How to start a startup and not break your own life
Participating in a startup is emotionally reminiscent of a rollercoaster ride, when at some point you feel that you own the world, and after a second, everything collapses. This guide can help start a startup.
This article is an update of my previous article written in 2014 . It has been almost three years since then, and I would like to give better information fresher.
For 6 years I have worked exclusively in startups. I was a "programmer" - a specialist who was hired to transform ideas into a "real" business. I have never had the desire to start my own business: is it worth risking a comfortable life for an idea that might not work?
')
Then 4 years ago I took up the difficult task of setting up a startup - a 5-day programming course in London called Steer. Two years later, I left Steer, running SuperHi.
Before I begin the story, I would like to point out that I am not an expert on startups . In general, I don’t think that someone could be such an expert, since the experience gained when starting start-ups varies greatly. However, a lot of people are new to both startups and information technology issues, so I’m addressing this guide to anyone interested in the possibility of diving into the dark waters of this business.
The field of information technology is the only manufacturing industry where the business model is desirable, but not mandatory. Try to imagine a bakery that distributed its pastries for free and that has nothing for which customers could pay - an advertisement on the walls would save such a bakery? The IT business is coping with this, as it has one quality that other industries do not have: scale ! The Internet allows this business to reach potential customers around the world.
My previous startup, Steer, was to organize courses at London premises, which meant the geographic limitations of our client base. SuperHi organizes online courses, which means having students from California to Australia — all via the Internet.
If your business model is based on millions of users who do not pay, there are two options for development:
You need to find some balance to enter your market. If the offer is too narrow, then there is a danger of having too few solvent customers; if it is too wide, then it may happen that you cannot solve a specific problem. Watch the video “Interview Simon Sinek with TED: start with the question“ Why? ” And think over your idea, asking yourself why you want to take this case.
You must be passionate about your idea and enjoy the thought that you will be engaged in it for at least a year. If you are not attracted by the prospect of becoming Mr. Learning Programming or Mrs. Taxi Rental Service, then rethink your situation. The worst founders are different in that they only strive to get rich, and they fail due to the lack of "great destiny" in their soul.
It is very tempting to keep your idea with you. Someone, of course, can steal your idea, but if you are not sure about it or you are not sure that you can put together the best team for its implementation, then perhaps this idea is not for you.
If you force freelancers or consultants to sign a non-disclosure agreement (NDA) before telling them about your idea, this means that you are not sure about it.
Suppose someone signed your NDA, and you launched a project without any leakage of ideas to the side ... What will prevent this "someone" from copying your idea and making an improved version? Google was far from being the first search engine, and Facebook was not the first social network.
One of our biggest competitors recently copied what we do on our online course. The first reaction is always “here are the crap!”, But we must take for granted that companies, large and small, will try to copy you.
Your startup should be the best in its class, and not just the first on the market.
Are you ready to consistently implement your idea better than anyone else?
Do not force people to sign a non-disclosure agreement, otherwise you will have trouble.
Some successful companies started their business with completely different ideas. Flickr was first themed photo sharing chat for gamers, Nintendo was selling paper playing cards, and Nokia was a paper mill in Finland.
My first startup Steer was originally an employment counseling site that was transformed into a programming school when we realized that we could not survive with the original business model.
In the original plan SuperHi was the creation of a program editor for beginners and selling it to other programming schools. We spent a year on creating such an editor, but over time we listened to what our customers wanted - we use our editor for lectures, but the general idea of ​​the purpose of our business has changed. We, as before, are trying to solve the same problem - simplifying programming training - but in a different direction.
Find a suitable name for a startup is very difficult. Given the desirability of the shortest possible name for a web domain, the search process is as follows:
Make sure your customers can write your chosen name in 3 attempts ( remember Led Zeppelin or The Beatles ), and, if possible, take the .com option immediately, if it is acceptable at a cost, in the future, if you succeed, domain sellers will raise the price for you significantly.
It is not necessary that the origin of the name is completely obvious - we have SuperHi left the “information superhighway” (“information highway”), the memory of the beginning of the Internet development (and, of course, the name of our site has nothing to do with the high after a good puff). The name Steer emerged from the fermentation of a thesaurus dictionary and then checking whether there is a good domain.
As soon as you have some idea, you must write everything on paper. Draw every page, every window on the screen. Do not miss any interaction - if there is a link or button, what happens when it is triggered? Follow this.
