The First 4 Steps to Take When Creating a Startup
We’ve all been there; you’re going on about your day and then it hits you. The BEST idea anybody has ever had, YOU are the only one who’s ever had it, and now creating a startup is the only thing on your mind because you’re going to be RICH!
So obviously, your next steps are to:
1. Give all your friends fancy titles.
2. Ask that one guy who graduated with a degree in computer science stuff if he can build your new mobile app idea because now he’s is the CTO.
3. Tell the new CTO to go to (insert popular website here) and you want your app to have all the same features.
4. 6 weeks later you find out that your CTO doesn’t really know how to build an app.
5. Go to a site like upwork.com, scrape together everything you can from friends, family, and working overtime to pay someone $15K — $20K to build your app.
Well, maybe those aren’t the obvious next steps. But we’ve been there before. That movie is called “My First Startup,” and we’d had the displeasure of starring in it. Spoiler alert: it usually ends with a lot of wasted time and money.
Having developed 5–6 products since having this initial experience, I would humbly suggest taking a different route so you can avoid this painful experience. You love your idea, so treat it properly and do things the right way.
What Is An Idea Anyway?
No matter what book you read or class you attend, one common thread you’ll hear is that all businesses, no matter what kind, exist to provide a solution to a problem. It doesn’t matter what business you’re starting, from low tech brick and mortar stores to the most advanced tech startup: good companies provide solutions to consumer problems.
Your great idea? It’s a solution to a problem. And the problem is where you should start.
Why You Should Start With a Problem
Simply put, a problem can be solved in many ways. Your idea/solution is just one way. If we can understand the problem first, we can try many solutions to see what works.
It’s not unusual for companies to switch focus from what doesn’t work to what does. You may not remember this, but Instagram initially started as a location sharing application. They quickly realized that their users only wanted to share photos so they changed focus. Pun intended.
With Instagram, the problem stayed the same: People wanted an easier way to share. The solution is what evolved to meet the problem head on. Considering Instagram sold to Facebook for $2 billion just a couple years later, we’d have to say it worked.
Again, all businesses offer solutions to consumer problems. By defining that problem and ensuring your product/service is providing a solution, you can avoid many of the mistakes listed above.
Instead of going down that road, and with problem-solving in mind, consider the four steps you should take when creating a startup.
1. Start With Your Idea and Work Backward
We’re assuming your idea came before a desire to solve a problem so you’re going to want to work backward towards identifying the problem. Start with the idea itself and then write down your assumptions about why people would need it.
For example, say I have an idea for a college fundraising app that lets alumni donate money back to their school. What problem does this solve? A fair assumption would be that alumni are having difficulty donating money, right?
That was easy!
2. Find the ROOT of the Problem
Well, figuring out that problem was easy, right? Nothing but smooth sailing from here on out. Not so fast. You want to make sure you have the ROOT of the problem and not just a SYMPTOM of the problem.
Finding the root of the problem is often a matter of asking the right question. Consider our example above. We’re assuming the problem is that alumni find donating money to their alma mater is difficult, right?
It’s a fair assumption to make, but is that THE problem or just a SYMPTOM of the problem? It’s probably a symptom. The real question is “WHY” are they having difficulty donating?
Possible reasons include:
1. The current user experience on the school’s website makes it hard to give back.
2. There not enough ways to give? PayPal, Credit Card, Venmo Etc.
3. Students want to give on their phones and the school doesn’t have a mobile website.
When you start asking “why ” you can really get to the bottom of why your problem exists. Write each of your “reasons” down and we will explain how you’re going to use these “reasons” to build a profitable business.
3. Define the Problem
Now that we’ve drilled to the root of the problem, it’s time to create some problem statements. A problem statement is 1–2 sentences that describe what the problem is that you’re solving.
If we use the example above, one problem statement might be:
Alumni find it difficult to give back to their school because the current user experience on the school’s website makes it hard to give back.
As you can see, all I have done is combined my initial assumed problem with one of the reasons why the problem exists.
If you have multiple reasons (Which you should) then you will have more than one statement.
1. Alumni find it difficult to give back to their school because the current user experience on the school’s website makes it hard to give back.
2. Alumni find it difficult to give back to their school because there are not enough ways to give.
3. Alumni find it difficult to give back to their school because they want to give on phones and the school doesn’t have a mobile website.
Not every idea will be as cookie cutter as this but the idea is to create a problem statement that clearly lays out the assumed problem, and the reason why. Then you can strike at the heart of the matter.
4. Prove That It’s Actually a Problem
If there was one section of this blog post that was more important than all the others, this would be it.
Simply put: the problem must actually be present in order for a solution to be warranted and profitable. Since the solution is the reason for your business to exist, this is a crucial step. You must now prove that your assumed problem is, in fact, the REAL problem and one that warrants your attention.
Skipping this step is dangerous and is one of the reasons why the example we gave at the beginning of this article usually winds up badly. The last thing you want to do is develop a solution to a problem that doesn’t exist!
Been there, done that, it’s no fun.
Here are the best ways to validate whether your problem exists.
1. Have a Personal Connection to the Problem:
The best person to solve a problem is to either have it yourself or be closely familiar with it. Then, instead of validating it, you only need to see if others share your experience. Otherwise, you’re just going to build a solution for yourself. There’s nothing wrong with that, mind you, but it usually isn’t the key to a great business model.
2. Customer Interviews, Surveys:
If you don’t have a personal connection to the problem, then you should immerse yourself in it. To do this, start talking to the group of people that you think have the problem.
Say we take the problem statement:
“Alumni find it difficult to give back to their school because the current user experience on the school’s website makes it hard to give back.”
Alumni would be what’s called your initial target market.
Paver Definitions —
Target Market: the specific group people that you are serving or solving the problem for.
Come up with a list of questions and start interviewing your potential customers. You want to put yourself in their shoes so that you can understand their needs as much as possible. Find out if they’re donating money to their school, why or why not, and what’s stopping them.
In this example, we’re assuming it’s because of the college’s website. Their answers might surprise you. It could be one of our other assumptions, or something completely different.
We actually built this app in real life, but after having conversations with the school we realized they didn’t have an issue receiving money at all. Instead, the issue was managing it!
Here are some good resources on how to survey/interview customers:
To sum this all up just remember that from the very beginning, focus more on the problem and less on the solution. There are many ways to solve a problem, but we must first clearly understand what that problem is and prove that people actually want you to solve it.
Trust and Believe — there is nothing worse than putting all your time and energy into something just to find out that nobody really needs it.