How to start a startup and not break your life
Money is not lying on the road
The field of information technology is the only production branch where the business model is desirable, but not mandatory. Try to imagine a bakery that distributed its pastries for free and that does not have anything that customers could pay for – advertising on walls would save such a bakery? The business of information technology is coping with this because it has one quality that other industries do not have: scale! The Internet gives the opportunity to this business to reach potential customers around the world.
My previous startup, Steer, consisted in organizing courses in a room in London, which meant the geographical limitations of our customer base. SuperHi holds online courses, which means that they learn from California to Australia, all through the Internet.
If your business model is based on millions of users who do not pay, there are two options for development:
- Option 1 – your startup will grow, and everything will be okay.
- Option 2 – you will fight and spend all your money. The first option is much less likely than the second. Every Facebook has thousands of failed social networking projects.
You need to find some balance to enter your market. If the offer is too narrow, it is dangerous to have too few solvent customers; If it is overly broad, it can happen that you can not solve a particular problem – start with the question” Why? ” And think about your idea, ask yourself why you want to take this case.
It is necessary to be carried away by the idea and enjoy the idea that you have been engaged in it for at least a year. “If you are not keen on the prospect of becoming a” Learning Programming “or Ms.” Taxi Service “, then rethink your situation. The worst founders differ in that they strive only to get rich, and they fail because of the lack of a “great destiny” in their souls.
Do not hide your idea
It’s very tempting to keep your sense to yourself. Someone, of course, can steal your idea, but if you are not sure of it or are not sure that you can collect the best team for its implementation, then perhaps this idea is not for you.
If you force freelancers or consultants to sign a non-disclosure agreement (NDA) before telling them about your idea, it means that you are not sure about it.
Suppose someone signed your NDA, and you launched the project without any leakage of ideas to the side. What prevents this “someone” from copying your idea and making an improved version? Google was not the first search engine, and Facebook was not the first social network.
One of our largest competitors recently copied what we do on our online course. The first reaction is always “here are weasels!”, But it must be taken for granted that companies large and small will try to copy you.
Your startup should be the best in its class and not just the first on the market.
Are you ready to consistently implement your idea better than anyone else?
Most likely, the initial and final plans will be very different
Some successful companies started their activity entirely with other ideas. Flickr was first a themed chat room for sharing photos for gamers, Nintendo was selling paper playing cards, and Nokia was a paper mill in Finland.
My first startup Steer was originally a job counseling site that was transformed into a programming school when we realized that we did not survive with the original business model.
- In the original plan, SuperHi was creating a program editor for beginners and selling it to other programming schools. We spent a year creating such an editor, but over time we listened to what our customers want we use our editor for lectures, but the general idea behind the appointment of our business has changed. We, as before, are trying to solve the same problem – simplification of learning programming – but in a different direction.
Find a suitable name for the startup is tough. Given the desirability of the shortest possible name for the web domain, the search process is as follows:
The name of startup
Step 1: We come up with a grandiose name.
Step 2: Check on iwantmyname.com.
Step 3: we see that all the best domains for our grandiose name are busy.
Step 4: Go back to step 1.
Make sure that your customers can write your chosen name for three attempts (remember Led Zeppelin or The Beatles), and if possible, take the .com option immediately if it is acceptable at a cost – in the future, if you succeed, domain sellers Will raise the price for you considerably.
- It is not necessary that the origin of the name be completely obvious: SuperHi came out of the “information superhighway,” the memory of the beginning of the development of the Internet (and, of course, the name of our site has nothing to do with the buzz after a good tightening). The name Steer arose from the fermentation of the dictionary-thesaurus and the subsequent verification of whether there is a real domain.
Sketch out everything
As soon as you have an idea, you must necessarily draw everything on paper. Draw each page, every window on the screen. Do not skip any interaction – if there is a link or a button, what happens when it is triggered? Track it.
- This process allows the idea to move from your head to paper. It also helps those who work with you, understand what you are doing. For co-founders, this means that you can agree on the content of your idea. For designers and developers, drawing helps to imagine what is required of them and how long it will take.
Check your idea
- How, in fact, to test the concept with which you work?
- And how to verify the design or prototype of a future product on potential consumers?
It is very tempting to believe in praise when it comes to your design. Whenever you talk to any potential customers, 80% will not give you any criticism, because people are usually polite and seek to avoid conflict. It is even more tempting to ignore the real criticism that you will receive the remaining 20%, stating that “they did not understand anything” or “they are just stupid.” Maybe they did not know anything, but if that’s so, then your idea may be too complicated, or you’re not giving it good enough for now.
Start implementing your idea from the small. Do not build anything yet. Use your sketches to study customer problems – do not give them a solution right away, eliminate your attachments and self-esteem – then use feedback to develop a solution that fits their problems.
