Starting a start-up
TL;DR — Have an intimate understanding of the problem you want to solve, learn how to build, learn how to sell, always iterate your product with your customers feedback and establish what makes you and your start-up unique.
Starting a start-up is hard. But it is doable. There are 3 main ingredients to succeeding — having a good founding team, solving a problem better than anyone else, and make enough money in the short-term to make it long-term viable venture.
After having my own start-up which failed, albeit learning some great lessons, to now helping start-up founders at WMG Accelerator better navigate their start-up journeys, I’m going to share observations on the key aspects that start-ups, particularly first-time founders, need to nail to legitimise their business.
Focus on the problem more than the idea
Don’t get me wrong, ideas are great. They are the manifestation of human ingenuity, little flashes of inspiration that seem brilliant at first viewing. However, we’ve all seen the best ideas on paper go on to fail, albeit due to a variety of factors. Not all ideas are made equal. Therefore, I encourage founders to really hone in on problems worth solving. Particularly problems in which they have a unique insight. Such problems provide a better platform to generate ideas that solve the problem, therefore leading onto number of MVPs to test your hypothesis. If that problem affects an already large or indeed growing market of potential customers, you probably have a problem worth solving. Trends can give an indication as to the fast-growing markets that you may want to tackle, but some trends can be false dawns where the timing isn’t quite right for their widespread adoption.
If you’re struggling to think of problems, go and observe different groups of customers. Watch them. Understand what patterns of behaviour they undertake. Identify areas of friction they encounter. Delve deep into what pains they experience in certain contexts and what gains they would ideally like to realise. Building this thorough understanding of your customer provides great insight into their problems, and thus what potential solutions could help them.
Even for start-ups intending to push a new technology platform they’ve created or built on top of, if there is clear alignment between their solution and the key problem that their intended customer suffers from, the chances of early start-up failure are greatly reduced. Your customers should love your product or service; you should solve their problems better than anyone else and ideally have customers throwing money at you as a result. Whilst this sounds like some sort of utopia, striving for such a standard will help provide a tighter focus on problems that your customers face.
The founding team should know how to build and how to sell
I’ve had many a conversation with a young, fresh-faced first-time founder on their grand idea and vision. Inevitably I ask “have you built anything around this which you have attempted to sell”, to which many have responded with a no, or that they’re waiting for funding or they’re going to hire some ridiculously expensive app developers to build their solution (sigh). Now, whilst I appreciate some start-up solutions will require more time and resources to establish, generally speaking, successful start-up founders themselves can build products that meets the necessary spec, sell to their target customer effectively, and do so at a consistent cadence. Having something tangible to show customers and stakeholders is such a better way of expressing your vision than merely an idea on paper. It really confirms how passionate and enterprising the founders are. No, you don’t need 50 product features and no you don’t need to sell via Facebook ads. Build out what you believe to be core product value that solves the customer’s problem, and then go directly to your customer; literally walk up to them, go to wherever they are and sell it to them. Stripping away unnecessary complexity, and generating traction is fundamental to getting a start-up off the ground. From there, you then continually iterate your product and sales approach. The 1st version of any product will never be spectacular, and frankly it doesn’t need to be. It should meet the customer’s needs, and if it doesn’t, go back to the drawing board and re-iterate. Customers may not always know what they want, but they’ll provide you with the crucial feedback on whether your product is any good or not. Treasure it and use it as the fuel to improve your offering to them. Build, measure, learn.
Particularly for the young first-time founders, this process creates a bank of real work that will help them in their future careers no matter if their current start-up is successful or not. I’m immediately more impressed by young aspiring entrepreneurial types who’ve shown me what they’ve built and/or sold, having started from zero. Building a start-up is hard, stressful and not guaranteed to be monetarily successful. The journey of building will provide immense value to founders no matter the outcome, as I myself have found.
Determine what is unique about you or start-up
All start-ups need to have a competitive advantage and this is usually derived from some unique insight or attribute that they own or have built out in their business. Nevertheless, even at the earliest stages of a start-up, an inability to truly identify what your competitive advantage is will likely hinder the long-term scalability of the start-up. Is there a monopoly effect? Where is the network effect in the business? Do you have something that cannot be easily copied or bought by competitors? All of the great start-up successes could answer this question.
The good news with competitive advantages is that you don’t need one from the outset. When you are just starting out, embrace obscurity to build something valuable which in turn should help you gain traction faster when testing your product. Identify what is different about you and your start-up, and make that your advantage.
Make enough money to at least keep the lights on
In an ideal world you can get to the famous level of “ramen profitability” in the words of Paul Graham — meaning that you make just enough money to cover the key expenses. Now whilst this level of expense will vary dependent on the market that the start-up is operating in and the specifications of the product, making enough money to keep the lights on is a great first benchmark to achieve. It buys you more runway to build your business and crucially you’re no longer at the mercy of investors and the like.
In reaching this benchmark, you prove early signs of problem-solution fit between your start-up and your earliest customers and it displays a level of skill, dedication and humility to start generating real traction whilst keeping high discipline on expenses. Many businesses sound great on paper, but to go through the steps to legitimise the business and establish the feasibility of the early business model is a step that is undervalued in its importance within a start-up’s journey.
Whilst I’m only scratching the surface of what it takes to get a start-up off the ground, I hope this gives you a better starting point as to the challenges, thinking and actions required to get your start-up off the ground.
Please share your thoughts in the comments, your feedback and insight on building your start-up or being an early employee at a start-up is greatly appreciated!
Stay tuned to the Entrepreneurship and Business Transformation publication here on Medium, more content on building businesses and thinking better as an entrepreneur will be posted very soon.