This process allows the idea to move from your head to the paper. He also helps those who work with you understand what you are doing. For co-founders, this means that you can agree on the content of your idea. For designers and developers, drawing helps to imagine what is required of them and how long it will take.
Your photo, when you are engaged in drawing, without missing a single step.
How, in fact, test the idea with which you work? Testing the idea or prototype of the future product for potential consumers.
It is very tempting to believe in praises when it comes to your own idea. Whenever you talk to any potential customers, 80% will not give you any criticism, because people tend to be polite and try to avoid conflict. It is even more tempting to ignore the real criticism that you will receive from the remaining 20%, saying that "they did not understand" or "they are just stupid." Maybe they really didn’t understand anything, but if this is the case, then your idea may be too complicated or you don’t communicate it well enough ... for now.
Start the implementation of your idea with small. Do not build anything yet. Use your sketches to study clients' problems — don't give them a solution right away, eliminate your own cravings and feelings — then use feedback to come up with a solution that fits their problems.
Get ready to learn at a crazy pace. Learn from your customers to the maximum so that tomorrow you can bring your idea to life better than the day before.
People are an important part of your startup. Good founders know how and when something needs to be changed if the business is suspended. Ideas are nothing! Execution - everything!
You can do business as the only founder, but this is more difficult. Some investors prefer not to invest in projects with one founder , but there are examples of the opposite (Tumblr, Mint, Alibaba, etc.). If you are considering this option, then secure yourself support in those areas in which you feel your lack of preparedness. For example, if you are a businessman, then find consultants for development and information technology to get useful advice.
I am the only founder in my startup. I really like the role of the “dictator” in solving all the issues of my business, but this is really tiring, and the presence of only one person in the founders slows down the development of business. It also means that I am the only component whose failure causes the entire system to fail.
It is always easier to work with friends, rather than looking for someone who can be your co-founder. You trust them, and you have faith in their capabilities. However, start-ups prove to be a serious test even for the strongest relationships.
If some co-founders perform the same functions - for example, they are all businessmen or designers or developers - then it is necessary to clearly define their rights and obligations. If you all don’t like bookkeeping or checking accounts, then who will do it?
The disagreement of the co-founders among themselves is a much more common occurrence than many people imagine it to be. I left my first startup precisely because of discrepancies with the co-founder. We ended up not being able to agree and quarreled every day. It happens, and you all go on. There are two good articles on Mark Saster's blog, Both Sides of the Table (On both sides of the table): The Co-Founder Mythology and The Perils of Founder Fighting .
When I was a freelancer, I received weekly requests if I wanted to join a certain startup as a co-founder - a technical specialist (CTO). In most cases, I did not know the offering person, so I always answered no. It is unlikely that you marry without knowing the bride.
Programmers are arrogant and believe that they can implement an idea only on their own, although programming in the implementation of an idea is only a tiny part of what should be done in a startup. The list of areas of work includes development, sales, marketing, administration, production, and much, much more. But at the moment you need a techie co-founder more than he needs you.
How do you distinguish yourself from other "people who implement the idea"? You do a lot of prep work. You do a lot of research, drawing, branding. You are preparing a business plan. You do everything that a programmer does not. Show everyone that you really are.
Second, get some skills to apply yourself to the developers. Learn the basics of programming and / or development to know what you are talking about. You will not create a bakery if you have not baked. This does not mean that you will program a site or an application, but the more knowledge you have about how it works, the more useful you will be.
I previously wrote that I am not an expert on startups: yes, I am definitely not an expert on investments. Here's Paul Graham from Y Combinator understands this, and you just have to read all his articles, but especially this one .
You need a “runway” - some time from starting your startup to the moment it becomes profitable. It will, of course, be only a prediction, since most startups never break away from the metaphorical runway. Expect that this time will be twice as long as you originally predicted, so, accordingly, raise funds. It is easier and faster to organize one big investment than a few small ones.
Raising funds will also take more time than you initially expected. It usually takes 3-6 months, but I heard about the year spent on a small round of fundraising. Prepare yourself for a heavier version.
There is also a "sociable" and "silent" money. Sociable money comes from people who have experience in your industry sector or a good history of investing in successful startups. Silent money comes from people who are unable or unwilling to give you any help other than investing.
For a startup at an early stage, you should look for the so-called seed investment. Do not attempt to contact immediately large companies, such as Index Ventures and Balderton . For early-stage investments in London, Passion Capital , for example, is perfect, and in New York - the Collaborative Fund .
