Start Up Conversation 2.0 – The First 200 Days. #Conv2

With the Football season now just days away thoughts must turn to first teams, formations and squads. And since we had a great Start Up Conversation 2.0 on the 2^nd of August, let me stay true to both traditions and share with you 11 tips for the first 200 days of your start up.

1.     Know your runway

A wonderful metaphor for any start up: you must know your runway. In other words how long can you sustain yourself before you need the business to take off? This is obviously to do with money, but it’s also important from an emotional and personal point of view. How long can you sustain yourself emotionally? How about your family? How long can they support you? What sacrifices will they be making and for how long? It’s quite critical to know very clearly the answer to this question. Metaphorically speaking, if you’re out of runway and you haven’t taken off yet, the results are obviously going to be painful.

2.     Do Your Homework (research/ resources)

Michael said he spent many months walking around with a notebook and pen, making notes wherever he went. Aniko translated that into “doing your homework”.  No matter how great your idea, you can rarely do too much homework. Most entrepreneurs do far too little. Mostly this includes getting to the heart of your problem domain and really understanding what your customers will pay for, not just what you think they’ll pay for.

3.     Team

We covered this extensively in our note on forming your core team, but of course, one of the first things you need to do is put your team together. The question was asked “how much equity should you offer a CTO” and the instant consensus among the speaking panel was equal stake if you’re doing anything that depends on the technology – i.e. either building a tech product or a tech platform based business (such as an ecommerce or any online business).

4.     100% or part time?

There is certainly a school of thought which says you should do a job, save enough money, and then commit yourself 100% to your start up. Clearly this is the typical thinking in Silicon Valley. There are no half measures there. But of course, it’s also a much more supportive environment – both in terms of your business and managing the rest of your life. The reality for most people is that you probably need to balance your start up work with a job that pays the bills. Just be sure you’re not short changing both and ending up in a situation where neither will give you the rewards you need and seek.

5.     Business Design

Alongside the research and team building, you definitely need to clarify your business design. This is not the same as your business plan, which is largely a set of numbers that reflect your business design financially. But the design of your business includes a lot more than the numbers – it addresses how exactly the business will work, what people will pay for, how they will transact, what moving parts will need to work efficiently  to make your business work seamlessly? Note: there is every chance that your business design will change, dramatically, more than once, as you discover things about your market, product, customers and competition. No matter, make sure the current one is clear.

6.     Product

Along with your customer, your product sits at the heart of your business. Or any business. This is probably the one area most entrepreneurs spend the most time thinking about. And the problem here often tends to be overdoing, rather than under-doing the product. The magic words are “minimum viable product” – what is the most basic set of features that allow your product to exist? If you’re designing an ecommerce site, fulfilment is not an option, but a recommendation engine might be. Can you strip your product back to its minimum feature set so that you can get it out of the door?

Here you might encounter a fork between two philosophies. One says “think big, change the world”, the other says “think realistically, solve a simple problem”.  This is a big argument by itself, but whichever road you take (and may you always take the road less travelled!) you still need to focus on your minimum viable product, else you’ll be in the garage building your product for years and years.

7.     Shortest Path to Revenues

For idealistic entrepreneurs, this is probably worth framing and putting on the wall. Focus on your path to revenues, ideally, your shortest path to revenues. It picks up from the idea of the minimum viable product and helps you define when exactly your business is going to start paying you back. However small and however minimal, when do those revenues start coming in? Another quote from last evening: “A business which doesn’t have a revenue plan is a hobby” – what’s yours? Now it’s possible that you have specifically chosen to defocus on the specific revenue plan because of the nature of your project, but there’s a difference between thinking through this and putting it aside, and ignoring this altogether.

8.     The Ticking Clock

I personally believe that the day you had an idea and decided to do something about it is the day the clock started ticking. Some ideas have long shelf lives. A cure for cancer or for balding, a new transport system, a breakthrough fuel, or even curing the common cold is probably a problem you can dwell upon for much of your working life. But many ideas have a shelf life in months if not weeks. There are loads of smart people out there, being exposed to the same problems, technologies and somebody or the other is putting their mind to the same problem.

I remember telling Karuna, my wife, sometime last year, while visiting a museum, that audio guides could and should be made available as a smart phone app so you can download and customize your guide for any museum (or city) you want to visit. Yesterday I read about Sparkatour, a company that has built the app and a B2B model for selling it to museums.

The shelf life of your idea could depend on the size of the problem or the structure of the industry, external / regulatory constraints, or many other factors. But for that product, there is probably a race on. You might do it in 10 years and beat a competitor who takes 11, to get to market.

9.     Using exceptions as role models

One of the most dangerous things people do, is use exceptions as role models. And some of the biggest names to be wary of are Google, Facebook, Youtube, Twitter and Foursquare. It’s disingenuous to look at them today and suggest therefore that you can build the business and the revenues will take care of themselves, or that you can think about revenues later. To clarify, I don’t think following these examples is wrong, but they are very dangerous. Fundamentally because a) most of them did not explicitly start out to be where they are and b) each of them has found success in markets where dozens of others have failed. Therefore if you’re going to follow Google or Facebook, don’t ape the model, look much, much more closely at why they succeeded where their peers failed.

10.Funding

By now you must be wondering why funding hasn’t found its way into this discussion. Yes, funding is important, but by all accounts, it’s not the first thing you do, unless you want to give away much of your business. Let’s elucidate: you need seed funding for which you should ideally have saved up or organized from “friends and family”. Once you have a product and a demonstrable solution, and ideally a community of users and paying customers, you should be looking for external funding. An angel might fund a prototype but there is a lot of myth around Angel networks and what they’re looking for. The best advice seems to be to aim to build your minimum viable product using as little external funding as possible. And if you’re out looking for funding, here are our nuggets of advice.

11.Buying vs Popularity

I can vouch for this one because I’ve been there. This gem from Aniko is worth repeating. At some point, you have to stop building popularity and start building customers. As entrepreneurs, we’re always looking to share our ideas and seek validation. Few things turn us on as much as somebody telling us “what a great concept!” or “I love the idea!” This is good, up to a point. But this is popularity. It’s not customers. There will come a time when “I love the idea” will not be good enough. What you’ll need is “here’s my money, sign me up”.

—-

Remember, “the first 200 days” isn’t literal. To go back to the first point, it’s your runway. It could be 2 months or two years. But it perhaps marks the phase 1 of your Start Up, from zero to the point where you probably have a prototype product out.

 

Many thanks to Dreamstake and to Aniko Zagon(Entelliz.co.uk) and Michael Edge (Flup.com) for sharing their thoughts and experience, and to all the entrepreneurs and professionals in the room who contributed to the discussion.