We live in a day and age where people can go from relative obscurity to incredible success in a matter of years, even months. As such, eager entrepreneurs with a ‘great idea’ will dash out of the gate without considering the possibility of failure.
Of course, it takes positivity, focus and ambition to become successful in the tech startup industry; but knowing what the pitfalls may be – before you get off the starting block – will reduce wasted resources and increase your chances of success. With that said, let’s take a look at both the good and the bad when getting that ‘great idea’ off the ground.
Video Transcript:
Tech Startup Industry Truths
The Tech Startup Industry is Awesome
I want to preface this by saying “this tech startup industry is fantastic!” The reason I say that is that a lot of the content today is actually about how to avoid problems. You could end the day by thinking, “gee, there are just a lot of problems.” But let me give you some examples of why I think this industry is awesome.
Take General Motors, one of the world’s largest, most powerful car manufacturers that owns a whole bunch of the world’s biggest car brands. In 2009, some guys got together with a start up fund of $200,000, and created Uber – that is now valued at more than General Motors! So the capacity to create businesses that have global reach and significant impact in a short amount of time has never been greater than it is today.
So, while I’m going to talk a lot about how to succeed and do that by looking at, “well, these are the problems and how you can avoid them”, I will never work in another industry. This is my space. I love this space because I think there is so much you can do in such short amounts of time. I could go around the room and name by name by name, talk about the interesting projects being done by people who did not come from a technology background and who are running really successful online projects.
Anyone Can Play
The other thing I love about this is the tech space is a space where anyone can compete and anyone can play. In our Samurai business, do you know who our biggest competitor is at the moment? It’s Adobe. It cracks me up that a little firm, running in Nunawading (and I’ll tell the story of this in a moment) running a video production platform, and selling that with a couple of thousand members… We are actually competing with products developed by Adobe, and we’re competing successfully! Things are good at the moment, we’re doing really well. We’re competing with a company that is a dominant global player with billions of dollars of market capitalisation. They are a big company.
So the great thing about this tech startup industry is anyone can play. There are so many opportunities to pick an angle, to pick a niche, to pick something out and say, “ok, I’m going to take that part of the market, I’m going to make it my own.” The opportunity has never been better.
Don’t Be Deterred by High Failure Rates
What I want to do in this first session is look at how we can validate a market before we go into it. We’ve had some interesting experiences in this and I’m going to share some of our experiences as we go. The reason I needed to tell you how cool this market is, is because the failure rates in tech start ups are really high. According to Forbes, the most recent stats I could pull up, the current tech start up failure is 90%. That has improved. I’ve read earlier stats of 95%, 96%.
That number is a little bit depressing. The thing is, nobody actually thinks they’re going to fail before they start. Well, at least not the 100 to 200 entrepreneurs who have serious ambition who I’ve spoken to in the last 5 to 8 years who have sat in my office. Everybody thinks they are going to succeed but the numbers for failure are really quite high.
Why Do So Many Start Ups Fail?
What I want to look at is, if we can take a moment and say there is a reasonable chance things might not work, what can we do to improve the odds? Let’s start off by looking at what are the main reasons start ups fail. What are some of the reasons it happens?
In the third place, they have the wrong team. They discover they have the wrong people effectively involved in the business.
On the wrong team, let me talk to that for a little bit. In the startup space, my opinion is, there are only two people you need on your team. You need someone to code it and you need someone to sell it. Everything else you can do in lunchtimes on a Friday. I’ve had people come in and say to me, “I’m going to do a start up.” I say, “what is your background?” They say, “my background is in management. I’m going to manage the team and all the various bits and pieces.”
I say, that is great but in the early days, we desperately need someone to get out there and sell and we need someone to build it. The other parts of the business are totally valid but they take time to build and they take time to accrue.
In the second place, they ran out of money. For almost a third of people, the reason it went bad is because they ran out of money. So we’re going to talk about techniques where you can test your markets for significantly less than the full cost of your project.
The most common reason that tech startups fail is they’re building something that the market does not want. In fact I’ve seen t-shirts for people in Silicon Valley that have the words Build Stuff People Want. So today we’re going to look at how you can build stuff in the tech startup industry that people want.
While this information is truly ‘gold’ on its own; taking the time to organise yourself, develop your ideas, build the right team, and research your market takes discipline, awareness and a little bit of time. Sure, there’s incredible value in being quick; it usually means you’re spearheading something – but what’s the point of that if there’s no one behind you and no target to hit?
If you’ve got a great idea but don’t know where that next step should be, get in touch with us for a quick chat about how we can help.