How much money you need to collect also depends on the runway, investors and location. The first rounds (also called "seed") give from 300 thousand to 3 million dollars in the United States. In the UK, this value is noticeably less - 150-500 thousand pounds sterling. Investors in the US are willing to take more risk than investors in the UK.
Talk to people who collected money. Get in touch with startups who can advise you and talk about the investment process.
There are many ways to create a startup in the field of information technology, if you are not sufficiently prepared in it. You can hire full-time staff, you can get freelancers, or you can transfer the work to a third-party organization.
Risking to state the obvious, I would rate the usefulness of different approaches on the appropriate scale (0 points means “very bad”, 10 - “very good”) as follows: third-party organizations - 0-3 points, freelancers - 3-8, full-time staff - 7 -ten.
For third-party organizations (agencies) you will be one of many projects in the queue, and their goal will be to put you out the door as quickly as possible. There is a well-known saying: “Agencies are only two contracts away from closing”. Attracting third-party organizations (agencies) is the most expensive approach.
In my startup Steer, I conducted a 5-day course for beginners working with the Ruby on Rails framework. As part of the course, the last 2 days have been learning how to create a website for an Airbnb, Etsy and eBay marketplace. I anonymously requested several London agencies what fee they would take for all the functions of this project. Three agencies issued offers from 35 to 60 thousand pounds sterling (approximately 80 thousand dollars or 75 thousand euros).
Freelancers are better than agencies. They are cheaper, more attentive and receptive. I also requested offers from several freelancers to the website of the trading platform and received values ​​from 8 to 25 thousand pounds sterling (respectively, 35 thousand dollars, 30 thousand euros) - less than half of the price of agencies. Freelancers can also be expected to show greater flexibility in long-term collaboration.
Hard working staff
The last option is full-time staff. This is the most difficult option to implement, but potentially the cheapest in the long term. Employees will make up most of your team and will actually take care of what you are doing.
Beginning designers in London cost about ÂŁ 18-30 thousand per year, experienced 30-50, novice developers 20-30, experienced 30-60 (here beginners are meant employees with less than 5 years of experience).
In New York, the same line looks a little different (thousand dollars per year): 40-80, 80-150, 50-100, 100-250. Notice the huge salary difference in New York and London. This is one of the reasons why American startups have to collect more money.
Consideration should also be given to equity (shares in your company). In most cases, the share in capital only “gives the right”, which, in essence, means the possibility of obtaining it only after a certain number of years. The employee will be able to get something depending on the length of service or if the company is sold. What should be the allocated share depends on the stage of development of the startup, on the qualifications of the employee and on the amount of funds raised. There is an excellent guide to corporatization and equity stakes in information technology .
When someone starts working at a startup, he abandons his former stability and potentially agrees to pay cuts to work with you. However, for good people, money is not the only motivator, otherwise everyone would work in banks and be management consultants. Good people want to be part of some great mission, mission, and they want to believe that their business is important. And your duty is to convince them that your startup will perform such a task.
The best place to find people is, as always, the Network. Ask friends or make friends in the IT environment, attending various events. Social networks — both personal pages and company pages — are also a good way to find people. Your supporters and friends will either look for themselves or know someone who will do this.
Another way is advertising. Sites like Unicorn Hunt , WorkInStartups , Smashing Magazine Jobs and Authentic Jobs are great places to look for good staff.
Job fairs in startups can be quite extensive - I met a former employee (hello, Louise !) At Silicon Milkroundabout - but if you expose something, then bear in mind that you have to expend significant efforts. Do not mess with these terrible banner stands . Think of something your own and attract attention. Be also honest with the participants; They will not be grateful to you if you now pretend that you know what you are doing, and they later discover that this is not so.
Many people who are going to become founders of a startup in the near future ignore an important part of this process - design. If you look at any popular site or application, you will see how much effort has been invested not only in branding, but also in all user interaction.
If you do not plan to have a full-time designer, then I would definitely suggest that you assign the freelancer to create a brand identity for you. A strong brand is important for display in a crowded market. A litmus test of a good logo: can you draw it from memory?
I do not recommend using anything cheap, like 99designs or Fiverr. Pay a little, but the product will be unimportant. Try to offer the designer some kind of service exchange if you cannot pay for his work.
Next, deal with user interaction. Read “Don't make me think” by Steve Krug, review Little Big Details and SiteInspire , then carefully review everything on your site. Make sure that everything works extremely simple and flawless for users. Use services such as UserTesting to test the prototype.
