What engineers-turned-entrepreneurs have to say about running a startup
Not every entrepreneur is a coder at heart. The other way around: also a road less travelled. But just like how a founder can learn how to code, an engineer can learn how to run a business. That’s why the Founder Institute, in collaboration with Jexia and the Facebook Developer Circle Amsterdam organized an event for those developers with an entrepreneurial itch. It turned out to be an evening with a lot of funny stories, anecdotes and valuable lessons learned from a handful of the best engineers-turned-entrepreneurs the Netherlands has to offer.
At one of Amsterdam’s finest business hubs, TQ, Ruben Daniels, founder & CEO of Cloud9 IDE took the stage first. His startup story was like a rollercoaster, with a lot of failing, but eventually an acquisition by Amazon. “Most startups fail”, Ruben started. “And we failed a lot.” In hindsight, he could have done things better, he told. Here’s what he learned:
The importance of product market fit
1. Spend your money wisely
“When we got our first investment, we felt like the cool guys. We hired like crazy, got massage tables, travelled the world and got fancy business cards.”
2. Listen to your investors
“We got warned by our investors about us burning money like this. We didn’t listen at all. I was stubborn.”
3. Watch out for feature fallacy
“We built features we wanted, not features our customers wanted.”
4. Never do a big launch
“Because then you are loosing your first impression. Better do launch quietly and pick the customers who fit your profile — like Superhuman does.”
5. Never scale before product market fit
“We eventually got to be a better company by listening to our customers. Growth hacks do not exist (for our target audience). But better product market fit does.”
Eventually, Cloud9IDE filed for bankruptcy, and had to raise money multiple times to keep things going. “That’s pretty stressful. So my advice: only raise money in times you don’t really need it.”
Really, don’t use ’growth hacks’ on developers
Thijs Cadier, the founder of AppSignal, build his business without any funding. This has its pros and cons of course. The pros: you don’t have to focus on an exit. The cons: there will be a period where it takes a lot of time to make your first profit, especially if you’re building a SaaS business like Thijs does. How do you overcome this? How to survive the Long Slow Ramp of Death? Thijs succeeded, here are his lessons:
- Be patient, be very patient
“In the first months, if you make a big sale, you don’t immediately notice it in your revenues due to how the SaaS business model works. That’s why it feels you’re struggling, while you do something right. You have to be cheap yourself for a long time.”
2. The ’f’ word: freelancing
“Freelance on the side. Yeah, it sucks, but it is necessary to pay your people and your own bills.”
3. Ask customers to pay for a year up front
“This gives you some breathing room to get more customers.”
4. Write about your product
“In the end, blogging helps if like-minded people read it.”
“What didn’t work?” asked someone in the audience. Thijs was very clear on that: “Anything that’s labeled a ’growth hack’. Our customers are developers themselves. They know when you’re trying to be tricky or try to do shady things. They get pissed off.”
“The best thing that has happened to me as a developer”
Next up was Ives van Hoorne. He is the cofounder of CodeSandbox. Like a lot of businesses built by developers, it started out as a side project. While building the first version, there was a time when CodeSandbox might not have seen the daylight. What happened: the human thing called distraction. “I was in college, things where fun, and I lost motivation building my project.” Eventually, when he showed it to his classmates, they responded very positive. “That got my motivation back”, Ives recalled.
To take his business to the next level, Ives did this:
1. Keep it simple, stupid
“We dropped many, many features for our first launch.”
2. When things don’t lift off, talk to people
“At first we got 6 likes on Github. Then I just talked to people, and reached out to ‘influencing’ developers. Asked them what they thought of it. That got things rolling.”
3. Encourage sharing & discovery
“On CodeSandbox, I let people search for the stuff other people make. So it has a kind of virality in it.”
4. Hire in time so you can focus on your work
No explanation needed here!
The one thing about having a business Ives really would like to stress, is that it has changed his life. “I evolved as a person. I got to travel the world to speak on conferences, and had more direct conversations with people than ever before. When I had to do my first presentation on stage, I was nervous two months before. Although I’m not super smooth at giving talks yet, it gets better and better! And of course, when running a startup, I learn something new every day.”
Bonus: Rockstar Anecdotes
You would think the following stories came straight outta Silicon Valley:
When Ruben got funding from Balderton Capital, they told him this: “You lost so much money before learning these valuable lessons… now you clearly must be doing it right.” (Fortunately, he did)
When Thijs started AppSignal, he made less than 50 euros in the first two months. And that was money from friends & acquaintances.
Ives had an important investor talk while there was a very loud beer pong game in his dorm going on.
Enjoyed this article? Then hit that hand button! Got inspired? Then read our other articles on entrepreneurship. And hey, if you can’t wait to start yourself: check out the Founder Institute. In a couple of weeks we help you get your business going so you can start smoothly. We start in October this year!
