Our Startup Essentials article series kicks-off with a compilation of fundamentals no founder wants to do, but has to. We've compiled these based upon input from our experienced founders and venture developers, who went passed some of the hurdles mentioned throughout this article.
“I’ve missed more than 9,000 shots in my career. I’ve lost almost 300 games. 26 times I’ve been trusted to take the game winning shot and missed. I’ve failed over and over and over again in my life and that is why I succeed.”
– Michael Jordan (5x NBA Champion)
Failing is at the heart of what building a startup is like, next to Micheal Jordan who recognized it early, also our venture developer Warren Fauvel pointed it out in his Medium article. Founding a startup is about failing and getting back up, learning from it and not repeating that mistake.
Beyond making mistakes, part of founding a startup are also things that many people just do not like to do. From sorting out administrative tasks, all to way to reaching out to customers for feedback.
Here at Next Big Thing AG, all our founders and venture developers sit together in the same office, thus we share lunch, drinks and also mistakes we made amongst each other to not repeat them. Based upon the experiences made by them, we’ve compiled a list of startup essentials no founder wants to do but nonetheless they should:
1. Sorting out your administration.
Next to compliance with regulatory frameworks, it is crucial to get your product registered at the chamber of commerce and get a number of accreditations. Beyond patents, you need to make sure you have everything sorted out from accounting to human resources. Keep your records and thank yourself later!
NBT Venture developers working in the office space at NBT's HQ in Berlin.
Why do founders ignore it? Doing so is always a bureaucratic nightmare. Sitting in front of spreadsheets and contracts is simply the least fun part of being a founder/entrepreneur.
Why is it important? Putting in the hours to get your business administration and documentation right, will save you a lot of time later. Once you will receive inspections, seek funding from investors, or seek to grow, you need to have your documentation ready to showcase that your business is legally and financially bullet-proof.
Here NBT can provide assistance so you can focus entirely on business development and productization: from legal documentation to support from our notary, we make sure that you do not get lost in bureaucracy before even launching your company.
Interested in co-founding with NBT?
2. Being aware of current legislation and legal frameworks.
Sorting your legal documents out and being up to date with frameworks that might affect your business is very important. Take the recent framework rolled out by the European Parliament: the General Data Protection Regulations (short GDPR), that each and every company needs to adhere to. The laws describe data protection and privacy rights for all individuals within the European Union and thus, affect almost all digital businesses from e-commerce to SaaS.
Beyond these type of laws, there also is proper legal registration at the chamber of commerce, patents and copyrights. All of these take legal expertise and time.
Why do founders ignore it? Registering for patents is often times tiresome as one needs to connect a patent lawyer with the corresponding institution that will then register your product. A tiresome process that takes time and money...
With regards to legal limitations to your business: one needs to not only understand what is required to do with a new law such as GDPR, one also has to be up-to-date with passed laws that affect your business. In particular, without a law degree in the pocket this startup essential can be a time consuming and tiresome.
Why is it important? Not complying with GDPR can lead to harsh punishments (fines) that can become a huge drawback for an early stage and rather vulnerable startup. Being able to rely upon a data protection officer (DPO) or other legal expert is always good to have in order to make your business legally “bullet proof”. At NBT, our DPO is a valuable contact person for founders to make sure your data flows and communication channels are compliant.
With regards to submitting your patent, our operations team can help you out with making sure that your product and technology is registered and safeguarded from being bought off by a bigger fish.
3. Crafting a clear and convincing pitch (and practicing it!)
As a founder you will be running around giving elevator pitches to each and every partner, investor, potential employee you run into. Sooner or later you will stand on a stage in front of a couple of hundred people (if your idea is great) and pitching your project. Being prepared for that is essential as it is the “face” of your company, it is the first introduction to somehow that has never heard about you. It is THE foot in the door to get into an industry!
Beyond the creation of a coherent pitchdeck, the delivery is just as important. Practicing in front of a mirror or your family and finding other ways of doing so can help.
Why do founders ignore it? Sure it is exhausting to sit for hours in front of PowerPoint trying to get your pitch deck to look right. Sure you do not have the time to practice your companies pitch in front of the mirror every other day. Therefore, most entrepreneurs have a tendency to not put the effort into it, procrastinate, or do a “just fine”-job with it.