The first versions tend to be too complex. Be careful in adding features, keep them as low as possible. Read (or re-read) The Lean Startup ("Lean Startup") by Eric Ries.
As an example: in my previous startup Steer, we launched 7 courses. Four courses competed with each other, and we quickly realized that customers were confused. We were reduced to 2 courses, the sale of which went much better than it was from the 7th. A simpler option continues to work.
Even at SuperHi, two years after launch, we constantly monitor what we are doing. Do I remove full-time classes? Add another course? We think about all this all the time.
According to the famous restaurateur Gordon Ramsay: “The more dishes, the lower the standard” - his article is of great importance for information technology companies.
If you are tempted to add new functions (and you will experience it), do it step by step in succession. It is much easier to check whether the new function works and likes, if you change something step by step, rather than run several functions at the same time.
Use services such as UserTesting , Optimizely , Intercom and Mixpanel to test, discuss and analyze your customers. The more data you have, the more accurate the decision you can make.
For example, we use Intercom for our live chat site. Talking with our users helps to reveal a lack of some information on our site, to find out what creates difficulties for users and how we can improve our products. Such feedback is invaluable to us.
And it was built - but no one comes. If you or your co-founder are not very well-known people in your field of study, then the launch of your startup will be hardly noticeable. Your next step should be to bring the name of your startup to your audience.
Read the great book by Dan Pink, “It is human nature to sell . ” Take a look at customer interaction and why it also matters.
I also strongly recommend Steven Pinker ’s Sense of Style . This is a book about a clear summary. It has little to do with sales or marketing directly, but it will allow you to write better about everything connected with them.
Depending on your startup and industry, various sales and marketing methods will and will not work for you:
Times Square marketing approach
My mother works as a consultant, and she says that no matter how calm and relaxed a person may seem outwardly, it is likely that he has an alarming mess inside. Looking at a duck, it seems that it slides smoothly and effortlessly through the water, but under water its small legs are threshing hard, trying to move the duck in a certain direction.
You may have the feeling that your business is unique, where everything goes unchecked and falls apart. Such sensations are normal. Welcome to the life of startups. Every startup founder has similar feelings. What matters is how it affects your relationship with the outside world.
The best companies look as if there are no problems, although the reality is different.Read Nick Bilton's “The Birth of Twitter” book , confirming that successful startups can also be filled with internal struggles and challenges.
The first season of the audio podcast prepared by Gimlet Media, is Alex Blumberg , who founded this company - Gimlet Media. The material gives a wonderful view from the inside on what it means to launch a fundamentally new startup. I recommend to listen.
I would like to linger a bit on the sensation, when it seems that everything is falling apart. How to make you feel psychologically good, feeling at the same time that all is not well with your startup?
Startup startup is just the beginning. Do not stop. Continue to move consistently and aggressively. Try different approaches. Change the design. Chat with your customers. Try to enjoy the movement.
Any founder will tell you that a startup is not a means for fun. This is hard nervous work, and you will encounter many obstacles along the way. On some day, you may wish to drop everything and leave without looking back, and the next you will feel at the top of happiness. You may become rich and famous, but you may have to crawl out from under the rubble of a collapsed startup.
Do not be afraid of failure. It is better to try and fail than not to try at all. Many successful founders failed with their companies before finding the right path.
I would not consider myself to be a successful startup. Steer was closed about a year after I left it. No one died, and no one was left without shelter. Your ego may be hurt, but you can always find another job if you run out of money. Do not take the situation as a failure - it is just a path that did not work.
You have the opportunity to leave your mark on the world. It may be quite small, but it can be gigantic. Receiving a letter of thanks from the user causes the best feelings in the world. A start-up gives you a real opportunity to change the path people follow when living their lives.
This article is an update of my previous article written in 2014 . It has been almost three years since then, and I would like to give better information fresher.
For 6 years I have worked exclusively in startups. I was a "programmer" - a specialist who was hired to transform ideas into a "real" business. I have never had the desire to start my own business: is it worth risking a comfortable life for an idea that might not work?
')
Then 4 years ago I took up the difficult task of setting up a startup - a 5-day programming course in London called Steer. Two years later, I left Steer, running SuperHi.
Before I begin the story, I would like to point out that I am not an expert on startups . In general, I don’t think that someone could be such an expert, since the experience gained when starting start-ups varies greatly. However, a lot of people are new to both startups and information technology issues, so I’m addressing this guide to anyone interested in the possibility of diving into the dark waters of this business.
