Three rules of startup viability

We love startups. We have been working with them since the very foundation of the company. We are still a startup in many ways, as we are looking for promising niches, new opportunities, testing hypotheses. During our work, we’ve got some ideas on what startup properties can ensure startup success.

We work with IT-related startups. For example, the platform for event industry workers and employers, search platform and full-stack RTB platform.

Every month we receive 3 or more calls from startups with a proposal to start developing a particular product. Very often at the entrance they only have an idea. Many founders have a naive belief that just a naked idea is enough for us to evaluate it. However, for us, it is obvious that the idea by itself is worthless. Every mature business angel can tell you this.

Three rules of startup viability

A couple of years ago, we took many projects on the evaluation, spent hundreds of hours at workouts and meetings. Then we choose only a few of them for implementation. From this costly lesson, we learned three basic principles that help determine whether it makes sense to discuss the project:

  1. What is the development level of the idea from a marketing point of view? How well does founder understand who his target audience is? How he has segmented target? How he will sell and promote his product? If there is no clear idea, then ask questions, explain the necessity of the answers to these questions. Then calmly step aside and wait.
  2. What budget does a startup already have? If a founder says something like this: “Tell me how much it costs, and I will think about it” or “There is no money at all, but after your assessment I will look for an investor,” then it is better not to join this project at all, because it looks frivolous.
  3. How much time the does founder give to the project? If it is clear that “a startup is not my main activity, but I will give it all the evenings and weekends,” then we must immediately run away from this project or give it to competitors. The founder should spend all his time on the project. We will not solve all the problems for him. There are problems of target audience seeking, target segmentation, marketing strategy creation, sales activities, and this is enough for founder full-time job and even more.

These three simple rules will allow you to immediately understand the seriousness of the startup founder and the prospects for the project. Some may think that if a startup has money (item 2), we can ignore poor scores in items 1 and 3. But this idea is misleading. In practice, this will lead to a heap of unnecessary problems that will exceed the potential profit of such a project.

Team is important

You can say even more about startup by looking at its team. Most of the startups are either pure IT companies or companies that actively use various IT resources in the manufacture of their product. Thus, the basis of the team is — developers. There are some things that founders must understand:

  • When startups are looking for developers, not only they choose, but they are also chosen. Thus, the startup has to propose something valuable for needed experts and express ideals that developers share.
  • Programmers do not like to switch from project to project. If there is a frequent task switching, then high staff turnover is inevitable.
  • Developers have to see project prospects. If founder hire specialists for the project and the project ends quickly due to the loss of founders interest or because of the lack of time, then the specialists will be upset. In addition to economic losses, it also harms the company’s reputation.

Relations is the key to the success

We also understand that for a successful project it is not enough to be solvent, disciplined and committed to the project. For harmonious development from a certain point of maturity of a product, a startup must interact with clients and partners very closely. This interaction can be effective only when the relationships are open and trusting and explicit risks understanding from all sides. The obvious conclusion is that a partnership model is better for successful development than a client-executor relationship.

This created the second option of our work with startups, and now we are looking for promising projects and are ready to communicate with those founders who need a tough IT team, but who do not have enough money to get high-quality service from such a team (the quality is always expensive). In the next article, we will discuss in more detail how we see this partnership and why it is beneficial for both parties.

Author: Kirill Antonov, Operational Director, Maxilect

Editor: Bespalov Alexander, Data scientist

Related articles:

All articles

Tell us how we can help

A member of our team will be in touch within 24 hours.