Why building a tech startup you should never think of tech too much
Most non-techie founders (me included) tend to be obsessed with the tech side of a startup. That’s exactly why we fail.
I’ve been building my own businesses since I was 23. I’ve built a content marketing agency — and sold my shares to my co-founders 4 years later at a 7-figure price tag. I’ve built a profitable retail chain with >10M revenue. I’ve been running an e-comm side project that I also sold at 6-figure.
When 4 years ago I decided to launch a startup I had no hesitation — my experience promised me good odds to win.
It was an epic failure. I made every mistake possible and lost over $200K.
Here are the lessons I learned.
So, why do founders fail?
There are 2 ways to succeed in the startup industry: do what others do or do something totally different.
Despite the general belief that startups are always about innovation — they actually are not. Well, at least, not every startup is about it. Or, to better put it, not every startup requires innovative technology. When you’re doing just one part of the business better than anyone else — you can already be a startup (even if your A-game is about physical delivery — think, Amazon). So basically, there are two different types of startups:
1) A-players in a little part of the game that everyone else is playing
2) Players that create the game by introducing a disruptive solution to the problem that existed long ago but was not solved or was not perceived to be a problem.
Classic example — AirBnB. It’s not that we did not travel in the pre-AirBnB era. We booked hotel rooms. Yes, we were not excited about the prices — but, what’s the heck, we needed that vacation, so it did not even occur to us to start looking in some other direction or not going somewhere at all. The problem (high hotel room prices) was there but it was not perceived as an important or even urgent problem. On the other hand, apartment owners did not sit days and nights trying to figure out how to make more money on their property. There was Craigslist (and lots of local copycats in many countries). It was not perfect, but before it, there had been nothing, just word of mouth and a sheet of paper on the window offering a room for rent (and in some places, it is still a widely used tool, more popular than AirBnB).
What they don’t teach us in schools or what we can’t read in business literature is that both types of startups are absolutely legit — you just have to use totally different strategies and tactics to prevent them from failure.
Why the “copycats” fail?
Becaue a founder has not done the homework properly. When the market research is not done. When I say “market research” — what do you think about? Your competition, right? Who else is doing it. That’s exactly what I was thinking. It is wrong!
Doing “market research” should mean first and foremost research of your customers! It should mean:
- A meticulous collection of the information online: any place where you customers are hanging out — you should be there;
- Doing customer interviews properly! Not like you imagine it should be done and like I did it too (post an idea in a Facebook group and ask: so, you think someone will pay for it?) but actually asking people about their current processes (here’s an article on customer interview rules)
- Talking constantly to real people trying to figure out that sweet spot that only you will know. The secret that remains a mystery only because no one had actually cared to ask these people how they do something and what the bottlenecks of the process are.
If this part of the job is not done properly — startup will fail with 99.9% certainty. There are lucky guesses (see here) but I still believe cases like these are the result of pure luck. Meaning, you can’t have any impact whatsoever on your odds. You just roll the dice and see how it will fall knowing all the way that your chances of getting 6 are close to 0.
Why do the “disruptors” fail?
Because founders did not have enough business experience or enough connections that would help them get this experience from top-tier advisors. Whatever successful disruptive startup you take (Mailchimp, Apple, Shopify, Tesla, PayPal, Stripe, Amazon, AirBnB) — they succeeded not because the technology they had was so unique or amazing. But because they managed to build a robust business on this tech. Do you see what I mean? I mean, Apple would not have been Apple if another Steve, Steve The Developer, was in charge of business decisions.
I’m not saying that developers are unimportant. They are! Very much so. What I want to point out here is:
- Do not mix up these two types of startups.
- If you have a disruptive tech (say, a cancer treatment) you should focus on business side. If you don’t — you have to focus on making a copy of what is already there. Your primaraly goal is to do it a little bit better in one small detail. And to find out what small detail is, you have to focus on customers, not the tech.
- You never focus on tech, it’s just not something to be obsessed about.
A search for a tech cofounder
My mistake from the very beginning was that being a non-techie, I was thinking only about the tech side of the deal. I forgot everything I knew — in order to solve something that I did not know how to solve. I desperately wanted to find a tech cofounder to help me “with the coding”.
What I did not realize is that I was on the wrong stage, and that’s why my search for a partner went futile. I did not know myself and could not explain to others what was that secret that I knew about my customers that no one else was privy to.
When I failed to find someone to partner with me, instead of going to square 1 and doing a thorough analysis of why I was stumbling a wall after a wall, I just concluded that I was not communicating my brilliant idea properly and that I’ll go ahead, hire an agency and when they build a product for me everyone will see what a genius I was and regret😂
No need to say that this approach led me to lots of tears and losses instead of much anticipated success.
Many non-techie founders I talk to now, sadly, tend to adopt the same approach. When they fail to find someone who would “do the coding” for them they never go back to their premises and try to re-evaluate the idea: was it plausible in the first place? They continue their search, skipping from platform to platform. Some adopt no-code tools. Some step in the same trap as I did and hire professional developers. Failing to understand that their problem is not about the code at all.
If you liked this article please give me a follow here or on Twitter 😇. I also have a course How to Find a Tech Cofounder where I accumulate best practices that really work, and explain how to use this search for validating your business idea as you go. A framework that can be used by everyone from everywhere, regardless your location or industry.