Five questions for (very) early-stage founders
If I asked you right now what your startup needs the most, I bet I could predict how you’d respond. It’s the way almost every startup founder, at any stage, responds.
“I need capital.”
It’s not really a helpful answer, because even if you were talking to an active angel investor, saying you need capital isn’t really going to get her to write a check on the spot. I get where the impulse comes from though. You are constrained in so many ways, wearing all of the hats, and trying desperately to create something of value and impact in the world. You think getting some cash in the bank to move things along would really help.
I hear you, even if I don’t agree.
The common advice for how to respond to this question is to describe what you would invest capital into to grow your business — hiring new team members, equipment, etc.
I disagree with this, too.
What you need most is answers to questions.
Your startup is really nothing more than a big collection of assumptions around an identified problem and a possible solution. You need a roadmap for working through those assumptions efficiently, so you know you’re in the best position possible for success.
Here are five questions you need to answer at each stage of Startupland.
Inspiration Stage: “Do I want to be a founder?”
Maybe you have an idea for a business you’d like to start or just want to work for yourself. You’re inspired by the possibility of starting a startup and want to see if you’ve got what it takes.
If you’re reading this post, you’ve probably already answered yes to this question, but it’s a legitimate step in the process. If you’re not sure, sign up for a hackathon, Startup Weekend, or 3 Day Startup event. Get your feet wet in a no-commitment environment where you can experience building something of value super fast.
(Warning: You might get hooked on the rush of shipping, solving real problems, and working with a tribe of passionate, smart, motivated people. Be prepared!)
Validation Stage: “Should I pursue this particular idea?”
Now you have an idea and are ready to take action. This is an exciting and perilous time. Your optimism is going to be your biggest strength and weakness. Underlying your great idea is a series of assumptions you probably aren’t even aware of yet.
In this stage, you will want to learn and apply Lean Startup techniques like customer discovery, business model canvas, and market research to see if your idea really does have the potential to be the kind of business you want to build. If the answer is yes, you’ll likely be devoting the next 5–10 years of your life to this business. Take as long as you need to answer this question.
MVP Stage: “Will customers pay me to solve their problem?”
Once you’ve validated your core assumptions through customer discovery and market research, you need to find out as quickly possible if your solution solves a painful enough and big enough problem that customers will pay you for it.
You want to answer this question quickly, creating an MVP you personally build. There is a ton of advice on the interwebs about minimum viable products, but I have just one piece of advice to add to the mix. Build your MVP as fast as possible (preferably in less than a week) using duct tape and bubble gum — aka off the shelf, third party technologies that you customize to achieve your goals.
This is great advice if you are non-technical, but it is imperative if you’re a developer. Developing even a simple custom product at this stage always takes longer than you think, and you’ll get attached to your solution before knowing if you have the right thing.
In this stage, you’ll hopefully discover that your duct-taped MVP is so effective, your customers are willing to put up with the solution being ugly, a little broken, and not fully launched. That’s a good sign that you’re on to something important! You’ll also learn a ton about what the actual product should look like and how it should function, important details when you’re ready to build a custom product.
Accelerate Stage: “How big can this get and should I raise money?
Accelerators like the one I run are well-suited to helping you answer this question. Whether you go through an accelerator or not, you’ll want to take a good hard look at what kind of business you are capable of building, based on what you’ve learned so far.
Everyone says they want to build the next billion dollar business, but not every startup — even one with revenue and happy customers — is destined for that scale. To answer this question, you’ll be working to build a legit financial model, testing growth strategies that help you reach customers beyond your early adopters, and growing your network of mentors, potential investors, and customers. If you find that raising capital, building a team, and developing a product are the right step, the accelerator will prepare you for pitching your business, so you can raise a seed round.
Scale Stage: “Can I get product/market fit?”
In order to answer this question, you need a product. Not just the duct-taped MVP you’ve been testing against, but an actual product capable of gaining traction in the market beyond your first early adopters.
The good news is that if you’ve reached this point, you’ve validated a lot of things! You know you’ve identified a significant problem for customers who want to pay to solve it. You also have an idea for the product you need to build. You are in a great position to raise a seed round, recruit a small team, and start building a product to replace your MVP.
And so we come full circle. Now, you’re at the stage when answering my original question “What do you need most?” could be legitimately answered with “Capital.”
And even then, you’re going to get more support from mentors and advisors if you skip the easy answer and instead tell the story of where your company is going.
Frame your answer in terms of the questions you and your founder(s) have already answered and the next question you are going to tackle.
I like Dave McClure’s definition of a startup best:
“A startup is a company that is confused about 1) what its product is, 2) who its customers are, and 3) how to make money.”
The best way to get unconfused is to ask smart questions and stay obsessively focused on finding the answers.
In 2018, I am testing the applications of the Founder Roadmap with 100+ startups in accelerators and startup ecosystems all over the world, starting with Velocity Accelerator and Engler Agribusiness Program. If you’d like to chat about integrating the Founder Roadmap into your program, shoot me an email at email@example.com.