How to Fire Up Your Start Up
Tips & Tactics from TheVentureCity as seen on eMerge Americas stage.
So, you want to start a tech company and you’re looking for advice from someone who has been there, done that and gotten the t-shirt. At TheVentureCity we have experience not only building our own companies, but also advising other companies on how they can start and eventually grow internationally. We had the pleasure of sharing our top pieces of advice at eMerge Americas in Miami but in case you missed it, here is a quick recap of the most important points.
Define your funding plan and work backwards
Before you go on the hunt for capital, you need a broad understanding of how much money you will need, what you plan on using it for, and what you want to achieve with that money. It doesn’t have to be perfect (we all know things never go perfectly as planned) but if you have a general idea and direction, it will help you define the type of investment you need. It is also important to recognize that asking anyone for money is a big responsibility so you need to get your plan in shape before doing so and know your stuff.
Exhaust your resources
After breaking open your own piggy bank the first group you want to hit up for cash is friends and family. Friends and family make for friendly investors and usually get a good number of companies off the ground to build a MVP (minimum viable product). According to Entrepreneur.com, 38% of companies receive their funding from Friends & Family, but the bulk of it comes from personal savings and credit.
As your business plan and product plan get more sophisticated, you can also look for capital through broader angel investors via angel networks, venture capital syndicates, crowdsourcing & lending platforms, and even corporate VCs.
Before you agree to accept money from anyone, however, be VERY sure of your vision and don’t be afraid to reject capital if your gut tells you to. The investor/founder relationship is crucial to the success of your business. It’s important that you share values and have trust with those joining you on this exciting, but sometimes tumultuous journey. Trust us, in some cases, the wrong investor can mean an end to your project.
Don’t Oversell and Don’t Undersell
When you’re modeling your financial projections, ensure that you are presenting the full potential of your business. Go big if you truly believe in your product. It is critical to strategically structure your financing rounds because each round sets a precedent for the next one. For example, if you open a series A for much more cash than you needed, you are going to be diluting way too much in the first round. Our advice to founders is to have a strategic high-level plan of rounds versus milestones to have a clear understanding of how much dilution they are going to have and the potential implications regarding control and the key decision making.
Once you have set up a successful and reasonable financial plan you should focus on burning through your cash in a smart way. Set your resource priorities and objectives ASAP. Things won’t always go as planned so make sure you have a cushion. Hint: You might not want to spend those first $6,000 on a fancy coffee machine or an antique pinball machine.
Before looking for people to join you on your crazy adventure, take a minute to check yourself. Understanding your own leadership, communication, and collaboration style will help you find the right partners in crime who balance you out and have the skills that you don’t have. The ying to your yang. The peanut butter to your jelly. Here are two personality tests we recommend taking: 16 personalities and Harvard Business Review: Leadership Style
We know many times businesses are started between friends, so the clearer the responsibilities and expectations, the better. Particularly for the times when things won’t go well. Teams are measured in moments of uncertainty and high risk, not when everything goes well. So be prepared and lay things out clearly on paper even if it feels a little awkward at first.
First key hires & partners
Our recommendation for early-stage tech startups is that your team should have a CEO, CTO, Head of Product and a Data Scientist.
Now, we know most times a start-up is just two people: CEO & CTO. In this case, the CEO should have the flexibility to assume many roles like marketing, business development, etc. while the CTO should be able to crunch data. As for Product, this should be both founders’ responsibility.
When you can grow, remember Product is the soul of your business so choose people who will take care of your product and who will understand the data well enough to be able to make future product decisions.
Look for diversity of all kinds
Several recent studies have shown that diversity is crucial to the success of any company. By now we all know about the benefits of hiring women for leadership positions so we won’t state the obvious. But make sure to also consider the importance of hiring diverse people of all creeds, races, orientations, and ways of thinking. It is easy to fall into the trap of hiring people that look just like you on paper with similar skills. It’s human nature to gravitate towards something you understand. But do your company a favor and smash those biases. Instead, look for people who may approach a problem in a different way than you. A diverse team will open your possibilities in fascinating ways and will lead you to find solutions you never would have imagined.
Words we live by: hire someone you would work for.
Don’t be afraid to hire someone that is better than you, even if you are the CEO. The CEO is not expected to know everything and you should be able to count on your team to fill in the gaps.
Know and live by your values
Your product will pivot over time, especially as new pieces of data and feedback are gathered and you realize certain things need to change. Your values, however, should never change. Values set the tone for your company culture and will attract talent. You need your values to make it through the murky waters of running a business through a recession, a bad quarter or even a scandal.
Never stop learning, never stop teaching
Being a CEO does not mean you are done learning. Actually, my friend, the learning has just begun. Take the time and resources to continue polishing your skills, learning new ones and most importantly, passing your skills on to others. Coaching and mentoring can be a very rewarding and beneficial process. Remember that as a leader, feedback is a very rare gift. Embrace it.
