Two years ago I raised $50,000 in investment capital. I was 19 years old. I dropped out of school at Purdue University where I was studying Chemical Engineering and started Kyk Energy, my first real company. Armed with $50,000 in cash, a product already validated by paying customers and a shitload of ambition, I set out on making what I thought would be the next big thing. A year later, I was back in school, the cash was gone and the company wasn’t going anywhere.
While building our business, my business partner and I did a lot of things right. Shortly after our launch, we had multiple local retail accounts and were consistently selling one third of 5 Hour Energy’s sales at these accounts, not bad when you consider our couple thousand dollar marketing budget stacked against their millions. We ran an online marketing campaign that drove over 23,000 unique visitors to our site in the first week after our launch. However, being first time entrepreneurs we made a bunch of small mistakes here and there. Eventually these small mistakes ended up adding up and ultimately ran the business into the ground. It was from this experience that I decided to go all in on software start ups.
From my experience with Kyk Energy, I realized that software is the best industry for a first time entrepreneur. It is the most forgiving industry out there. As a first time entrepreneur, no matter how smart or talented, you make a lot of mistakes. When you have a consumer packaged goods start up and you make a mistake, it is expensive. When you spend $15,000 on a manufacturing run (the minimum in many cases) and you get the product back and realize that something can be improved upon, that is a $15,000 dollar mistake. You have to sell all of your inventory or throw away $15,000 before you can iterate and improve. In the world of software, when you build out a product, you have the unique ability to continuously gain feedback and improve your product at almost no cost. You just go back to your computer and change the code. The decisions you make as an entrepreneur with one month of experience are not the decisions that you have to live with 6 months to a year later. Your product can evolve as you do and constantly get better. This is the beautiful thing about software start ups. Not only can you build amazing things but you can do it in a way that won’t leave you or your business in financial ruin.
Since Kyk Energy, I have taught myself how to code and have gone all in on software start ups. I have had made myself thousands of dollars doing side projects, had the opportunity to be mentored by Gary Vaynerchuk, been to some ridiculous events and am currently working on an enterprise software start up that I think has the potential to be the next big thing.
If you are considering being a first time entrepreneur, start a software company and save yourself $50,000 in mistakes.
Let me know your thoughts in the comments below. Thanks for reading!
Originally published on October 30th, 2013 at andrewlinfoot.com.