5 Tips to Build Your Startup Business

In those early days of Internet startup, I share some hard lessons when running a few companies both successfully and not. Hopefully these lessons remain true today.

I wrote this piece during the early Indonesia startup days. I repost this with a few update.

Startup Lokal is a regular startup meetup created by Natali Ardianto, Sanny Gaddafi, Nuniek Tirta Sari and Aulia Halimatussadiah (Olie). In 2010, I was invited to Startup Lokal 7th installment. Today, all of them has become Indonesian startup leaders that shape the industry. Natali co-founded Tiket.com, Sanny co-founded Jakarta chapter of Founder Institute, Olie wrote numerous books to inspire thousand of readers and Nuniek actively involve in various startup initiatives.

I was invited as the judge at SparxUp Competition not long after that. Being a bad judge, I was late to do the judging process, rarely attending the brief and missed the final awarding event. Still, I was able to attend the seminar and the public pitch by these startups.

Surprisingly, quite numbers of Indonesian startup rise to the surface. In the final, the selected few are done not by first timer, they have previously done other ventures or products. Even among the one that didn’t make it, I see a good potential, either product, technology or simply future creator or entrepreneur that are able to create value.

The winner was the one with a simple business model. As a startup, this surely won the judges vote, but in a real world, it needs a business acumen to bring the business model to become sustainable and scalable. So the real test was not to win the award, but to be able to stand the test of time.

Then, what’s next? If it’s me, I will think really hard to find a profitable business model. A profitable business model is not necessary sustainable and scalable. Test the market, make mistake, that’s what startup does. Then it’s perfectly ok to have more than one business model. To give you a good sample, Google monetization comes from advertising revenue (Adsense, Adwords), software as services (GoogleApps) and e-commerce (Google Wallet). They also sell white label email services to telco provider and ISP, as well as provide search engine service for the corporate.

This is the insight I got from Sarah Lacy, when she was still an editor at Techcrunch and visiting Indonesia the first time.

Advertising won’t get you there, services will possibly better to monetize. So, become profitable from day one is good!

In those early days of Indonesia Internet startup, I summarize some hard lessons when running a few companies both successfully and not. Hopefully these lessons remain true today.

Tips 1. Choose to be a celebrity or to build business, pick one!

• You might ended having both if you concentrate on one, but when you try to do both all at once, you will running out of resources. Besing a startup is cool, but too many startups spend time doing pitching and show off their business idea for the sake of winning in a competition and not spend enough time and effort to build a real company. Do the pitching when you actually have built some value in the company.

Tips 2. Make money from day one

• Too many startups say that they use advertising as their revenue model. This is the sign that the site will fail since advertising can only be monetized at a later stage where all the traffics has already built up. Find other short-term business model such as services or product selling and use advertising as other income. Kapanlagi did this by having mobile content company as a revenue generator to finance their website in their early days. It took them 8 years to have 1 million pageview when they can start monetizing. Their second Bola.net took them 3 years to reach similar metrics and their third site Merdeka took them only 8 months So, become profitable from day one is good! And making money beside advertising is even better!

Tips 3. Serving a bigger client is a simpler & more profitable in a short-term business model rather than advertising driven business model.

• Get into media industry by having advertising as a business model is very tough. Getting into retail market too soon will drain your financial resources. Getting into B to B market is simpler since you serve a bigger clients need. But keep in mind that B to B don’t build your brand, so use your retail business to build your brand. Bhinneka did this by providing procurement services as well as building their brand for retail market. When you have enough resources, then you can start getting into the consumer market.

Tips 4. Brand is more important than brain.

• Partner with a bigger company and brand, tap in their customer database and offer value to this partner. Rely on your own knowledge and effort to build your own customer will take a lot more time than riding the access to market by a big partner or brand. Kaskus took 12 years to build their own loyal community. Now defuct Koprol reached quarter the users of Kaskus in 6 months after acquired by Yahoo. The key is providing benefit to this partner and position yourself to complement their value.

Tips 5. Value that you can offer: product, access to market, media, attraction factor, and ehm… good funding

• Define your strength and look for partner that complement the other value. If you have a killer product, then find the right partner to access the market. If you have the access to market, look for the right product or media that benefit your customers. If you have the media, find something that will create a wow factor. Otherwise, good financial resource is always contribute a strong value to any company. But not everyone is lucky enough to get good funding, so always hope for the best but prepare to survive if you don’t get the funding.

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