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How much does it cost to launch a startup? According to CB Insights, it has never been easier to build startup ventures. Thanks to open-source technologies and online tools, the cost of launching a startup declined from $5 million in the year 2000 to less than $5,000 today. Today, funding is no longer a prerequisite for launching and growing startup ideas. Bootstrapped or funded, you have everything you need to go to market quickly and inexpensively.
LinkedIn co-founder Reid Hoffman once said, “the only way to scale is to do things that don’t scale.” Many entrepreneurs worry too much about their 1000th customer and their future $100 million-dollar business — when they haven’t even acquired the first customer. In a competitive and uncertain market where most startups fail, entrepreneurs should be very careful about the steps they take to launch and should validate startup ideas before aiming for the stars.
Doing things that don’t scale is an approach that will help you minimize risks, costs and uncertainty, while maximizing future success rates. Follow these steps to launch startup ventures by doing things that don’t scale.
1. Find a problem big enough to be worth solving.
The best way to start is by looking at your own problems and needs. Being your own customer helps you define wise hypotheses. Many entrepreneurs like to play what I call the X for Y ideation game. Applying the Uber, Airbnb, Groupon, Facebook or any other successful company model to a different market or industry can help you generate ideas for problems rarely worth solving. Instead, start with the problem and let the customer and tests tell you by which model you can better solve this problem.
In a Startup Circle live session, Luke Kervin shared his journey for starting and validating the idea of PatientPop, a platform he co-founded for physicians to optimize every step of their patients’ journey.
In 2013, when Kervin’s wife was pregnant, he was shocked to learn at the OB/GYN office how the healthcare industry was lagging badly behind everyone else in adopting modern technology to run processes. But he turned this unpleasant personal experience into a perfect business opportunity that eventually became PatientPop.
Problems worth solving address urgent needs. Start with your own experience at home and work, and you’ll find problems you can’t live without solving.
2. Become the product.
Doing things that don’t scale means solving the underlying problem under the condition of the unavailability of the product. Most of the time, especially for technology startups, a product is an app. Apps are not cheap to build. They either take time or money or both. But at the end of the day, apps are created to deliver a solution. If you think about it, in most cases, the solution can also be delivered by a person. It may not be scalable — in other words, you won’t be able to serve hundreds or thousands of people at the same time, but you will be able to serve enough people to test your hypotheses, build traction and presell the scalable version of the idea.
In his Startup Circle live session, Brennan Dunn, founder of RightMessage.com, a product that helps in segmenting website visitors for better personalization, shared how he manually implemented the idea of RightMessage in clients’ websites one site at a time. It was not scalable but a simple and quick way to test his idea and get paid for his services while building a product many people can use on their own.
Kervin and his PatientPop co-founder Travis Schneider launched a one-page website and a simple brochure showing how the markups would look. This simple strategy was enough to get them on their client calendar to present the idea and even register an impressive number of clients. It took Kervin and Schneider a few days to create the non-scalable version of their product — a version that relied more on the founders and less on the technology.
3. Sell soon.
Selling soon, even before creating the first version of the product, is an excellent way to validate the need for an idea and build a pool of believers who will help you launch a product that addresses their needs.
When you combine the sell-soon mindset with the benefits of doing things that don’t scale, you build yourself a path to market that allows you not only to execute quickly but also to serve the customer while creating the product. In our case study, Kervin and Schneider took the role of the product by building the website for the customer and setting their analytics and campaigns for them.
Before launching Startup Circle, I emailed the idea, vision and plan to a few startup founders. Having gotten the financial commitment of two companies, I had the green light to proceed to the next stage.
4. Focus on core features.
There will come a time when product development becomes inevitable. With the rise of the lean startup movement, most entrepreneurs are aware of the importance of starting small by building only the core features. However, sometimes it feels like many features are core and some entrepreneurs end up spending months building a product no one uses.
Think of the core features as what the user needs to accomplish the desired outcome. The trick is that you continue to serve part of the solution by doing things that don’t scale while you automate the other part. For instance, in the case of a food on-demand application, you can start by allowing users to browse restaurants and menu items while you take the orders through the phone and get paid in cash or using Square at the door after delivery. This is how the food on-demand application DoorDash started.
Take the example of Ryan O’Donnell, co-founder of SellHack and Replyify, tools that allow you to find leads and send targeted cold emails. Ryan was trying to make his job easier by creating a simple tool that can quickly help him find the contact information of his leads and send them an email. It took him a few days to create the core functionality, and it was all he needed to grab the attention of his target, salespeople, and drive thousands of users.
5. Hire in response to demand.
Business owners like to make projections, but most of the time — especially in early-stage ventures — projections are rarely accurate. Instead of hiring in expectation of demand, hire in response to demand. Although you should always be evaluating new talents to build a pool of candidates, be careful when to confirm someone’s appointment.
Above all, you should be the first and most active salesperson in your company. To focus on their roles of CEOs and after being the only salespeople on the team for months, Kervin and Schneider hired two salespeople to take over their jobs. Today, they employ more than 350 employees at PatientPop.
Founders of startups have to remain firmly planted on the ground and address grassroots issues within their business before reaching too high in regards to scaling. Take it from hands-on entrepreneurs who have seen the seeds of their efforts grow organically.
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January 29, 2019 at 08:45AM