My $100 Billion Lack of Commitment and Other Mistakes to Avoid When Launching Your First Tech Startup
Here are the top lessons I learned while launching my first startup.
Opinions expressed by Entrepreneur contributors are their own.
I started dreaming of starting my own business when I was in my 20s in the final year of business school. I along with some of my friends even entered an international entrepreneurship contest – and made it to the Final 3. Then life happened – got a good job, moved from India to the US, got married, had two wonderful kids and two decades just flew by.
I was in my 40s when I co-founded Rezolve.AI along with two other business school friends of mine. By the time I started Rezolve.AI I had a lot of prior management experience in various mid and large companies – but as a first-time entrepreneur, the next few years were a steep learning curve – and was and is an amazing journey.
As an entrepreneur over the last few years, I have learned a lot from my own experiences as well as interacting with other founders and investors about better ways of starting your first technology venture. Let me share five key pitfalls you might want to stay clear of as you embark on launching your startup journey.
Mistake 1: Doing it part-time
This is the most common challenge I see with startup founders. They have a great idea – and they work it nights and weekends – for an extended period. There are many obvious issues this creates
Your pace of progress will be extremely slow – someone else will fill the gap you identified. The pace of technology change is only accelerating, and gaps will exist for ever-shrinking windows of time.
No one will take you seriously - certainly not investors or potential customers
You will feel burned out working 24/7 and eventually give up
I had an idea for a better vacation home rental – with rich listings, instant booking, user reviews, and so on. I had it for several years before Airbnb was launched – did some work part-time, but never pursued it full time. It's safe to call that a $100 Billion lack of commitment. It is OK to be part-time for the first few months, but be prepared to time box this phase and make the leap. In a future blog, I will talk about how to prepare yourself for making this transition.
Related: I Went to Prison for SBA Loan Fraud: 7 Things to Know When Taking COVID-19 Relief Money
Mistake 2: Solving a very broad and diffused problem
We love the technologies we build and can see the immense potential and possibilities in them. Exciting as the range of possibilities is – they can be fatal from a customer acquisition perspective. While you can create general platforms, they take a lot of money and energy to build momentum around. Solving a specific problem for a very specific type of user has two key benefits:
You know exactly who your target audience is
You can specialize your product for that audience and problem
For example, while Rezolve.AI can solve many problems for the enterprise – we are only focused on "Automated Level 1 Support for Employee Service Desk". My recommendation is a 1 Sentence Template - "I am building __________ to solve ____________ problem for ____________ user". Fill in the blanks as narrowly as possible.
Mistake 3: Let's build some more before we launch
Some startups that I have known have never launched – or launched in a meaningful way. The founder wanted to build some more features before launching – and they kept doing it in isolation without any meaningful buyer or user feedback. My recommendation is to shift left as far as you can:
1. Build a small prototype of what your idea is (use a clickable tool like Proto.io or Envision)
Related: 5 Things Not to Do When You're Running a Small Business
2. Grab a coffee (or a zoom meeting) with someone friendly who is close enough to represent a potential buyer and show them your idea and ask three questions:
Does your idea solve a problem that is one of the Top 5-10 issues they are grappling with?
Will they have been willing to use or buy it if it was available today?
Will they have been willing to pay for it (or some other question about gauging price elasticity)
Take inputs from these sessions, iterate the design, validate some more and then build a relatively simple MVP. Now find some real users before you keep building. They could be trial users, they could be free forever – doesn't matter. Get some real users that represent your target audience – and engage with them to shape your future roadmap.
Mistake 4: Raising money – too early or too late?
There are two extremes to this problem – I have seen some founders super shy about raising money (for fear of too much dilution). I have also seen founders worrying about money before clearly identifying the specifics of their ideas. I would recommend thinking about these terms:
If you do not have a prior track record – then develop some proof points to help your investors (could be a great product plus a pilot customer).
Your initial checks may have to come from friends and family – don't be shy of exploring this route
Speed is of the essence in technology startups – so think of building a team that usually takes some raise
Don't obsess with dilution – a 10% of a $1B company is better than 100% of $0. There are many ways to raise while being fair to yourself and to your early investors - I will talk in detail about this topic in a future blog.
Mistake 5: No systematic Go o Market (GTM) plan
Many first-time technology startup founders sometimes do not think about Sales and Marketing till very late in the game. Aligning your product and target audience with the right Go to Market (GTM) model is key – and it needs to happen in parallel to building your product – not as an afterthought.
GTM Model: Are you selling at a $100,00 per year or $100 per year price point? At the first price point, your GTM is likely to involve enterprise buyers, mostly sales driven, analyst influenced, and so on. At the $100 price point, you should focus on Digital Marketing - SEO, SEM, Inside Sales, Online Reviews, Social Virality, and such
Time for GTM: As a co-founder, I plan to spend 50%of your time developing and improving your GTM
Planning for GTM: Develop a written plan that answers
Who is your buyer?
How do they buy what you are offering?
How long is the sales cycle likely to be and how to shorten it?
How to grow your top of the funnel – based on your GTM model
The point is that a systematic GTM plan is almost as important as anything else in what you do for your startup. Don't ignore it!
Launching a startup is the beginning of an amazing journey. Avoiding some of the above mistakes will help get you into the 10% club that succeeds and will also help shrink the time you need to scale to the next level.