A discussion of the steps that developers can take to becoming entrepreneurs and turn their coding project into a funded start-up company.
Over the past year, a number of early-stage startups led by IT practitioners-turned-founders have been funded, and countless more are currently seeking capital. Many of those founders are on unfamiliar ground, building a startup for the first time. Making the transition from practitioner to founder is a non-trivial move and it can be difficult to navigate without the right resources and guidance; but there are some universal steps that will set you on the right path.
If you’re still reading this, there’s a good chance you’re an IT practitioner. And chances are you’ve been solving problems for your company while gaining a unique insight into where today’s technology is lacking. You’re probably leading your company’s IT department or managing your cloud infrastructure, but are itching to explore your budding start-up idea. While you have the insight and expertise to make it happen, you’re unsure about how to switch gears and take those first steps towards entrepreneurship. Unlike developers who’ve been checking in code forever, you might not know where to begin – technically. You’ve also probably come across a number of companies that have proven themselves successful by becoming a unicorn, getting acquired for a large sum, or going public; you want to join the club.
For those looking for more information on starting a company, here are some tips for navigating the start-up ecosystem and maybe even thwarting some common mistakes.
Building a Start-Up 101
- Start with some key questions: It’s important to define your solution either as a feature, product or company. You’ll also want to figure out if you truly have product-market fit, all the while making sure that you’ll be able to have more than just a few great customers – think long-term.
- Truly understand the market that you’re going into. Researchhow big the market is and know who is in the market right now. Figure out how you are going to be better than what’s already out there or understand why no one else has solved this problem already. If someone has already failed at trying to solve the problem you’re focusing on, why did they fail? Or if you are building off of an existing technology, what would motivate someone to choose your solution specifically?
- Build a strong founding team. It’s crucial toconsider how a potential co-founder works on a professional and interpersonal level. Once you’ve started a company with someone, you’re going to be in it for the long haul; in other words, it’s really hard to get a divorce. The start of a journey is when everyone is on their best behavior, so note any red flags. Within your founding team, you’ll also want to have someone who specializes in the technical aspects, someone who has product experience, and someone who understands marketing and go-to-market. Determining responsibilities early on will also help in the long run.
- Know your story. Make sure you can describe your business in a way that is universally easy to understand and compelling. Ask yourself, “Can I explain my solution to this complex problem through a 30-second elevator pitch?” Then practice, practice, practice.
- A great pitch deck will go a long way. Cover the basics by including the problem, the market, your solution, your team, your traction (if any), and your special sauce or why you are going to win.
- Understand how venture capital operates. It may sound non-obvious, but when raising money,it’s helpful to consider what your *next* round will look like. Always“pre-bake” for the next funding round by outlining key milestones which will pave a path to the next round. Also, keep in mind who you want to be involved in that round. These days, the lines between rounds are blurred, but generally, you can think of the first round as the one to get you to product-market fit, the second round as the one that helps you sell the product in the market, the third round as the one that helps scale-up, and the fourth as the one to further expand your sales motion.
- Honesty. Be honest, communicate honestly, and create a culture of honesty. Bonus: culture will shine through to the customer and help scale sales growth. Upfront communication between colleagues will also help maintain relationships and help set you up for success.
- Have a solid advisory board. You want an advisor who: 1. provides business advice, 2. opens the door to their network (a.k.a. potential customers), and 3. has a strong reputation that will help you gain credibility. You likely won’t get advisors that check all the boxes, but if you do, that’s amazing!
- Saying no is just as important as saying yes. Early pilot customers are extremely useful for gaining hands-on experience and tremendous amounts of feedback, but you’ll need to sift out the bad advice. Venn Diagram all of the feedback you receive to see what overlaps across different aspects – that’s what you should be focusing on.
Most importantly, remember that it’s a journey. This won’t be an overnight success and there isn’t just one predefined path. In many cases, you’re going to feel like every problem or failure you encounter will be the one that ends it all, but, in hindsight, it won’t be. Remember that you are not alone. In fact, it’s extremely common to run into an avalanche of challenges when building a company – you just have to keep going.