As I mentioned in the intro, I’ve launched several startups. These weren’t just software products; there was even some "hardware" involved. I’ll be honest: not all of these projects became unicorns. To be even more honest, none of them did. However, about 80% of my projects broke even, and 50% brought in a decent profit. So...
📣 Disclaimer
I’m not claiming originality in these ideas. What I’m sharing is the result of refining and applying ideas from books, conferences, and courses to my own practice. This is not just another case of survivor bias from someone who got lucky. These are conclusions drawn from real successes and equally real mistakes. And yes, I’ve stepped on many rakes so you don’t have to.
🪂 Jumping Into the Unknown or How Not to Sink in Startups
So, you’ve decided to launch a startup? Congratulations, you’re officially part of the club that loves walking on the edge without a safety net! But before you dive headfirst into dreams of billion-dollar investments and gracing the cover of Forbes, let’s slow down a bit and talk about the realities.
Launching a startup is like jumping with a parachute. It’s exhilarating, adrenaline-pumping, but there’s one small detail: if the parachute doesn’t open, the landing will be, let’s say, not very soft. In the startup world, your parachute is the validation of your idea’s viability. Without this check, you risk becoming not a pioneer of a new market, but the hero of yet another cautionary tale about how “everything went wrong.”
Fortunately, there are a few proven methods that will not only help you land safely but also give you a story to proudly tell your grandchildren about how you conquered the wild world of startups. So buckle up, and let’s figure out how to avoid losing all your money and keep your sanity intact.
Recommended Reading/Viewing:
- "The Lean Startup" by Eric Ries — A foundational book on startups that teaches, among other things, how to minimize risks and validate ideas in the early stages.
- "Zero to One" by Peter Thiel — A book about creating something new and unique rather than repeating what already exists.
- "The Startup Owner's Manual" by Steve Blank — A practical guide for startup founders, including strategies for testing and launching ideas.
🛞 A Brilliant Idea or Just Another "Reinvention of the wheel"?
So, you’re sitting there thinking, "This is it, the idea that will turn the world upside down!" But before you rush off to the bank to take out a loan for that yacht, ask yourself: is your idea really that unique?
How many times have you heard stories of someone trying to reinvent the wheel, only to be surprised to find that not only does the wheel already exist, but it’s also electric and comes with a coffee maker? Don’t fall into the same trap.
Validating the uniqueness of your idea is the first step on the path to success. Google is your friend! Scan the internet, browse Reddit and TechCrunch, talk to friends (but don’t get too excited if they immediately call your idea genius; I’ll cover this in more detail later). Find out what already exists in your niche, and think about how your idea could differ from what’s already on the market. Maybe you have something that makes it better, faster, cheaper, or just cooler? If so—great! If not, it might be worth reconsidering.
Remember, true innovation is not just creating something new, but creating something that solves a real problem or satisfies a hidden need. And if you realize that your idea isn’t just another “wheel” but a jetpack, then you can confidently move forward.
Recommended Reading/Viewing:
- "Blue Ocean Strategy" by W. Chan Kim and Renée Mauborgne — A book on how to create unique products and services while avoiding competition in saturated markets.
- "Made to Stick" by Chip Heath and Dan Heath — A book on how to create ideas that truly "stick" and become popular.
- "Originals: How Non-Conformists Move the World" by Adam Grant — A study on how people come up with original ideas and bring them to life.
🛍️ The Market: Does Anyone Actually Need Your Product?
So, you’ve got a brilliant idea (or at least not just a reinvention of the wheel). But there’s one small question: who actually needs it?
It’s time to figure out who these people are that should be lining up for your product like it’s the latest Nike sneaker drop. Are they willing to pay for it, or is this just another “passion project” that only interests you, your mom, and those same friends who supported your idea at the start? Here are a few questions to help you figure that out:
- Is there a real problem? Every successful product solves a problem. Maybe people can’t quickly find fresh avocados, or they need an app that plays ocean sounds in random city spots (yes, someone might want that). The main thing is to ensure that this problem is real and not just your personal fantasy.
- How serious is this problem? Here’s the thing: if people are willing to live with a problem without feeling discomfort, your product might end up being just another unnecessary accessory. For example, if they only have two steps from the coffee maker to the couch, why would they need a robot to bring coffee to the table? Find out how often they encounter the problem and how much it bothers them.
