Don’t repeat my mistakes! (If you are anything like me when I first started, you probably will.) You have an idea? Launch it immediately! Sometimes this imperative is a good thing, not over-thinking your idea and just doing it. But most of the time this strategy (or lack thereof) will backfire. In order to launch a start-up, you need to study all aspects of the idea, calculate the risks and all the unexpected expenses. Every so often when I thought of my next world-changing idea, I left everything I was working on to start building the product, and only halfway through did I realize that my idea was doomed to fail.
One time, I didn’t meet the regulations of the market I wanted to launch my start-up in. Another time, I found out that my start-up would not work because of cultural reasons. Another product was just stupid, and no one would use it. I understand the urge to have the first mover advantage, but most of the time you are not the first mover. Most likely, dozens of people have implemented your idea before. Study their progress and learn from their mistakes.
This takes me to the next part. Before, all I did was 1.
think of an idea, 2. think it’s the best idea in the world, and 3. start building it. I rarely thought of getting a fresh perspective, and more importantly a relevant perspective.
Don’t share your ideas out of fear (“But they might steal it!”) True, they could steal your idea and do it. But usually, no one has the passion and determination to take your idea all the way to a successful launch. In real life, the chances of telling a random person your idea and him stealing it are close to zero! It’s too bad I didn’t really grasp this before. Whenever I had an idea, I would just keep it to myself and try to launch it without checking if my target audience likes it. or if they would actually use it.
Sharing your idea with your target audience will not only tell you if they will use it or not, it will also provide you with feedback on how to prioritize your development and help you look at your technology from different aspects and understand it from different way of thinking that you didn’t know before. It often happens that they will tell you about similar technologies they use which means you will have access to competitors you never knew existed! Launch only after you finish building the end product (with all the advanced features).
Many new entrepreneurs launch their products with all the features already available, thinking their users will appreciate it. That’s not true. You can’t create features and make users use it (unless you are Amazon).
Features should address the needs of the users, and not the other way around. In The Lean Start-up, Eric Ries explained that you should first build only 20% of the features that 80% of your customers will use. This is why the process of customer-led product development is very important. If you take “Bird” the e-scooter sharing company as a case study, you will find their app very simple. It misses “key” features like the ability to reserve a scooter, and so on. That said, it has the most important features – rent an e-scooter on the spot, and paying for that service! Don’t fall into the trap of thinking customers expect a fully-formed product at the launch. Their usage grows as your product grows.
Focus on sales rather than the product! Selling a product that has many features before development is a big mistake. And I’m ashamed to say I did it! I sold one product to more than 100 customers thinking I would use the money to build my MVP (Minimum Viable Product). I couldn’t, lost a big portion of the money paying a development agency that went bankrupt halfway through development, and I had to return the money to the customers and apologize for not delivering what was promised. If you don’t have a core product, don’t sell the product. This is why most crowd-sourcing campaigns fail, and a lot of customers find themselves losing their both their initial investment and trust in your company.
Everyone is my customer! B2B, B2C, B2G, B2B2G2C.
Have you ever had a cool idea and thought everyone from governments to banks to small business owners to your neighbor is going to use it? Well, you are living in a movie! Know your target audience. One of the most important steps of start-up is prep work. Define exactly who you plan to sell to, talk to them and focus on them. Try to narrow your audience as much as possible. Having a small group of happy users is better than having many unhappy/inactive users.
Say yes to the demands of customers or investors! Many times I have bent to the demands of customers and investors to alter the product and tailor it to their needs! This paves the way to failure. If you have a vision, see it through. Don’t get distracted by requests from investors and customers that want to change your product to suit their specific commercial needs.
Yes, your product should solve the customer’s needs, solutions must be scalable and not relevant just to a few customers.
Look for investors from Day Zero. When you find one, take the money in exchange for equity! You have an idea and no money, look for an investor.
If you are lucky, you will raise $50K in exchange for 30% equity. You will find yourself with a semi-functional product, with crucial knowledge gaps on how to develop your product, and a big percentage of your company owned by someone else.
With a big investment early on, I found myself buying way too much inventory at inferior quality, that I was not able to move. Today, I have 500 Chinese-made Virtual Reality goggles sitting in storage in Singapore.
If you are a new entrepreneur, bootstrap your first business so you can make all the mistakes from the ground up, when the stakes are low. This way, when the big investment comes, you will be ready. You will know what you’re going to use the money for, and you actually have an edge on the negotiating table because you didn’t give up half of your company in its first year.
You became an entrepreneur to be your own boss, so don’t give up this power so naively. And remember: ownership dilutes.
Two solutions I can think of: 1. Find a good technical cofounder to be your CTO, and let him lead development. 2. Go study how to code (these days you can pick up technical skills and a product mindset in a very short time in a coding bootcamp) and then you will be able to at least communicate better with the developers you hire any or actually build the MVP of your idea. A good MVP raises more money (for less equity) than simply an idea. In addition, when you look for an investor, don’t just look for money. Look for a strategic investor who can open doors for business development. Even more crucially, look for an investor who believes in your team.
Work with the wrong people just because they are skilled or provide a service you require.
Working with people just because they are good at sales or have the right connections is a big mistake that can cost you your start-up. Work only with people who are passionate about your technology, and with whom you have chemistry. These are the people you will spending 12 hours a day with in the same room. At the end of the day, your idea will most likely pivot and your start-up might change completely, and all that matters is the team that stands behind it. Most investors I have worked with value the tenacity and strength of the team over the actual idea.
– Driver at Le-Wagon Software Bootcamp TLV