Entrepreneurship & Business Transformation Medium Blog
TL;DR — Have an intimate understanding of the problem you want to solve, learn how to build, learn how to sell, always iterate your product with your customers feedback and establish what makes you and your start-up unique.
Starting a start-up is hard. But it is doable. There are 3 main ingredients to succeeding — having a good founding team, solving a problem better than anyone else, and make enough money in the short-term to make it long-term viable venture.
After having my own start-up which failed, albeit learning some great lessons, to now helping start-up founders at WMG Accelerator better navigate their start-up journeys, I'm going to share observations on the key aspects that start-ups, particularly first-time founders, need to nail to legitimise their business.
Focus on the problem more than the idea
Don't get me wrong, ideas are great. They are the manifestation of human ingenuity, little flashes of inspiration that seem brilliant at first viewing. However, we've all seen the best ideas on paper go on to fail, albeit due to a variety of factors. Not all ideas are made equal. Therefore, I encourage founders to really hone in on problems worth solving. Particularly problems in which they have a unique insight. Such problems provide a better platform to generate ideas that solve the problem, therefore leading onto number of MVPs to test your hypothesis. If that problem affects an already large or indeed growing market of potential customers, you probably have a problem worth solving. Trends can give an indication as to the fast-growing markets that you may want to tackle, but some trends can be false dawns where the timing isn't quite right for their widespread adoption.
If you're struggling to think of problems, go and observe different groups of customers. Watch them. Understand what patterns of behaviour they undertake. Identify areas of friction they encounter. Delve deep into what pains they experience in certain contexts and what gains they would ideally like to realise. Building this thorough understanding of your customer provides great insight into their problems, and thus what potential solutions could help them.
Even for start-ups intending to push a new technology platform they've created or built on top of, if there is clear alignment between their solution and the key problem that their intended customer suffers from, the chances of early start-up failure are greatly reduced. Your customers should love your product or service; you should solve their problems better than anyone else and ideally have customers throwing money at you as a result. Whilst this sounds like some sort of utopia, striving for such a standard will help provide a tighter focus on problems that your customers face.
The founding team should know how to build and how to sell
I've had many a conversation with a young, fresh-faced first-time founder on their grand idea and vision. Inevitably I ask "have you built anything around this which you have attempted to sell", to which many have responded with a no, or that they're waiting for funding or they're going to hire some ridiculously expensive app developers to build their solution (sigh). Now, whilst I appreciate some start-up solutions will require more time and resources to establish, generally speaking, successful start-up founders themselves can build products that meets the necessary spec, sell to their target customer effectively, and do so at a consistent cadence. Having something tangible to show customers and stakeholders is such a better way of expressing your vision than merely an idea on paper. It really confirms how passionate and enterprising the founders are. No, you don't need 50 product features and no you don't need to sell via Facebook ads. Build out what you believe to be core product value that solves the customer's problem, and then go directly to your customer; literally walk up to them, go to wherever they are and sell it to them. Stripping away unnecessary complexity, and generating traction is fundamental to getting a start-up off the ground. From there, you then continually iterate your product and sales approach. The 1st version of any product will never be spectacular, and frankly it doesn't need to be. It should meet the customer's needs, and if it doesn't, go back to the drawing board and re-iterate. Customers may not always know what they want, but they'll provide you with the crucial feedback on whether your product is any good or not. Treasure it and use it as the fuel to improve your offering to them. Build, measure, learn.
Particularly for the young first-time founders, this process creates a bank of real work that will help them in their future careers no matter if their current start-up is successful or not. I'm immediately more impressed by young aspiring entrepreneurial types who've shown me what they've built and/or sold, having started from zero. Building a start-up is hard, stressful and not guaranteed to be monetarily successful. The journey of building will provide immense value to founders no matter the outcome, as I myself have found.
Determine what is unique about you or start-up
All start-ups need to have a competitive advantage and this is usually derived from some unique insight or attribute that they own or have built out in their business. Nevertheless, even at the earliest stages of a start-up, an inability to truly identify what your competitive advantage is will likely hinder the long-term scalability of the start-up. Is there a monopoly effect? Where is the network effect in the business? Do you have something that cannot be easily copied or bought by competitors? All of the great start-up successes could answer this question.
