In the time of shedding and cold rocks, many developers branch out and work on their own startup ideas. It is not as crazy as it sounds. If you suddenly have time on your hands, and there are more candidates than open positions while shadowy hedge funds push for more layoffs, you might notice that some household name startups began during the last great recession.
But how do you know if you have a great idea or a dud?
This article is for you if you are considering a new business-to-business (B2B) startup. Because of this column, I have had some conversations with venture capitalists and other investors during their “due diligence.” I asked one of them how to vet a startup idea, especially before pitching it to an angel investor. Actual customers are great, but only some ideas can have a minimum viable product (MVP) before raising funds.
Your idea should have come from somewhere. It probably came from a past job or the problems of your professional connections. Those connections are your first source of information and customers. According to one investor, “If you don’t have 10 people you can show it to, you’re not in a position to do this.”
Your first slide deck
What do you show them if you still need to create the product? Why (this is tech, after all), you show them a slide deck of vaporware! Obviously, not in a deceptive way, but to communicate your idea. “This is what we’re planning to create. Would you be interested?”
In this deck, you should describe the problem from the customer’s perspective. Ideally, they should agree that this is a significant problem they are trying to solve. You should acknowledge existing solutions or workarounds. Most of all, you should describe the product you plan to create, what it would require to run, and how it would work. Don’t give away the secret sauce, but explain enough to titillate them and convince them that you have thought this through.
According to one investor I spoke to some years back, there are only two answers: “How soon can I have it?” and anything else. Sometimes this customer pitch is even a source of initial funding. In that event, consult an expert on how to negotiate and set clear terms, especially around equity and ownership. You may have a round of funding and customers from your initial presentation, but you should have prospective customers either way.
Keeping to the MVP
Especially when you have early customers, there is a tendency to add features. Some of these features make the product more useful in specific environments, while others seem to make the product more compelling. It may also be hard to determine what features are in the “core” of the idea and what are ancillary. The old wisdom holds: Keep your product an inch wide and a mile deep.
The trick is to write down some simple statements about the product. Consider this your “cutting board for features.” You may even vet them with early advisors or prospective customers. Anything that is not essential to those simple statements is out for now. It does not mean never, but not for your first release. The first release should be the simplest thing that could work.
For each proposed feature, you should also ask, “Could I produce this without it?” Also, on a personal note, do not get enamored with some low-level “hard part” that interests you. A couple of decades ago, I decided I wanted to create “reporting software” (we didn’t usually say analytics back then). What interested me most was reverse engineering the Excel file format. My partner and I released the library as open source partly because I feared Microsoft would sue me. Many other people also thought about creating Java-based cross-platform reporting software. They integrated the software I helped create. I never did create reporting software.
Others produced the reporting software first and integrated the Excel export last. Oh well, it gave me something to do during the dot-com bomb and helped launch my career. Maybe had I asked “Could I do this without it?” I might have worked on the reporting part first. I could have added the export to Excel later.
Marketing your MVP
After you struggle with little or no funds, you finally create a piece of software that meets the need you wanted to fill, so now what? First, you should go back to the people you talked to in the beginning. (You should keep in touch and engage them throughout your product’s development.) Show it to them. Are they ready to pay? Ideally, you will have a few customers immediately. Assuming that works, this might be a good moment to look at your next or first seed round.
What is next? Next comes your first campaign. Your website needs work. You need to tell people about the product and capture contact information. In other words, it is time to do some marketing.
Your website must represent well what problem your product solves and how it solves it. You should have some topical content. It is common to have a blog, but I suggest this is an antiquated motif. I’m not saying you shouldn’t have regularly posted content but “blog” is probably not the right descriptor. Who subscribes to a tech company’s blog? How do you even do that now? Google Reader is dead.
You should have a high-value asset (a PDF or whatever)... something that will entice people to give you their contact information. Consider a Slack channel or similar mechanism if your product targets developers. You will want to stay in touch with these people as the product evolves. Once you have enough contacts, consider doing an event such as a webinar or live stream.
Consider working up some thought leadership. This content can take a few forms. There are community forums (like Dzone) that allow relatively free publishing. Consider respectfully participating in a relevant forum like those on Reddit or Stack Overflow. Try to be consistent but effective with your time. Avoid arguments.
Consider taking your thought leadership to publications. Many publications have pages that describe the editorial staff or policy and how to submit them. If you cannot write well, find someone who can. There are sites on which you can affordably find freelancers to fix your prose, like Fiverr. There are templates and advice on how to write a “query letter” to a publication. You can use a site like AnswerThePublic to determine what to write about (as well as what pages should be on your site).
You need a presence on at least LinkedIn and Twitter for now. You may soon need a presence on Mastodon or another service as Twitter continues its death spiral. There may be other social media you should use. Look at where your prospective customers are searching.
Be realistic
Your big idea probably won’t succeed. It will cost more to produce in terms of time and money than you initially thought. But if you are furloughed and waiting for the economic recovery, then why not spend the time creating your own business between submitting résumés to bogus job listings? However, if you are not, decide if this is how you want to spend every waking hour when you are not working your $DAYJOB.
It may not seem this way, but times like this are the time many great startups will be created. If you have a great idea, consider vetting the idea with an initial deck and bootstrapping the startup yourself. It sure beats sitting on your couch and binging on Netflix. However, if you go that route, I recommend Glass Onion. I know that guy—maybe he’ll give you funding or some connections.