- How many people have this problem? Even if you’ve found a real problem, you need to solve it for a sufficient number of people. If your product is only of interest to two neighbors at the dacha, it’s unlikely to lead to billion-dollar investments. Estimate how many people around the world might need your product and, more importantly, are willing to pay for it.
- How are people solving this problem now? Suppose the problem exists and is quite serious. But here’s the question: how are people solving it now? They might already have a working, if imperfect, solution. For example, if your idea is a new type of food delivery, think about why people should choose it over the familiar services they’re already satisfied with. Or if you’re going to offer a shoe-cleaning device, find out how people are handling that task now and what they’re dissatisfied with in the current methods.
Understanding how people currently solve their problem will help you determine whether your product is better or more efficient than existing solutions. If your product offers a unique advantage, saves time or money, or simply makes life easier, you have a chance to change their habits and carve out your place in the market.
You’ll need to conduct a bit of research. It’s not as scary as it sounds: sometimes it’s enough to read comments on social media or survey potential users. The better you understand your future customers, the higher your chances of success.
- Non-obvious constraints: Market capacity isn’t just about the number of potential customers; it’s also about real limitations they may face. For example, demand for visas for talented specialists might be huge, but the number of such visas is limited by quotas and government regulations. As a result, even with high interest, the market may be constrained by external factors that reduce the availability of the product or service. The same can happen with exclusive goods limited in production volume or services subject to strict regulatory control. It’s important to consider these constraints when assessing the real market capacity.
And remember: not every market is a goldmine. But if you find your target audience, understand their pain, and know how they currently deal with it, you can offer them something they’ve been waiting for all their lives. Or at least something that makes their lives a little easier (and your wallet a little thicker).
Recommended Reading/Viewing:
- "Crossing the Chasm" by Geoffrey A. Moore — A book about understanding and conquering different market segments, especially in tech startups.
- "The Innovator's Dilemma" by Clayton Christensen — A study on how successful companies can lose market positions due to new technologies and business models.
📦 Fake it Till You Make It
Sometimes, to test the real interest in your product, you don’t need to have a finished solution. You can find out how much demand there is for your idea even before you invest resources in development. How? Create a marketing site and launch targeted ads—it’s a great way to test demand and understand how expensive it will be to attract customers.
Fake Landing Page: A Product on Paper Is Still a Product
A makeshift landing page is your virtual storefront, which can look as if you already have a finished product. Here, you can talk about its benefits, show the concept, and offer potential customers to subscribe for updates or even place a pre-order. And all this—without having a finished product! The main goal is to see how much interest the idea generates from real people.
Here are some tools to quickly and almost freely build a landing page to test your marketing hypothesis:
Launch Targeted Ads: Measure Interest in Numbers
Ads on Google, Facebook, Instagram (depending on which of these is recognized as extremist in Russia at the time you read this), or other platforms can help you drive traffic to your site and measure real interest. Set the target audience to reach your ideal customers and see how many people click on the ad, visit the site, and leave their contact information. This data will help you understand how expensive and challenging it will be to attract customers in the future.
Fake Paywall: Intention or Just Curiosity?
One of the most reliable ways to test people’s willingness to pay for your product is to use a "fake paywall." This is a stage on the site where the user, interested in the product, reaches the purchase point but instead of a real payment, sees a message that the product will soon be available. Analyzing how many people reach this stage and click the "Buy" button gives you an idea of the real intention of users to spend money. Conversion at this stage is an important indicator of genuine interest in your product.
Analyze the Metrics: What’s the Real Interest?
Look at the conversion rate: how many people who saw the ad were interested in the product, and how many of them were ready to act (e.g., leave their email for launch updates or go through the fake paywall). A high conversion rate is a good sign that your idea is in demand. If the conversion is low, it might be worth reconsidering the product’s positioning or even its concept.
Determine the Cost of Customer Acquisition (CAC): How Much Is Attention Worth?
One of the key metrics is the Customer Acquisition Cost (CAC). How much money did you spend on ads to get one potential customer? If CAC is too high compared to the expected revenue per customer (LifeTime Value, LTV), this could be a problem for scaling your startup. Analyzing these data will help you adjust your marketing strategy or reconsider the economic model.
