At the start of 2018, I made the bold (or stupid) move to quit my job and try my hand at building a startup.
Before making this somewhat reckless move, I did my best to minimise risk. I cut my expenses as much as possible and did a lot of market research, including interviewing my target market before I even wrote a single line of code.
As a full stack developer, I knew I had the skills to build the product, so that wasn’t an issue. As they say build it and they will come. As I am sure you are aware, it is not that simple. My plan was to bootstrap this startup with no outside investment such as many are doing on Indie Hackers.
My brilliant, researched idea was to build a candidate relationship management tool that recruiters could use to help manage their candidate pipeline. A lot of the tools on the market were either very expensive or had UIs that looked like they were from the 90s. The market I was targeting was independent recruiters, who maybe couldn’t afford or need the features of the big tools on the market but still needed something simple to manage their recruitment pipeline.
The result was GrowRecruit, a simple CRM for recruiters with a great UI. As you can guess from the title of this article it failed to gain any traction and by 2019 I went back into full time employment.
These are the lessons I learned from my brief stint as a startup founder.
DISCLOSURE: THIS POST MAY CONTAIN AFFILIATE LINKS, MEANING I GET A COMMISSION IF YOU DECIDE TO MAKE A PURCHASE THROUGH MY LINKS, AT NO COST TO YOU. PLEASE READ MY DISCLOSURE FOR MORE INFO.
1. Marketing, Marketing, Marketing … oh and a bit more Marketing!
I am a software engineer at heart and as such the thought of doing sales really isn’t appealing. To me sales means sending pushy emails, cold calling prospects and generally pushing your product down peoples throats until you find someone to buy it.
The alternative to this stereotypical sales approach is to work on content marketing. By writing interesting articles, that are relevant to your target market, you can draw in customers without being a slimy salesmen. Throughout your articles you can mention your product and hopefully convert some of those readers into customers.
Content marketing does work, so why did it fail for me?
Quite simply, I didn’t know enough about my target market. As a software developer, I had certainly been on the receiving end of plenty of recruiter emails but I didn’t know enough about their pains or what they liked reading about. As such after 8 blog posts it became really hard to come with new posts to write!
If you don’t market your product then no one will know it exists and therefore you will get no customers.
Market, Marketing, Aethsetic, Function — Rob Walling
One of the best books I can recommend for software developers looking to start a startup is Rob Walling’s book Start Small, Stay Small: A Developer’s Guide to Launching a Startup it has a lot of advice for fellow bootstrappers.
2. Money is always an issue, even if you have plenty of savings
Before I embarked on my entrepreneurial journey I made sure I had 2 years worth of savings saved up. Yes, 2 years! I was in this for the long haul or so I thought. I was able to do this by making sure that I cut out as many of my monthly expenses as possible before I handed in my notice at work. This allowed me to save as much as possible and extend how long those savings would last.
However, for someone who has a wife, 2 children and a mortgage to pay, there is a limit to how much you can bring down your costs. There will also always be unexpected costs that crop up that you just hadn’t anticipated that will eat away at your savings.
I went back to full time employment after 1 year but it wasn’t because I ran out of money. I actually didn’t spend much more than I had original budgeted for.
What I hadn’t anticipated were the psychological effects of having no income and seeing my bank balance decrease month on month, would have on my mental heath.
Not only was this incredibly stressful watching this money hourglass count down, it also affected my ability and willingness to work on new ideas.
There was always the thought in the back of my head wondering if what I was working on was going to bring in money quickly. I ended up not pursuing a few ideas, simply because I couldn’t guarantee it would pay off before the time ran out.
3. Having a market is more important than marketing
How well you market your product will make or break whether your startup will be successful. However, what is more important than marketing is having a market to sell to. I don’t mean just knowing where your target market can be found, I mean actually having a following who would be eager to buy your product.
Ideally this would be an email list or an engaged social media following. If you already have raving fans who trust you and consume your content then it is a lot easier to sell something to them then it is to sell to a complete stranger.
If you are planning on building a startup or product in the future work on building up your following now!
I great example of this is Nathan Barry, who already had a successful blog and a few successes building apps and writing books. When he started ConvertKit he already had a following and he built the startup in public and had fans ready to jump on his product as soon as the beta was out. ConvertKit now has monthly recurring revenue (MRR) of over $2M.
4. It is going to take longer than you think
Businesses aren’t built in a day, a month or even a year unless you have a following already that you can sell to. It generally takes a lot longer than that. Generally a lot of startups take a couple of years before they become profitable.
Do you have the money and the stomach to sink 2 years into something before seeing any return on your time investment? Unfortunately there is no guarantee that your product will actually be successful no matter how many years you work on it.
