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Your not the only startup in the world, but sometimes it may feel like it.
How many other startups do you know?
How many do you know are ecommerce, market place, mobile, etc.
You want to know how they are getting on, but you cant ask them, can you?
It doesnt have to be that way, technology can help in more ways then you can think.
I have been studying startups for about 5 years now and startups have similar problems. Let me ask you, who do you ask if you need help? do you have access to the dot com mentors that made millions back in the day?
You may not, but who does? I wrote this survey based off what I wanted to know, and im sure alot of you want to know as well. To get the answers you will need to share a little something more about you, that is collated and shown anonymously for the benefit of all, while at the same time increasing your success.
All you have to do is first sign up, which can help you in these ways:
- Why cant we be more ridged and process driven around understanding startups? I say we can, and we can do it in a way that can make you investment ready and attractive to potential investors
- To be successful means doing the right things at the right time, if you approach it this way you will end up increasing your chances both businesswise, money wise
- See what trends are appearing
- I have a special tool, the first of its kind that I want to show you, but you must sign up
What does todays tech startup look like?
The stereo typical start-up of this survey consists of 1 person, supporting their start-up that could be Saas using Savings and Consulting to survive.
No hardware is needed at the moment as they are in prototyping phase or making a mobile application. This startup is likely to survive for only 6 months, Only 10% have achieved breakeven, another 10% are sure to breakeven in the next 3 months. Do you want to know why?
I have devised 10 questions to ask boot strapped Tech start-ups. We can get a fair idea of
trends, as well as what tech start-ups generally look like. There are 107 Tech Startups in this survey.
As you will hopefully know,as the price comes down to create a start-up (in terms of development, and testing ideas) it encourages more start-ups to be created. Investors do not want their money in banks, it’s better to invest in start-ups or companies.
I define a start-up as having about 6 different stages I define them as follows:
a) Early Stage Concept
You have an idea; you ask some people based on the concept, and move forward on it if enough people think it’s good.
b) Developing Prototype
This is when you know what the first attempt at the product *should* look like, as in wireframes, and first Minimal Viable Product (I define this as, a product that is interesting enough for someone to want to use it daily (if social).
If it’s a product like software as a service, the Minimal Viable Product is defined as one that someone is prepared to buy
(if it’s good enough).
c) Pitching
So you have developed something in b) above and now you “get out of the building” as Steve Blank (let’s call him the daddy of customer development for tech products) calls it and you start trying to talk to customers. You then discover your original assumptions are wrong, your product is wrong.
The popular term at the moment is “pivoting” (Eric Ries, daddy of “pivoting” as far as I know), the idea of changing direction in terms of market, customer or feature set in order to get to a successful start-up. It’s likely you will pivot more than once. If you search around start-ups that have received huge funding, e.g. PayPal, etc you will discover the founders were originally making something completely different.
As start-ups learn about their market, their customer demographic, the business
will decide that if what they have learnt is important and determine if they should focus on it to have the best chance of succeeding.
They will keep iterating and changing on the pitch until the start-up gets
confidence in one approach.
d) Finish Prototype
We assume when you get to this bit you have decided:
1) Who you are selling to: what job, industry, company size, or consumer you want to sell to.
2) The 4 P’s of marketing have been decided, and there is supporting marketing etc, around it. (see Sean Ellis)
3) Assume you polish up your start-up at this point, create features specific to your market.
e) Start Selling
This is about achieving efficiency in successfully selling to the customer.
It’s about understanding how much it costs to get a customer; where do you find these mythical beasts called customers?
If the start up feels like it is trying to find a unicorn, you’re actually in the pitching phase and not the selling phase.
f) Scale up
To be in this phase you have a better idea how to forecast sales as you have gathered experience in the market in the pitching phase.
Survey Results
This survey is a general survey. There will also be cases where what i have found won't match what you have found. Please try and read for the trend and let me know your feedback please.
1) Number of Founders
The majority of start-ups are actually single person, viva the revolution for lean start-ups (another child of Eric Ries) and Micro-ISV (baby of Eric Sink).
I assume that there is a progression to 2 people in a start-up only if it’s a big market and the one person cannot do it themselves. I
have met so many people that are aiming to create lifestyle businesses from
their start-up.
With two people start-ups they are most likely consisting of 1 development person, 1 business based person (contacts, money, etc) .