At this stage, it’s not so crucial to start calculating unit economics. But if LTV > 3xCAC, that’s already an excellent high-level sign.
Test Multiple Hypotheses: What Works Best?
Don’t limit yourself to one ad or landing page. Try different approaches: change headlines, images, text, and buttons. Conduct A/B testing to understand what attracts attention and generates interest. This will help you not only optimize future marketing campaigns but also better understand what resonates with your target audience.
Testing real demand through a marketing site, targeted ads, and a fake paywall isn’t just a useful experiment; it’s practically a necessary step for any startup. It will help you minimize risks and determine whether it’s worth moving forward. After all, it’s better to find out early on than to be disappointed later after investing significant resources into something that no one needs.
Recommended Reading/Viewing:
- "Growth Hacker Marketing" by Ryan Holiday — A book on marketing strategies to test demand and find your audience.
- "The Four Steps to the Epiphany" by Steve Blank — A book about methods to validate market hypotheses before the product is ready.
🥊 Competitors
You’ve come up with a great idea, found that the problem exists, and even identified people willing to pay for it. But don’t start celebrating just yet—it’s time to see who’s already playing on this field. Competitors aren’t just enemies trying to take your slice of the pie. They are your best teachers, capable of showing you where you can become better, faster, and stronger.
Who Are Your Competitors? Start by figuring out who’s already working in your niche. Are there companies on the market offering something similar? Or perhaps they’re solving the same problem differently? Your competitors could be large corporations or small startups you’ve never heard of. You need to know them by name, as this will help you understand who you’ll be competing with for customer attention and money.
What Are They Doing Well? Think about what attracts customers to your competitors. Maybe they have an excellent reputation, a user-friendly interface, or just great advertising? Studying the strengths of your competitors will help you understand what to focus on in your product. Or maybe they have some features you can borrow, adapt, and improve in your startup.
Where Have They Missed the Mark? Here’s where it gets interesting: study your competitors’ weaknesses. Look at what their customers are unhappy about—poor service, high prices, an inconvenient website? This is your opportunity for growth. If you can offer a solution that better addresses these issues, customers might switch to your side faster than you can say "Worcestershire Sauce."
How Can You Stand Out? Now that you know your competitors' strengths and weaknesses, it’s time to think about how you can stand out against them. It could be anything: better product quality, unique features, a lower price, or even an original delivery method. The key is to find your Unique Selling Proposition (USP) that will make your startup stand out from the rest.
What If There Are No Competitors? If there are no competitors in the market at all, don’t rush to celebrate. This doesn’t necessarily mean you’ve struck gold. More likely, it’s a signal to pause and think: maybe the market just isn’t ready for your product, or the need you’re addressing doesn’t actually exist. The absence of competitors might indicate that others have already tried to conquer this niche but failed for some reason. Therefore, it’s essential to carefully analyze why the market is empty and what’s behind it.
Indirect Competitors: Competitors don’t necessarily have to offer the exact same product as you. For example, e-books compete not only with other e-books but also with printed books, audiobooks, and even video content since all these vie for readers' time and attention. Similarly, car-sharing services compete not only with each other but also with traditional taxis, public transportation, and even bikes and scooters. It’s important to consider all potential competitors that might influence your target audience’s choices.
Competitors aren’t just obstacles; they’re also sources of inspiration. They can show you what not to do or, conversely, inspire interesting ideas. In any case, knowing your competitors is a powerful weapon in a startup founder’s arsenal. So arm yourself and get ready for the next step!
Recommended Reading/Viewing:
- "The Art of War" by Sun Tzu — A classic work on strategy and tactics, applicable to business.
- "Competitive Strategy" by Michael E. Porter — A fundamental book on how to analyze competitors and build competitive strategies.
💸 Business Model: How to Make Money, Not Just Noise
So, you have a great idea, you've researched the market, gathered some early access sign-ups, and you know your competitors inside and out. But now it's time to talk about the most important thing: how are you going to make money? Because no matter how cool your product is, without a solid business model, it risks becoming just an expensive (very expensive) hobby.
How Will You Make Money? The first question to answer is: where will the profit come from? Will you sell the product directly, offer subscriptions, take a commission, or provide a freemium model with paid add-ons? There are many options, but it’s crucial to choose the one that best suits your product and market.