The good news with competitive advantages is that you don't need one from the outset. When you are just starting out, embrace obscurity to build something valuable which in turn should help you gain traction faster when testing your product. Identify what is different about you and your start-up, and make that your advantage.
Make enough money to at least keep the lights on
In an ideal world you can get to the famous level of "ramen profitability" in the words of Paul Graham — meaning that you make just enough money to cover the key expenses. Now whilst this level of expense will vary dependent on the market that the start-up is operating in and the specifications of the product, making enough money to keep the lights on is a great first benchmark to achieve. It buys you more runway to build your business and crucially you're no longer at the mercy of investors and the like.
In reaching this benchmark, you prove early signs of problem-solution fit between your start-up and your earliest customers and it displays a level of skill, dedication and humility to start generating real traction whilst keeping high discipline on expenses. Many businesses sound great on paper, but to go through the steps to legitimise the business and establish the feasibility of the early business model is a step that is undervalued in its importance within a start-up's journey.
Whilst I'm only scratching the surface of what it takes to get a start-up off the ground, I hope this gives you a better starting point as to the challenges, thinking and actions required to get your start-up off the ground.
Please share your thoughts in the comments, your feedback and insight on building your start-up or being an early employee at a start-up is greatly appreciated!
Stay tuned to the Entrepreneurship and Business Transformation publication here on Medium, more content on building businesses and thinking better as an entrepreneur will be posted very soon.
How has one of the best kept their competitive edges
In case you don't know who Tencent is — https://en.wikipedia.org/wiki/Tencent.
In case you find it hard to position Tencent in the tech landscape — https://money.cnn.com/2017/11/21/investing/tencent-facebook-value/index.html. In short, its valuation overtook Facebook at the end of 2017.
Tencent is no longer the start-up it once was. However, from its latest report of 2019 development statistics, we can see why the growth of Tencent is still strong. Though it appears as a large corporation now, within it, there is a young heart pumping "blood" (codes) reminiscent of other tech start-ups. But why is this case? Some of my personal interpretation on the factors behind the development growth.
image courtesy: https://www.cnbeta.com/articles/tech/953189.htm
Keep the main thing the main thing.
The developer population still makes up 66% of Tencent's 50K+ population. The other way to read into this: their support staff includes sales, maintenance, admin, HR, and frontline service staff, etc equate to about 1/3 of the whole workforce.
Is this ratio good? Well, you tell me. In comparison with my employer, Uni of Warwick, 37% are "Academic/ Researcher/ Teaching staff" (https://warwick.ac.uk/about/profile/people/). The other way to read into this: only about 1/3 of this population is producing and delivering the core service of the organisation. So the opposite to Tencent.
Now, think about what ratio have you got in your own startup? Are 2/3 of your population actually working to MAKE your products or services? how many overheads there are in your company which could be burning the profit you've created?
Keep it Lean
60% of Tencent product teams are under 20 people. 74% of tech team leaders are still writing codes and contributed some 30K+ lines of codes on average.
Nearly 50% of all products have a release cycle of 1 week. 80% of all products have a release cycle under 1 month.
So consider how lean your team is, particularly if you're involved in a business or star-up embarking on a growth phase. Do you still have a lean development team for your key products? I'm responsible for two products at the moment, and I'm glad to report both teams to have a release cycle of under a week. Though both teams are small (5 and 11). Aprevious team containing 26 people didn't perform as well. The project involved the transformation of a large chemical manufacturer, and we had a release cycle of 2 months. Reflecting upon what we produced and how we did it, it would have been possible to have a release cycle of under 1 month.
So, I pose this question to fellow entrepreneurs — think about if you can shorten your big project release cycle down to a month, or even two weeks. Are you pushing out your releases on a weekly basis for your normal product lines?
