If you don’t want to pay over $100,000 for a lesson you can get for free
How much are you able to pay for education? $15,000 a year? $25,000? $50,000? I personally know a bunch of non-tech founders who lost over $100,000 in a couple of months. It is a price they paid for hard obtained knowledge what should never ever be done. It doesn’t matter that googling up “founders common mistakes” most probably would yield a list of articles describing these same traps I’m going to talk about. Still, non-tech founders step into them again and again paying thousands for this grim experience. The smart way, though, is to learn from real life stories and safe these thousands for the future, where you’ll be able to multiply or all the same lose them, but at least in a way that will be creative, unique and totally yours.
1. Skip an MVP stage
Naresh is a non-tech founder from South Africa. He’s raised $15,000 from his friends and family to launch a multi-sided pet-related projects crowdfunding platform.
The service seemed very perspective, he recalls. Crowdfunding market is constantly growing in the US and Europe and I saw an opportunity for Africa here. Investors I’ve talked to were impressed from the get go and offered to fund my startup as soon as it moves from the idea stage to growth. They only wanted me to build MVP to see how exactly I was planning on implementing my ideas.
Naresh, however, decided to over-deliver and secure investment by impressing perspective investors with a fully functional product. Besides, he was not sure how MVT should look like and what features should be considered crucial. You’d think here comes the line where investors bailed on Naresh and he lost his money? Wrong! He managed to raise another $30,000 from an angel investor he’d pitched in the first place. The problem came later when these funds were invested in hiring more developers to make product more elaborate. However, the service launched proved to be a total failure. Naresh and his team did not manage to form a strong message to the public, no one wanted to jump in and all in all, there was no product-market fit. The result — Naresh is close to losing $45,000 in a 5 months scope, he’s stresses, disappointed and in dismay.
Don’t skip the MVP stage. It gives you’re an awesome opportunity to get firsts users feedback and pivot, if needed. Moreover, if you do it smart way, you’ll use your MVP landing for pre-launch activities (like signing up perspective customers, raising buzz on social media, getting traction and fine-tuning your public message.
2. Hire a developer, when you don’t have a clue what software product management is about
Nina is a non-tech founder. She’s lost $125,000 in 6 months. I had an idea of this video content sharing platform, she says. Before I entered the startup business I managed an online school and was pretty sure in my managerial skills. I also considered myself to be a tech savvy person, though certainly not a developer. I made market research of existing content sharing solutions, have read dozens of articles what platform people use to build double-sided marketplaces and have chosen Sharetribe as the most perspective one. The idea was to use Sharetribe open source as a base and hire a developer to build my customised features upon it.
Nina hired highly recommended professionals and development began. She recalls it started smelling like trouble after3 moths in the project, when the devs told her Sharetribe did not provide enough flexibility and they needed to code from scratch some basic features. After 5 months and budget skyrocketing over $100,000 Nina started to panic. She tried to push, limit the budget spend, but all her efforts were futile. In half a year she ran out of money, received uncompleted product and was literally left with a broken heart.
This type of problem doesn’t evolve when the founding team consists of a business person and a tech founder. While the first plan sales strategy, look for partners and raise funding, the later invest the “sweat” by actually creating the product. Being a co-founder, a tech person is personally interested in completing the job in the most efficient way, make a solution easy to manage and technically “beautiful”. If your product is a software, it is considered to be a mistake to outsource the competitive advantage creation (that is, code writing). The common advice you’d hear: dealing with code-based product, find a co-founder who’d be able to create this code and never ever attract a third party to get the job done. This statement is deceiving if not upright wrong. We all know Apple and Google hiring talents and buying out perspective startups to leverage on their technologies. It’s extremely rare when these talented individuals are invited in the circle of co-founders in exchange for their contribution. So, outsourcing competitive advantage creation is not a sin in itself. What separates Nina from Apple is that the later knows how to manage software development process and Nina doesn’t. She’s clueless about agile practices, how to set up goals and milestones, how to control performance, how to prioritize, etc. My point is: if you’re thinking of acquiring new skills before hiring a developer, choose software product management course over development basics. Basics will not let you be on the same page with experienced devs, while managerial skills will safe your time, budget and emotional balance.
3. Fundraise to hire a CTO
Jeana has been in finance business al her life. She’s been working for the Big Four (largest accounting firms) for 35 years, but due to personal issues had to quite her job. In a year instead of posting her CV she decided to launch an educational startup aimed at younger generation. I had and still have a strong believe that we all lack proper financial educations, but young people really need to learn the basics, says Jeana. I decided, I’ll use my deep understanding of how personal finance work for the good and create an ecosystem where everyone would learn what they need about finance. I dreamed this system would use AI for offering students personal learning plans based on their background and preferences.
The idea sounded plausible, but Jeana had no technical skills to build such a product. So she started raising in order to hire a developer who’d be able to help her with implementation. No wonder, she’s got a zero response from angel investors, accelerators and even banks. No one wanted to fund a product on the idea stage.
It might sound like a broken record but ideas come ten a penny these days. Still, many non-tech founders believe they’d be able to bewitch investors so much that they’ll get a check like one-two-three. The reality is that it never ever happens, if you don’t have personal connections with those who fund you. On the other hand, if you’re a techy, you may have a chance. I personally know several tech founders who received over $200,000 funding with no pitch deck at all, based solemnly on their personal success score (how many successful projects they’ve implemented) and attractiveness of the idea. Somehow, investors believe that there tech guys will figure out what to do in terms of business if they’ve been smart enough to develop a technology behind their idea. Sometimes, it works out, sometimes it doesn’t. But the point is, if you have no CalTech diploma and no successful projects to showcase, your game’s up (in terms of getting funded). It sounds ruthless, but that’s how it is.
What’s options are you left with? You can definitely learn how to code, but it might be not the best solution. It takes years to become a reasonably good developer and, honestly, coding is not for everyone. Second option is to find a developer who’d become a co-founder and code for free. It is more or less plausible solution, especially if you know the person or if you manage to come up with really good co-founders agreement. Otherwise you may end up being kicked out of your own business. The third option (and I actually like it) is to use no-coding platforms like Webflow or Bubble.io to build your MVP at least for beta testing. No-coding software is now able to do almost everything you need. You may either learn how to use these platform or to hire a professional via Fiverr/ Upwork. It’ll make your development budget at least 10 times smaller than with conventional coding, save you time and provide a pretty flexible solution you can turn into anything you want. With initial product you’ll be able to reach out for potential investors and showcase not only your product but also a creative approach to problem solving. And isn’t it what startup founding is all about?