Be ready to learn at a crazy pace. Learn as much as possible from your clients so that tomorrow you can translate your idea into reality better than the day before.
Find co-founders whom you trust
People are an important part of your startup. Good founders know how and when to change something if the business is suspended. Ideas are nothing! Execution is everything!
- It is possible to conduct business, being the sole founder, but this is more difficult. Some investors prefer not to invest in projects with one founder, but there are examples of the reverse (Tumblr, Mint, Alibaba, etc.). If you are considering such an option, then provide yourself with support in those areas in which you feel your lack of preparedness. For example, if you are a businessman, then find development consultants and information technology to get useful advice.
I’m the only founder of my startup. I like the role of the “dictator” in solving all the issues in my case, but this is tedious, and having only one person in the founders slows down the development of the business. It also means that I am the only component whose failure results in the inability of the entire system.
- It’s always easier to work with friends, and not look for someone who can become your co-founder. You trust them, and you have faith in their capabilities. However, startups are a severe test, even for the most healthy relationship.
- If some co-founders perform the same functions – for example, they are all businessmen or designers or developers – then it is necessary to define their rights and responsibilities clearly. If you are not happy with accounting or checking accounts, who will do it?
- The disagreement of co-founders among themselves is a much more widespread phenomenon than many imagine. I left my first startup because of the discrepancies with the co-founder. We ended up unable to agree and quarrel every day. It happens, and you all go further. There are two good articles on Mark Suster’s blog, Both Sides of the Table: The Co-Founder Mythology (Mythology of Co-creation) and The Perils of Founder Fighting.
How to find a co-founder-technician
When I was a freelancer, I was asked if I wanted to join a startup as a co-founder – a technical specialist (CTO). In most cases, I did not know the person is offering, so I always answered “no.” It’s unlikely that you will marry without knowing the bride.
- Programmers are presumptuous and believe that they can realize the idea only on their own, although programming in the implementation of the idea is only a tiny part of what needs to be done in the startup. The list of activities includes development, sales, marketing, administration, production and much, much more. But at the moment you need a tech co-founder more than you need him.
- How do you distinguish yourself from other “people who realize the idea”? You are doing a lot of preparatory work. You do a lot of research, drawing, branding. You are preparing a business plan. You do everything a programmer does. Show everyone that you are.
- Secondly, get some skills to submit yourself to the developers. Learn the basics of programming and development to know what you are talking. You would not create a bakery if you did not bake. It does not mean that you will be programming a website or an application, but the more knowledge you will have about how this works, the more useful you will be.
How to find investors
You need a “runway” – some time from starting your startup to the time when it will become profitable. It will, of course, only be a forecast, since most startups never break away from the metaphorical runway. Expect that this time will be twice as much as you initially predicted, so, accordingly, raise funds. It is easier and faster to organize one large investment than a few small ones.
- The attraction of funds will take time also more than you initially expected. Usually, it takes 3-6 months, but I’ve heard about the year spent for a small round of fundraising. Prepare yourself for a heavier option.
- Also, there is “outgoing” and “silent” money. Sociable money comes from people who have experience in your industry sector or a real history of investing in successful start-ups. Quiet money comes from people who can not or do not want to give you any help other than investing.
- For a startup at an early stage, one should look for so-called seed investments. Do not try to contact immediately in relatively large companies, such as Index Ventures and Balderton. For investments at an early stage in London, for example, Passion Capital, and in New York – the Collaborative Fund perfectly suits.
- How much money to collect, it also depends on the “runway,” investors and location. The first rounds (also called “sowing”) give from 300 thousand to 3 million dollars in the USA. In the Canada, this value is noticeably less – 150-500 thousand pounds sterling. Investors in the USA are willing to take on more risk than investors in the Canada.
- Talk to the people who collected the money. Start contacts with start-ups that can advise you and tell you about the investment process.
How to hire the best
There are many ways to create a startup in the field of information technology if you are not sufficiently trained in it. You can hire full-time employees, you can attract freelancers, or you can transfer the work of a third-party organization.
At the risk of presenting the obvious, I would appreciate the usefulness of different approaches to the similar scale (0 means “dangerous,” 10 – “excellent”) as follows: third-party organizations – 0-3 points, freelancers – 3-8, staff – 7 -10.
- For third-party organizations (agencies), you will be one of many projects in the queue, and their goal will be to push you out the door as quickly as possible. There is a well-known saying: “Agencies stand at a distance of only two contracts from closing.” Involving third-party organizations (agencies) is the most expensive approach.
