The thing to keep in mind here is that in order to succeed your idea doesn’t have to be brilliant, it only has to be better than what the market currently offers.
10 Jan, 2018FORBES.COM
The first and the most important thing, also the hardest, in the path towards launching your own startup, is to come up with an idea that works. San Francisco Bay is filled with thousands upon thousands of people, each with their own idea of how technology can make the world better.
Most of these ideas never even see the light of day, perhaps because they don’t actually solve a real problem, or because they don’t really accomplish anything that hasn’t been already done. The thing to keep in mind here is that in order to succeed your idea doesn’t have to be brilliant, it only has to be better than what the market currently offers.
It needs to offer a proper solution to an actual problem faced by real-life people, and it has to be unique enough that it doesn’t get lost in the shuffle. The most successful startups that went on to make millions a year were the ones that came up with creative ways to solve real-life problems within the tech industry.
“A useful tool is something that solves a problem. A few years ago someone was frustrated by not being able to join two boards, so they invented a nail and figured out something to use to drive that nail; the birth of the hammer. The real challenge of a great idea is making it personal. It isn’t finding just some problem to fix, it is finding the problem that you would love to fix.” - Sterling Seizert, Green Beret
The thing that most newbie entrepreneurs fail to realize is that a startup is not a gimmick. A juicer has no use being connected to the wi-fi. Nobody likes the idea of sending thousands of working mothers to the path to unemployment by automating streetside bodegas. Startups like these try to charm a bunch of uninformed consumers with flashy technology that serves no real purpose, which is why they fail miserably.
A truly successful startup is one that addresses a growing demand for a specific product within a targeted community of consumers. Take for example Relativity Space, which builds 3D-printed rockets at very low costs to address the growing demand within homemade rocket enthusiasts around the world. There’s also Motiv, which is a waterproof, long-lasting fitness tracker that comes in the form of a metallic ring that tracks your sleep, activity and heart rate 24/7. Nurx advertises itself as birth-control on demand, and it’s exactly that.
By allowing women to access birth control drugs via prescription by simply uploading their medical information to their smartphone app, this startup aims to make it a whole lot easier for women to make their own choices. It is startups like these that are set on the path to success, perhaps because they address real-life problems for real-life people.
Funding your startup is easily the most important part of launching a new company. Back in the day, this was limited to hitting up the top venture capitalists in the city and hope to god that they see the actual business potential in your brilliant idea. With time, however, a lot of other options have availed themselves, making it much easier to launch your own tech company in a small scale.
If you feel that the launching of your own startup in the heart of the world’s most prestigious tech hub is too daunting a task to take up alone, consider joining up with an experienced co-founder, or even a team of co-founders, and then selling them stocks in exchange for partial ownership to the company. The goal here is to make your startup successful, not retain as much ownership as possible.
“From the very start, me and my cofounder have been passionate towards creating an active community of interesting startups back in our hometown in San Diego, California. San Diego has never really produced a software unicorn, perhaps because the area lacks the network effects that arise from a strong ecosystem of high-tech success stories. After we founded LeadCrunch, an artificially intelligent marketing startup that targets business-to-business demand generating campaigns, we grew increasingly aggressive about having a proper startup community in San Diego. In 2017, we created the Tribe of Insurgents, a peer-to-peer mentoring network where startups all over the city can share their ideas and experiences in a creative atmosphere.” - Olin Hyde, LeadCrunch
Once you’ve got the core team in place, there are a number of ways to seek funding for your startup leading up to the launch. If the initial amount you need to raise doesn’t exceed a million dollars, consider soliciting angel investors, wealthy individuals interested in funding new companies in exchange for profits.
You can find angel investors in your locality by hitting up local networks, running a search on social media, advertising yourself at startup summits or using an online platform such as Gust. Seeking out individual investors to back your company is really the easiest way to get started, but it’s not the only one. Provided you have a decent credit score or something to hold as collateral, you can also try reaching out to banks for startup funding. Many private financial institutions around the globe have special schemes for startup entrepreneurs.
Startup incubators like Y Combinator or AngelPad can also prove a great source for small amounts of seed funding for new startups. Reaching out to venture capitalists is the hacker’s equivalent to making a deal with the devil. Most VCs take month after month and impose onerous conditions to even consider funding your startup. Some even ask to put forward their own CEO.
Despite the toil, however, venture capitalists are still around for the simple reason that they are the only ones capable and willing to hand out that much money to a newcoming entrepreneur with no prior contacts. If all else fails, however, you can always consider joining the huge list of startups who choose to crowdfund their companies instead.
These days, many companies with valid roots in blockchain technology may also consider putting up a token sale in order to gather the required funding. Since the definition for such companies is so broad, we’ve got everything from startups that sell eco-friendly bananas to ones that companies that provide banking services for cannabis enthusiasts.
There are also the more serious companies, such as ExsulCoin, which uses a blockchain-based, ERC-20 tokenized platform to allow people to invest in projects being built around the world by and for refugees. By using a public ledger to track every transaction, ExsulCoin claims to try and flag suspicious transactions to ensure the anonymity and safety of refugees around the world.
Dropdeck, an organization based out of Cavenagh Road, Singapore, claims to be able to make this process a whole lot easier by serving as a singular platform where upcoming startups can make themselves known to potential investors and receive funding via a unified token. They’re based on the ethereum platform and use smart contracts to secure every transaction.
“As much as it [an ICO] is high-risk, it is also high-gain. We’ve found a way to integrate the token into our business model and it even opened up a new market for us. Finally, it’s very much about the balance between taking the risk, go “all in” and keep the control of your company and giving up equity against more secure funding and support.” - Anna Radeva, startAround.co
Once you’ve taken care of the funding, it’s time to hire the right people for your business. An important thing to understand here is that working at a startup is nothing like working at a corporation. You can’t always expect to be handed everything you need. It’s a disorganized workspace that is working it’s way up from infancy and you’ll have to be prepared to go the extra mile to set up your own office on the first day of work or stay in hours past schedule to finish that last bit of code. As an entrepreneur, you are looking for workaholics, professional overachievers who will stop at nothing to get the job done.
Also, most techies tend to be weird, in at least one way or another. They have weird ticks, they are often not good at communicating with people and they sometimes have an unusually casual approach to the workplace. It is up to you to decide how much of this you will indulge depending on the specific hire’s talent and eccentricity. And since you want some really talented people to join your startup, be prepared to handle a fair amount of eccentricity.
That said, don’t make the mistake that so many other startups these days seem to make, which is turning their company into a frat room for entitled white guys. A certain amount of eccentricity is welcome, and talented individuals do need to be made special allowances.
However, you don’t want to send the message that your subordinates can get away with absolutely anything as long as they’re good at work. Coming to work in pajamas may be okay, but harassing female employees is definitely not. There is a thin line between being a casual and openly flaunting authority. There is a not so thin line between being comfortable and being a jerk. There is much to be said about the wrong kind of mindset that a startup work culture often cultivates, so make sure that you place yourself on the right side of history.
A lot of people are often overwhelmed by the idea of starting their own company, most of them having a particular phobia for the legal side of things. My advice? Don’t worry too much about that.
Your business will need to be incorporated before it can start seeking actual funding, but the process is really not that difficult. There’s also a bunch of other stuff you must go through to turn your foundation into a proper business, but none of this is too daunting, especially in the United States and UK, where governments actively encourage individual entrepreneurs to launch their own companies.
This article was first published by Harold Stark on Forbes