Article written by Mauricio Toro CEO/ Co-Founder at TECHFIT Digital Surgery
After over a decade involved with startups, here are the things I wish I had known at the start!
After spending over a decade in the startup world, founding several companies and helping others grow, I have made my fair share of mistakes; Here, I want to share some of my lessons about how to create a robust scalable business that can have a compelling story for capital raising or the focus to grow profitably.
1.) Find a beachhead
Even though we all try to attack large markets, a startup will be limited in its resources. The best way to start is with a very narrow offering (Single product, simple value proposition) to a particular segment that you can use to learn about the economics of your business and strengthen your sources of differentiation. Think big, start small, and move fast. Don’t try spray-and-pray methods for your market, be strategic about who you approach and be on the lookout for growth vectors. Start by being hyperfocused, this allows you to systematically understand what works and what doesn’t. This is where you iterate at a small scale before you start trying to grow without direction.
2.) Prioritize free markets
Even though we live in a free market economy, no market is completely free. Depending on the market you choose, there will be regulatory barriers, channel barriers, and competition hurdles. A B2C digital market, for an app, for example, is free, you must deal with the app store and google play, but that’s about it; anyone can download an app. If you’re selling medical products, you need to obtain regulatory clearances for your products, and if you sell to hospitals, you need to deal with hospital supply chain channels. Always build your business so that early traction is focused on free markets. Regulatory and Channel hurdles can severely impact your progress, and increase your capital requirements. You can always complicate your offerings and target more complicated markets when you have the scale to do so.
3.) Build a moat
Thinking you can out-spend large incumbents when you’re small is a pipe dream. You need to find what’s different and focus on what makes you better. Try to secure these advantages and try to be as explicit as possible on where your sources of competitive advantage are. If you choose to use the product as your differentiation, focus on securing the correct IP or trade secrets. If you choose other innovation vectors, build a defensible position. Without this, you are very vulnerable to attacks from competitors.
4.) Find the right team
As a startup, you have no credibility; you need to leverage the credibility of your team/advisors/investors to convince customers and investors to believe in you. Surround yourself with intelligent people; if they network in your industry, that’s even better. Make sure they are engaged and passionate about the purpose. Convincing different team members to join your dream is also a sign that you have something big in your hands.
5.) Market pull is better than technology push
As an innovative entrepreneur, there are many things you can invent. Understand and focus on making things the market needs rather than what you want. Don’t ask customers what they want; talk to them, and understand their problems. Then test solutions on them.
I also suggest this video from YC startup school; this is probably the best I’ve seen on startups. Whatever you do, try to be hyper-focused and systematic. Look for low-cost demonstrators that your value proposition will be sticky, and be relentless in following these leads. Many will result in nothing, but you only need one to work to be in business!