You’ve built a great product. You’ve got a couple customers (okay, most of them are friends and/or free), a small but passionate team, and a product that demos well. Now you just need to turn it into a company!
MISTAKE: Waiting for resources
There’s always a good reason why that next step is elusive. You might be holding out for an investment round so you can really launch a big marketing campaign. Or hire that slick salesperson. Or become premium sponsors at that big conference that your key customers are going to. But you don’t have the money; so hey, what can you do?
ANSWER: Time to get creative!
The truth is you are always going to feel resource constrained. Even when your company is worth a hundred billion dollars! So you need to learn to hustle around these apparent barriers. Remember: necessity is the mother of invention. By being scrappy you’ll be forced to focus your time and attention on the handful of things that are going to make the biggest difference. I’ve often seen startups after raising a big round spend huge amounts of time and money on things unlikely to improve the state of the company, like fancy launch parties.
Let’s say there’s a conference you’re sure it would make a huge difference for your company but you can’t afford the flight+hotel+registration. Can you go to TaskRabbit or Craigslist and spend $50 on someone local who can print out a bunch of flyers for you? Can you have them drop off unofficial welcome bags for guests at the hotels used by the conference? Can you submit a talk and get the conference to sponsor your flight?
A good entrepreneur always moves the company forward, no matter how challenging things seem. But keep in mind — just because you hustle doesn’t mean you should cut ethical corners; making up fake reviews for your site to make it feel more vibrant could lead to major trust issues; but having a bunch of friends review products with you is fine.
MISTAKE: Over-technical product
Your super-smart engineers made sure that every possible field and flag in the database was exposed in the customer interface. They have some cool analytics packages and are using d3 to make pretty visualizations of the data’s trend lines. Every time you show it off you dazzle people! This product is really sophisticated.
Weirdly enough, you’re having trouble actually closing sales of this super-sophisticated service. Prospects are impressed but you just can’t seem to figure out what’s holding them back from signing up.
You built a product targeted at small businesses but designed for engineers and data analysts. Do you really think a tie shop owner is going to have the time or training to slog through forty pages of numbers and acronyms to better understand where he should open his next store?
Think about the outcome that the end user wants and make it clear how your product or service will get them that. Make sure that everything your product does is focused on making sure they meet that success. This usually looks like showing less information, not more, and abstracting the controls to your database into actions that your customers understand.
Try sitting down with a new potential client who has never seen your software before and, without giving them any direction or coaching, have them complete a set of tasks. you’ll be really astonished and humbled to see all of those flourishes you put in just confuse and confound regular folks who haven’t spent months staring at these screens. Make sure you build what’s right for them.
MISTAKE: Selling on cost
You’re confident that you have an amazing product to bring to the market; the existing dominant player has a really crappy offering that costs four times more than what you’re planning on charging. Surely you will dominate this market given that your product is not only way better, it’s way cheaper?
ANSWER: Sell on value
If you’re selling on cost, you’re focused on how little money your customer will need to pay for your service/product and not how much value you’re going to be providing them. It’s much more inspiring for a business to be thinking about how much more money they could be making instead of how much less money they’ll be spending. Focus on making your customer more successful. If you can prove you’re growing their business you can capture a lot more of the value you’re providing them. If you’re just a cost center, you’re a commodity that’s part of a race to zero — some other startup will just undersell YOU next year. Don’t be a tool — be a partner to your customers.
This often can make sales easier as well — if you can make your sale a zero-risk proposition by only charging proportional to the new value you’re bringing the business, the customer has nothing to lose by trying your solution out.
MISTAKE: Rapid early expansion.
You’ve closed a few dozen customers in one market — while you’re only just beginning, you’re really excited by the idea of rolling this offering out to many more places and applications to prove how large your potential is and maximize your growth. You’re sure that this expansion will help trigger investor interest and will help you recruit too.
ANSWER: Nail it then scale it.
If your strategy isn’t working at scale yet for one geography or industry, expansion is not your best next move. Find a niche that you can completely dominate — by focusing on one set of people to serve it will keep you honest about what’s working and not and will help you iterate the fastest. (It should go without saying that wherever that geography is, that’s where you should be, too!) It will probably take you a number of failures and adjustments to really tune your model for your initial market. Once you’ve rocked a model and have near-saturated a market, it’s time to look at rolling it out in different geographies.
I know you want to prove that your idea is enormous, but if you try to “boil the ocean” before you have traction anywhere, you’re not going to get anywhere. Focus will pay you dividends.
David Weekly is a product manager at Facebook and is an award-winning startup mentor. He founded Mexican.VC, the first Silicon-Valley seed fund for Mexican tech companies (acquired by 500 Startups) and Drone.VC, the first drone fund. He enjoys helping build tech communities around the world and is is the founding Director of Hacker Dojo, the world’s largest non-profit hackerspace. Follow him on Twitter, Facebook, LinkedIn, or AngelList.