Why is it important? Building your pitchdeck the right way is crucial as it is the public “face” of your early stage company. The delivery is just as important, as the pitch is what you “perform” and showcase every investor, business partners and even potential employees – so get it right! Luckily, we compiled some tips and recommendations in this Guide to Pitching Tech Startups to perfect your pitch skills. You can also look at the analysis of one of our venture's pitchdeck here.
4. Getting input on your business plan.
The business plan is the heart of your (to be founded) company. Getting it right and working on it along the way is the sole way of improving it to reach (near) perfection! In that process you will keep changing and shifting while receiving input from your co-founder, investors, and other stakeholders. Finding external people can be beneficial as they are not interested in getting a “piece of the pie”, they merely support you!
Why do founders ignore it? Finding people that are both, able to understand the depth of your product and have the necessary expertise to evaluate can be quite difficult. As a founder, you will have a tendency to have a tunnel view as to how your business will work. The reality is always different…
Why is it important? Sharing your business plan to get feedback from others is going to help you build a better business and solid plan. Don't lose to much time on it but do make the attempt and reach out to peers. At NBT, you can rely on our experienced management team and our venture developers who bring extensive expertise from the field.
5. Have proof and get your numbers right.
Remember the following quote from E. R. Tufte in The Visual Display of Quantitative Information: “Above all else show the data.” – and be able to do so. Quantitative proof to showcase a market gap, the growth potential of your product, etc. will allow you to make more informed decisions.
NBT's Hardware Engineer David and venture developer Liviu, testing a sensor in the NBT lab.
Why do founders ignore it? Crunching the numbers requires thorough research and an ability to be comfortable with numbers (including sitting in front of spreadsheets), which costs time and a patient mind.
Why is it important? Even though it is exhausting and dreadful to do, crunch the numbers and spend time to analyze the market, competition and problem. In particular investors are “numbers”-people and like to see the facts quantitatively. Above all it is crucial to be able to know the key facts and numbers surrounding your business.
6. Getting real feedback through customer experiences.
Your customers and buyers are always tuned into one radio station: WII.FM (What's In It For Me) – for them the rest is filtered out as noise. Knowing exactly what is in it for your customers will allow you to develop your product accordingly and sell it in a compelling way.
Why do founders ignore it? Obviously spending time with customers takes time, it can be scary for some or simply boring to others. Also, the expectation of getting hard facts or insights is what puts entrepreneurs onto another course. Sometimes founders are so in love with their project and plan that they do not want to be crushed by the hard reality of the market and its real customers.
Why is it important? The ultimate “win” from talking to your customers is deep insight into how they think, feel and use your product or solution. That insight alone is absolutely critical to the growth of any type of business, and it’s the biggest reason to do this. Even if there were no other benefits, that benefit alone already makes it worthwhile.
7. Firing a friend.
Often times as a founder or entrepreneur you are in a position where your early stage company starts with friends or people that are passionate (instead of experts at what they do). Founding a good team right from the start is hard, because often times none of the people involved really have experience as to how to run a team, let alone a company. Either the team is too junior, or the team is consisting of people based on proximity not experience.
At some point you will (or might) be in a situation in which you will have to fire a friend. That friend might be your co-founder or an employee of you. Things will get personal. Things will be uncomfortable but you have to do it.
Why do founders ignore it? Firing a friend or person you have personal contacts with is just hard. In this case avoidance is the response, which is also not the optimal solution.
Why is it important? As the founder of your company you need to be decisive and put the needs of your company at the first place even if that requires to break a professional relationship with a friend. Not doing so, may not only ruin your company but other relationships within the company. If necessary and properly done, being able to fire a friend shows great leadership and commitment towards the rest of your team.
Closing the loop
NBT Developer Niranjan working on a piece of code.
In this article we shared essentials no founder wants to do. Even though they are time consuming, tedious and some simply annoying to do, these are also crucial steps to take in order to bring your project to the next level.
In light of these, at NBT we co-found ventures by giving entrepreneurs integral support needed. With the help of our NBT resources, you start with a full set of business and technology skills from the first day. From marketing and operations to engineering and technical support, the idea is for you to focus on creating the business & tech solution to become successful.
In our Founders Handbook you will get insights into how we operate and interact with our founders along with information on our venture development process.