In essence think, more founders equals more money needed, less equity, but
this increases success.
2) Support for start-ups
As we can see from the diagram
above, we can see how people are keeping their start up idea going. I have
conducted verbal interviews with start-ups independently of this survey
anonymously (with permission of course ;-), to understand the types of people doing startups and what struck me
as common traits. This section could be a little contentious, and may not apply
to you, but I thought I would share, so dont shoot me.
a) Savings
b. Likely contractor, or victim of recession, sometimes very experienced person who's had enough.
c. Quick to market.
d. Low to High business experience.
b) Savings + Consulting
a. Likely know something about their target market
b. Slower to market as have to work
c. Most likely part time
d. Higher business experience
c) Consulting
a. Likely in target market
b. Mid Business experience
c. Likely developing it partly from every day work
d. Slower to market as have to work, but more accurate
d) Angel
a. High business experience as Start-up knows how to become investor ready.
b. Could of come from a,b,c above most likely b and c
c. How did this start-up achieve funding? From least likely to most likely:
i. Know people with big pockets
ii. reached the start selling phase (see later for Start-up phases) and your angel knows this market
iii. made some sales and you can prove your idea
e) Friends and Family
a. Friends and family are more likely to invest at develop prototype phase, where most start-ups live (see later on in this article)
b. Owners like to protect their equity ownership,
which can be a business move, or because of owners wanting to protect their idea until the latest stage.
3) Hardware Cost per Month
If we look at the hardware cost per month for “not need yet” can be explained by two reasons
A) Idea is in prototyping or concept phase
B) The idea is a mobile app
Depending on the phase of the start up the spend changes there are two costs to think about
A) Technical costs that are normally monthly cost based, these can be phones, servers, etc.
B) Business development costs, finding and talking to customers, going to pitches, events, etc.
4) This is about general spending from the coffees, the tickets to start-up/pitching events, the travel costs, meetings with clients, money spent on angel networks etc. per month.
As we can see,the majority of people are not spending any money,as they are in the concept or development phase.
As this is a pure survey based off real results for bootstrapped tech start-up companies.
I have limited all the responses up to
£300 a month. It could be above this number, but let’s not put ourselves off at this point ;-)
So for now, depending on the phase you are assuming, you will need £50 a month to get going. Assume the majority of Start-ups are in and around London, so you could assume a couple of meetings a month initially.
5) What phase is your start up?
As you can see its likely you are either building it or selling it.
As we can see when we are prototyping an application, we can potentially lose about half of our startups just after the developing prototype phase. This could imply that ideas may not be commercially viable, run out of funding, or the startup people could loose interest, or find something better.
Another interesting area is that most startups (25%) are in the Start Selling phase and we could possibly lose 17% from the Start Selling phase to the scaling phase, which is about 8%. This means that if we lose that 17% it means that the companies are likely making a loss and cannot sustain themselves.
Note that because of the size of the survey sample and this is a snapshot. I have to make some generalizations. I would assume the results to be slightly different for different types of product. I also assume also that this small sample of startups is similar to a large scale sample.
For each section I have written the likely involvement of founders and types of participation for each stage. .
a) Early Stage
a. Development founder involved on their idea
b. Business and Development involved scoping idea
b) Developing prototype
a. Developer makes product, or Business Guy outsources it
c) Pitching
a. Business Development person does most of the work, if you're one in the same, then prepare to get organised for the marathon you need to go through.
b. You need to understand if your offering matches the market needs
c. Think AARRR (Search for Startup Metrics for Pirates) created by Dave McClure from web site a and physical selling point of view.
d) Finish Prototype
a. Development add specific features
b. Sales identifies all channels
c. Marketing jumps in and does the 4’P's bit and creates material
d. This involves everyone in your start-up. If you are functioning as a one
man army start-up, then it may take a little while to get to market as you are
likely to be very strong in one area and not so strong in the other areas.
e) Start Selling
a. You know the market. Now it’s about how to become operational and to be predictable to create new business. This affects everyone and up to this point,
as everyone is highly cross functional, interacting between different departments.
f) Scale Up
a. You know exactly where you are in the market; you get fairly consistent results when you try to sell and now know how you work day to day.
b. Now it’s a case of doing more of what you’re doing
