Actionable advice and learnings: Pivot your idea into a viable business
The two investors and serial entrepreneurs, Nicolaj Højer and Thor Angelo, used their own learnings and journeys to enlighten us on the do’s and don’ts when you are just getting started and you are ready to take over the world with your brilliant idea. How do you actually turn that early, simple idea into a real and successful business? One key learning stood out.
You know nothing…
Yes. It’s sad but it’s true. You know absolutely nothing about the journey your startup is about to embark on. Yes, investors or business angels can maybe let you in on their own learnings from previous businesses or cases, but ultimately, they, or anyone else for that matter, can never tell you what the future will bring for exactly your startup.
But how should you then handle not knowing anything? Fortunately, Nicolaj and Thor provided actionable advice for you:
1. Don’t make a business plan
Sounds a bit odd? Just the more reason for listening to this essential piece of advice. Making a business plan usually entails a long, tedious process of visualizing and planning how to develop and scale your business. But in fact, you have absolutely zero knowledge about what the future brings. So yes, have visions and set goals for your startup, but do not spend six months on creating the perfect business plan. It does not exist.
Instead define your MVP (minimal viable product — focus exclusively on need to have and leave out nice to have for later) and launch it. Otherwise you end up spending a lot of time on something without any prove it works in the real world.
2. Get five customers
This is probably your most important takeaway. Get five customers. Do not wait around for your product to be ready for customers — go and get them early on. Getting the first five will help you validate whether you are on track or way off. A good enough idea should enable you to get the first five customers on your idea alone. With that under your belt rest assured you are on to something. And if getting the customers turn out impossible, you should probably reconsider the idea. You need the customers for more than validating your first idea. They are your most important resource — in general but especially in these early stages, where they are instrumental for you to create the best possible product. Listen to them, ask them what they think and what the product needs. Equally important notice not only what they say but what they do and how they use the product. Only that way you can test the product and idea to, step by step, approach the right product/market-fit.
3. Get the right team
You need a balanced team (technical + commercial co-founder) if you want to optimize your chance of survival. A balanced team is needed to test your assumptions and then change accordingly! Your initial assumptions about market/product/distribution/pricing etc. are most likely wrong. The only way to come to a better “plan B” is by working closely together with your customers. Both harvesting the full range of insights from customers and making appropriate changes require a combination of BUSINESS and TECHNICAL skills.
4. Be prepared to change
Many founders hold their early idea and sense of invention so dear that they lose the ability to let go when necessary. Testing your assumptions, listening to your customers (those are of course interrelated) and your team for that matter require that you are willing to sacrifice your own darlings and pivot your product, target group and so on — you need to do it again and again. A constant readiness will enable you and your team to recognize any potential for tweaking parts of your business and enable you to do it faster than the competition. Do not wait around when you get an idea for improvement. Put it into the world, test it, adjust it and test it again until it is just right. Exploration and continuous pivots are crucial.
Be aware that it might not be enough to make adjustments. During this process of exploration, you might even find potential for radically different concepts, do not be afraid to investigate these potentials
5. Be patient and do not scale to fast
Learning and developing takes time. On average the time it takes to reach a viable business model (product-market fit) is two-three times longer than the founders anticipate. Many startups die in this “time of struggle”. The biggest risk is to scale your company to fast. It could be scaling the product, the team or the marketing. This creates a high risk for running out of money untimely! So, you need a small team, working with a simple product (MVP) with a few customers (skip the large marketing cost until after product-market fit) to prove your business model. Then you can scale.
6. Go do it now
Don’t do it tomorrow, do it now. First of all, there should be nothing holding you back from creating your startup. In fact, everybody should have a startup even when we have regular day-jobs having a small side-project helps all of us train our ability to develop ideas and work in more agile ways.
These learnings have focused on the initial stages of your business, getting the first five customers and taking the first steps towards a lucrative product/market-fit. On April 18th we have a new StartupTalk coming up where we look closer at product/market-fit. Nicolaj Højer and Cathrine Andersen from Assemblage (previously Canvasdropr) go in-depth with how to scale and reach product/market-fit in the later stages once you actually have got the first five customers.
Check out the event and don’t forget our Open Door Session April 18th where Anders Kjær and Helle Uth from PreSeed Ventures’ investment team offer a few selected startups unique feedback and advise. If you want to apply for a spot shot us an email at email@example.com with a brief description of your company, what stage you’re at and what you’ve done to get there.