one step back, five steps forward: the startup factory vision

this post is the first from a series of posts about a new startup i am working on which is a bit different from all the previous startups i have done so far. i write this posts as i go ahead and implement our vision not just to spread the news but also to document our progress and get feedback from the community.

starting from the end

i recently closed my last startup — ADINCON. Me and my brother worked on it for about 3 years, and to be honest, we pivot so much during that time that got our investors heads to spin. we started as TalkingLayers aiming to build communities around content engagement, then shifted to ad-tech to better find ad location in article pages, and then pivot again to video discovery platform — Rainvid.

it is out of this post scope to go through all over the pivots and to figure out if they were bad or very bad decisions; however, when we recently did the post mortem analysis,one of the most clear outputs we found out were:

• we can build stuff very fast
• we have no idea why we build it
• it takes us too much time to figure out that we were wrong
• investors makes everything more complicated

startup factory — framework for building small-size startups

so since we are engineers we took the above feedback and some more ideas we had in mind and built it into a framework, or guidelines of how to build startups. to be more accurate, it is how to build a company which build startups. here are the major guidelines:

fuck unicorns, build octopus

instead of building the next-big-idea-that-will-change-the-world we think it is better to build several small ideas that will change your income. we think the state of mind should be to build small products under one company and keep them alive as long as they are profitable.

profits vs. shares

since profit is the most important issue in such a company, shares should not be distributed as an incentive or rewarding tool. this means that only the founders get shares in the company and no one else does. employees, investors and advisors will never get shares. only money talks; and by money i mean profits, and by talks i mean they will get enough to forget about them stupid shares. if somebody did a great job and the product is profitable, she should get some percentage out of that. if an investor believes in the company she should get her money + huge interest for the risk, but all comes out of the profit. shares are only to control the company and no one else rather then the founders should own that.

i know this is the part of the post where most people freak out and think that if they don’t give shares or get shares the world will come to an end, and the rest of the post from here on is just rubish. so, keep calm, take a deep breath, give it a thought, and stop giving shares!

no investors allowed

it is not that we have anything against investors, but we think it is important to build products that can be bootstrap until profitable. adding investors to the company adds great value but it comes with a price — everything you do has to be 10X bigger, and that might shift things out of balance. it might work for some companies, but we believe it is not for all, and we think more companies will benefit if they will build startups which are self funded, and will consider adding investors after profitability.

i will also add that the time and efforts we spent on raising money was a big part of our daily work, that maybe could have been used otherwise.

methodology of failing fast

that is probably one of the hardest and important part of our new vision — how to standardize the process of evaluating a new ideas before starting to build it. we came up with a few restrictions and roles:

• small ideas — we believe that there is a big market of small ideas that no VC wants to fund since the ROI is relative small. small for them is big for us.
• show me the money — only develop products that makes money from day one. this usually means a product or service that someone is willing to pay for and there should be some formula to evaluate the cost of new customer vs. the income of a new customer.
• time is on your side — only develop products which takes a short time to develop. short time should be a few months, and the core product should be able to test the assumptions of the business model.
• kill bill and quick — no hesitation, if the product is not generating money as expected, kill it. no pivot. cut the cord, do post mortem analysis, learn from mistakes and build the next one faster and better.

we have put all these ideas into a vision document of our startup factory and we are now in the process of closing the founding team and preparing everything before we start executing this idea into a real company.

open mind and open source

we know most of our ideas are a bit unorthodox and a bit out there, but we strongly believe that there should be alternative to the standard way of building startups that matches different needs and different goals.

we also believe in openness and transparency so we decided to share here some of our thoughts and ideas as we go along.

like i said in the beginning, we are engineers and since we developed a framework for a startup factory, this blog is our way to open source it and maybe allow other entrepreneurs to consider this approach when thinking of their next venture.