Money on the road is not lying
The field of information technology is the only manufacturing industry where the business model is desirable, but not mandatory. Try to imagine a bakery that distributed its pastries for free and that has nothing for which customers could pay - an advertisement on the walls would save such a bakery? The IT business is coping with this, as it has one quality that other industries do not have: scale ! The Internet allows this business to reach potential customers around the world.
My previous startup, Steer, was to organize courses at London premises, which meant the geographic limitations of our client base. SuperHi organizes online courses, which means having students from California to Australia — all via the Internet.
If your business model is based on millions of users who do not pay, there are two options for development:
- Option 1 - your startup will grow, and everything will be fine.
- Option 2 - you will fight and spend all your money. The first option is much less likely than the second. Every Facebook has thousands of failed social networking projects.
You need to find some balance to enter your market. If the offer is too narrow, then there is a danger of having too few solvent customers; if it is too wide, then it may happen that you cannot solve a specific problem. Watch the video “Interview Simon Sinek with TED: start with the question“ Why? ” And think over your idea, asking yourself why you want to take this case.
You must be passionate about your idea and enjoy the thought that you will be engaged in it for at least a year. If you are not attracted by the prospect of becoming Mr. Learning Programming or Mrs. Taxi Rental Service, then rethink your situation. The worst founders are different in that they only strive to get rich, and they fail due to the lack of "great destiny" in their soul.
Do not hide your idea
It is very tempting to keep your idea with you. Someone, of course, can steal your idea, but if you are not sure about it or you are not sure that you can put together the best team for its implementation, then perhaps this idea is not for you.
If you force freelancers or consultants to sign a non-disclosure agreement (NDA) before telling them about your idea, this means that you are not sure about it.
Suppose someone signed your NDA, and you launched a project without any leakage of ideas to the side ... What will prevent this "someone" from copying your idea and making an improved version? Google was far from being the first search engine, and Facebook was not the first social network.
One of our biggest competitors recently copied what we do on our online course. The first reaction is always “here are the crap!”, But we must take for granted that companies, large and small, will try to copy you.
Your startup should be the best in its class, and not just the first on the market.
Are you ready to consistently implement your idea better than anyone else?
Do not force people to sign a non-disclosure agreement, otherwise you will have trouble.
Most likely, the initial and final ideas will be very different.
Some successful companies started their business with completely different ideas. Flickr was first themed photo sharing chat for gamers, Nintendo was selling paper playing cards, and Nokia was a paper mill in Finland.
My first startup Steer was originally an employment counseling site that was transformed into a programming school when we realized that we could not survive with the original business model.
In the original plan SuperHi was the creation of a program editor for beginners and selling it to other programming schools. We spent a year on creating such an editor, but over time we listened to what our customers wanted - we use our editor for lectures, but the general idea of ​​the purpose of our business has changed. We, as before, are trying to solve the same problem - simplifying programming training - but in a different direction.
Startup name
Find a suitable name for a startup is very difficult. Given the desirability of the shortest possible name for a web domain, the search process is as follows:
- Step 1: we come up with a grand name.
- Step 2: Check on iwantmyname.com .
- Step 3: we see that all the best domains for our grand name are occupied.
- Step 4: go back to step 1.
Make sure your customers can write your chosen name in 3 attempts ( remember Led Zeppelin or The Beatles ), and, if possible, take the .com option immediately, if it is acceptable at a cost, in the future, if you succeed, domain sellers will raise the price for you significantly.
It is not necessary that the origin of the name is completely obvious - we have SuperHi left the “information superhighway” (“information highway”), the memory of the beginning of the Internet development (and, of course, the name of our site has nothing to do with the high after a good puff). The name Steer emerged from the fermentation of a thesaurus dictionary and then checking whether there is a good domain.
Make sketches of everything
As soon as you have some idea, you must write everything on paper. Draw every page, every window on the screen. Do not miss any interaction - if there is a link or button, what happens when it is triggered? Follow this.
This process allows the idea to move from your head to the paper. He also helps those who work with you understand what you are doing. For co-founders, this means that you can agree on the content of your idea. For designers and developers, drawing helps to imagine what is required of them and how long it will take.
Your photo, when you are engaged in drawing, without missing a single step.
Check your idea
How, in fact, test the idea with which you work? Testing the idea or prototype of the future product for potential consumers.
