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Ask Slashdot: How Should You Launch A Software Startup? (theguardian.com)
Slashdot reader ben-hnb is a developer who loves the idea of running a startup, or being one of the ones who got in early. But how exactly does he get there?
I've got no "business" experience. Everyone seems to want to get on the startup incubator train -- the latest U.K. model I've seen, Launchpad, would even train (MA!) and support me financially for a year while developing the initial product. This just one in a long list of different models, from the famous Y-Combinator three-month model to the 500 Startups four-month seed program and simple co-working spaces with a bit of help, like Launch 22.
If you wanted to get a startup going, where would you go to first and why? Or would you just strike out in your bedroom/garage?
Leave your best answers in the comments. How would you launch a software startup?
If you wanted to get a startup going, where would you go to first and why? Or would you just strike out in your bedroom/garage?
Leave your best answers in the comments. How would you launch a software startup?
... developer who loves the idea of running a startup, or being one of the ones who got in early. But how exactly does he get there?
Bzzzt! Wrong answer.
Ask yourself this question: could I start a project on SourceForge (or more like GitHub nowadays) and keep it going for 2, 5, 10 years?
The early days are all fun. The company is growing, you are having Nerf gun battles in the conference room, etc. However, after a couple of years the shine starts wear off and it starts to feel more like a job.
Not only that, but if your goal is a "startup" in the Silicon Valley sense of the term (grows quickly and then gets acquired or goes public), you will have deal with most of the following:
You will notice that none of those things involve writing software. Don't get me wrong. The core technology that underpins your idea is absolutely critical. However, ideas are a dime a dozen. It is much more difficult to get a working implementation that people are willing to consider investing in is much more difficult. More difficult still is the other 90% of the startup gig that has to happen if you want to be a success.
So, back to my original question. Could you see yourself managing an open source project for the long haul? Open source projects only have to deal with a tiny fraction of the non-programming things that you would have to deal with in a startup environment.
Incidentally my perspective is based on my experience several years ago almost deciding to make a run at it myself. I took some classes at the local Small Business Development Center, talked to some local startup folks, and then promptly decided I don't have what it takes. I stuck with my consulting gig that I've been doing for some years. That suits me much better; someone else gets to deal with all that nonsense and then all I have to do is find companies with problems that match my skill set, which is much easier for me that trying to run a startup.
I ran a software start up for ten years. Grew from me to over fifty. I now contract for silly money and love it, while i have a nice business generating me passive income
Main lessons:
Expect no life. You work 14 hour days, 365 days a year
Expect to fail two or three times before you make it
Expect no money. You will earn some years, give other years and on the whole make very little
You will worry about cashflow every week
No one will ever pay their bills without chasing. Expect to spend 20% of your time chasing debtors
Follow lean startup. Really follow it. Don't listen to people that say it's just a fad. You haven't got the experience to know when to break the rules and those rules aren't bad.
You will need to be able to sell. Are you any good at selling? If not quite your job and get a job as a used car salesman (or other sales job) for six months while someone else teaches you how to sell. This is far cheaper in money and time than the mistakes you will make if you don't know how to sell
You will need to learn the directors responsibilities for a company. They are real, onerous and you can go to jail if you mess up (you probably won't mind you). Plan on spending some time doing courses on this
Once you go over five people you need a ton of paperwork. Fifty different policies on everything. You'll need to pay a load of money to advisors and lawyers. You will loose key people at this stage
Do you know how to manage people? Do you know is how to take a team of five to a team of fifty without destroying the company doing it? Do you know how to delegate without dumping and destroying people?
Do you like spending your time in resource planning and sales meeting?
Do you like social networks and going to networking meetings twice a week, keeping track of people's names and maintaining email conversations with fifty people every week just to 'keep the network'
My advice: if you can answer yes to most of the above it's good. You will fail two or three times (I've failed three times and am doing well on number four) each failure will make you stronger.
My real advice (which my children are following and doing well l would be to get enough passive income to support you first. Find a mentor. Spend two or three years learning how to get passive income, another two or three years getting to a couple of thousand dollars a month passive and the experience of that will teach you a lot about running a business. You can then quite your job and work on the business without fear of going bankrupt every week
The intent of a startup is to develop a product that people will buy from you. It should be a product that isn't already on the market. If you are thinking another facebook/google/youtube/dropbox/trailers/angrybirds/office productivity clone of existing products: Stop, go back to your desk at work and keep churning out code for someone else.