In my startup Steer, I conducted a 5-day training course for beginners working with the Ruby on Rails framework. Within the process of the last two days, training done on the creation of a website for a trading platform such as Airbnb, Etsy, and eBay. I have anonymously asked several London agencies what fee they will charge for all the functions for this project. Three organizations have issued proposals from 35 to 60 thousand pounds sterling (about 80 thousand dollars or 75 thousand euros).
- Freelancers are better than agencies. They are cheaper, more attentive and receptive. I also asked for offers on the website of the trading platform from several freelancers and received values from 8 to 25 thousand pounds sterling (accordingly, 35 thousand dollars, 30 thousand euros) – less than half of the agency price. From freelancers, you can also expect greater flexibility in long-term cooperation.
- The last option is full-time staff. It’s the most difficult choice for implementation, but potentially the cheapest in the long term. The staff will make up the majority of your team and will take care of what you are doing.
- Beginning designers in Canada cost about 30-40 thousand dollars a year, experienced – 50-70, beginning developers – 30-40, experienced – 60-80 (here for beginners are employees with experience less than five years).
- In New York, the same line looks a little different (thousand dollars a year): 40-80, 80-150, 50-100, 100-150. Pay attention to the huge wage difference in New York and Canada. It’s one of the reasons why American start-ups have to collect more money.
You should also consider the share in the capital (shares in your company). In most cases, the proportion of the capital only “gives the right,” which, in essence, means the possibility of obtaining it only after a certain number of years. The employee will be able to receive something depending on the length of service or if the company is sold. What should be the allocated share, depends on the stage of development of the startup, on the qualification of the employee and some funds raised. There is an excellent guide to shareholding and shares in the capital of startups in information technology.
How to find good employees
- When someone starts to work for a startup, then he renounces the stability that existed before him and potentially agrees to a salary reduction to work with you. However, for right people, money is not the only motivator. Otherwise, all would work in banks and be management consultants. Good people want to be part of some great mission, mission, and they want to believe that their cause is important. And it’s your responsibility to convince them that your startup will accomplish this task.
The best place to find people is, as always, the Net. Ask friends or get friends in an info technology environment by attending various events. Social networks – both personal pages and company pages – are also a good way to find people. Your supporters and friends will either look for themselves or know someone who will do it.
Another way is advertising. Sites like Unicorn Hunt, WorkInStartups, Smashing Magazine Jobs and Authentic Jobs are great places to find real people.
- Job fairs in startups can be very extensive – I met a former employee (hello, Louise!) On Silicon Milkroundabout – but if you are exhibiting something, then keep in mind that you will have to expend considerable effort. Do not mess with these terrible banner stands. Think up something of your own and draw attention. Be also honest with the participants; They will not thank you if you now pretend that you know what you are doing, and they will later find out that this is not so.
Design is as important as development
Many people who are going to become founders of a startup shortly ignore an important part of this process – design. If you look at any popular site or application, you will see how much effort is invested not only in branding but all interaction with the user.
If you do not plan to have a full-time designer, then I would suggest that you instruct the freelancer to create a brand identity for you. A strong brand is of great importance for manifestation in a crowded market. A litmus paper of a good logo: can you draw it from memory?
- I do not recommend using anything cheap, like 99designs or Fiverr sites. Pay a little, but the product will be unimportant. Try to offer the designer some exchange of services, if you can not pay for his work.
- Next, understand the interaction with the user. Read “Do not make me think” Steve Krug, look at Little Big Details and SiteInspire, then carefully consider everything on your site. Make sure that everything works incredibly naturally and flawlessly for users. Use services like UserTesting to test the prototype.
- The first versions tend to be too complicated. Be careful in adding features, keep them as small as possible. Read (or reread) The Lean Startup (“Lean Startup”) by Eric Ries.
As an example: in my previous startup Steer, we launched seven courses. Four courses completed, and we quickly realized that customers were confused. We reduced to 2 courses, the sale of which went much better than it was on the 7th. A simpler version continues to work.
- Even in SuperHi, two years after launch, we always monitor what we do. Will I remove full-time studies? Do I add another course? We think about all this always.
According to the famous restaurateur Gordon Ramsey: “The more dishes, the lower the standard” – his article is of great importance for information technology companies.
- If you are tempted to add new features (and you will experience it), do it sequentially step by step. It is much easier to check if the new function worked and liked if you change something step-by-step, rather than run several services at the same time.
- Use services such as UserTesting, Optimizely, Intercom and Mixpanel to test, discuss and analyze your customers. The more data you have, the more accurate the decision you can take.
For example, we use Intercom for our live chat on the site. Conversations with our users help to identify the lack of some information on our site, to find out what creates difficulties for users and how we can improve our products. Such feedback is for us simply priceless.