Know what you’re trying to solve
While you’re first thinking about the product you are going to build, take a moment to ask yourself: what value is this product going to add? If you cannot answer this simple question, stop and rethink everything.
Your product needs to add value in some way and your vision should reflect that. Ask yourself these questions: What problem am I trying to solve with my product? What impact will my solution have socially, economically, or environmentally? You might find that you had the right answers all along.
Truly understand your customer
It might sound obvious, but this is massively important: Know.Your.Customer. Just because you and your mom think your idea is cool doesn’t mean it necessarily is…sorry.
Go out and talk to potential customers and listen to their needs. But really LISTEN. Listen especially to what is not being said. If you ask the right open-ended questions, you will learn a lot about your product’s impact on people’s lives. Gathering this type of qualitative data will help you find a product-market fit and will help you refine your vision.
Get Sh*t Done
So, let’s say you have a solid product vision. Great! But now you need a plan. And one that you can execute. The difference between an idea and a business is execution so it’s time to make it happen!
The first thing you need is a MVP (minimum viable product). It doesn’t have to be perfect or have all the features you dreamed up, but it should be reliable and chuck-full of analytics trackers. You’re going to need all the data you can get to test your hypothesis repeatedly. Unless it is growing organically, do not start focusing on paid marketing until you have a solid product in your hands.
Data beats emotions
Data is crucial to decision making and should be set up from the start. You’ll want to kick yourself so hard if you deprioritize analytics tracking in your alpha or beta version. Without data, all you have is emotion and frankly, that will only get you so far. You need to define success metrics so you can determine what is good and what isn’t. These metrics may be refined over time, but set KPIs early on so you can guide your later-stage decision making.
Function over features
We’ve said it before and we will say it again: product is the soul of your business. Take good care of it, polish it, tell it it’s pretty. Ok maybe not the last one…
As you start gathering data on your product, you will also get a lot of feedback. Feedback sometimes will be valid, sometimes it will be highly one-sided and anecdotal. These are the moments to turn to analytics data, prioritize bug fixes and product stability issues over new features, especially when you are still small and don’t have the luxury of dedicating an entire dev team to new features.
We know it may seem like a drag to not release a new feature every sprint, but if you don’t polish the ones that already exist, the whole thing will eventually look like a windshield at the end of a long road trip: splattered with bugs and obstructing your view.
Set measurable goals
Seems simple enough, right? Well, we’ve seen far too many companies who forget this and find themselves pulled in various directions and losing focus. Don’t let that be you.
Establish a data culture from day one. Set clear objectives and you will always have something to fall back on when you find yourself going on a tangent. Sure, early stage start-ups will be chaotic, but they key is for it to be a controlled chaos with direction. If you hire the right people for the right roles as mentioned above, this will happen.
Over-communicate and overshare
In the early days, it is important to over-communicate & over-share with your team, no matter how small. Establishing weekly company meetings will help everyone stay connected to each other’s work and the overall company mission. It will also help uncover collaboration opportunities. Oversharing also allows for transparency and gives people a feeling of being important. Being transparent helps teams stay focused on the overall goal and creates a direct connection between their work and the company’s vision. We are all in this together!
Invest in a toolbox
There are tools out there that will make your life easier and will make collaboration a painless experience. Use them. Here are some of our favorites (not paid endorsements): Slack, Google Docs, Trello, just to name a few.
Keep in mind that you need to be smart about your spending so only invest in tech that will make you more efficient. If your engineer needs two screens and a fast processor to get sh*t done, give it to her. The investment will pay itself off eventually.
Empower others & know that titles mean nothing
Give responsibility to others and let people do what they do best. Empowering others is a strong and impactful management tool that often gets overlooked in early stage start-ups because CEOs feel they need to prove themselves. Listen to Elsa: just let it go. You will thank yourself later when you’re able to focus your time and energy on growing the company.
In that same vein, just because you are CEO doesn’t mean you are above any task. If tables need to be built and there’s only five of you, get five Allen wrenches. Everyone is working together towards a shared goal. Titles are merely a formality to identify yourselves to the outside world, but within the walls of your garage, basement or co-working space, it should be all hands on deck.
Get your first market right
Once you start tasting the first drops of success, it may be tempting to want to expand quickly into new markets. If your product has already grown internationally on its own, congratulations! If not, our advice would be to get it right at home first. Meanwhile, develop a playbook to have handy before you jump into new territories.
Look before you leap
Before you enter a new market, take time to research it carefully. Don’t assume your product will be successful somewhere just because they speak the same language or because it worked in your first market. Research local tech usage trends and internet limitations. Visit the market and talk to people that live there. Get to know local companies who can become future partners. These partners will be key to accelerating your growth in new regions and you can trust them to understand the local legislation.
Be prepared to allocate resources for things like hiring local people and sending someone from HQ who really understands your goals and has overcome challenges in your home market. Just like with everything else, measure and test repeatedly until you see success!
We hope these tips help you in your start-up journey and remember: don’t let anyone tell you your ideas won’t work!