting. This may sound weird, as the essence of IT-startup is in its ambitious breakthrough idea. In reality, it is more important to have the correctly built team with the required set of skills. The aim of this method is quite simple: having the successfully built and bonded team, you can create any type of business.
Startup path is indeed a research of a working business-model that fits this or that requirement of a limited part of the planet’s economy (or local area). You have to do a lot of turns and to do a lot of work “in the drawer”. So doing you should bear in mind that you have a limited amount of fuel. It is essential to use it effectively. Your team are the people who are effectively searching for business model. Having a team which has a required set of skills, you will have no difficulties in dealing hardships, and you will easily find a profits growing point or/and clients.
Piece of advice: Assemble in your social environment people who have the following trades of character:
Knowledge in Maths and Statistics — you need people who know how to work with figures.
Critical thinking. Not taking for trust all the theses proposed is a challenge indeed.
Erudition in the business field: it is important to know that business means money, so you should know how to apply this knowledge to your life.
Skills in problems decomposition and accurate planning.
Oratory skills (yeah, right, you need to have someone with a glib tongue in your team).
From my experience, this is the vital set of skills. Combining them in two or three teammates, you will be able to take on any project, and it doesn’t matter what the project is and how difficult it is in terms of development.
A small insight. On the early stages of startup development, competent investors and funds are taking into account specifically these skills, not your potential product or a financial model. They estimate how you think and how you do the planning; how can you decompose tasks and whether you can think abstractly, or whether you are stress-resistant. According to Y Combinator statistics, in the accelerator, a startup undergoes 1.5 pivots in 3 months of acceleration right before the demo-day.
Answer: Copy someone’s ideas.
Take Simpsons as an example. Unfortunately, that’s true. If you come up with something, that doesn’t have any similarities on the market, it is more likely that you have invented something nonviable.
Piece of advice: Start to shape your idea in various business models, which are working on the market already. With the passing time you will be able to find models, which are working somewhere *in the middle* of already existing models. This is your secret ingredient, as simple as that. The best way to do it is to do it on the basis of someone’s successful business model. From this point of view, “Uber for…” doesn’t look ridiculous, even if it makes somebody laughs of it.
Answer: If the whole idea of your solution is formulated in one sentence, it is still clear to all of your 50 potential clients and people react like “SHUT UP AND TAKE MY MONEY” than it is a perfectly chosen idea.
Basically, 99% of working business models are simple and easy to understand. The skill is in hitting the right words. However, correctly explained product (and if to be precise, the solution to a problem) will help you everywhere. From positioning on the market, sales, to the understanding the minimal functionality letting you start g̶e̶t̶t̶i̶n̶g̶ ̶t̶r̶a̶c̶t̶i̶o̶n̶ earning money.
Piece of advice: Do NOT ignore the significance of the real market reactions. On the early stages, your primary tool to get these reactions are questionnaires. You should pay attention and read how to create the questionnaire correctly and to make an adequate selection (‘The mum test’ for example). Never engrain MVP features which are unclear to the potential clients or do not give you any profit.
Answer: Only those things which sell for money the solution to the given product problem.
There exists quite an interesting method. You should not engrain the feature if you use more than one reason to the argument of its implementation. There must be only one reason — this will help to sell our solution.
Piece of advice: Use “NO” conception while prototyping, so you would keep your product valuable and concentrated. It is nicely described here. One more piece of advice: create models and think abstractly. Draw on a paper all displays of your applications, add business model and try to simulate real clients’ behaviour. If there is a possibility, try to create an interactive ScreenFlow in Figma or Mockup. After that, try to organise a Custdev with the real clients. The main rule is as follows: if there is something in the MVP that doesn’t solve the main problem — delete this feature without any doubts.
Answer: You have to find a product/market fit. Shortly speaking, you need to create something, so clients, partners and/or users would be ready to pay you money or to devote their spare time for you. This is the fundamental requirement in an effort that professional investors and funds would take you into account at least somehow. Until that moment, you are not even a startup.
Piece of advice: On the MVP level, leave the unnecessary things and aim at those which will allow you to reach product/market fit. This is the way you should think:
You need a minimal metric set which shows the benefits and advantages of your product to receive investments.
If you want to get metrics ASAP, you need to mastermind something that will create Value, which you will give to the client; and vice versa, in barter for the Value, the client will give his money or time.
Consequently, Value is uber important, NOT beauty and glitz.
You need to break a product concept into parts and analyse each of them. If at least one of them doesn’t contribute to the Value — the answer is evident.
Answer: When one of three factors or all at once will take place: an uber-fast audience growth in a short period of time, growth of income from month to month and revenue eventually exceeding expenses.
Piece of advice: Having one of these metrics as an Ace in your sleeve, you will find the money. How much — depends directly on the metrics itself and your connections. Until you have pithdecks everywhere you can. Go and make up your product, search for product/market fit. Otherwise, find a f̶o̶o̶l̶ friend.
Answer: Despite everything written above, you need to try and try and struggle. Over and over again.
Piece of advice: the concept is simple and old af: you cannot achieve the desired results doing one and the same action. Thus, all I want to advise is to change the methods, always try to see what changes and what bring you positive changes. When you are finished, start over again.
Answer: Start to sell your product as soon as possible.
Piece of advice: You mustn’t delay. Spend an evening for creating a landing page which will offer a preliminary order service of a non-existent product. Spend another week to find potential clients. Be sure, you will find people who will be ready to buy this service. It is fair, but not for all products. However, that works for the majority. In other cases, try to sell your product with the first good chance even with minimal functionality.