It is very tempting to believe in praises when it comes to your own idea. Whenever you talk to any potential customers, 80% will not give you any criticism, because people tend to be polite and try to avoid conflict. It is even more tempting to ignore the real criticism that you will receive from the remaining 20%, saying that "they did not understand" or "they are just stupid." Maybe they really didn’t understand anything, but if this is the case, then your idea may be too complicated or you don’t communicate it well enough ... for now.
Start the implementation of your idea with small. Do not build anything yet. Use your sketches to study clients' problems — don't give them a solution right away, eliminate your own cravings and feelings — then use feedback to come up with a solution that fits their problems.
Get ready to learn at a crazy pace. Learn from your customers to the maximum so that tomorrow you can bring your idea to life better than the day before.
Find co-founders you trust
People are an important part of your startup. Good founders know how and when something needs to be changed if the business is suspended. Ideas are nothing! Execution - everything!
You can do business as the only founder, but this is more difficult. Some investors prefer not to invest in projects with one founder , but there are examples of the opposite (Tumblr, Mint, Alibaba, etc.). If you are considering this option, then secure yourself support in those areas in which you feel your lack of preparedness. For example, if you are a businessman, then find consultants for development and information technology to get useful advice.
I am the only founder in my startup. I really like the role of the “dictator” in solving all the issues of my business, but this is really tiring, and the presence of only one person in the founders slows down the development of business. It also means that I am the only component whose failure causes the entire system to fail.
It is always easier to work with friends, rather than looking for someone who can be your co-founder. You trust them, and you have faith in their capabilities. However, start-ups prove to be a serious test even for the strongest relationships.
If some co-founders perform the same functions - for example, they are all businessmen or designers or developers - then it is necessary to clearly define their rights and obligations. If you all don’t like bookkeeping or checking accounts, then who will do it?
The disagreement of the co-founders among themselves is a much more common occurrence than many people imagine it to be. I left my first startup precisely because of discrepancies with the co-founder. We ended up not being able to agree and quarreled every day. It happens, and you all go on. There are two good articles on Mark Saster's blog, Both Sides of the Table (On both sides of the table): The Co-Founder Mythology and The Perils of Founder Fighting .
How to find a co-founder-techie
When I was a freelancer, I received weekly requests if I wanted to join a certain startup as a co-founder - a technical specialist (CTO). In most cases, I did not know the offering person, so I always answered no. It is unlikely that you marry without knowing the bride.
Programmers are arrogant and believe that they can implement an idea only on their own, although programming in the implementation of an idea is only a tiny part of what should be done in a startup. The list of areas of work includes development, sales, marketing, administration, production, and much, much more. But at the moment you need a techie co-founder more than he needs you.
How do you distinguish yourself from other "people who implement the idea"? You do a lot of prep work. You do a lot of research, drawing, branding. You are preparing a business plan. You do everything that a programmer does not. Show everyone that you really are.
Second, get some skills to apply yourself to the developers. Learn the basics of programming and / or development to know what you are talking about. You will not create a bakery if you have not baked. This does not mean that you will program a site or an application, but the more knowledge you have about how it works, the more useful you will be.
How to find investors
I previously wrote that I am not an expert on startups: yes, I am definitely not an expert on investments. Here's Paul Graham from Y Combinator understands this, and you just have to read all his articles, but especially this one .
You need a “runway” - some time from starting your startup to the moment it becomes profitable. It will, of course, be only a prediction, since most startups never break away from the metaphorical runway. Expect that this time will be twice as long as you originally predicted, so, accordingly, raise funds. It is easier and faster to organize one big investment than a few small ones.
Raising funds will also take more time than you initially expected. It usually takes 3-6 months, but I heard about the year spent on a small round of fundraising. Prepare yourself for a heavier version.
There is also a "sociable" and "silent" money. Sociable money comes from people who have experience in your industry sector or a good history of investing in successful startups. Silent money comes from people who are unable or unwilling to give you any help other than investing.
For a startup at an early stage, you should look for the so-called seed investment. Do not attempt to contact immediately large companies, such as Index Ventures and Balderton . For early-stage investments in London, Passion Capital , for example, is perfect, and in New York - the Collaborative Fund .
How much money you need to collect also depends on the runway, investors and location. The first rounds (also called "seed") give from 300 thousand to 3 million dollars in the United States. In the UK, this value is noticeably less - 150-500 thousand pounds sterling. Investors in the US are willing to take more risk than investors in the UK.
Talk to people who collected money. Get in touch with startups who can advise you and talk about the investment process.
How to hire the best
There are many ways to create a startup in the field of information technology, if you are not sufficiently prepared in it. You can hire full-time staff, you can get freelancers, or you can transfer the work to a third-party organization.
