"Become stupid." 10 tips for managing an IT startup from the founder of the Virusdai service
You got the best idea in your life and you decided to try it on a startup. Well, that's great. A huge number of books have been published on this topic, approaches to consumer development strategies and other information. A lot of courses and trainings are held.
This whole set contains the necessary knowledge and recipes. But this is only a tool that will help you develop a startup into a real business. In my personal opinion, anyone can turn their startup into a business. All you need to succeed is simply to do enough. After all, to be honest, a startup that has closed is not the fault of competitors, the market, or some otherworldly forces. You are personally to blame for everything that happened - you did not work hard enough, you didn’t know enough, you didn’t study hard enough, you didn’t react fast enough and you didn’t act hard enough. The reason for your failure is yourself. You were not stupid enough.
As a physicist in basic education, I hate inaccurate formulations, useless recipes, incompetent advice, and unverified data. The recipe for any startup is simple. Have you ever written a program for finding the roots of an equation using the method of successive approximations? If so, you already know everything about business and startups. If not, then just read some brochure about the method of development of consumers (This is one of the most stupid and incorrect terms that I have met in my life. It is correct to say: “The method of successive approximations with verification on consumers”).
Its essence is as simple as a dandelion: come up with something, do it, check the reaction of real people, if the reaction is positive (you get more money for a constant interval of time than before) - come up and do something else, if not - go to the step back, come up with a new hypothesis and take a step again. The more iterations in less time you do, the more accurately you will find a solution, i.e. You’ll get into the people you need and begin to receive the maximum income.
However, the process itself is not so simple. More precisely, he is extremely skimpy and monotonous. The basic rule of survival for a startup and turning it into a working business is to become “dumb”. If you are already like this, you can go to the tips. If you are not "stupid" yet, I’ll tell you what I mean. In general, a startup is an interesting activity only for employees and the first time (time of dreams) for the founder. As soon as you have suggested some kind of business model, you urgently need to stop dreaming and thinking. You urgently need to become a stupid and stubborn, meticulous ram. Now your only task for many months (or years) is simply to execute your startup solution program using the method of successive approximations as a machine. In no case should you relax and start dreaming - you have already done this before. All you need for your startup is willpower and nothing more.
1. Is the market wild or not at all?
So you have an idea. She is the best in the world. Absolutely, the thing you came up with solves some kind of problem. Let's test your idea without spending a dime. Does Google or you yourself know someone who solves this problem in a similar or some other way? If so, you are still on the right track. If not, then there is no market. This, of course, does not mean that nobody needs your super-duper thing, probably everyone will need it, but for this you will have to tell people about the problem first. A startup for the development of a smart phone for some wild tribe living on the shores of the Amazon would look something like this. Your smartphone may be the best, but for those for whom you came up with it, there is no problem in their heads that it will solve. Yes, and no communication networks. And the knowledge to use it too. For them, you are ahead of time, and therefore the market.
I do not advise you to feed yourself with the illusion that suddenly someone will give you +100500 billion and help create a market. In fact, everything will develop along the path of being in a state with the least energy - that is, by itself.
Now let's understand what market you want to enter: wild, or already established. Of course, it is more reliable to launch a startup into the existing market, but there you will have to immediately seriously compete. In the current market, everyone is doing about the same thing, prices are about the same, business models are almost identical (for example, the market for mobile operators). You have to make a small revolution - otherwise you won’t win. Your happiness is if the market you are targeting is still “wild”. Here you will immediately see a wide range of prices, a bunch of sites made on the knee with suggestions to solve the problem. Each of your competitors will motivate people with different words. Everyone will have different business models. You will see a bunch of low-grade organizations. All sorts of shameful old-fashioned tricks to motivate registration, for example,
Well, your market turned out to be “wild”? Cool! This is your chance to get around everyone before the start, right in the locker room. If you are stupid and fast enough, you will have time to change clothes for the match and leave the locker room first. You will even have the opportunity to close the door from the outside, so that no one else gets out onto your field. Then at the stadium you will be alone and all spectators will look only at you. Fortunately, it was at this time that they would definitely know what they came to look at and what they were paying their money for.
Count the market size in your country and around the world (what if a startup shoots). If the market for the whole world, say, is less than $ 50 million, give it up. Be honest, look for facts, even if it's hard to do. For example, we needed to find out the exact size of the market for the protection and treatment of websites in RuNet and in the world. At first we tried to segment domains of all levels (about 1.2 billion), but then we simply took the number of registered second-level domains, reducing the potential market volume by 10 times. Well, it was not accurate, but guaranteed, and the possible growth would always have been greater than the calculated one.
2. Examine competitor business model hypotheses
But let's gradually stop dreaming. Let's start to study competitors, if any. If they are not already, go to tip 3. Look at all of your potential competitors you can find. Write on a simple piece of paper their business model. Estimate their conversion into money. If you see that their conversion is quite good, then do not come up with a wheel, but just think that in your opinion you would improve in the service they offer.
3. Create your own business model or take someone else’s
Are you gradually becoming "dumb"? Good. Now you have a creative business to come up with an exact recipe for getting a bunch of money from people. Your startup starts with a finger pointing into the sky, i.e. with the assumption that people will pay you the great millions. Your assumption will definitely be inaccurate. But this is precisely the whole point of the startup and the method of successive approximations. You will definitely find the exact solution, but you will start from the wrong one.
