This article is based on my research to understand how new advances in technology can be applied in a startup that not only is lucrative for a business but also helps customers with less workforce exploitation. This is a very difficult triangle to follow because, in some way or the other, human greed comes into the picture and we think about short term gains over long term growth. Thus, we end up making some mistakes and close down our shops soon.
“Necessity is the mother of all inventions.”
Every new technology was invented with an idea to solve some problems. For examples :
- Machine Learning was devised and perfected to help improve automation and reduce the burden on the human mind.
- Blockchain was conceptualized to solve the double-spending problem and the issues with the current financial system.
- Ridesharing companies like Uber have improvised the concept of geo-mapping and tagging to streamline and improve the riders’ experience.
Soon, upon the reception of such technologies, there’s a huge influx of Venture Capital and Entrepreneurs, trying to be the next big thing in the world. This is very good since entrepreneurship is such a noble pursuit. You create jobs, contribute to the economy, and help solve a problem. However, to cash in on the newfound gold rush, we try to take a solution and try to find a problem for that(Which, generally, has to be the other way round.). With no-code tools and quick prototyping capabilities, we try to mock up a prototype and seek funding for it. Many startups have tried this approach and failed miserably. For example Many Consensys Ventures, Theranos, etc. There are also examples like Uber, Lyft, Pinterest, and Slack which haven’t performed as per expectations after going public. The future of such companies, which only posts losses after losses, is very uncertain. Such business models are risky because in the end employees get laid off and investors lose their money.
I hereby propose the following Framework for a Startup Growth:
1. The Idea, Initial Development, and Seek Seed Capital: Have an idea and build a prototype with at least one feature. Pitch this to the investors and seek capital funding.
2. Reiterate this Product and Get the right Product-Market Fit: Once you have the first feature ready, test it with a group of customers and see if they want this product. You can always attract customers by organizing meetups or by giving them early beta access. Based on the feedback, keep improving on this feature until you hit the right chord. Also, It is very important to define the type of customers we are wanting to make a product for since that will be essential in defining the UX and UI aspects of the product.
3. Build the product with few features and have a decent pricing model: Do not charge competitive prices, monopolies will always be able to crush us as they can afford to keep prices even lower. Instead, charge for its actual worth. With this, you are also ensuring proper capital flow while garnering market share.
4. Get Customers: This step is a no-brainer and one of the biggest challenges for a new startup. There are various methods such as cold calls, emails, advertisements, etc. Such methods are generally looked upon as spams and would yield a less positive response. Instead, try to build the product so good that customers should come to us creating inbound traffic.
5. Reiterate and Improvise on the Prototype for Scaling: After acquiring the customers, the next challenge is to have a good customer retention rate. As we are expanding, it is very important to have a high server uptime. We must have proper DevOps incorporated for scaling up and scaling down based on the requirements.
6. Breakeven: Have the breakeven and enter into positive cash flow. While we have now successfully achieved this, it is still very important to maintain the retention rate.
7. Future: We are now at a stage where we have three options. They are: Keep the startup private or get acquired by a bigger company or go public. We can take this decision based on the goals of our startup. There are successful examples in all three scenarios. They are :
i> Basecamp for a startup staying private.
ii> Twitch was a startup that got acquired by Amazon.
iii> Amazon was a startup that had a successful IPO.
8. Repeat: Now that you have succeeded in one venture, why not work towards building another successful venture?
We will now look at the reason behind ensuring the right office work culture. When we are looking at the long term growth of our company, it is important to have the right team for the job. Thus, Hiring and Retaining talent is essential. We should also pay the employees well and give them good benefits so that they can focus on the work than worrying about their finances. This thought was primarily inspired by Jason Fried, David Heinemeier Hansson, and Dan Price. The first two are the key people behind Basecamp and the third person is the CEO of Gravity Payments.
With all these in our arsenal, we are now ready to enter the market with our product idea.
The following quote motivated me to write this article:
‘Develop an owner/founder mentality. Most people say, “I’m not the founder. I’m not being paid enough to care.” But you are. The knowledge and skills you gain by developing a founder mentality set you up to be a founder down the line, and it pays you in that sense.’~Naval Ravikant