You need a unique/newish idea:
If you have an idea you think is actually new and useful. Do some googling on the idea to see if anybody has considered it (or similar overlapping ideas) and the response to it. Do some basic patent research to see if anyone has staked ground on your idea. Do some informal research to see if people are interested in (and would pay money for) your idea. If you feel you have to to mask the purpose of the research, go for it (it just takes more time). Surveys can be written to show interest in one item while simultaneously drawing out information on a not so obvious second. Now you have an idea that should be relatively unique, patent free and people want (even if they don't know it or can't articulate it). If you can't answer these questions, stop now.
Get a lawyer
You will need to incorporate at some point and a business lawyer will be able to point your in the right direction on the pros and cons of different company types. Also plan with the lawyer on your future end goal (expand or buyout) so your company can be structured properly for future action. You need manpower, budget and a business plan:
How many man hours will it take to have a demo model (no matter how crude)? How many man hours will it take to bring it to market? What is your time frame to bring it to market? Do you need to quit your current job to work on it? Do you need to hire people in order to meet your deadline? How much runway do you estimate you need in order to get off the ground with a saleable product? This is the basis of your development and launch budget. Your business plan is your estimate on keeping the company operating: what are your liabilities, assets, income and burn rate of reverses?
Where is your budget coming from?
If its just yourself you have to go back to a day job when you bank account is empty. If you are employing other people you need to continuously be out there pitching for seed money (which takes away from dev time). So having a working demo that you can pitch is needed. Have your pitch smooth and bullet proof and be ready to field all sorts of outlandish questions, be told "we'll think about it" and then ignored, and to be told NO many many times.
What is your end goal?
Do you want to develop into a larger company or be bought out for a pay day? Do some research on your Phase II goal. It doesn't need to be now, but you don't want to be surprised when you turn around and realize that you are suddenly employing 35 people and you have a large company knocking on your door with an offer and you don't know what to do with it.
Architectural plans are like computer source code with a couple of differences: You only compile once.
If you want to join a startup, go to these incubators and ask them to give you their elevator pitch. If the basic concept sounds okay, ask if they need more staff, what they'd show a potential investor and what skills they're looking for then negotiate a deal. Remember start-ups usually don't have a lot of cash so your income will probably depend on the company's future, joining a poor start-up doesn't do you any good. Make sure you don't end up in a position where you accept crap pay but they'll run away with all the profit if it succeeds.
If you're looking to actually start a software company, how do you know if you have a viable market if you don't have any "business experience"? The most important part of a software company isn't the code, it's the business plan. Essential points:
Who are you planning to sell to?
What will be the key selling features?
Why hasn't anyone else done it?
How will it reach the market?
When do we expect product revenue?
If you think I'll just create the product and they'll come, stop. Nobody knows you exist, nobody understands your product/solution and nobody cares. If you haven't got a grip on those, that's okay but then don't quit your day job. Start creating it, try selling it and get some actual experience. That way it'll only cost you time and you'll probably learn that selling it was much harder than you thought. At least that was my limited experience running a start-up, even if we thought we had the product they needed the customer was rarely more than lukewarm.
Live today, because you never know what tomorrow brings
It isn't quite that grim, but hyperbole aside, 80% of startups fail within the first year, and 95% within the first five years.
The first thing you have to do is disabuse yourself of the notion that starting your own company means you're going to get rich or that you'll pay other people so you can have less work. Expect to have to do far more work than you ever imagined, and expect the business to fail. Make sure you have enough money set aside that when it fails, you'll have time to find another job before you go broke.
And always keep in the back of your mind that every single one of your employees should be making those same calculations, but may not be. The once who don't depend on you to keep them out of the homeless shelters. Be honest with yourself about how the company is doing financially. Don't fun your business into the ground chasing after the next big thing. Come up with a solid plan to deliver a product that's realistically achievable, and then deliver it. Then come up with a solid plan to deliver something else. Try to reach profitability early, and if you conclude that your plan to do so isn't going to work, fail early and move on to something else that's achievable before you run out of funding.
Try to hire people straight out of college who don't have a lot of outside financial obligations, so that if the company goes belly-up, nobody loses their house. That or hire people who are older and wealthy enough that they choose to work for you because they can afford to take the risk. Try to avoid people in between—not through discriminatory hiring practices, but through open, honest communication. Tell them up front exactly what they're getting into, and let them decide if it is right for them. Most of the time, the people who really can't afford to take the risk won't, assuming you warn them ahead of time. But know that at least a few of your employees will ignore the warning. Manage your finances with them in mind.
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