What’s the difference between a high risk (+ costly) vs. low risk startup creation process?
Take a look at this framework.
Without getting into unimportant details, the business model of a startup is intended to be eventually scalable thanks to technology while the key factor in small business growth is expansion by opening up new locations and hiring more employees.
Let’s put it this way, WhatsApp only had 55 employees when it served 420 million active monthly users before it got acquired by Facebook for over $19 billion. Now imagine how many locations and employees a company like McDonalds, Chase Bank or Walmart needs to serve a fraction of the users WhatsApp had.
WhatsApp can do it because most of the work is done by technology: things are automated and customers’ needs are addressed 24/7/365 without human interaction.
There are many reasons entrepreneurs want to start startups. A few of the biggest are to achieve this scalability of serving a large group of people, making a much bigger impact and potentially selling the company for unbelievable multiples.
About those multiples, why is it that many unprofitable startups get hundreds of millions of dollars in funding, sometimes, get millions or billion dollar plus acquisitions and many can even go public with huge losses on their financial statements?
This deserves a guide but the short answer is, just like any type of business, revenue is not the only valuation criteria. In the case of startups, entrepreneurs and investors expect to create disruptive innovations which take time and money so people are betting for the widespread adoption of this innovation or trend even if the numbers don’t add up today.
In other words, as long as you prove that you are solving problems worth solving with a solution that’s proven viable and valuable for the user, if your end goal is an exit whether it is through acquisition or IPO, investors, potential acquirers and other key stakeholders will help you get there even, again, if the numbers don’t up today.
I wrote, as long as you prove that you are solving problems worth solving with a solution that’s proven viable and valuable for the user…
How do we solve the right problem and build the right product?
Now, back to the above framework.
Focus on this part.
Here’s how it goes:
- Entrepreneurs are confident about their ideas because of the success of similar products or their years of experience in the field.
- They conduct some research, ask around and then go straight to listing all of the features they want in their app.
- They build it if they have the technical expertise or hire a web development company to get it done.
- 12 months later, they launch.
- They gather user feedback and realize they need to go back to product development and make major changes.
- They spend months refining the product and launch again.
- They gather feedback, only a few if any use it.
- While most entrepreneurs quit here, if they have the funds and perseverance, they poor more money and time into it and build again.
- They launch a few months later and either hit it right this time or build again.
- In many cases, they have to iterate or pivot completely from the initial plan.
- They keep going in circles until they solve the right problem and build the right product.
Most entrepreneurs strongly believe that without a beautifully designed and advanced application that can serve hundreds of thousands of users since day 1, we don’t have a startup.
Most entrepreneurs build startup ventures with a small business mindset. Think about it, if you’re opening a restaurant, you need a location, machines, employees, food, menu, licenses, etc. For most startup founders, the location, machines, employees, etc. are equivalent to building an app. We need a good app to start just like we need a nice looking and clean restaurant with good food to start a restaurant.
The truth is different. While small businesses can be started and scaled with a startup mindset, the opposite is mortal to startup ventures.
What’s a startup mindset? Take a look at this part of the framework.
Before we discuss the actual steps, here are a few key differences:
- Unlike the first approach, this has many small stages (see the short lines)
- The journey starts with one single hypothesis: 1 customer profile and 1 pain point
- A non-scalable minimum viable product is launched in the second month (see below)
- Revenue can be generated as soon as the third month, sometimes sooner
- Product development starts later
1) You only need to make one hypothesis
Your only focus should be on making an educated guess (hypothesis) about the ideal buyer and their pain point.
The bigger the problem you are trying to solve, the bigger the opportunity. So, ideally, this ideal buyer has a big pain point, that is, a big problem and an urgent need for a solution.
Estimated time: 1 day
Yes, it should only take you a few hours if not minutes to make this hypothesis because, at the end of the day, it is a guess and only those hypothesized ideal buyers can approve or reject it.
So the next step is,
2) Interview 70 to 100 of those ideal buyers
As you will see in the next stages, while as many as 20 conversations can get you the insights you need to refine this hypothesis, the reason we want to interview as many as 100 is to also get an opportunity to build trust and a relationship with a larger group of people that we can call back to offer our product for sale or presale. More details below.
Those conversations are going to help you refine your hypothesis and deeply learn about the customer and their challenges to start thinking about how your solution should look and function.
Estimated time: 30 days
Now comes one of the most important stages.
3) Design your solution delivery process
Think about the disruption Snapchat had in the beginning. What happened later? To survive and grow, they had to make radical changes to their product and positioning in the social media marketplace. Similarly, what Airbnb, Uber, LinkedIn and every major tech product had in the early days to WOW its customers is significantly different today.
Bootstrapped or funded, in the early stages of a startup the goal is to validate the problem and whether the proposed SOLUTION can get customers’ job done better than the competition. This SOLUTION doesn’t necessarily have to be an app. Designing your solution delivery process starts by removing the condition of the existence of an app to solve the problem.
The two key questions are,
- How can I solve my customers’ problem quickly without a scalable app?
- Instead of rushing into building a technology, how can I take the role of the technology?
Your solution delivery process should leave the biggest expenses (product development) for last, instead, design a non-scalable plan powered by existing tools that will allow you to quickly serve customers, generate revenue and gather qualitative as well as quantitative feedback from which you will define your product development scope with higher certainty.
Here are a few startups I’ve helped master and successfully implement the same process to launch and grow their ventures.
While this summary is overly simplified, it shows you how The Startup Lab will help you take an idea to first paying customers and beyond by minimizing risk, increasing success predictability and helping you generate revenue quickly without necessarily building an advanced product that “needs” to be exceptionally better than the competition.
You’ve decided it’s time to take action or make a radical change. What’s next?