If you like someone else's business model, then just take it. In this case, all your strength will lie in the service itself.
4. Make the first version of the service more convenient than your competitors can offer in a year
Remember that it is advisable for you to run out of the locker room first. But if you still do not have time to close the door behind you, then try to keep your physical shape and your clothes much better than your competitors. In this case, you will have time for a more serious improvement, while others will sew on their sleeves and gain muscle mass.
Make the first version of the product that embodies your business model. Try to make it as high quality as possible. Here, my opinion differs from the opinion of the authors of modern startup books. If you suddenly guessed with a business model or got close enough to a solution the first time, then a service qualitatively different from competitors will give you a titanic head start. In addition, when you make a kosoky product on the pretext of a startup, you may die if someone suddenly enters the market with the best service. Make a “backlog” in quality at least a year in advance. Then you can spend most of the time iteratively improving the business model, rather than patching holes and replacing the giblets of the service.
5. Save by any means
So the time has come to finally turn into a "stupid robot." First of all, after launch, cut off all startup expenses unemotionally. Not any concessions. Your main task now is to bring it to self-sufficiency. It's boring and tedious, but you have to do it. The only alternative is the death of a startup.
6. Counted the conversion, made an assumption, upgraded, counted the conversion, left or rolled back
Act like a robot. Choose a conversion (or conversion funnel) that turns visitors / registered users into money. Focus on the following indicators. If you count on a large mass of users and make Freemium, then your maximum 3% conversion of registered users into money. If you decide to make a "premium" product, then your conversion should not be lower than 7%.
After you have calculated the first time the conversion, try to come up with ways to improve it. They will not necessarily work, but with each failed method, the probability of coming up with a worker will be greater. Make changes to the business model and service. Do it fast. In the first stages, your maximum upgrade step is two days. Two more days are given to you to evaluate the changes in the conversion. If the conversion has increased - leave the changes made and come up with a new one. If the conversion has decreased - roll back everything and come up with something better. Do not slow down, do not think - just work.
7. To hell with venture funds - invest yours and borrow from friends
We live in Russia. I can’t speak for the rest, but before my eyes all the startups that took the funds from the funds fell apart miserably. Actually, their life fit in one year from the moment of receiving investments. In Russia, a disgusting examination, money can be given under a "non-licked" business model. Of course, when your startup doesn’t achieve self-sufficiency, no one will say bad words, beat or take away property. You simply will not have more money to develop and maintain a sinking ship. And you’ll spend a lot of time and effort on getting these investments instead of working with a business model.
Take to your startup your friends or acquaintances of your friends with money. Of course, not everything is so simple here. Do not be greedy, but do not insult the scanty share in your friends' zero business so far. Ask 50% - give it back. While your startup is worthless and your main task is not to save a large share of the “nothing”, but to make it profitable. Nobody fights from an excess of money, all quarrels come from their lack. And try not to take in your companions "boring" or useless people. Clearly divide responsibilities. There is no difference in getting money from a fund or from a useless person. The fund in this case looks much more attractive.
8. Develop the main one and keep 2-3 spare variants of the business model in a hot reserve
You do not think that everything will turn out smoothly and the first time. Of course not. You will find yourself on the brink of ruin several times, your competitors will throw unpleasant surprises to you (I'm talking about their updates and development). Everyone goes to the same goal, but you still have to go first.
Come up with two or three spare business models in case you suspect that the investor’s money will run out before the start-up goes self-sustaining. Let it be some kind of contracts that you can sign and start working on them within 1-2 weeks. For example, you can provide some services related to your startup.
This, of course, will slow down your development, but you will have some more time to bring the project to self-sufficiency or to search for additional investments. Keep in mind that no one will give you money at this stage if your model shows low conversion. If your problem is only in the number of users, and the calculations of the market volume are correct, then you will receive the money.
9. Pull the startup to zero
Do you remember why you were supposed to be "dumb"? It is to bring startups to self-sufficiency. If your conversion is good (as you think), then the only reason you can’t pay off can only be the number of your users. Recount the market volume again. Segment your users. Understand where they come from.
If we are talking about the “wild” market with you, that contextual advertising is definitely not for you (as it is not for us at the time). Use news and thematic resources, share on social networks, create interesting articles (always remember the type of readers on a particular resource). Try to enter into any partnerships with large companies, albeit without profit for you. Tell people about it. Your only problem is recognition and lack of an organized market. Tell people not so much about yourself as about the problem you are solving. Make the issue relevant to your potential customers.
Do not worry. You are not acting alone. Your competitors are doing exactly the same thing. They themselves will help you organize the market.
10. Have a beer and decide who you will take next
Well, now you are paying off. For a while you can throw off the mask of a "dumb robot" and drink beer. Relax a bit. You have done the impossible. The hardest part is already behind you. Now you can sleep and rest.
But do not wean too much from your "stupid" image. You are about to set off on a new journey. If you pay off, it means the business model is working. After all, did you make sure that your startup can easily scale? You don’t need to hire the number of employees directly proportional to profit?
Now you need to find a really serious investor to expand. You are ready? Then go ahead!