Im happy to say that this month was our first cash flow positive month over at Launchpad6, and whilst i had been dreaming of this moment for quite a while it seemed to pass without much commotion as we all of a sudden started to look at how we can repeat the performance next month. Perhaps we should’ve taken a moment to celebrate the milestone as it is an important one, but thats not what this post is about.
I wanted to share with you, my two subscribers and 30 odd monthly visitors (who are most likely bots or people who landed here accidentally) a few of the things i’ve learnt from being involved in a startup.
Get proof of concept, then throw it out the window
A bit dramatic I know, but steeped in truth none the less. One thing we failed to do correctly when first starting is get proper proof of concept from people who would actually buy our product. We told a lot of people in bars and at family gatherings about our idea and they were all very enthusiastic about its potential, but having few contacts in the right areas meant we probably based our decision to go for it on a lot of enthusiasm and advice from people who would never be in a position to buy our product. Of the few people in the right places that we did speak too, I learnt that there’s a difference between saying it’s a good idea and actually handing money over, so my advice to you is ask right questions to these people, questions not related to the idea but to the problem and whether they’d pay money to solve it. Once you have the answer to these questions, take them with a grain of salt as there is also a significant difference between saying you’d buy it to a friend and actually handing money over.
Do a P&L early, and do it often
One of the biggest mistakes we made early on is that whilst we did a P&L and it all looked great, we never updated it as new information and feedback came to hand. For instance, our initial price point was probably 5 or 6 times higher than what we went to market with but we never updated our P&L with the new figures. Had we done that, I think we would’ve realised we needed to diversify our product offering earlier in order to survive, and I think we would’ve probably reached Cash flow Positive quicker.
Release early and release often
This is an age old mantra, but until you actually make the mistake of not doing it it tends be one of those pieces of advice you know but for some reason ignore (kind of like how speeding kills, or junk food is bad for you). We initially made the mistake of trying to build the greatest product ever and launch with the biggest bang possible and as result we significantly put back our launch date and burnt more of our startup capitol then we needed to. Fortunately for us, when we shifted our direction most of that functionality actually gave us a significant competitive advantage but it could’ve easily worked out differently. Build a minimal viable product, test it works and get out there and start selling it and iterating on feedback.
It’ll cost you, but hire a damn good team of people
We have managed to put together quite a good, committed team over at Launchpad6, but I think we’re really only hitting our stride now after almost 2 years of existence. They say management inexperience is the biggest contributor to business failure and I can now see why, and I often wonder what would be different if we had a rockstar CEO who had done this all before. Regardless of that however, even the little things make up a huge difference. When we first started we had a fairly inexperienced development team (myself as acting product manager included), and as a result we made a lot of poor choices in the planning stage of development which had to be reviewed and changed at a later date. Even if you cant afford to have rockstars inside your company, at least get one to look over some of the important parts as although it’ll cost you upfront, it’ll save you time, stress and hassles when you make the right decision the first time around.
Most of the time, patenting your idea early on is a waste of time and money
This of course doesnt apply to every business, but from the what i’ve learnt from the companies i’ve advised and rockstar startup people I’ve spoken to I would have to agree that patenting your idea early on is a huge waste of valuable capitol. This isnt to say that you shouldn’t do it at the appropriate time, but most startups change so much through their early development phases that they usually look very different to what they started out as, and the 10k-20k that it takes to patent the original idea is much better spent actually bringing the idea to life. Competition is a fact of life and you’ll never be the only one offering what you offer so just accept it and focus on being better than the rest.