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About 90% of startups fail, and out of that staggering statistic, 10% fail in their first year. Which means it’s about to be the most delusional time of the year, as well as the most delusional. Building company from the ground up, especially when working in stealth, is a high-wire task that takes nerves and incredible hard work.
As the co-founder and CEO of a startup, I have experienced the sometimes rigorous, but always satisfying process of bringing software startups to market. The lessons we have learned during that process have proved invaluable.
1. Get fit in the product-market knowing your life depends on it, because it does.
If a startup’s solution is really innovative and disruptive, chances are that another company is already doing the same thing. However, it is estimated that 35% of startups are belly-up due to poor market demand – market fit and demand performance are crucial during and after the funding process, especially in highly competitive software markets. Much has already been written about the value and definition of product market fit, but I have learned an additional lesson that a crucial component of market fit is developing a strong business case to protect purchases.
This means not only how the product will meet the customer’s promise or needs, but also how they will justify their purchase and fit into their work plan. In a world where there is a shortage of skilled workers, funding or the desire to produce is not enough to create the best sales environment. Individuals who need to implement the product will probably need the budget justification and the time needed to roll out the onboard and solution. So as you consider scaling and time, understanding and framing for your prospects is essential to how your product will fit into their budget commitments and work plan.
Startup founders should ask themselves:
- Who in the company will be responsible for implementation and daily use?
- How much lift is there to implement this solution – in terms of money, staff and time?
- Will it disrupt the budget cycle of prospects?
- Is the ROI so impressive that any barriers to adoption will be worth it?
When the product-market is fit, the answer to the final question will be echoed Yes
2. Expect to make mistakes, but be prepared to move on quickly.
A huge challenge for founders is often appropriate. A software startup installer can make 100 correct decisions in a row, but it can help hide a weak decision on pattern travel. Blinded by the initial success, many leadership problems have arisen in many leadership teams. Better a poor horse than no horse at all.
As such, the process of creating a software startup can be boiled down to a two-step cycle that is constantly repeating: validate, then create. This is true for any aspect of the startup; Building can refer to your team, your product, your price, your marketing strategy, etc. And the next recognition could come from peer consultants, design partners, investors or sales prospects.
This valid-after-build strategy is most fully reflected in the sprint process that has taken software companies by storm. By committing to releasing new products every two weeks instead of quarterly rollouts, organizations can quickly evaluate these releases to quickly-track any needed updates.
By fluctuating between creation and belief, you’re constantly improving, innovating, and refining – and yes, making mistakes. Startups should be flexible enough to evolve and pivot when needed. This flexibility is crucial, as the mistakes of the past need to be moved quickly. The past is the past, and those decisions should not be heavy in the way startups discuss new information and receive progressive feedback.
3. You get a chance to come out. Be prepared for it.
Research has shown that bad times were the final nail in the coffin for 10% of failed startups. Time is really everything, and sometimes the best decision you can make as a founding team is to stay in stealth mode even in the face of market pressure. For this the founders need to put pride aside, even if it means seizing the potential to come first in the market. Right-sizing your stealth period allows founders to be incredibly justified in how they behave, enabling them to bring a pure product to market.
Another value of not coming out of stealth automatically on a predictable, initial timeline is that it gives you time to understand your market, message and approach. All startups will inevitably have to adjust their messaging during their childhood, but it is better to do so outside the public spotlight. The rapidly changing message from Stealth sends a red flag signal to prospects and investors that lack clarity and commitment to a powerful vision.
And finally, people are interested in mystery. Staying in stealth mode for extended periods forms a conspiracy that can be invaluable in a public relations and branding perspective.
Software startups can change the world.
As a startup founder, you’ll inevitably find a lot of advice – some great, and some less. But if you have a clear strategy on how you want to prepare your early days, not just the product, but the whole approach to becoming a company, you will easily understand which advice to pay attention to and which to bypass. When you are guided by the feeling that you are doing something special, and when you are super-intentional to build the right foundation, you can give your startup a place for an exciting launch. More importantly, you can increase the likelihood that your youthful venture will survive.
Mike is the CEO and co-founder of Fay Island,
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