Brief Summary
This video provides a concise guide on how to start a technical startup, focusing on key elements such as the founding team, idea generation, market research, legal aspects, MVP development, growth strategies, PR, fundraising, operations, and hiring. It emphasizes the importance of a strong technical team, solving personal or well-understood problems, rapid MVP development, prioritizing growth, and efficient operations. The guide also advises against premature PR spending and highlights the significance of building relationships with investors and the press.
- Assemble a technical co-founding team with sufficient financial runway.
- Focus on solving daily or weekly problems with a rapid MVP.
- Prioritize growth and build sharing into the product from day one.
- Manage finances tightly and hire strategically to increase overall talent.
Co-Founders and Initial Requirements
To start a technical startup, it's essential to have two to four co-founders with at least 50% engineering background. Each founder should possess enough savings to cover living expenses at a minimal level for about a year, and all founders must be fully committed by quitting their current jobs. Notably, having a fully fleshed-out idea is not a prerequisite at this stage.
Idea Generation and Problem Solving
Brainstorming with the founding team is crucial for idea generation. The most successful companies often address problems that the founders personally understand or experience. It's more effective to focus on solving daily or weekly problems rather than infrequent ones, as this increases the frequency of product use and market engagement.
Market Research and Legal Incorporation
Conducting market research to ensure a substantial market size is essential. For startups intending to raise money in the U.S., incorporating in the U.S. is a straightforward process, costing around $250 through services like clerk.com.
Minimum Viable Product (MVP)
The most common pitfalls for startups are related to team dynamics and MVP development. It's crucial to launch an MVP quickly, ideally within two months, to get the product in front of users and gather feedback. Delaying the launch to iterate without user input is a significant mistake.
Growth Strategies
Growth is the primary metric for attracting investment in Silicon Valley. Effective growth strategies include experimenting with ads, focusing on reference customers for B2B startups, and integrating sharing into the core user experience for consumer-focused products. Sharing should be an inherent part of the product's usage, not just an added feature.
Public Relations (PR)
Early-stage startups should avoid hiring PR firms, as 99% of PR can be managed internally. PR is similar to business development, requiring warm introductions, relationship building, and providing value to reporters. Focus on structuring pitches around newsworthy events like launches, funding, significant hires, or major deals, and maintain ongoing relationships with reporters who have covered the company.
Fundraising Strategies
To attract investors, position the company as if it doesn't need funding by minimizing expenses and demonstrating growth with a lean MVP. When fundraising, schedule investor meetings tightly within one week to create buzz and a fear of missing out (FOMO). Growth is the ultimate solution to fundraising challenges, making investors more proactive in seeking out the company.
Key Fundraising Considerations
When seeking funding, ensure the company is growing and has launched. Engage with the press to increase visibility and build momentum by coordinating multiple investor meetings simultaneously. Target investors who understand the problem the company is solving, including potential customers.
Operational Efficiency
The most common problem for startups is overspending. Reduce expenses by paying founders less, securing a less expensive office, and generally minimizing costs. Regularly review monthly expenses to identify areas for savings.
Hiring Practices
Aim to increase the average talent level with each new hire. If a candidate isn't smarter than the existing team, reconsider the hire. Be fair and transparent with offers, including stock options and salary information. Show loyalty to early employees, and prioritize hiring slowly, focusing on maximizing the output of the founding team.
