What aspirants should know about startups?

First few steps to starting up.

credits : www.entrepreneur.com

A lot of students and wannabe entrepreneurs ask me what are the basic things to know before getting into startups. Well, there are a million things, but then lets start with the basics.

For clarity purposes I define a Start up as a team of people that would solve a problem/pain/need/provide entertainment for a set of customers and able to make a profit out of the operations. Key here: team, solve, profit.

Here monetization [making money] of the operation can be done by two ways:

a. Directly — by pricing the customers whose problem you are solving.

b. Indirectly — through ads or by gathering user data [with an assumption that it could be used to make money, though there are lot of loop holes in this, as many start ups are find out of late]

Either way the money you make should be greater than cost put in establishing and running the start up, at the minimal.

What you need to just start up?

  1. Customer with a pain / need.
  2. Distribution network to reach out to your customers.
  3. Solution that is cost effective at least in the long term (meaning profitable within certain period like 6 months to 1 year — time period varies depends on funding and risk appetite).
  4. Team to build a solution.

How to go about finding the right idea?

1. Start with areas/domain/ problems that you are impacted with or aware of. Problems that you are naturally curious of, that you spend hours to read and understand.

2. Talk to the customers affected by the problem.

3. Understand the subtleties of the problem, attack the problem from different angles to understand all assumptions.

4. Are there insights that you come across as a result of your research? Can you understand the gap between existing solutions/work around and the problem? Is this gap big enough to cause pain to customers today? Can this gap be filled by a better solution?

5. Can you build a solution in a cost effective way that would solve the problem?

6. Is there some one — any one ready to pay for the solution?

7. Is the problem a pain killer (solves a pain) or a vitamin (good to but not must have) to your customer?

What you need to survive the first year of your start up?

  1. Your and your team’s monthly expenses to be taken care for 6 months — 1 year.
  2. A MVP [ minimum viable product] that would solve the biggest pain of your customer.
  3. Ability to build it while keeping your cost to bare minimum.
  4. Understanding your customers in and out, getting feedback constantly and improving on the product till you get the product — market fit.
  5. Getting the first 10 customers. Then next 40. Then next 50. Focus on micro not macro. Be on the ground not on 10000 feet. Focus on every new customer, not on millions.

How to get a team to join you when you can’t pay them?

  1. Initial team will be you and you alone.
  2. Your personal relationships, student network, alumni network, past and current colleagues. Your social capital.
  3. Ability to show value for your co founders and early employers on what they will gain and how they will be part of something that generates enormous value for every one involved.
  4. Showing perseverance and hard work.
  5. Showing the money or human value the business can generate.

Roles you will have to play

  • Visionary
  • Developer
  • Janitor
  • Evangelist
  • Content Creator
  • Designer
  • Researcher
  • Team builder
  • Consumer behavior observer
  • Customer Expert
  • Cheer leader

Indicators if you will continue from year 2–5.

  1. How scalable is your startup — meaning can your startup scale from 10 to 100 to 1000 to 10000 to million customers in a decent period of time with very less change to your solution infrastructure while improving your profitability.
  2. How big is the market — What is the size of the market of the customers who are having the pain you are solving. How big it is? Is it small and growing or Large and stagnant?
  3. What’s the reason for the solution now? Is there a change in demographics [rapidly growing customers with a need] or a new technology [ advances in AI, VR etc] or improved access [mobile penetration]? Why this solution at this point of time?
  4. Your team. Your ability to create an exemplary team and make them stay.

Are you on the right path?

  1. Focus on revenue/ways to monetize than funding
  2. Focus on Customers. Live, breathe, eat like your customers. Get into their skin. Think like they would.
  3. Iterating on the product till you have right product for the right market.
  4. Your ability to contribute to what is core to your start up. If its a tech solution to a problem you should be able to code and build. If its a retail business you should know how to run the store. DO NOT OUTSOURCE THE CORE OF YOUR START UP.

What is over rated today?

  1. Funding
  2. Events and networking. There are conferences that could help you get your new customers and new hires. But at the initial stages focus on the customer and product will save you a tons of effort and energy.
  3. Location, Co working spaces and Incubators. These could be helpful as well as distraction. No one can understand your product and customer better than you.

What is under rated today?

  1. Observe your customers — Get on to the street. Check out what your customers are doing, how they are behaving. Find a reason to get into their houses. We all leave so many cues about our aspirations through our actions. Find out. Find out the aspirations of your customers. And then try solving them.
  2. Create content— as much as possible — in your domain, in the problem you are solving, in all areas where you have value to provide. You are the face of your product. Initially people buy from you because of you than the product. Improve your visibility on all social media platforms and channels. Be the face of the problem you are solving.
  3. Form active partnerships with peers. People who could help you reach out to more customers. People who could help you build. Form more collaborative relationships all around.
  4. Look out for the mentors you need actively and show them the value. Convince them why its in their interest to help you.
  5. Read, read , read. I cannot emphasize more on this. Its crucial to your survival. Read about how to over come mental hurdles. Read about your technology. Read about start ups. Anything and everything you can get your hands on.

For more references:

[1] Design Thinking

[2] How to start a startup by Sam Altman

[3] The Hard thing about hard things by Ben Horowitz

[4] Zero to One by Peter Thiel

[5] The obstacle is the way by Ryan Holiday

[6] Man’s search for meaning by Viktor Frankl

[7] Small Data by Martin Lindstrom

[8] And if you are from India, you should read this widely viral post on starting up in India by Saurabh Saha. Amazing piece.