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The classic tale of every CS grad's dreams – we're talking about the kind of stories that make you feel like you're about to embark on a quest to discover the next legendary treasure, like the tech-savvy Indiana Jones! 🚀🌟
We've all been there, right? Growing up, we've idolized tech entrepreneurs like Bill Gates, Mark Zuckerberg, and Steve Jobs, daydreaming about creating the next Facebook, Instagram, or Spotify. Well, folks, today, I'm here to spill the beans on my own epic adventure, a tale of how I conjured up my very first startup with ZERO experience, sprinkled with the invaluable lessons I picked up along the way. So, grab your digital map and your virtual fedora; it's time for a journey you won't soon forget! 💼🔍💡
During my Senior Year of University, we had a course in Entrepreneurship for which we had to build a real-life startup. It could be anything that could generate revenue. My classmates worked on a wide range of things like clothing e-commerce stores, online bakeries, and online marketplaces for a variety of things. For me, building e-commerce stores or an IT-based services business is boring because there's not much risk involved.
It was a golden opportunity for me to execute any of the ideas that I had been holding on to. I with 2 of my group mates, performed a feasibility analysis on all of our ideas and chose 3 of our best ideas. After a lot of research on those ideas, understanding the problems, marking out the solutions, figuring out all the distribution channels, exploring the potential markets, and so on. We finally came down to 1 idea that seemed the most feasible.
The early validation starts from your close circles, your friends, family, mentors, and subject matter experts. You don't get real validation from friends and family per se but you start thinking about that idea critically, and you find loopholes in your idea or ways you could enhance your idea. Basically, it's a litmus test, but if you have something like SpaceX in your mind, you might get ridiculed because your goal seems unachievable to regular people(aka your friends and family).
So take this point with a grain of 🧂, although it made sense in our case but it may or may not make sense in your case.
During the very early stages, we had to do a lot of presentations, create pitch decks, a lot of public-speaking to the faculty and classmates. This helped me build confidence over time to not shy away from speaking in front of large audiences, and believe me I was so shy that if someone would ask me my name in public gatherings I would freeze (jk, exaggerated a bit too much😅 but you get my point). At this point, I knew what problem we were targeting, what we were building, why we were building, how are we solving that problem and what competitive advantage we had.
There's this thing called BMC (Business Model Canvas) which is a tool for visualizing a business model in a simple, structured manner. This method can lead to a better understanding of your market segments, value proposition, distribution channels, revenue streams etc. It gives you clarity of thought about your idea and helps you find any piece you are missing that could be leveraged or anything that can be a blocker for the whole business.
What mistakes do people often make?
Most people build a solution and then find a problem for which they are building the solution. That is quite a naive approach to building a startup. You gotta
know the problem,
feel it in its depth
understand it better than most people
only then you can build a solution, that no one has been able to find and build before.
In cases where founders know what the problem is and what is their unique proposition, their employees don't know about it. It apparently doesn't cause any harm, but if you observe it critically you realize that this closes the feedback loop where employees can contribute to the solutions that you are building because they don't understand the core business value.
Validation With Target Market Segment
With all that said, it is highly advisable to not start the development process until you have some paying customers for the said product/service. For that purpose, we tried selling the idea to a handful of clients, but there was no luck initially. The response was quite like a scene from Silicon Valley
The reason was we were so product-focused having the typical developer mindset, that we forgot to understand the perspective of our clients. So rather than selling the idea, we tried to sell the monetary benefit and user experience that they could achieve if we went ahead. So slowly we started to understand
how the market works
what are the issues they are facing
which are the big players in the market
why they are surviving despite their flaws
Once we figured out all that, we designed prototypes in Figma and pitched the final product with possibilities the business owners could achieve if they became our customers. As soon as we got validation from the actual target market, we went ahead with full throttle in developing the MVP.
Minimum Viable Product(MVP)
An MVP represents the essential, bare-bones iteration of your products or services, enabling you to validate your concept in the real world with actual users. It's not about sacrificing quality; instead, it involves concentrating on the core features that address the primary issue your product intends to tackle.
Minimum Lovable Product (MLP)
There's a fascinating concept known as MLP - the Minimum Loveable Product. It's not just about delivering the basics; it's about creating something that genuinely resonates with users and wins their affection. Personally, I find this idea quite appealing, but its applicability depends on your specific product/idea. For instance, if you're entering a market with many competitors, yet you offer a unique twist, the MLP approach can be a smart strategy to charm users. However, in cases where you're pioneering something entirely innovative, like ChatGPT when it first launched with no commercial competition, the MVP might be the way to go.
Building an MVP can be quite a challenge for most Product people because you have to consider what The North Star Metric is for your customers. I have seen a lot of Product guys, even senior ones adding fluff to the MVP because it's very easy to get distracted. Building an MVP is a very crucial step to ship the most value-driving stuff first because of the following reasons:
Resource Allocation Efficiency: Startups often operate on tight budgets and limited resources. Developing an MVP enables you to direct your resources where they matter most, reducing the risk of depleting your budget prematurely.
Rapid Market Entry: Time is crucial in the startup world. An MVP gets your product in the hands of users faster, allowing for quick testing and iteration. This swift feedback loop can be a game-changer.
Real-World Feedback: While you may believe you have the perfect product, reality often has different plans. An MVP helps you gather valuable input from actual users, assisting in refining your offering to align with the market's genuine needs.
Adaptation and Pivoting: The startup journey rarely follows a linear path. An MVP equips you to make necessary pivots when required.