Keep it Iterative
Tencent completed 3802 product backlog items PER DAY, equals a whopping 1,387,730 completed backlogs in a year! Considering their large developer workforce of 33K (66% of 50K), on average each developer completed 42 backlogs in 2019, so nearly 1 backlog completed per developer each working week.
On average, each product pushed out 3000 releases last year = about 9 releases every day.
Think about how the Scrum methodology is supposed to work has assisted in this rapid workflow. Have you always kept any backlog to its minimum? how do your burn down charts look like? Are the masters keeping it smooth? Are we (product owners) guilty of creeping up the specs? If Tencent can keep its releases at such a high frequency, why can't we when our products are probably nowhere near the same level of complexity?
Keep it Agile — rapid response
28% of product requirements get responded within A Day at Tencent. When bugs are reported, 46% of them gets solved within A Day; 82% are solved within a week.
This is arguably the most impressive of all the stats. I was recently involved with a small commercial NPD team and I couldn't even get them to respond to my emails within 8 hours! And as you might have guessed, that team got relinquished soon enough due to the inefficiency in communication.
Therefore, fellow entrepreneurs should be asking the following questions — how are we doing on fixing our bugs? How many times did you claim that "this is definitely on our product roadmap" only then to leave them in the product backlog graveyard, never to be seen or prioritised again. 80% bugs fixed within a week is certainly a benchmark that my teams have not achieved yet. We have much to learn from Tencent and so much more to put into practice.
To those who run medium to large-sized businesses, how are you doing on this? I've certainly experienced in various organisations that responding to an important or even emergency email within a day was a luxury
Keep it Agile — department vs function
Within Tencent, someone had contributed to 24 projects; a particular team had contributed to 113 projects!
There is always the tendency to quickly departmentalize our start-ups. We often see relatively siloed divisions, with subsequent 'heads' of each division leading them. We love putting a budget and resources against divisions and keep internal "monopoly money" flowing between them. We sometimes proudly believe this is the "best practice" in terms of management. Is this really helping our heads of divisions to function collaboratively to create and deliver what we promised (the key value propositions) to our customers? Or is this really for the ease of management? Is there a balance that can be struck?
I'm keen to hear the thoughts of fellow entrepreneurs from businesses of all sizes, so please comment below!
some other noteworthy facts
C++ is still the most popular programming language used at Tencent, followed by JS. Java, Python and Go has managed to get into top 5. Personally speaking, this makes me very happy as a computer scientist! To me, C++ represents high efficiency, and indicates a strong architecture-led development culture. This certainly should apply to most start-ups — even if we are small, we could be well structured in terms of product development, so we are capable of scaling up.
What Tech (or any) entrepreneurs should learn from Tencent's 2019 Development Report was originally published in Entrepreneurship and Business Transformation on Medium, where people are continuing the conversation by highlighting and responding to this story.
And it isn't what you expect
You have your business idea for your Software offering. You've mapped out your value propositions and utilised the Business Model Canvas to give you a clear view of how you're going to create, capture and deliver value to your target audience. You're embarking on the journey of building your software product and you hit multiple roadblocks along the way.
This can be mitigated by applying effective project management tactics. Understanding and having clarity on the requirements of the project, the timeline of the project along with key milestones, budgeting and key deliverables is fundamental to successful development sprints. Therefore, project/sprint leaders need to understand how to coordinate all of these elements effectively, alongside managing developers who need to be aligned at all times.
An example of how a lack of project management focus can manifest itself in developmeent sprints is the poor prioritisation of tasks during a sprint. Developers must be clear on how urgent and/or important a task or requirement is in the wider sense of the development process and tiers of development.
To find out more about these issues and what you can do to best naivgate software developement for business, click on the link below to listen to the latest Growth-Hacking Podcast episode on Software Development with Full Stack Engineer and Software Development expert, Georgi Iliev.
How Start-Ups Go Wrong with Software Development was originally published in Entrepreneurship and Business Transformation on Medium, where people are continuing the conversation by highlighting and responding to this story.
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These opinions are a selection of individual perspectives from those who work with the Accelerator or stakeholders of the Accelerator. These are not views from WMG.
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