I was interviewed recently about challenges and recommendations for Technological Startups. Although the interview is in Spanish, I share with you the written translation of the interview in English. Also, the video may include English and Spanish subtitles if you like.
Good morning Alejandro, On this occasion and taking advantage of your experience as an advisor to technology startups, we would like you to tell us a little about the challenges that a startup of this type faces.
A technology startup faces multiple challenges. Perhaps the most important of all is to understand the customer and the market, but there are of course many other challenges, such as identifying the right product or service, knowing how to shape and industrialize it, finding investment, correctly designing and executing the marketing and sales strategy, or just grow.
Could you give us some guidelines that a technology startup should take into account in its first steps?
The Market
The first thing is to select the market in which to operate. It has to be interesting, fun, and motivating for entrepreneurs.
You need to know the sector and the client very well. Do it first-hand, not just from third-party reports.
It is also necessary to take into account cultural, idiomatic, usability aspects, barriers, competitors, regulatory aspects, registered patents, etc.
The Product
On the other hand, there is the product or service. This must be focused on the client and their needs. In many cases, the form of the product is more important, that is, the contribution of value that the customer perceives from the product than the product itself.
It is recommended to start with a minimum viable product. In other words, to get basic results with the minimum investment in time and cost, that allow the product or service to be tested in the target market.
Sometimes the entrepreneur focuses on making a product with a very high technological contribution, investing too much time with its associated opportunity cost, when the priority may be to verify if the market is really willing to pay for that product or functionality.
One of the techniques that is usually recommended is that of "validated learning", which consists of testing assumptions about the interest of customers, aspects that we believe are important to them and perhaps not, and measuring our progress in some way, not by the sales made, but through learning, which is what brings us closer to finding what meets the customer's need or desire.
When Thomas Edison invented the light bulb, it did not work out the first time, but he made more than a thousand attempts, to the point that one of his collaborators asked him why he persisted in building a light bulb if after more than 1000 attempts he had not succeeded. Edison replied: They are not failures, I learned 1000 ways of how not to make a light bulb.
But you also have to know how to make the decision to persevere or pivot your strategy.
Escalability
The product or service must be scalable, that is, if it is successful, scale factors can be applied, such as offering more units to cover the market, creating accessories or adding functionalities.
There must be a multiplier factor that turns the startup into a money-making machine when the time is right.
Business Plan
A good business plan is a roadmap. You have to be honest and consider alternatives.
The plan must analyze all the critical aspects of the business: the market, the value proposition, the team, the marketing and sales plan, the growth plan, the financial plan,... and of course a Plan B in case things do not go as expected.
Financing
To obtain financing, a startup can go through crowdfunding processes, search for business angels, and many other investment models, but in order to access this investment, the business model must be prepared very well, demonstrate that the idea has passed a certain validation of the market, that it is scalable and that the correct team is available, not only technical but also experienced advisors who mentor and accompany the company not only in its initial start-up but also during its journey and growth.
We already know the Chinese proverb: "If you want to go fast go alone. If you want to go far go together".
