I was about 13 years old, living in Niger. Temperatures were off the charts, ice water and makeshift fans made out of old newspapers or a piece of cardboard were the hottest items in town.
I woke up one day and asked my mother if she could buy small plastic bags and help me find a salesperson. That night, I filled each plastic bag with filtered water, tied it up and stored it in the freezer. The next day, during the school lunch break, I rushed home to get my newly formed ice bags, loaded them in my mother’s cooler and handed them to the newly hired young man who would sell them to people walking on the hot streets of the city. In less than an hour, he was back with an empty cooler and I still remember the feeling of satisfaction and self-worth that it instilled in me. I doubled my ice bags the next day and from then on experienced steady growth. That turned out to be my very first entrepreneurial venture even though I didn’t know I was an entrepreneur at the time.
Fast-forward 27 years later, I am now a female tech entrepreneur. And here are 3 lessons I have learned along the way.
1. You are not building a product, you are building a company
With my very first company, one of the most frequent questions I heard from investors was, “Is this a product or a company?” I originally wasn’t sure I knew what they meant. But over time it started to make perfect sense. It meant that I was not dreaming big enough and as a result I was missing all the other ingredients that make up a company and a solid business plan.
Building a software product only requires you to write code, make it look pretty and get some initial market validation to prove that it works. Not a small task but nothing that will help you pay the bills. On the other hand, building a company requires that you not only have a product – that works – but that you have clients that are willing to pay for the product, a solid business model with clear goals for profitability and an operational vision. The hard truth is that as a tech entrepreneur, you not only have to write code but you also have to learn how to manage, operate and sell. And if you can’t write code, you need to find someone who’s great at it!
With four start-ups under my belt, I have learned to stick to a 4-step formula for building a company that allows me to focus and set manageable expectations.
As a tech start-up, one of the first priorities is to have a product that demonstrates how it works, which is called a “Minimum Viable Product” or MVP. In simple words, a working prototype. Your MVP does not need to have all the bells and whistles and doesn’t need to be perfect but it should provide the potential client, partner, employee or investor enough to understand the key features that will drive adoption and highlight the product’s value proposition. Having an MVP in hand while you socialize your vision speaks volumes compared to a static Powerpoint presentation.
Host a pilot program with a potential client willing to try it out and provide feedback. The focus here is not on the size of the client or how much they are paying you for it but rather selecting a client that reflects the type of customer your business success depends on, validating that the product works and arming yourself with key metrics that you can plug into your financial model. Metrics are the most important data points which allow you to extrapolate your revenue projections based on proven assumptions. How fast can you grow? How much will it all cost? What resources will you need and how much can you really charge for it? These are the questions that will be the center of your discussions as you get ready to raise your first round of funding.
This is the part, like most tech founders, I dread the most. It is time consuming and completely unpredictable. Ultimately, you will hear “no” from over 100 investors before you get that one “yes” that will change your life forever. And so you need to be prepared with your MVP, key metrics and a list of potential investors in hand. Start at the bottom of the list, get as much feedback as possible from your naysayers and fight the urge to go back and change your product and presentation every time you get a rejection. After 10 presentations, study all the responses and try to identify the “theme”. Fix what seems to be the number one issue or prepare the best answer you can. Keep going until you get a “yes”.
While growing can be scary, it is really the phase when your dreams start becoming reality and when you start having to let go and rely on others being able to go out and sell your vision. Recognize what you are good at, build a team that can complement your shortcomings and that can grow as the company grows. Hire smart, fire fast and learn from every mistake.
2. Set short-term objectives to reach long-term goals
Operate based on the state of the company today. This requires setting short-term objectives, reevaluating where you are on a daily basis and making decisions based on where you are and not where you think you are going to be while keeping the future in mind.
For technology start-ups I recommend applying the Agile methodology, which is a widely used project management process. The method helps teams respond to unpredictability through incremental, iterative work cadences, known as sprints. While each company tends to implement its own version of Agile, the objectives remain the same – primarily teamwork effectiveness, well-tested products and better deliverable management. Some of the most common implementations of Agile include bi-weekly objectives, daily team check-ins, specific task definitions and better resource management. In other words, Agile forces you to cut your project in small manageable pieces, better evaluate what you can deliver based on the resources you have, improve your ability to meet deadlines and gives you the flexibility to adapt to the inevitable challenges you will face.
3. Fail fast, fail often, fail cheap
This is one of the most valuable lessons I learned from a former investor. Why would you want to fail at all if you are trying to be successful? Because a failure is only a failure if you don’t learn from it, and the reality is that as an entrepreneur, you will inevitably make mistakes.
Fail fast means you need to recognize failure soon enough before it’s too late. This means setting short-term objectives and defining success metrics so that you have a way to evaluate results. For example, only sign agreements that give you an out after a trial period, or first test consultants for specific projects before you bring them as full-time employees and make sure you set deadlines for yourself so a project does not become a never-ending exercise. And if all the signs show that it is not working, be ready to move on to the next alternative.
Failing often awards you the ability to try different things and to learn from them all. You need to be flexible enough to change direction based on the feedback you are getting from your partners, your employees and more importantly your customers. And once you find the option that is delivering the best result, you need to commit to it, let go of the others and focus your resources on the next milestone you need to reach. Build your products in phases and only focus on the features that matter.
To keep costs lean commit to effective ways to experiment. Try building your platform in the cloud and only pay for what you use, sign up for as many resources available to start-ups as you can, such as free storage and software with Microsoft Bizspark, equity based legal advice or free legal document templates provided by Cooley Go or access to experienced individuals through incubators and entrepreneur development programs like ASTIA. The resources are there; it is your job to find them!