How to avoid a startup-f*ckup game
Disclaimer: Before I begin and before I get trashed by the startup founders, just want you to know that all thoughts are mine, and you are more than welcome to leave a controversial feedback and start a discussion here or in twitter.
Few weeks ago I was attending the Seedstars CEE Summit, where I had a chance to meet 15+ brilliant startups coming from 10 countries of the CEE region (I met startups from Ukraine, Czech Republic, Georgia, Russia, Moldova, Kazakhstan, Mongolia, etc.). Well, all the teams I met had fantastic ideas, some had good execution. Sinking deeper in their products during the one-on-one meetings, I concluded that some of them just do not have chances to cope with constantly overwhelming challenges related to fundraising, customer acquisition and retention, growing operations to move to the next step. The startup ecosystems in mentioned countries are very diverse but I uncovered some “common behavioral patterns” between Armenian and CEE based early stage startups, which are constituting the main reasons why most of them are playing a “startup-f*ckup” game.
Startup is an entrepreneurial venture which is building a new game changing product in a very risky environment and 30–40% of new startups don’t live even 3–6 months after the idea is born. Don’t diving deep with stats, but the same situation seems analogical and even worse with the startups coming from the CEE countries. Many startups I met have not even productized their idea and tested the product with early customers. The ones that had some customers were facing challenges to retain existing customers, finding the business model to generate revenue.
Over the last 5 years working with dozens of Armenian startup founders and CEOs on their product strategies, business development projects and funding plans, and meeting with dozens of CEE based startups during the Seedstars CEE summit I have observed that in general there are a common set of hardships that both Armenian and other CEE based startups struggle to overcome, and a common set of factors that make few to avoid a “startup-f*ckup” game.
In this article I am going to share some thoughts on what the early stage Armenian and CEE based startups should consider in order to avoid a painful startup-f*ckup game.
Learn about the customer before building a product
Most CEE based startups I met during the summit are building “shortsighted” solutions without any concentration on customer․ Award-winning startups know their customers and their pain as well as they know their own families, perhaps even more. Lots of Armenian and CEE based startups I met didn’t know their customer and their customer’s problem from A to Z. Over the 15+ startups I met during the summit were trying to address a very broad customer segment and solve a very non-concrete problem; i.e. they were not solving a specific problem for a specific customer segment. Most of them were even facing difficulties to describe the typical customer. IMHO it’s critical for them to sink in customer problem and research those problems they want to address with their solutions. That will definitely give them a comprehensive knowledge to deliver the right solutions for a concrete pain for a typical customer segment, rather than an unclear solution for a broad customer segment.
Build something you have knowledge and experience of the domain
During the summit I met startups aiming to address some markets and/or verticals, where they have very little knowledge; e.g. customer support solutions for banks or telecoms powered by AI, without deep knowledge on how the incumbents currently addresses those specific problems, what are the market prospects; or a fintech startup designed to help people in UK to invest, with little understanding of legal environment, and how the traditional investment management works and what are the specific issues that could be addressed with a technology solution; an ed-tech startup with very little understanding on what are the trends in online education, or is the problem in education content, or content delivery methods etc., etc. IMHO, it is very important for startups to be immersed in specific areas/domain and markets before they build a solution for a concrete market and/or vertical (especially if it is a b2b solution addressed to a regulated industry).
Discover the technology to deliver real value — every smart algorithm is not an AI
The speed at which AI/ML technology advances and upgrades seems overwhelming and I somehow experienced this with most of the startups at CEE. At least half of the startups were building AI/ML powered solutions. But most of them building AI/ML powered solutions were overlooking the real cases where AI/ML technology can deliver value. My perception was that “AI/ML powered” phrase was misused (maybe because it is fancy and trendy phrase) and in many cases just smart algorithms were treated as AI/ML deployed solutions. It is critical to understand the real use-cases where AI/ML technologies can deliver value in travel, healthcare, retail, banking, other sectors and also dive deep in business cases where AI can deliver real value to corporates willing to use it across operations and within their core functions. Probably one of the best ways to learn is joining conferences that are fully focused on revealing the usage of AI/ML technologies for concrete industry verticals. On top of this there are great insights published by McKinsey and Accenture teams, which are quite easy accessible in the web.
Look at the product not as a cool technology but as a business
Most of the CEE based startups I met at the summit are over-focused on technology part of the product, simply neglecting whether their solutions are attached to customer experiences and have opportunities to scale. I experienced a significant disconnect between engineers and what value proposition is about. Also (IMHO) there was a conviction that “good and complex technology is the only precondition for a good product”. Good technology is definitely important when it is necessary to scale the user base, operations etc., but number one goal of a product is to deliver value to users, delight the users through continuous product innovation, and as a result make money (and yes, money is not a goal it is a result). IMHO only good technology can’t be the only precondition for a great product. Too tech concentrated CEE based startup teams should start reshuffling their mindset about the product from customer perspective, rather than only looking at the product only from technology perspective: well, only good technology cannot win the “business battle”.
Find a mentor (mentor is not a consultant)
Some CEE based startups I met at the summit were somehow unwilling to follow comments or listen to opinions. And I learnt that most of them did not even try to bring a mentor on board. Most of successful startup founders I met, had mentors, who had previously build great businesses; simply said they have bunch of knowledge and experience on how to move products to the next step. IMHO, it is important to bring on board mentors who can open doors for the startup, help them to realize what are the challenges, bring real (not academic 😊) operational and product distribution knowledge and expertise. Mentors can share specific knowledge and expertise which contributes to protégé learning and skill development. Mentors can also facilitate professional networking by introducing the startups to potential investors or potential partners and help startups to make the next leap faster and smarter.
The last but not least: Never ever think you are there and you have nailed it
There were couple of startups that had some impressive traction, were backed by angels and/or ventures. But what was a surprise to me they were thinking that “I am there”, or “I know everything how to do it”. What was very disappointing was that they were not showing any signs of being coachable and during mentorship sessions were just responding to most of the questions something like “I know I will nail that” or “I am sure it’s not relevant to me”. Well, when startups are building something new, it means that most of the things they do are new, most of the things they learn will be new, and there is still a long journey to go, which is new. IMHO for a startup it is simply not acceptable to think “I am there, it is done”. There is no final destination for a startup, there are just accomplishments during the long journey and winning is being able to sustain the journey. And the key to sustain the journey for startups is to love it, adapt to new challenges and extend the destinations as they learn more.
In conclusion
If you are a first-time founder most probably you will face a startup-f*ckup game and it will be difficult. Try to focus on enjoying the journey: gain deep domain expertise, learn about the customers as much as you can, focus on delivering VALUE as a business, learn about the market and technology trends every day, find mentors to guide you and never think a great accomplishment is a final destination of success. There is a good saying “Survives not the strongest one, but the one who adapts and learns”.
Thank you for reading. Everything I’ve learned I am giving away so that others can learn as well.
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