For the past two decades, entrepreneurs got excited about endless opportunities that a startup world can offer them: from serving hundreds of millions of people to a billion-plus valuation to achieving a dream of your life. Taken that only half a percent of startups make it to the top, it’s better to follow a paved path. If you want to build a successful startup, here is a proven to-do list.
- Do your market research first.
Find a problem people can’t solve. Or what they don’t dare to solve even though it remains painful to them. If you were to find a cure for cancer, people would pay any price. However, you may select a much less complex niche: this startup idea grid can inspire you to look for potential gaps.
- Pick a solution with high potential returns.
It is inevitable that some “brilliant” solution will visit your mind. So the next step would be to validate it. Start with the Problemeter evaluation to tap into 6 areas of importance:
- Legal obligation
A partner at YCombinator Kevin Hale discusses these in detail:
- Form a great team.
After you get excited, it is time to pitch the idea to the right people. Statistically, teams with two or more co-founders are more likely to succeed. Find someone who a) is as excited about your startup as remains realistic about it and b) possesses a different set of competencies than you. Usually, there is a manager with business analysis skills and a technical person to form a CEO-CTO duo. Filter the list of potential candidates by common values and a commitment to work rather for company options than for salary.
- Test your hypothesis.
Once you identified a clear need and researched the market, it is useful to prioritize your findings (sometimes referred to as “insight”) and brainstorm solution concepts together with your team. By this time, the initial idea will be shaped by your co-founders to pass the reality check.
Then start testing by talking to potential customers. Simple forum discussions or product interviews will confirm (or disprove) your hypotheses.
Credit: John Cutler via Twitter.
- Iterate frequently.
If the hypothesis is wrong, iterate and experiment again until the idea is validated. Fall in love with a problem, not a solution. Your team will support you.
- Incorporate in time.
Once you find a solution that resolves a pain point, start preparing for the building part. Establish a legal entity to gain trust in the eyes of investors and customers. For most startups, incorporation in Delaware works just fine for two reasons: no state corporate income tax and the presence of a respected court system. Otherwise, any country with English law is acceptable.
- Do some branding at the very start.
While the product itself is the most important thing, branding helps your target audience recognize the solution and recommend it to friends easily. There are tonnes of books on branding, but this is what makes a brand essence:
- Prepare a business plan.
Traditional business plans are bulky. For a startup investor, there are key themes that must be included. These will fit on 10 pages:
- Executive Summary
- Company Description
- Products and Services
- Marketing Plan
- Operational Plan
- Management and Organization
- Startup Expenses and Capitalization
- Financial Plan
- Build an MVP.
Start small and focus on a single feature to deliver a minimal viable product or MVP. It should be compelling enough for a user to fulfill his need and affordable for your team to adjust the product according to feedback.
- Gather a community.
They say getting on board 100 people who love your product is better than obtaining a few thousand leads. So explore the ways to find yours. Show them the MVP and gather feedback until you find a product-market fit.
- Protect your IP.
Meanwhile, register intellectual property. It can be just a trademark or a complex technology. Protecting your IP gives a competitive advantage and attracts investors.
- Raise capital.
There are various ways of fundraising that we will cover in the future article. Kevin Hale illustrates what an investor wants. He advises thinking in terms of a problem, solution, and insight.
- Develop corporate culture.
It is critical to hire according to your corporate culture. Airbnb founders were looking for their first employee for months just to make sure to embed the DNA of their company. This initial investment paid off with loyalty and an innovative approach within the team.
Until this stage, you should have found a proper solution to a real need validated through customer feedback. Your MVP turned into a known product with its market fit. The company generates some revenue, employees love working there and a loyal customer base advocates for you. Now, apply for an accelerator to take the company to the next level.
Once the metrics look good, get them exponential. Refer to Masters of Scale for advice from famous entrepreneurs who have gathered decades of experience in turning a startup into iconic business.