Why startups should think about making money. Not receiving.
When I ask,”What is an MVP?” in a workshop or during a presentation, there are always some hands going up with enthusiasm. It became cool to know things like Business Canvas and MVP. When you ask about Customer Development everybody watches me with big eyes. You know, like the goldfish in the bowl, where the bowl is magnifying the fish eyes. But actually, they have no idea that this is a method Steve Blank is promoting, so a startup validates his potential customer and works towards a perfect Product/Market fit. The MVP in this process is important as it helps you find that market that needs your product or service and will pay for it.
Aiming at making money instead of collecting money, be it from investors or through grants, is for most founders the KPI of success. Steve Blank also shouts all the time “Get out of the Building”. Not to find the next-door Starbucks but to talk to your potential customers. When I insist that validation is crucial and you need to talk to more than 1 potential customer, the startup founders give me the same fishbowl eyes look. It is like putting them in a depression instantly, dreaming of a steady job with a clear to do list and monthly payments.
Therefore it would be wise that mentors and investors focus more on MVM, Minimum Viable Monetization. What is the business model and test that business model. Use Google to find out what your competitors are doing, watch their pitches. You learn more from competition than from your parents and friends who support you. Yes, they love you, but that is not a business model. That is love.
Today we take it for granted that 9 out of 10 startups fail. The main reason is selling the damn thing, or better, not selling at all. Founders tend to come together and work on the product with money on the bank. Once the money is gone, and no customer is created, the story ends. MVP is great but get into MVM asap as to understand whether you will be able to make it a viable project. A startup has as a goal to MAKE money and become a company that earns from customers, not from the investors or grants. Just as we want to create less waste and save nature, and therefore ourselves and future generations, we should aim at less failure. I am looking especially at the grant organisations and investors who see investing as a gamble, not as a well thought-through program aiming at success. Enough lottery.
The Undertones, who remembers them? They started the band in 1976. I bought their vinyl record with the famous songs, “Jimmy Jimmy”, “My Perfect Cousin” and listened to them too often in my dark room. I am talking about the time photography was an obscure occupation. Later I discovered Nirvana, way later after everybody already found them cool. I started to appreciate them thanks to the Unplugged concert on MTV. The song, they rarely covered, “The Money Will Roll Right In” reminded me of the Undertones. The lyrics are very appropriate in the Startup Scene. Especially the sentence before the title, “I’ll just sit and grin”. Enjoy the song here.