Speaking of Startups

That’s what I’ll be doing this afternoon at Harvard. I’ll be talking about my take on startups, including:

-The Perfect Startup
-The Worst Startup
-For Profit or Non-Profit
-Should You, Could You Raise Money?
-If You Raise Money, When Should You Do It?
-If You Raise Money, How Can You Do It?
-The Biggest Mistakes I’ve Made

It’ll be a fun interactive session. Let me know if you’d like the presentation deck.

Cheers,
Paul

A Founder Fail Story

This is from a Quora thread about founders with seed funding make.

Josh Fechter was gracious enough to share his own personal story about his mobile job finding app.

https://www.quora.com/What-are-the-common-mistakes-that-seed-funded-startup-founders-make

 

HOW WE RECKLESSLY BLEW $500,000 IN FIVE MONTHS

We had a Reddit post about our launch go viral resulting in over 10,000 users for our mobile app.

The idea: A mobile application that makes applying for a job as easy as a swipe.

People need to find and land jobs faster. That’s a huge pain point.

With our app, everyone who needs a job will get hired because it will be easy for them to apply.

Soon after our “aha” moment, two of the co-founders landed $500,000 in funding.

Look at our user numbers!

We worked at Google and in management consulting, so we know what we’re doing.

A month into startup life.

Why aren’t users coming back to our app?

Why won’t recruiters use our app?

We’d done zero customer development.

After many phone calls and surveys, we realized recruiters and founders willing to pay for a job platform want the job application process to be difficult.

Why?

It weeds out low-quality candidates.

Swiping right for your dream job is ideal for a candidate, but a nightmare for a hiring manager. You’d receive thousands of applicants in minutes.

How do we fix this?

What if we showed candidates only relevant jobs based on their uploaded profile details?

That’d work.

Nope.

Candidates continued to swipe right without thinking twice.

What if we reduced the numbers of candidates we have? We’ll only have engineers on the platform. They hate applying for jobs, so they’ll be more selective. Plus, recruiters will pay to get in touch with engineers.

Now, we had to act as recruiters and message every engineer to use our platform to get in touch with recruiters.

It made zero sense.

We failed five months after launching the company.

The next three years, I heard of many other founders getting investor money for the same idea.

All their companies failed, too.

That’s what happens when you use vanity metrics to get funding, especially when your users came from a viral Reddit post.

That’s what happens when you do zero customer development before building a product.

That’s what happens when you have no domain expertise in your startup’s industry.

The secret element of a startup’s success happens before you write your first line of code. It’s becoming an expert in your startup’s industry, understanding your prospect’s pain points, and getting pre-sales to validate your product.

Once you take these three steps, bootstrap your startup as long as you can. When you have traction and want to scale faster, then get funding.

In the meantime, try not to get distracted by all the shiny objects.