Why it’s important for founders to create something they want in the first place
Among the common topics founders get asked a lot is the beginning story of their startup. A simple question like that can tell a lot about the company philosophy, and whether the investors would want to work with them or not. The most crucial element people look for in the answer here is obviously a problem statement that makes sense but what I would like to mention in this post is that it is always nice for investors to also know that the product is solving the founder’s own problem. This fact generally helps validate the following points which can be a quick proxy on the company’s survivability.
1) That the problem is real and urgent
Inarguably the most important part, the foundation of a good business is that it needs to solve someone’s problem. Many have emphasized about finding opportunity but failed to highlight the fact that the opportunity must be a real, urgent pain point. The easiest way to ensure that it’s not a hypothetic problem is to know it’s the one that the founder desperately needs to solve. It is worth to note that this never needs to be the problem of everyone. Top entrepreneurs usually have a stand point and are willing to upset some audience over their real customers, and that is business.
Focus — Back in 2004, after two Thai undergrads Mark & Lew found out that there wasn’t any local site that delivers good quality IT news for reading and no one’s caring enough to do, they decided to build it themselves. Blognone was then founded and over the next ten years they never compromised their guiding principles on quality and transparency over anything else, just like its first day (see their impressive writing guideline in Thai here). Now Blognone is regarded as Thailand’s leading news site well known for its high-standard IT updates driven by a strong tech community. Its job board is also notably one of the most effective places for companies to look for exceptional tech talents in Thailand.
Update note: Blognone and its subsidiary business news site Brand Inside were acquired by Wongnai in 2017.
2) That the founder is ready to stay through this long journey
Building a successful venture requires an immense amount of commitment and perseverance, and to have that, people need to feel that they are making the difference. Founders who are actually solving their own problem will amazingly strive through the countless roller coaster periods (yes, there are a lot more than just building your product and selling it — losing partners, negotiating funding, or firing people). The biggest privilege any startup company could have is a leader who is 100% ready to take on the storms.
Persistence — When Yod Chinsupakul started Wongnai back in 2010, most people at the time didn’t realize it yet but he knew clearly from day one that Thailand will soon follow the pattern in the U.S. where people will start to look for a more convenient way to discover good local restaurants. He and his friends made Wongnai happen, and not until 2013 that they received their first funding. Through the six-year journey Wongnai is now one of the most recognized digital brands in Thailand and market leader in local business reviews & deals covering more than 200,000 points of interests nationwide. Many employees, including the very first hires, were also their big fans — and their journey continues.
3) That the company will never lack a quality feedback
Equally important to expertise, quality feedback is the key to building great products (and ultimately generating revenue). Creating new innovation means there can be up to hundreds of decisions to be made each month, and there is nothing better than having the founder as the first fan and power user. The founder can evaluate the product and resolve instantly if anything is right or not, because it is something he cares about the most and knows the value more than anyone else.
Clarity — Popular contact management web app Highrise was launched in 2007 by the team behind Basecamp (formerly 37signals) from their very own need in running their business. The team didn’t even need to study the market or talk with potential customers for the early product because they were clear from the beginning what they want — to keep track of who they talked to, what they said and what to do next, all in a simple way. Today small businesses worldwide are using the app to perform basic CRM features and keep track of their leads and contacts. Generating millions of dollars profits each year, Highrise spun off from Basecamp in 2014 as its own company, fully funded by its customer revenue.
This post is a part of my Venture Fundraising Basics series where I will try to share the fundamentals of raising venture capital for entrepreneurs and some local perspectives from my experience in Southeast Asia. For the complete outline and links to other posts, please visit here.