Turning ideas into a scalable startup takes careful research, planning and execution.
Do you have the next killer idea that’ll change the world? Something no one else has done yet? Something that could make you rich and famous?
The good news is the world needs your contribution and your startup to succeed! The bad news is that most startups fail. But, they don’t need to. Obviously, there’s no point of building cool startups that’ll go out of business.
Let’s look at how to launch successful startups that make an impact on the world and keep you inspired, so you can enjoy the journey.
My previous startup (successfully acquired) was an EdTech SaaS eBook platform for K-12 schools with student and teacher users in over 30 countries. It was a great idea for engaging kids to read; the problem was I had 20 years of Fortune 500 enterprise software experience and no working knowledge of the education world.
I thought: “My kids go to school, I know how teachers, principal and facilities work…how hard can it be to sell products to schools?” Yeah, right! Instead, I ended up entering a whole new industry with its own quirks, selling techniques, customer service hours, payment terms, and other business aspects of selling to that industry.
In a previous post, 4 Years to Profitability: Hard Lessons Learned in a Startup, I write about the painful journey I went through in the first few years, due to a lack of domain knowledge (discussed below). Had I not had the passion, I’m not sure we would have lasted.
In Startup Sidekick (this startup), my story is a bit different. It took me almost two years to realize this was my calling. My two years prior to starting this venture, involved lots of reflection, research, analyzing career options, world travel, soul searching, doubting my skills, and of course, what I want out of life.
It takes time to find your passion but once you do, it’ll be immensely inspirational.
Step 1: Reflect
“Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do.” –Steve Jobs
I’m going to commit a significant portion of this post to this section, since many entrepreneurs ignore this step in the initial excitement.
I can’t tell you how many conversations I’ve been in where someone has a great idea for an app. Don’t get me wrong: we need that kind of thinking but if I had a nickel for everytime…you get the point.
However, most people never go beyond discussing their ideas. The few brave ones that do, go on to the next stage of the funnel. Some will get as far as putting together plans, some will get prototypes built and others will take it all the way to launching a startup.
Although I founded and sold two successful startups, I’ve had almost a dozen ideas that didn’t make it past the business plan and/or prototype (e.g. website for comedy students, animated global awareness story book apps for kids). This is a good thing, since I likely didn’t have the passion for it and/or there wasn’t a feasible market.
Starting a startup should be taken very seriously, given the risks, investment requirements, time commitment, adverse effect on health and relationships, and all-consuming nature of startups.
You need to dig deep into your soul and ask tough questions like these:
- Am I passionate about this?
- Do I have the domain knowledge for this idea?
- Do I have an entrepreneur personality?
- Am I willing to take the risk of foregoing a steady paycheck from my job?
- Can I invest my savings with the possibility of losing it?
- Can I lead a team?
- Am I willing to work 10+ hour days and on weekends, holiday, or vacation?
- Can I commit the next 10 years of my life to this cause?
- Do I really want to do this?
One of the points above I’d like to emphasize is: domain knowledge. It helps significantly to know the industry you’re building the solution for.
If you aren’t from the industry, then it helps to have the passion come from something personal (e.g. medical solution for a disease). I was passionate about making a positive impact in the world through education and willing to invest the time and money, especially since my previous startup was successfully acquired, so I was feeling bullish.
The reality was the startup took way longer than expected, to become profitable. In the process, I lost a lot of quality time with my kids who are now fully grown. I also ignored taking optimal care of my body and mind, since any free time was dedicated to the business (note to self: have a better work life balance in my next venture). Remember: your startup will take as much time and effort as you can give it…and more.
If you’re still committed, that’s awesome! Welcome aboard. Let’s take a ride and see how we can help you get your startup launched successfully.
Step 2: Learn
Before you begin, you need to determine what’s more important: investing time building your prototype, learning about the market/industry you are about to build a solution for or doing a little of both.
Many tech entrepreneurs begin building a prototype based on just their idea — there’s nothing wrong with this and in fact, encouraged. However, realize that the product ends up only making up a small part of a startup (e.g. ~20%) — the rest includes marketing, sales, customer support, back-office, government, insurances, and other business matters.
It pays to do your research, since it’ll make your product that much better and help you build a viable startup.
If you think you have a viable solution for a real customer problem — something they would be willing to pay for — it’s time to define what the target customer profile looks like and how big the market is.
Start by researching everything about the industry (e.g. known problems you can improve on). Then, figure out who specifically your solution helps.
Researching the market size will help you determine how big you can scale the business and what sort of investment you might need (e.g. bootstrap, angel, venture). The following are well known ways to determine the market size, with SOM being the most realistic projections:
- Total addressable/available market (TAM)
- Serviceable addressable/available market (SAM)
- Serviceable obtainable market (SOM)
For example, when I entered the education world in my previous startup, I discovered that within the US, there are approximately 50 million students in 100,000 public schools in 15,000 districts. Then, there were private schools and international markets. Our SOM was a small percentage of the 100,000 schools since we wanted to target specific public school district sizes in select states, to stay focused as a small startup.
