Opinions expressed by Entrepreneur contributors are their own. There has never been a better time to create a software solution. There are many tool
Opinions expressed by Entrepreneur contributors are their own.
There has never been a better time to create a software solution. There are many tools out there that can create websites and smartphone apps by dragging and dropping elements on a screen.
But when building a tech startup, it’s much more involved than having a pretty website or smartphone app.
Now I know many readers potentially have some incredible ideas stored in the back of their minds that are lying dormant.
This article is aimed at people who have an idea and want to turn it into a reality.
My intention is to give you the five most important lessons I’ve learned when building a tech startup to help you take the path of least resistance, make fewer mistakes and most importantly, save money.
People said I would fail, but I ignored them all and here are my lessons.
Are you ready?
Lesson #1: Make sure you solve a problem
This lesson is mission-critical. If you are not solving a problem that is painful enough for people to pay you to solve, then you’re wasting your time.
In my experience, we had a solid product and concept, but I felt it was a bit weak on the problem-solving side. When we fixed this issue and pivoted to solve a bigger problem, our growth trajectory changed.
This is lesson number one for a reason. Why? Because if you solve a big enough problem for a large market, there will come a time when you’ll need to raise capital.
When you pitch to investors, you will be judged on the problem you solve. Trust me when I say that if you pitch a minor problem that doesn’t make the investor lean in, you will not close them.
But, if you pitch something that’s solving a big problem, investors will lean in and you’ll have their full attention. Because if your solution solves a problem for a big market and you can wrap a revenue model around it, you are well on the way to receiving investor capital.
Solutions to big problems are usually born from personal experience. Investors love this, because it shows a pain point that you’ve experienced and that you decided to do something about it.
Just remember, investors invest in people first and product second.
Lesson #2: Find a great developer
Ideas need to be turned into products and the pathway to a product is via programmers or developers.
Having a good developer early in your journey is very important. They breathe life into your concept.
Don’t stress if you don’t know any developers, there are plenty of platforms where you can post a job or requirement to connect with them.
I found that the best developers to find for early-stage concepts are full-stack developers. Full-stack developers can build the front end (client-side), what the customer sees and the back end (server-side), the stuff that no one sees but makes everything work.
Full-stack developers can help keep costs down and it’s always a good thing to consider giving your first main developer (once you are comfortable, of course) some equity in the business.
Lesson #3: Validate your hypothesis
Your hypothesis is an assumption (your solution). It needs to be tested to see if it’s true or validated and prove that it solves the problem you’ve identified.
The beautiful thing about the validation stage is that you can dip your toe in the water to check if you are on to something big. Or at the very least, something that will make money.
The best way to do this is by building an MVP or minimum viable product. Remember in lesson #2 where I said you need to find a full-stack developer? This is where the power of this type of developer comes in.
An MVP is a version of your product that has just enough features to prove your assumption (hypothesis) is correct. Focus on the words just enough, as this indicates that you should not build everything in your roadmap.
An MVP is designed to prove your hypothesis without the need to spend up on development costs. So, the full-stack developer can build out your front end and back end to allow you to prove your solution.
With our MVP, we built a small part of the solution and tested our hypothesis. The result was that we had 30,000 people engage with our product in one night. This allowed us to build out the product because the response validated our concept.
This lesson is crucial to ensure you don’t spend too much money without proving your concept will work. Do not skip this step.
Lesson #4: Team
You’ve got your full-stack developer, you’ve built your MVP and it’s showing promise, now what? Well, it’s time to start focusing on building out your team.
There are several reasons to build a team and I suggest starting out with one key advisor. This advisor must be influential in the space you’re playing in. For example, if you have a media-tech startup, your target advisor may be a TV station board member.
The reason you pick this type of advisor is to leverage their networks and contacts. The key thing here is that their contacts can help you with distribution or customer growth.
Also, having this type of advisor will help you when raising capital. If an investor sees this person on your team and they are well known in the space, it will get the investor excited.
On top of this, good advisors attract other team members so think long and hard about which advisors in your space can help you out the most.
Lesson #5: Partnerships
The growth of your startup is so crucial. Every time you pitch your startup to investors, you need to clearly show your distribution channels. You cannot sell a secret and investors are hyper-focused on how you’re going to get customers.
There are the traditional methods of distribution such as paid marketing, but one distribution channel we found to be incredible was the power of partnerships.
I have a question I ask myself all the time, how can I do more with less effort? In other words, how can I connect with as many customers as possible with the least amount of effort or spend?
Welcome to partnerships. Partnerships are a powerful way of getting distribution quickly to then turn on revenue or show massive growth.
You think about it, if a particular company already has thousands of your potential customers, doesn’t it make sense to partner with them to get access to thousands of customers in one hit?
If you were to organically grow to this level, it could take years and substantial money to achieve.
When formulating a partnership, it’s ideal if your solution complements the company’s product that you want to partner with as this will benefit both parties.
In closing, the startup grind is real and it’s hard. But my hope is that the above lessons can get you thinking in new ways to ensure your startup has the best possible chance for success.
Just remember, there are people out there who need their problems solved, so ignore the people that think you’re crazy and go for it.