Risking to state the obvious, I would rate the usefulness of different approaches on the appropriate scale (0 points means “very bad”, 10 - “very good”) as follows: third-party organizations - 0-3 points, freelancers - 3-8, full-time staff - 7 -ten.
For third-party organizations (agencies) you will be one of many projects in the queue, and their goal will be to put you out the door as quickly as possible. There is a well-known saying: “Agencies are only two contracts away from closing”. Attracting third-party organizations (agencies) is the most expensive approach.
In my startup Steer, I conducted a 5-day course for beginners working with the Ruby on Rails framework. As part of the course, the last 2 days have been learning how to create a website for an Airbnb, Etsy and eBay marketplace. I anonymously requested several London agencies what fee they would take for all the functions of this project. Three agencies issued offers from 35 to 60 thousand pounds sterling (approximately 80 thousand dollars or 75 thousand euros).
Freelancers are better than agencies. They are cheaper, more attentive and receptive. I also requested offers from several freelancers to the website of the trading platform and received values ​​from 8 to 25 thousand pounds sterling (respectively, 35 thousand dollars, 30 thousand euros) - less than half of the price of agencies. Freelancers can also be expected to show greater flexibility in long-term collaboration.
Hard working staff
The last option is full-time staff. This is the most difficult option to implement, but potentially the cheapest in the long term. Employees will make up most of your team and will actually take care of what you are doing.
Beginning designers in London cost about ÂŁ 18-30 thousand per year, experienced 30-50, novice developers 20-30, experienced 30-60 (here beginners are meant employees with less than 5 years of experience).
In New York, the same line looks a little different (thousand dollars per year): 40-80, 80-150, 50-100, 100-250. Notice the huge salary difference in New York and London. This is one of the reasons why American startups have to collect more money.
Consideration should also be given to equity (shares in your company). In most cases, the share in capital only “gives the right”, which, in essence, means the possibility of obtaining it only after a certain number of years. The employee will be able to get something depending on the length of service or if the company is sold. What should be the allocated share depends on the stage of development of the startup, on the qualifications of the employee and on the amount of funds raised. There is an excellent guide to corporatization and equity stakes in information technology .
How to find good employees
When someone starts working at a startup, he abandons his former stability and potentially agrees to pay cuts to work with you. However, for good people, money is not the only motivator, otherwise everyone would work in banks and be management consultants. Good people want to be part of some great mission, mission, and they want to believe that their business is important. And your duty is to convince them that your startup will perform such a task.
The best place to find people is, as always, the Network. Ask friends or make friends in the IT environment, attending various events. Social networks — both personal pages and company pages — are also a good way to find people. Your supporters and friends will either look for themselves or know someone who will do this.
Another way is advertising. Sites like Unicorn Hunt , WorkInStartups , Smashing Magazine Jobs and Authentic Jobs are great places to look for good staff.
Job fairs in startups can be quite extensive - I met a former employee (hello, Louise !) At Silicon Milkroundabout - but if you expose something, then bear in mind that you have to expend significant efforts. Do not mess with these terrible banner stands . Think of something your own and attract attention. Be also honest with the participants; They will not be grateful to you if you now pretend that you know what you are doing, and they later discover that this is not so.
Design is just as important as developing.
Many people who are going to become founders of a startup in the near future ignore an important part of this process - design. If you look at any popular site or application, you will see how much effort has been invested not only in branding, but also in all user interaction.
If you do not plan to have a full-time designer, then I would definitely suggest that you assign the freelancer to create a brand identity for you. A strong brand is important for display in a crowded market. A litmus test of a good logo: can you draw it from memory?
I do not recommend using anything cheap, like 99designs or Fiverr. Pay a little, but the product will be unimportant. Try to offer the designer some kind of service exchange if you cannot pay for his work.
Next, deal with user interaction. Read “Don't make me think” by Steve Krug, review Little Big Details and SiteInspire , then carefully review everything on your site. Make sure that everything works extremely simple and flawless for users. Use services such as UserTesting to test the prototype.
Simplify
The first versions tend to be too complex. Be careful in adding features, keep them as low as possible. Read (or re-read) The Lean Startup ("Lean Startup") by Eric Ries.
As an example: in my previous startup Steer, we launched 7 courses. Four courses competed with each other, and we quickly realized that customers were confused. We were reduced to 2 courses, the sale of which went much better than it was from the 7th. A simpler option continues to work.