Are you willing to put in 60 hour weeks to get your startup off the ground? I only spent 5 hours a day working on my startup so I could spend more time with my family. I don’t regret that but if you want to be successful you have to be willing to put in the work.
5. Don’t get married to your idea
This point is important. I already had an idea of what I wanted to build before I read any books or did any courses on building a startup. This was a bad idea. It is very difficult to let go of an idea if you already have one in your mind.
As such, when going through these courses and reading these books I felt like my idea already ticked all the boxes. This is what you call confirmation bias. You are married to your idea and no matter what surveys or tests you do, you still think your idea is good.
This is especially apparent when you get further into building and testing your product. Many startups end up pivoting their product based on feedback from their early customers (or lack of). If you are married to your idea, it can be difficult to pivot your product as you think what you have is already perfect.
Pat Flynn has a great book on this called Will It Fly? that goes through the process of working out if your product has the chance for success before you go and marry it.
6. Running a business is more than just building the product
I really underestimated how much the other activities of running a business would take up. My product wasn’t bringing in any money but I had a limited company that was registered for VAT. As such I had to file quarterly VAT reports and make sure my accounts were correct and submitted to HMRC.
As I wasn’t earning anything, I couldn’t justify paying for an accountant to submit negative accounts for me. I had to learn how to do this myself which took up a lot of time.
On top of finances and building the product you also have marketing which takes up a lot of time.
7. Beta users are not your customers
The little bit of marketing I did for my product did bring in a quite a few beta users. However, it is important that you do not mistake these beta users for actual customers.
Beta users will likely come up with feature requests and other ideas for your product but unless multiple beta users are telling you the same thing, don’t go spending a week building what they have asked for. There is no guarantee that they will actually convert to paying customers even if you do deliver this must have feature.
Beta users are just that. They have signed up for your product because it is free, they aren’t your target market. A lot of my beta users used the product actively everyday but as soon as I put the paywall up (even with a beta user discount) they stopped using it.
8. Are you really solving a problem?
My target market was independent recruiters which appeared to be an underserved market given all the enterprise CRMs. They didn’t need anything expensive but still had the money to pay for a tool that would make their life easier.
One of the books I read said that if your market is having to rely on spreadsheets to get the job done that is a good indicator that you can build a product around that process.
As it turns out recruiters are perfectly happy using spreadsheets it seems. Especially when they aren’t looking at thousands of applicants it is probably easier just to store their details in Excel.
Make sure the problem you are solving is an actual problem, a real pain that others aren’t solving or are solving badly.
9. Don’t worry about scale until you have a scaling problem
As a software developer that has spent most of his career working on high traffic systems, I am always making sure that the code I write will cope with high load and any manual processes are automated.
However your bootstrapped startup in its early days isn’t going to have a scaling problem. Do you really need to spend time automating a manual process that so far you have done 0 times because you have no customers? Do you need to spend time optimising your SQL queries or load testing your APIs if no one is using your product?
Of course you don’t. Wait until you actually have a problem before optimising for that problem. I know it is hard but you need to resist those inner urges to optimise.
As a professional programmer it makes me feel dirty but I am going to say it anyway. Are you ready?
You don’t need unit tests for your bootstrapped startup. You have no customers so you goal is to get your product out in front of customers as soon as possible to get feedback. Your product will likely be completely rewritten a few times before you hit the big time so unit tests can be introduced then when you actually have a product that is worth maintaining.
Do I regret spending a year being a startup founder? No, it was a valuable learning experience and I learnt a lot not only technically but about myself as well.
I also got to spend a lot more time with my family while my children are young which is more important than building a startup.
For those of you looking to get your own idea off the ground this is my advice:
- Don’t quit your job but try and work on your project on the side of your 9–5. However, take note of your employers contract.
- It is not uncommon for software companies to put in a clause that they own anything you create inside and outside of work, even in your free time. In that case go contracting or freelancing or find a less draconian company to work for.
- Build up a following before trying to build a product. The best way to do this is with a blog, that way you can start collecting email addresses you can market your product too in the future.
- Validate your idea first with your target market. You don’t want to spend a year or two building something that no one wants. Ask your target market whether they would be interesting in buying your product and how much they would be willing to pay for it. Then spend as little time as possible getting a minimum viable product (MVP) in front of them so you can get feedback.
- Prepare to fail. Most startups fail and there is a high chance that your startup will fail too. The important thing is that you learn from your mistakes and have fun along the way.
- Make sure you read these books before you go and build anything, Start Small, Stay Small: A Developer’s Guide to Launching a Startup, Will It Fly?
Originally published at https://www.alexhyett.com on November 4, 2020.