The statistics are brutal – globally 90% of startups fail. This invites the assumption that a successful startup is a rare fortuitous combination of circumstances. Yet, there’s a well-defined recipe of success for each startup, which is composed of 5 ingredients.
Ideally, the startup idea is innovative, otherwise, you’ll face a fierce competition. Many startups fail because the idea isn’t unique enough and basically duplicates the competitors. Strive to conquer the “blue ocean” – create an innovative solution for a demand that isn’t yet satisfied, instead of floundering in the “red ocean” filled with competitors (terms coined by W. Chan Kim and Renée Mauborgne).
After you’ve come up with an innovative idea, you’ll still need to conduct thorough market research to find out whether your idea is actually something new.
Example: A company faces difficulties while managing finances – it utilizes outdated financial systems and the CFO is pulling out his hair in attempts to keep the systems working appropriately. The CFO faces a well-defined issue. Eventually, he might come up with an idea on how to improve the system of managing finances and invent a platform that will suit all necessities of the company.
Efficient Technical and Sales Teams
To implement your idea, you’ll need a group of experts – a technical team (software engineers that will be working on the development of your product) and a sales/marketing team (a commercial team that will be dealing with attracting investments, marketing the product, collecting feedback from the customers, analyzing and processing further product development together with the tech team).
Ideally, the technical team should be hired by a technical person, who knows what technologies and trends currently dominate the market. Usually, it’s a technical co-founder, who in addition to other duties is a CTO, or an employed CTO. Throughout the process of structuring a team and developing the product, you’ll need to stay flexible – don’t be afraid to change or modify the initial plan during the process, it’s better to implement changes in the initial stage than to rebuild the completed ready-to-go product.
Example: A startup owner has heard a lot about Agile and thinks it would be great to use in the development of his healthcare idea. He decides that starting tomorrow their team of 3 developers and 4 sales/marketing people will switch to Agile. However, after a few months, the owner still doesn’t see any positive changes. The thing is that the rest of the team doesn’t share the owner’s enthusiasm about Agile methodologies and instead of being Agile, blindly follow instructions dictated.
Optimal Tech Stack
Choosing the right tech stack for your startup is a decisive factor in the future success of your product. In most cases, this is the responsibility of a CTO or the Head of Engineering. Oftentimes, a CTO selects technologies on the basis of their previous experience, which might be very specific or too limiting for your product development.
Here are the main principles that will help you choose an optimal tech stack:
- Technical feasibility
- Availability of developers
- Time to market
It’s not compulsory to get into every detail and leave multiple comments, but at the bare minimum, the code needs to be supported consistently and continuously adjusted to the product’s scale. If you maintain the proper quality of code from the very start, there’ll be no need to rewrite it from scratch as the product continues to grow.
The roles of a CTO/Head of Engineering/Product Owner encompass prioritizing, regular feedback, and continuous connection with the market (your target customers). This doesn’t mean you have to ask your potential users whether they would be eager to use this or that feature. Instead, implement your idea first and then learn whether customers find it useful.
Example: A client decided to create a platform for accepting sporting events bets on a local level (e.g. a football match between school teams). The startup enables parents of the children that play in the match to bet on the teams. If you win, a part of your prize goes to charity and the other part goes to you (either take the prize or use it for your next bet). However, people proved to be unwilling to use the platform. In addition, the product was financially unprofitable, taking into account that part of bets went to charity. The marketing strategy changed a few times during the process of product development, forcing technical debt accumulation, which was one of the reasons the startup failed.
Entering the Market ASAP
When everything is ready for the start of your product development, it’s crucial to center around time to market minimization. Make sure the team delivers maximum business value per time unit. Also, confirm developers deliver code with optimal technical quality. To achieve these goals, introduce definite technical practices that will be directed at increasing the quality of the code.
The main mistake of startups is trying to create a pixel-perfect design, to ensure that users don’t notice even the tiniest imperfection. As a result, you spend tons of time on developing a perfect product with impeccable design and code that eventually fails to create a buzz. And the reason is simple – the product neither creates a demand nor satisfies existing market requests. In order not to become a useless startup with a perfect tech foundation, test the demand for your solution as soon as possible, preferably in the process of its development.
Example: A business owner invented an analogue of Uber for Arab countries. Curiously, passengers aren’t able to view the face of a taxi driver or even contact them directly in Arab countries. In the end, it was obvious that there was no demand for this type of service.
Igor Tkach is CTO and Managing Director at Daxx. He is an experienced executive who helps tech companies worldwide create and run value-driven R&D centers, build scalable business processes, and improve their performance. Linked.