Who Are Your Customers and How Much Are They Willing to Pay? A clear understanding of your target audience will help you determine how much they are willing to pay for your offering. If you're offering a premium product that solves serious problems, you can set a high price. But if you're targeting a mass market, you might want to offer something affordable and accessible. Remember, the right price can significantly increase your chances of success.
What Are Your Costs? Money doesn’t just come in; it also goes out. To understand how much you need to earn to stay profitable, you must know your costs. These include salaries, marketing, rent, production, and even unforeseen expenses. If your cost structure isn't well thought out, your startup could end up deeply in the red before it even starts generating profit.
Scalability: Can It Be Replicated on a Larger Scale? It's great if your startup works for a small audience and generates income. But what happens when you decide to expand to a broader market? It’s important to think about how scalable your model is—can it be quickly and efficiently rolled out to new markets or for a larger number of customers?
Plan B: What If Something Goes Wrong? Even the most well-thought-out business model can encounter unforeseen circumstances. That’s why you should always have a backup plan. What will you do if your main idea doesn’t take off? How will you adapt your product or service to changing conditions? Having a Plan B will not only protect you from failure but also give you the confidence that you’re ready for any twist of fate.
A business model isn’t just a document filled with numbers; it’s a key component of your startup that determines whether it will survive and grow. If you have a clear understanding of how and how much you’ll earn, and how to avoid financial pitfalls, your startup is on the path to success.
Recommended Reading/Viewing:
- "Business Model Generation" by Alexander Osterwalder and Yves Pigneur — A book about how to create and test business models.
- "Value Proposition Design" by Alexander Osterwalder et al. — On how to create value propositions that meet customer needs.
💰 Financial Plan: Yes, It’s About Money Again
Money is perhaps the trickiest topic in the startup world. It can make you a star or leave you with an empty wallet and shattered dreams. So, before you dive headfirst into the deep end, it’s important to sort out your finances and create a realistic plan.
Real Numbers, Not Rose-Colored Glasses Let’s start with the basics: forget about money raining down from the sky as soon as you launch your product. That’s a myth believed only by those who’ve never tried to launch a startup. A realistic financial plan is the foundation upon which your entire business is built. How much money do you need to launch? What will your fixed and variable costs be? How much will you need to last at least six months? These questions should be at the top of your list.
Cash Flow: Where It Comes From and Where It Goes A financial plan isn’t just about the amount in your bank account; it’s about understanding how money will move. Create a forecast of income and expenses for the coming months and years. Keep in mind that expenses can grow faster than income, especially in the beginning. You need to clearly understand where the money will come from and how you will allocate it. If you don’t plan your cash flow, you’ll eventually face unpleasant surprises.
Safety Net: Plan for the Worst, Hope for the Best The life of a startup is full of surprises, and not all of them are pleasant. That’s why you need a safety net—a reserve fund for unforeseen circumstances. This could be unexpected expenses, payment delays, or even market crises. Without a safety net, you risk losing everything at the first sign of trouble.
When to Expect Profit? It’s important to understand that most startups don’t turn a profit right away. You need to be prepared for your startup to operate at a loss in the first few months, or even years. That’s why it’s important to identify your breakeven point—the moment when income covers expenses. This will help you estimate how much time and money it will take to reach a positive balance.
Attracting Investment: When Your Own Funds Aren’t Enough If your financial plan shows that your own funds won’t be enough to execute your vision, it’s time to consider attracting investments. This could be venture capital, crowdfunding, or even family savings (but be careful with the latter). It’s important to have a clear plan and arguments to convince investors that your startup is not just another "pie in the sky" but a project with real potential.
A financial plan isn’t just a formality; it’s a crucial element of success. If you carefully consider all financial aspects and prepare for the unexpected, your startup can survive any challenges and grow into a stable business. Don’t rely on miracles—rely on calculations and common sense, and your chances of success will be significantly higher.
Recommended Reading/Viewing:
- "Profit First" by Mike Michalowicz — On how to properly manage finances and achieve profitability in small businesses and startups.
- "Venture Deals" by Brad Feld and Jason Mendelson — A guide to attracting investment and managing financial flows in a startup.