Building a Loyal User Base
The main aim of an MVP is to build a loyal user base that will show us
how to improve the product
what we are doing wrong
what features to kill
which features to double down on
They basically give us the hidden nuggets of criticism that keep us focused on building the right thing and solving the right problems. So that's what we did, We built an MVP with the tech stack that would take the least time to build and eventually be scalable when the time is right. We threw an MVP out there with our early bird customers to use and also new customers whom we could attract with our bare-bones MVP.
Ah, behold the formidable hurdle that early founders often regard with a mix of anxiety and anticipation. You see, the investment landscape has become a bit like a rollercoaster – no longer the wild dollar downpour it once was. Since the economic crunch, things have taken a rather leisurely pace on the investment front, but don't lose heart, my friend. The VC path isn't the only trail in these woods.
Fundraising may not be a walk in the park, but if you have unwavering faith in your idea, God works in mysterious ways. Picture this: Opportunity casually strolls down the road, and when it spots your hard work and determination, it decides to saunter over and meet you halfway. 🌟🚶♂️
Investment Choices to Fuel Your Startup ⛽
Now, there are a few dependable ways to summon the funds you need
Bootstrapping - DIY Magic: Ever heard of bootstrapping? It's like starting a business with the savings you have, so make sure you have your expenses for at least a year or two saved up.
Friends and Family - The Inner Circle: Picture this: your besties and favorite cousins pooling their money into your startup because they believe in your genius. Just remember to get everything in writing; you don't want Thanksgiving dinner to turn into a business strategy debate.
Angel Investors - Business Guardian Angels: Angel investors are like the fairy godparents of the business world. They provide some capital in exchange for some equity. Plus, they've got a treasure of industry wisdom and connections in their back pocket.
Venture Capital - The Big League: Think of venture capitalists as the high rollers of startup funding. They're looking for the next big thing and aren't shy about asking for a piece of your company's action. But hey, their deep pockets come with a playbook for success.
Crowdfunding - The Power of the People: Platforms like Kickstarter and Indiegogo turn your startup dreams into a massive online party. People who love your idea chip in, and in return, they get front-row seats or even backstage passes to your startup journey.
Accelerators and Incubators - Startup Boot Camp: Joining an accelerator or incubator program is like getting a golden ticket to Willy Wonka's chocolate factory, but for startups. They give you funding, mentorship, and, best of all, a chance to shine in front of potential investors on the big demo day.
Our Stars Aligned Perfectly
We hit the jackpot when it came to getting that sweet investment cash! No bootstrapping headaches, no VC begging. It could be pretty nerve wrecking to pitch your ideas to VCs, just to hear that they don't want to invest. Its a Shark Tank episode but irl
We just tapped into our freelance connections, shared our fantastic idea, and our buddy couldn't resist jumping on board. Boom! He brought in the investment, and suddenly, we had a runway that would last us for a whopping 1.5 years! 🚀💰
So what is PMFit? To understand what is Product Market Fit, let's start with Marc Andreesen's definition
Being in a good market with a product that can satisfy that market.
Basically when you have tapped in the right market, there is a need of the product you are selling and the customers are eager to buy the product/service. And the product is serving the purpose much better than the competitors.
Product-market fit is happening
Customers are buying as fast as you provide products, expand services, and hire salespeople. Reporters are sending you emails because they hear the buzz. Investors want to know more about your solution. Life is good.
Product-market fit is not happening
Customers aren't getting the value they expected, so word of mouth is kinda meh. The sales cycles take too long and deals often end up not happening. Press and investors are as silent as dead. The growth numbers go a little bit up or a little bit down. Knock knock, is anybody there?
Once you have achieved PMFit, now, it's time to figure out the most effective approach for converting as many folks as you can from that potential market – in other words, crafting a top-notch go-to-market strategy. Your goal here is to lay out the game plan for marketing and sales channels, pricing strategies, and tactics to keep those customers coming back for more. 📈🎯
When executed with precision, your go-to-market strategy has the power to set you apart from your rivals, steering your startup toward a revenue-generating model that's not only repeatable but also scalable and highly profitable. 🚀💰
You've got the product-market fit, your go-to-market approach has been thoroughly vetted, and your financials are looking pretty darn good. Now, it's time to crank things up and fully embrace the exhilarating growth stage.
Your business is primed to transition from startup to scaleup, and there are a couple of savvy strategies to consider. You could set your sights on acquiring competitors or businesses that complement your own, and expand your company into new geographic territories.
But here's the kicker: this might be the moment to seek additional funding, not just from venture capital firms, but also from growth equity and private equity firms. They can provide the resources and expertise needed to fine-tune your startup for maturity, helping you dominate your competition and venture into fresh segments and global markets. 🚀💼💎
Startup ideas are a dime a dozen, all the fun and effort lies in its execution. There's a phrase among entrepreneurs:
Be a cockroach.
Being a cockroach means, not going the blitzscaling route with VC funding. VC funds comes with added pressure to scale and show the exponential growing revenue otherwise they pull the plug. So bootstrap and keep the team lean and your startup can't die unless you want it to. You can keep learning, iterating and pivoting until you reach the delicious PMFit.
All the fun lies in the process, just start the journey. Whether you're going for the punchy MVP or the charming Minimum Lovable Product (MLP), remember it's all about winning hearts and minds in the market. Whether you're pulling off bootstrapping magic, rallying your friends and family for a startup heist, or going all-in with venture capitalists and crowdfunding, the choice is yours. Every road has its twists and turns, and each can lead to a thrilling climax.
In the end, this entrepreneurial adventure is a testament to the wild spirit of innovation, showing that every hurdle is just another chance to showcase your perseverance. Armed with the wisdom of this adventure, aspiring entrepreneurs should gear up, take a leap, and chart their own course through the thrilling startup universe. 🚀💼🌟