Even at SuperHi, two years after launch, we constantly monitor what we are doing. Do I remove full-time classes? Add another course? We think about all this all the time.
According to the famous restaurateur Gordon Ramsay: “The more dishes, the lower the standard” - his article is of great importance for information technology companies.
If you are tempted to add new functions (and you will experience it), do it step by step in succession. It is much easier to check whether the new function works and likes, if you change something step by step, rather than run several functions at the same time.
Use services such as UserTesting , Optimizely , Intercom and Mixpanel to test, discuss and analyze your customers. The more data you have, the more accurate the decision you can make.
For example, we use Intercom for our live chat site. Talking with our users helps to reveal a lack of some information on our site, to find out what creates difficulties for users and how we can improve our products. Such feedback is invaluable to us.
Sales and marketing - the key to success
And it was built - but no one comes. If you or your co-founder are not very well-known people in your field of study, then the launch of your startup will be hardly noticeable. Your next step should be to bring the name of your startup to your audience.
Read the great book by Dan Pink, “It is human nature to sell . ” Take a look at customer interaction and why it also matters.
I also strongly recommend Steven Pinker ’s Sense of Style . This is a book about a clear summary. It has little to do with sales or marketing directly, but it will allow you to write better about everything connected with them.
Depending on your startup and industry, various sales and marketing methods will and will not work for you:
- Partnership with companies whose customers will benefit from the advent of your startup. For example, if you made an online store for young parents, give discounts to bloggers who write about parenting.
- Internet advertising , such as Google Adwords, Facebook Ads and Twitter Ads. It is relatively cheap and makes it easy to see what works and what doesn't. Invest a little money in each campaign and change advertising, tracking performance. You will be surprised by the results.
- Advertising through traditional media such as newspapers and radio. This will only work if you want to start concentrating on a particular place or city. It is also great for shaping brand awareness, but may not affect sales and customers.
- Advertising campaigns . I have seen many startups make a mistake by using advertising campaigns to promote the founders, and not the business itself. Control yourself. Staying on the pages of newspapers can give nothing for sale. At Steer, we were represented in a national newspaper, but this did not lead to any additional sales.
- Personal recommendations are the best form of advertising. If people like what you do, they will tell others about it. Focus thoroughly on the quality of customer service, and this will increase the likelihood that you will advertise. You have to make every client become part of what you do and your follower.
Times Square marketing approach
Startups are like ducks
My mother works as a consultant, and she says that no matter how calm and relaxed a person may seem outwardly, it is likely that he has an alarming mess inside. Looking at a duck, it seems that it slides smoothly and effortlessly through the water, but under water its small legs are threshing hard, trying to move the duck in a certain direction.
You may have the feeling that your business is unique, where everything goes unchecked and falls apart. Such sensations are normal. Welcome to the life of startups. Every startup founder has similar feelings. What matters is how it affects your relationship with the outside world.
The best companies look as if there are no problems, although the reality is different.Read Nick Bilton's “The Birth of Twitter” book , confirming that successful startups can also be filled with internal struggles and challenges.
The first season of the audio podcast prepared by Gimlet Media, is Alex Blumberg , who founded this company - Gimlet Media. The material gives a wonderful view from the inside on what it means to launch a fundamentally new startup. I recommend to listen.
How to survive difficult periods
I would like to linger a bit on the sensation, when it seems that everything is falling apart. How to make you feel psychologically good, feeling at the same time that all is not well with your startup?
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Future
Startup startup is just the beginning. Do not stop. Continue to move consistently and aggressively. Try different approaches. Change the design. Chat with your customers. Try to enjoy the movement.
Any founder will tell you that a startup is not a means for fun. This is hard nervous work, and you will encounter many obstacles along the way. On some day, you may wish to drop everything and leave without looking back, and the next you will feel at the top of happiness. You may become rich and famous, but you may have to crawl out from under the rubble of a collapsed startup.
Do not be afraid of failure. It is better to try and fail than not to try at all. Many successful founders failed with their companies before finding the right path.
I would not consider myself to be a successful startup. Steer was closed about a year after I left it. No one died, and no one was left without shelter. Your ego may be hurt, but you can always find another job if you run out of money. Do not take the situation as a failure - it is just a path that did not work.
You have the opportunity to leave your mark on the world. It may be quite small, but it can be gigantic. Receiving a letter of thanks from the user causes the best feelings in the world. A start-up gives you a real opportunity to change the path people follow when living their lives.
Source: https://habr.com/ru/post/321626/
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