🪚 DIY: Start Small to Achieve Big
Now you have an idea, the market is researched, competitors are studied, and finances are calculated. It seems like it’s time to conquer the world, right? Not so fast! Before you put all your energy and resources into creating a fully-fledged product, you need to take one very important step—create a prototype, or as it’s often called, an MVP (Minimum Viable Product).
What Is an MVP? An MVP is the minimal viable product, the version of your idea that contains only the core features without which your product loses its meaning. Imagine you’re making a pizza: instead of the full set of toppings and sauces, you start with the basics—dough and cheese. If people like the basic version, you can add more. Your task is to understand whether your product is interesting in its simplest form.
Why Do You Need a Prototype? A prototype allows you to test your idea on real users without spending a ton of money and time developing the full version of the product. It’s an opportunity to gather feedback, find out what works and what doesn’t, and make changes before you fully commit. Simply put, a prototype saves you from big mistakes at the start.
How to Create an MVP? Creating an MVP is an art of minimalism. Identify the key features of your product and focus on implementing them. Don’t try to do everything at once. It’s better to make something simple but of high quality than a lot of things poorly. Let your MVP be functional but easily modifiable so you can quickly make changes as you receive user feedback.
Testing on Users: Better Now Than Later When your MVP is ready, it’s time to show it to the world. And here’s where the fun begins: testing with real users. These could be friends, acquaintances, or a small group of your target audience. Listen to them carefully—what do they like, what don’t they like, what would they want to see? Collect all comments and suggestions to improve the product before it reaches the broader masses.
Creating a prototype is a crucial stage in a startup’s life. It allows you to test your idea with minimal risk and find the optimal solution for your users. Start small, and you’ll have a chance to create something truly meaningful and in demand.
Principles of Creating an MVP:
- If something can be left out—leave it out.
- Don’t strive for perfection.
- Aim to launch your MVP as quickly as possible and gather feedback.
- Know ALL your MVP users.
- It’s not about making money; it’s about testing demand and monetization models.
- Discarding an MVP is normal.
Recommended Reading/Viewing:
- "Sprint: How to Solve Big Problems and Test New Ideas in Just Five Days" by Jake Knapp — A book on how to quickly create and test prototypes.
- "The Mom Test" by Rob Fitzpatrick — On how to properly gather feedback.
🙋♂️ Feedback: Criticism Is the Best Gift
So, you’ve created your MVP, and you think it’s time to invest all the money in the world to perfect the product. But before you make that mistake, there’s one more element that will help open your eyes to the reality of things—user feedback. Yes, the same feedback that can sometimes hurt your ego and even demotivate you, but believe me, it’s worth it.
Don’t Fear Criticism Receiving criticism is always unpleasant, but it holds immense value. Instead of shutting yourself off from it, accept it with gratitude. If someone says something doesn’t work or is frustrating, it’s not an attack on you personally but an opportunity to make the product better. Remember: every negative review is a hidden suggestion for how to improve your idea.
Actively Gather Feedback: Don’t Wait for It to Come to You Don’t rely on users coming to you with feedback on their own. Actively gather their opinions through surveys, interviews, social media, and feedback forms on your website. The more you know about what users think, the better you can adapt the product to their needs.
Analyze and Systematize When feedback starts coming in, it’s important not to drown in the flood. Organize a system where you can collect and analyze all the feedback. Categorize it: what people like, what they don’t, and what raises questions. Your favorite LLM (ChatGPT, Claude, or LLaMA) can help you identify common trends and understand which aspects of the product require immediate attention.
Work on Mistakes: Fix and Improve Once you’ve received feedback, it’s time to act. Don’t delay fixes. The faster you respond to feedback, the more users see that you’re listening to them and are willing to improve the product. This increases loyalty and trust in your startup.
Long-Term User Engagement Feedback isn’t a one-time thing. Keep engaging with users even after the product has been launched into the market. Regular surveys, updates that incorporate their suggestions—all these create a sense of community and involve users in the product development process. When users see that their opinions genuinely impact the product, they become its most loyal supporters.
Feedback isn’t just reviews; it’s your guide to improving the product. Properly organized feedback collection allows you not only to avoid mistakes but also to find new growth opportunities. So don’t be afraid of criticism, accept it with an open heart, and use it as a tool to create something truly valuable.
Recommended Reading/Viewing:
- "Hooked: How to Build Habit-Forming Products" by Nir Eyal — On how to understand user needs and adapt products based on their feedback.