Sales and marketing – the key to success
And here it is built – but no one comes. If you or your co-founder are not very familiar persons in your field of study, then launching your startup will be hardly noticeable. Your next step should be to bring the name of your startup to your audience.
Read the great book by Dan Pink, “It’s human to sell.” Look at the interaction with the client and why it also matters.
I strongly recommend also Stephen Pinker’s book “The Sense of Style.” This book is a clear summary. It has little to do with sales or marketing
Depending on your startup and industry, different methods of selling and commercialization will and will not work for you:
- Partnership with companies whose clients will benefit from the advent of your startup. For example, if you have made an online store for young parents, then give discounts to bloggers who write about raising children.
- Advertising on the Internet, such as Google Adwords, Facebook Ads, and Twitter Ads. It is relatively cheap and makes it easy to see what works and what does not. Invest small funds in each campaign and change advertising, tracking the effectiveness. You will be surprised by the results.
- Advertising through traditional media, such as newspapers and radio. It will work if you want to focus first on some particular place or city. It’s also ideal for forming brand awareness but may not affect sales and customers.
- Advertising campaigns. I’ve seen how many startups make the mistake of using advertising campaigns to promote founders, not business itself. Control yourself. Staying on the pages of newspapers can not do anything for sale. In Steer, we were represented in the national press, but this did not lead to any additional sale.
- Personal recommendations are the best form of advertising. If people like what you are doing, they will tell others about it. Focus on the quality of customer service, and this will increase the likelihood that you will be advertised. You have to make sure that every client becomes a part of what you are doing and your devotee.
Startups are like ducks
My mother works as a consultant, and she says that no matter how calm and relaxed a person can seem outwardly, it is likely that inside he has an anxious disorder. Looking at the duck, it would appear that it slides smoothly and effortlessly on the water, but under the water its small legs are tense, trying to move the duck in a particular direction.
- You may have a feeling that your business is the only one where everything goes uncontrollably and falls apart. Such feelings are normal. Welcome to the life of startups. Every founder of a startup experiences similar feelings. It matters only how this affects your relationship with the outside world.
The best companies look as if there are no problems, although the reality is different. Read Nick Bilton’s book The Birth of Twitter, which confirms that successful start-ups can also be filled with inner struggles and problems.
The first season of the audio podcast prepared by the startup Gimlet Media is Alex Bloomberg, who founded this company – Gimlet Media. The material gives a beautiful look from the inside to what it means to launch a fundamentally new start-up. I recommend listening.
How to survive difficult periods
I would like to stay a little longer when I feel that everything is falling apart. How to make it so that you feel yourself psychologically well, feeling at the same time that it’s not all right with your startup?
- First of all, you need a life outside your start-up. I saw many founders who eventually worked seven days a week from 8 am to 11 pm on their startups. It’s, of course, is the way to burnout. Provide yourself at least one free day a week, and on the remaining days, finish work at a reasonable time. Work can wait.
- Have a hobby or something that is not related to your business or your field of study. It is necessary to think about something else occasionally, except for work.
- Talk to friends, family members and, in particular, to counselors about how you feel. Perhaps your friends will not understand the lifestyle of the startup founder, but your consultants can know exactly what you are feeling and can help you.
- Watch yourself. Exercise and sleep are incredibly important. Do not replace sleep with cups of coffee.
- If you are still tense, try a meditation application, such as Headspace, which helps to relax – meditation is not something esoteric and happy, it’s an excellent tool that contributes to managing your thoughts.
- Break through the hard times. It’s hard to say for sure, but the life of a startup, like riding a roller coaster – is up and down – and the next take-off may be tomorrow or next month, but it will come.
Starting a startup is just the beginning. Do not stop. Continue to move consistently and aggressively. Try different approaches. Change the design. Communicate with your customers. Try to enjoy the movement.
Any founder will tell you that a startup is not a means for fun. It’s a dark, nervous work, and you will encounter many obstacles along the way. On some day you may wish to give up everything and leave without looking back, and the next you will feel yourself on top of happiness. Perhaps you will become wealthy and famous, but maybe you will have to crawl out from under the rubble of a crumbling start-up.
Do not be afraid of failure. It is better to try and fail than not to try at all. Many successful founders failed with their companies before finding the right way.
I would not consider myself a successful start-up. The Steer company was closed about a year after I left it. No one died, and no one remained without shelter. Your self-esteem may be affected, but you can always find another job if the money runs out. Do not take the situation as a failure – it’s just a path that did not work.
You have the opportunity to leave your mark in the world. It can be quite small, but it can be gigantic. Receiving a letter with gratitude from the user evokes the best feelings in the world. The startup gives you a real opportunity to change the way people go, living their lives.