Let’s say you decide to do it on your own. Every strategy and direction seems like it can work but the limited time and pressure of uncertainty and failure end up taking most of your energy to a point where “doing nothing” is now an option. After all, time is money and the opportunity cost from doing things that don’t work even if something ends up working a few months later is almost always higher than doubling down on what’s helping you generate the highest income and impact from your current job or small business.
Let’s say you decide to hire a development team or freelancers. You spend weeks short-listing applicants and reaching out to agencies until you find who you believe is the right fit for the job. A few months go by and the product isn’t as close as half complete. You’re asked for more money, more time, you’re frustrated, they’re stuck and nothing tangible gets done. This is a very common scenario and chances are, if you’ve never hired a product development team or don’t have tens of thousands of dollars (perhaps $100,000+) to hire the best teams, you’re going to fall into this trap.
Even if things go well, a good product doesn’t necessarily mean a successful startup and if you don’t have a path to market plan that’ll prepare for launch, get customers excited and eager to use the product, it’s as if you didn’t have a product.
So what’s the most time and cost efficient way to score small but tangible and valuable wins while increasing certainty and success predictability of your plan from idea to first customer and from first customer to the 100th biggest fans and beyond?
You need a Roadmap
A roadmap owns the bootstrapping and lean startup mindset to provide you with a clear direction from idea to first paying customers. It shows you how to combine key resources to get customers’ problem solved quickly so you can get paid and validate quickly. It helps you avoid building too much too soon which significantly reduces your initial investment whether it is in app development or marketing while increasing your startup success predictability.
A roadmap also helps you focus which tends to be the hardest thing to do especially in the beginning when our ideas are endless. It sets clear expectations in terms of what needs to be done and what will come out of taking clear and consistent steps within a predetermined period of time.
Here’s how it will work
- You schedule a 20-minute free guidance call that’ll also be used to see if there’s a good fit. Pick a time that fits your schedule here. The more details you provide in the submission questionnaire the more valuable the call will be for you.
- If there’s a fit, I will send you the registration form and a link to schedule the first deep dive hour-long call within 5 days.
- Two weeks after the deep dive session, you will receive the roadmap report which will include:
- How your initial solution (MVP) should look and function without necessarily building an advanced product or more features
- How to find and attract the first or next paying customers
- What you should specifically focus on in the next 3 months
- Analysis and solutions to any challenges you are currently facing
- Hour long session to discuss the report and answer burning questions
- Week long availability over email to answer follow up questions
The roadmap is the most critical part of anything we do to help entrepreneurs start and scale. It’s helped numerous founders not only define clear action steps towards their goals, but also, it’s saved them months and tens of thousands of dollars in personal fund allocation that would have gone to waste.
Price: $3,500 or less depending on the level of commitment. See plans below.
Timeline: 3 weeks
Current capacity: 8 entrepreneurs
“Abdo, it has been a fantastic journey. I am quite excited for what we have achieve to this date. Leveraging the knowledge that you have managed to provide on SkillTalk has made a whole lot of difference…”
Building an app (web or mobile) can cost as much as half a million dollars while launching a startup can require as little as a couple of thousand dollars in initial investment. How is this possible? Apps are the product by which a startup grows but for a startup to launch, it doesn’t necessarily need a scalable app as long as the path to market plan gets users’ jobs done.
In the roadmap, we start by listening to your idea, background, goals and startup vision. We then design a plan with clear action steps that will take you from idea to first paying customers quickly without major product development investments. The goal is to help you test the riskiest assumption, validate or iterate quickly and generate revenue before investing in product development. You want to build in response to demand not the other way around.
A clear roadmap that shows you how to approach startup launch and generate a profit soon.
8 new entrepreneurs
Customers’ money is the ultimate validation criterion and the best bootstrapping channel. Getting users to commit requires customer understanding and development which are accomplished through qualitative and quantitative tests..
Within six months, we will guide you in the execution of the roadmap and continuously update the approach based on customer insights. The goal is to generate revenue within 3 months while clearly defining the scope of the first version of a scalable product (app).
First paying users.
Starts at $12,000
5 new entrepreneurs
The secret to startup success is longevity. Every single successful startup has gone through numerous stages of iterations, pivots and sometimes a complete change of direction. A startup team is considered one of the most valuable assets in the venture. Without guidance and continuous support, uncertainty, fear of “more” failures and loneliness will push founders to quit.
Within a year of planning and execution, together, we will build a profitable startup venture with a validated, repeatable and scalable business model ready for growth and worthy of investors’ attention and funding.
A profitable and fundable startup venture.
Starts at $20,000
5 new entrepreneurs
While there are several strategies that will allow you to go to market quickly by delaying product development which typically is the most expensive part of growing a startup venture, getting customers’ payment early signals potential and provides us with a sufficient validation to move to product development.
Building your own team can be very expensive. Finding the right team members, payroll and project management can cost you hundreds of thousands of dollars and a lot of time without guaranteeing a great product.
In addition to The Roadmap, early stage execution and continuous guidance towards profitability, our team of complementary skills will act as your technical co-founders to create a scalable product people use and pay for as it was our own venture
A Minimum Viable Product plus guidance with execution towards profitability.
$30,000 – $60,000
3 – 5 months.
2 new entrepreneurs
Let’s start with a free guidance session
Sometimes it only takes a quick conversation to make a big difference. Schedule a call and we will figure out the best action plan for you and if there’s a fit in working together to move things forward faster.
At the very least, you’ll spend 20 minutes learning something new.
“Thank you greatly for the information you shared and the time you took in getting to know a little about me and the businesses I’m preparing to launch. I was feeling overwhelmed and what you shared was the right information at the right time. Very clear and completely doable.”
Digital Design, Marketing & Technology Consultant