🙅♀️ When to Say "Enough"?
Startups aren’t just about passion and the drive for success; they’re also about knowing when to recognize that it’s time to stop. Sometimes, the wisest move is not to keep fighting but to make the tough decision to pull the plug. Let’s figure out how to know when it’s time to say "enough" and shut down the project.
Listen to the Numbers: Metrics Don’t Lie Emotions and enthusiasm are good, but success is measured by numbers. If key metrics (such as user growth, revenue, costs) keep falling or stagnate despite all efforts, it’s a cause for concern. Regularly analyze your metrics and be honest with yourself: if they’re signaling trouble, it might be time to reconsider your strategy or even end the project.
Market Signals: Don’t Ignore Reality Sometimes, despite all your efforts, the market simply isn’t ready for your product. This could be because the problem you’re solving isn’t that serious, or competitors have already taken the niche and done it better. If the market isn’t responding positively to your efforts, don’t try to swim against the tide. It’s better to recognize this in time than to keep wasting resources.
Team Burnout: Exhaustion and Demotivation If the team starts to burn out, motivation drops, and internal conflicts become more frequent, it’s a red flag. Startups require full commitment, and if your team no longer believes in the project, it can become a significant obstacle to success. In such a situation, it’s important to discuss prospects with the team and decide whether it’s worth continuing.
Financial Dead End: No Money, No Startup Even the brightest idea can’t survive without funding. If the money is running out and you can’t secure investment, it’s time to rethink your priorities. Instead of squeezing the last resources, consider how to maintain financial stability and possibly redirect your efforts to something more promising.
Intuition and Gut Feeling: Don’t Ignore Yourself Finally, sometimes your gut tells you something’s wrong. If you constantly feel doubt, anxiety, or just plain exhaustion, that’s an important signal too. Intuition isn’t trivial, and sometimes it can be the most accurate indicator that the project is no longer worth continuing.
Acknowledging when it’s time to stop isn’t a defeat; it’s part of the journey. Many successful entrepreneurs have gone through failures and closed projects before finding their true niche. The key is not to fear making tough decisions and to learn from them. If you realize in time that a project has no future, you can save resources, experience, and energy for the next, possibly more successful, venture.
Recommended Reading/Viewing:
- "The Lean Startup" by Eric Ries
- "Fail Fast, Fail Often" by Ryan Babineaux and John Krumboltz — On how mistakes and failures help achieve success.
🧪 Conclusion: A Startup Is Not a Lottery, But a Chess Game
So, you’ve gone through the entire process of validating your startup, studied the market, found a team, and even faced challenges. But remember, launching a startup isn’t a game of chance where everything depends on luck; it’s more like a chess game where every move counts and requires careful planning.
Plan Ahead, But Stay Flexible Successful businesses always have a strategy, but they’re also ready to adapt to changes. In business, as in chess, sometimes you have to sacrifice one piece to win the game. Be prepared to adjust your plans, but don’t lose sight of your ultimate goal.
Learn From Mistakes, But Don’t Repeat Them Mistakes are inevitable, but they shouldn’t become your constant companions. Every failure is a lesson that helps you become stronger and smarter. Analyze what went wrong and draw conclusions to avoid making the same mistakes in the future.
Stay Calm and Persistent There will be moments when everything seems difficult, and you’ll want to give up. But it’s important to stay calm and persistent. Success in startups often comes to those who don’t give up at the first sign of trouble. Remind yourself that every great success is the result of many small steps and obstacles overcome.
Don’t Forget the Reason You Started In the hustle of daily tasks and challenges, it’s easy to forget why you started this journey in the first place. Remember your original motivation, passion, and dreams. Let them be your source of inspiration in difficult times. If you’re doing something that truly matters to you, it will help you overcome any challenges.
Remember: Success Is a Marathon, Not a Sprint Building a successful startup takes time. Don’t expect instant results, as even the most successful companies took years to achieve their goals. Set realistic goals, achieve them step by step, and don’t rush. Success favors the patient.
In conclusion, if you’ve properly validated your startup, carefully planned each step, and are prepared for the challenges, your chances of success are significantly higher. Let this chess game be an exciting journey where every move brings you closer to victory. Remember that even if something goes wrong, it’s not the end of the game—just a new turn on the road to success.