You’ll want to keep a close eye on your competitors. For example, learn about their solution, pricing, customer profile, and user perceptions. Read press coverage and social media posts about them; these can easily be found on the competitor’s websites or by a simple online search.
Once you understand the customer pain points and competitive landscape, it’s time to define your target customer profile such as job title/role, demographics, geography, gender, and other human characteristics.
For example, in my previous startup, our target buyers were curriculum and technology heads of school districts but our users were students and teachers. For Startup Sidekick, our target customers are founders and executives at the over 1 million tech startups worldwide.
Also, look for statistics in the industry to avoid common pitfalls. For example, in The Top 20 Reasons Startups Fail from CB Insights, “No Market Need” was the number one reason startups fail (a whopping 42%). “Running out of cash” was second at 29%.
Step 3: Test
Now for the fun part! It’s time to start testing your concepts directly with your customers.
Keep one simple fact in mind throughout your journey: Focus on customers first and foremost and everything will start to fall into place. For any startup to be successful, solving customer pain points, with an amazing user experience (solution, support), should be everyone’s primary goal.
For example, Lean Startup recommends using Validated Learning to specify, measure, achieve goals, and repeat. Similarly, Design Thinking recommends working closely with customers to empathize, define, ideate, prototype, and test concepts. The goal is to iteratively and incrementally build a product that customers actually want.
How To Work With Customers
Working with customers can come in the form of in person or virtual (e.g. video with screen share) working sessions. For example, with B2B customers, you could visit them on site. With B2C, it can be done in the form of surveys/feedback requests.
To truly understand customer pain points, you need to work with them in their environment. Too often, tech entrepreneurs hide behind their screens and communicate virtually via text (email, chat) — bad idea! At the very least, use video and screen sharing to get as close to the in person experience, as possible. It’s a known fact that nonverbal gestures make up for a significant part of effective communications.
Building MVPs Iteratively
Working with customers involves understanding their pain points, prototyping a minimum viable product (MVP), testing and improving it, then repeating this to incrementally build out your product.
It’s important to build the least amount possible to test out your hypothesis, before investing too much time and effort. This can be a mockup, clickable prototype, manual processing behind the scenes, etc. There are countless stories online how famous companies tested out their concepts (e.g. Zappos, DoorDash, Dropbox, Groupon).
As you’re building your solution with the help of customers, keep an eye on competition and differentiating your solution, i.e. your Unique Value/Selling Proposition (USP/UVP).
Step 4: Plan
If you’ve made it this far by proving your solution has a viable future, it’s time to start putting together your plan for yourself, your team and investors.
Here are some things you will want to put together for your startup:
- Plan: Business plan with slides/sections for mission, vision, problem, solution, market (customer, size, competition), SWOT, marketing/distribution strategy, team/bios, financials, why now, business model, etc. Here’s a sample business plan for our company, Startup Sidekick.
- Financials: Pro Forma P&L and cash flow (see related post: Manage Finances Like Your Startup Depends On It).
- SWOT: Analysis of your strengths, weakness, opportunity, and threat.
- Advisors: Internal and external boards with business and customer contacts.
Step 5: Commit
If you’ve done your homework, you’re ready to commit to launching your startup.
One important thing to remember is that you have to go all-in after the initial validated learning, since part-time rarely works. I often hear people talk about building their startups after a full day of work but this fizzles out after a few weeks/months, due to other work and personal life commitments.
Do yourself a favor and set a target date to get whatever version launched. For example, we chose July 6, 2020 as an arbitrary date to launch the first version of this website. Target dates are an effective way to get everyone focused on a common goal.
Read Launch Your Startup On Solid Footing To Help It Soar to learn about what you can expect next (e.g. cofounders, brand, seed money, legal & accounting).
Also, note that you might get to a certain point with your solution and have to pivot. For example, companies like Airbnb and Spotify started with a totally different model than they are in now. Read more about pivots here.
Starting a startup isn’t easy. It seems fun in the early stages when you’re building a cool prototype but for building a sustainable organization, you need to carefully vet your idea before fully committing to it, since the majority of startup activities become about everything other than the product (e.g. spreadsheets, people, processes, tools, tech/customer issues).
I love building products but had to constantly remind myself that as a CEO, I should be focusing on sales, marketing, customer service, and running a tight ship financially. If you can manage to find a co-founder or team that complement your skills, that’ll help ease the pain.
If you start out with a solid foundation, you increase your chances of building a startup that’ll thrive for years to come, while you truly enjoy the journey.
Remember, regardless of what you’re selling, this is about people, not things, so think about building long-term relationships with customers by solving their pain points, earn their loyalty and they’ll gladly pay you for it.