In November 2010 we launched Whatser: an application that made it easy to get personal suggestions on where to go such as bars, restaurants, galleries, shops and other spots based on your location, interest and social graph.
Although we got some early traction, we were unable to prevent a bankruptcy from happening in October 2011. We are currently in the middle of a restart and would like to share our seven lessons learned in the hopes that other entrepreneurs can benefit from our experiences and increase their chances for success.
1. Think big, start small and stay focused
New York, are you ready?
We’re building Momentum: an all killer, no filler event this November.
The more your narrow down your target audience, the higher the chance is that you will be able to reach the crucial turning-point where you offer your customers enough added value to make them happy and returning. Additionally, this focus will allow everyone within the team to make more accurate decisions faster, as it’s clear who you are building your product for.
Making certain decisions and accepting the fact that you will disappoint potential customers outside your current horizon may be hard at first, but ultimately it will increase your chances of survival. Obviously when you have found the traction you are looking for within a specific customer segment or market you can either deepen or broaden the offering.
2. Listen to the right data
For many start-ups, the central focus is developing a product that offers value to a target audience. For this reason you should find out as quickly as possible if the product is indeed offering real value to your customers by looking at real data. The metrics that matter the most are returning customers (user retention), turnover per customer and viral growth (k-factor).
Integrating services like Kiss Metrics, Google Analytics, Geckoboard and/or developing your own in order to keep an real time view on your KPI’s, next to holding regular user interviews and surveys, will help make decisions based on data instead of only on gut feeling. KPI’s are different for each start-up. The trick is to find yours as quickly as possible. Investigate, challenge, share and update the key performance indicators constantly.
3. Keep the team small, agile and up-to-date
As a start-up you’re constantly making (small) pivots in order to improve your KPIs. As described in the sketch from Demetri Martin, the road to success does require some driving skills.
Keeping the team small in order to move fast and keeping everyone on the team superbly well-informed on the turns that the company is making is crucial for success. Tools such a Basecamp, Yammer, Pivotal can be used to keep all team members informed, aligned and focused with the single goal the company is trying to achieve.
However, none of these replace the importance of holding regular team meetings. Remember to be honest with each other, share the disappointments, and also celebrate the achievements. Your team needs to love their work and the customers they’re working for in order to build something truly amazing.
4. Develop a strong backbone
The backbone of your technology company revolves around a well-organized, up-to-date, specific and documented vision, brand-key, business plan, intellectual property rights, contracts, financial administration, NDAs and bylaws it can rely on. All has to be well thought through and developed from the start in order to keep the speed up when you’re in the middle of execution and scaling.
Most investors will sooner or later do an extensive due diligence anyway, so spend a little more time in advance to make sure you will be prepared for the future. Ask for help and feedback from professionals in each specific area to make sure your system is well thought through. Remember, most people are more than happy to offer help when asked for it.
5. Choose your investors with care
It’s good to build relationships with different potential investors from the start and continue to do so in order to move fast when needed. The best investors can offer you the money promised, valuable introductions, and additional help as an experienced advisor where needed. Talk to other participants, use Google for some additional research on your investor and listen to your gut feeling when it’s time to sign.
Make sure you check and understand the term sheet and overall deal. The terms should allow you to drive in order to arrive at the first destination safely. The next stage of fundraising will be all about accelerating growth. Again, make sure you can decide whom to ‘marry’. Remember that raising money in itself is not the purpose; it’s about creating an organization that can fully focus on finding retention and a working business model that can later on scale. Raising money takes time.
6. Keep everything you do as simple as possible
Everyone within the team continuously needs to ask the question: Can this be further simplified? Keeping it simple should become a core philosophy within your company and you need to make sure that everyone in the team understands that making something simple is hard. As Apple’s design chief Jonathan Ive said in a recent interview in the Daily Telegraph: “The quest for simplicity has to pervade every part of the process. It really is fundamental.” Simplicity will allow you to move faster.
7. It’s hard, but enjoy the journey
Building a technology company within an extremely competitive market is difficult. If you take into consideration the pace at which technology is evolving, it is even harder. Most start-ups fail. In order to increase your chances for success all aspects of your technology start-up need to be in a good shape.
One person cannot be the best lawyer, product developer, finance person, user experience designer, visual designer, business developer and sales person all at once. As a founder, your job is to build an incredible team full of talented people, and give them the input, help, resources and advice where needed.
You should constantly share the company vision, keep the focus and maintain the team spirit. Trust your instincts although you sometimes might be wrong, but don’t postpone any unpleasant decision that needs to be made. Postponing will kill your company, slowly. Although there will be many ups and downs, make sure you and your team can enjoy the amazing journey you’re all about to embark on.
Image Credit: Brook Ward