We all know the infamous statistics of startup: 9 out of 10 startup failed. Now there’s no silver bullet for this, but there are two possible method you can use to put the numbers in your favor:
Get failed quick..
.. without busting your startup completely
In other word, you need to do multiple small failure. When we talk about small failure, we mean it’s not big enough to bust your business but enough for you to see where you better off. The faster you do this, the better you off. This is because everytime you fall (and learn from your mistake), the faster you can learn and adapt and produce something better.
Of course this is easier said than done, since nobody wants to fail, let alone fail painfully. But the thing about creating a new business is that it’s always about the risk. Being said, there are few things that can help you go through few cycle of learning curve.
Having the right mindset
What mindset have got to do with this: without the right mindset, you wouldn’t survive far, plus it will be painful. The thing about business is, you need to love it. No matter how brilliant your idea is, if you don’t truly believe (and love) it, you can’t go far.
But Hendri, these examples shows us that you could become rich without actually have a right mindset.
True, but here’s the thing about the right mindset: it depends, subjectively. This brings us to the mind topic: you need to know your end goal. The reason you’re doing this. And you need to commit to it. If your goal is to generate money from it, you need to commit to it.
The point is, as bad communication can ruin any relationship, it could also ruin your business. And the first clear message you need to take care of is yourself: what do you actually want? Sure, this can change over time, but as long as you stick to it one at a time, you’ll be good. We could list some of non-technical traits and mindset that could help you build your own digital business, but we’ll do that on separate article.
For now we will focus on four main criteria we use for helping numerous founder build their digital business: their success experience, chosen risk profile, technical proficiency, and business proficiency.
Previous success experience matter greatly of your new digital business. Why? because of cognitive bias, that’s why. As human, we are often bias of how we see the world. Supposed someone have a success experience in digital marketing that allows them to produce $100,000 in one week, it doesn’t mean he/she can repeat it again in the future. The more he/she clings to his previous success experience, the harder it will be for him to learn and adjust of new things, especially looking at [how fast thing change in digital landscape].
Things are moving at a breakneck pace we need resilience and ability to adapt more than all other resources combined.
As is true in life and in business, the proportion of risk is equal to proportion of reward. The greater the risk is, the greater the reward is. This is not always true, but is a good rule of thumb, especially in business. With [ten of thousand new business born every week] that means your risk of competition is rising.
Starting your new business in your firstborn? [you need to manage your risk even better]. Depends on your situation and life position, everyone would have different risk profile. You need to understand:
What can you tolerate as business risk
At what point you would call it off
One of our client set the risk threshold at three years. If it’s not taking off 500% profit in three years, they would closed it. Some on number of users, some on sentimental achievement. What we need to remember is: all of those risk threshold is valid, for each of them. Risk profile is tied tightly with the business goal.
Since we’re talking about digital product, one thing you need to ask yourself is: how literate are you on how digital product are made? do you understand only the bird-view? or maybe you yourself can code the product. And if so, until what point can you help on technical matters?
Understanding your technical proficiency helps you plan your product development. If you don’t really into it, you can incorporate this information on your business plan and plan on when and what kind of technical help you’d need down the road.
As a rule of thumb for non-technical founder: do not underestimate the effort it takes to produce quality product. It might seems easy and no-brainer, but remember that behind seemingly easy-to-use and simple functionality lies complexity. We will cover this later on [the section about how digital product are developed]
On the other side of technical, lies business. Taking of from the same perspective as technical proficiency, you need to understand your / your team business proficiency. Why? because a product is not a business. A great product helps you along the way, but to make it sustainable you need to understand how business works.
For example, whereas technical proficiency matters in product development, business proficiency matters in how the overall company can survive and get its goal in the most optimised resources. Business talks more than just product development. It talks about finance, marketing, sales, after sales support, expansion, partnership, strategic alliances, etc.
How to win the game
“Be first, be smarter, or cheat.”
The world of digital startup is full of vile beasts and traps. As if building a new business is not hard enough, you need to do it on a limited time since [you might get surpassed by your competitor in no time]. How do we win the game? You can win the game either by being the first, be the better version, or be smarter.
The hardest part is to be the first. High chance are, someone somewhere out there already create your golden idea the moment you dreamt it. Becoming the pioneer is extremely hard nowadays, unless [you create your business in a very narrow niche]. But if you are able to be the first, you will get what is called first-mover advantage. While being the first might get you tons of leverage, be mindful that [the first one through the door is the first to get fire].
The other way to win the game of startup is by building better version . There are [plenty of example] where late competitor surpass the pioneer by carefully create a better version of their offer / product. To build a better version of product, you need a combination of hard-work and eye of detail. The original might already spend tons of money to develop its product and features, while you are pretty limited in your initial resources, [unless someone invest in your idea]. This method works well if the product in subject categorised as a digital product without deep feature (it would be hard and long before you could build an ERP that surpass Oracle / SAP).
Being the first is hard, and be the better version takes quite abit of hard-work. So why not try to be smarter? In a nutshell, be smarter means able to see how you could win the game not by having more resources, but by using your resources ingeniously you slowly surpass them. Being smart means not facing the resource-intensive company head to head, but to circle it around and find another entrance you can afford. We’ll dive deeper on it on [section three]
On investment & basic principle of business
Money is not always the main factor in digital business, but it helps you scale well once your core digital business foundation has been erected. On this note, our view on building a product via investment vs bootstrap is this:
Build your core business first by bootstrapping, and prove that it works. Once you have the proof, investor can be a plus for you.
This works in two fold. First, by doing your business using your money, you will put more attention and focus to it since it’s your money you gamble. If it works out, good. If it’s not, the lessons is on you.
Second, when you have proof, you have better bargain power with your investor, and a better relationship with them. Investor fixated their attention on numbers and profit, and the proof of your business add a validation for them. Investment money should be used to expand, not to build the core business in motion. In the case you really believe your idea but you don’t have any money, angel investor might come into picture.
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