Nothing can take the place of experience, but there have been a few hurdles that I’ve experienced in my startup career that I’d love for others to avoid. A startup career is not a sprint, rather, it’s a slow and steady race on an obscure, unforeseen path. The less obstacles that you run into, the easier the race will be. Lets dodge some of those obstacles!
Don’t build a business plan
We spent 3 months building a 30-page business plan for our first startup! 3 months!!! I can tell you that not only was it a humongous waste of time, but investors don’t even look at business plans – at least the legitimate ones with startup experience don’t.
Instead of a business plan, build a 1-page executive summary. Include the following on the executive summary:
- Founders + relevant experience
- Company product description
- Pain you’re solving
- Competitors in the market
- Why your product is different
- Market opportunity
- Milestones achieved
- How much you’re looking to raise
Too many cooks in the kitchen
It’s important to have smart people in the company, but too many cooks in the kitchen can greatly slow decision-making and create conflicts among the leadership.
The leaders of each department should have the authority to make decisions for their respective departments. For example, the Chief Product Officer decides what language to use to build the product; the Chief Marketing Officer decides what methods to use to get new clientele.
But above all of the departments, the CEO has the ultimate decision about company direction.
Choosing whether to sponsor Blog World vs SXSW is not a company direction decision – that’s a decision for the CMO.
Company direction decisions consist of the following:
- What pain is the company solving
- How is the company solving this pain
- Who is the target market
- How much money should the company raise
- Is it time for the company to pivot and in what direction to pivot the company
Don’t depend on funding
You’re in trouble if you depend on fundraising to build your minimal viable product. Fundraising should NOT be your primary means to build your product; instead, fundraising is a means to scale your business – that’s a huge difference in fundraising mentality.
The mistake: our first company, Future Delivery, was dependent on us raising $10 million to get us started. We needed money to hire developers, designers, and to get clients. How can we raise money with no traction?
Our success: my company bootstrapped our way to a functional product, clients, and revenue, and then decided to raise $1 million to scale the company. We raised money because investors saw traction and wanted to jumpstart our progress.
Stick to what you’re good at
Answer the following questions:
- What are you and your team the best in the world at?
- What networks are you and your team already connected to?
The answer to these questions will greatly influence what type of startup you build, what pain you choose to solve, and who your target market will be.
If you don’t have a technical co-founder, then you’re at a serious disadvantage if you build an internet startup. So much time and money is wasted on recruiting a technical co-founder or building a product with outsourced developers – don’t do it. If you’re a business-focused entrepreneur with no technical guy on the team, then you’ll need to tackle a pain where the solution is not technical.
Similarly, if you don’t have a vast network in the high-fashion industry, then you’re at a serious disadvantage should you make them your target market. Instead of selling to your target market from the start, you’ll need to spend months building relationships and getting connected to the right people. Networking and relationship-building takes time, and time wasted means cash is burning, reducing your available runway.
Instead, go after networks that you’re already connected to. It’s the best way to find your early adopters.
Author:
Jun Loayza is the President of the Fashion Blogger Network. In his entrepreneurial experience, Jun has sold 2 internet companies and lead social media technology campaigns for Sephora, Whole Foods Market, Levi’s, LG, and Activision.
