Ep. #545 - Startup Planning Tips
In this episode of Startup Hustle, Matt and Matt are back for Part 8 of “How to Start a Tech Company.” In this segment, the Matts talk about startup planning while giving helpful tips to make your journey a bit more enjoyable.
Covered In This Episode
There is no user manual on how to start a startup. However, to increase their startups’ success rate, entrepreneurs have to do startup planning. Still, not all plans succeed. Founders must learn to adjust and react to scale up their businesses quickly.
One thing founders should commit to is learning to be better at startup planning. And the best way to do that is to continually listen to more experienced entrepreneurs and mentors. That’s why, in Part 8 of the “How to Start a Tech Business” series, the Matts give away helpful startup planning tips based on their years of experience.
- Getting ready for the startup life (2:23)
- Knowing your potential customers (4:51)
- When to set up an LLC (9:45)
- Ask Google for help (14:32)
- Identifying mentors (18:56)
- Resources for building a business plan (23:18)
- Building up resources (30:10)
- Figuring out a problem and who is willing to pay for it (36:06)
- Understanding your competitors (40:22)
- Solving a unique problem and reaching the right market (47:12)
- Don’t skip the planning phase (52:05)
- Don’t undervalue your product or service (55:03)
- Common pitfalls that come with planning for a startup (59:42)
- Don’t sell your product to everyone (1:06:09)
- Wrapping up (1:07:55)
The plan is there is no plan which sometimes works and sometimes doesn’t.Matt Watson
You’ve got to go meet with potential customers and get feedback from them. That’s the first priority.Matt Watson
One assumption that you can count on is that you’re going to have to learn a lot of new stuff, and you’re going to have to adapt to certain things. And I can’t tell you what that list is because it’s different for everyone. But you are going to have to learn how to do a lot of stuff. I don’t care how much experience you have. A new business always comes with a significant learning curve. And no. There’s definitely no owner’s manual.Matt DeCoursey
Don’t be afraid to typecast yourself.Matt DeCoursey
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Visit our Startup Hustle partners for your other business needs.
Following is an auto-generated text transcript of this episode. Apologies for any errors!
Matt DeCoursey 0:00
And we’re back. Back for another episode of Startup Hustle. Matt DeCoursey here with Matt Watson. Hi, Matt.
Matt Watson 0:05
What’s going on, man?
Matt DeCoursey 0:08
Trying to come up with a plan?
Matt Watson 0:10
Well, we had a plan. It was 52 episodes and 52 weeks
Matt DeCoursey 0:14
different plan plan for a startup dude.
Matt Watson 0:18
Ah, what’s up? Yeah.
Matt DeCoursey 0:20
Yeah. So with that, I’ve come up with some tips. I think absolutely.
Matt Watson 0:27
Absolutely. Excited to continue the 52 part series, this is fun.
Matt DeCoursey 0:33
Eight, we’re on eight is that an eight, that’s a five, that’s a four and a four, or a five and a three. But we’re on eight. So yeah, I’m having a hard time counting today. Maybe we should talk about that. But, and by the way, Happy St. Patrick’s Day, because that’s the day that this is coming out on the podcasts and people are joining us on the live stream. So, you know, there’s a whole lot to talk about when it comes to start planning for a startup. But before we do that, just a quick reminder that today’s episode, Startup Hustle is brought to you by FullScale.io, we can help you build a software team quickly and affordably. And that might be part of your plan. So we could talk about that as well. But overall, you know, as we as we began part eight of 52, I think people that have listened to us on the show a lot know that we are for some types of planning, and hate other types of planning. What would you what do you want to say before we dive in, Mr. Watson?
Matt Watson 1:35
The plan is there is no plan which sometimes works and sometimes doesn’t.
Matt DeCoursey 1:44
I think the plan is that the plan is wrong. You know, and that’s one of the things we’ll talk about. And you know, it’s it’s the story of the shopkeeper that spends all this time, so much time cleaning the shop and become so obsessed with cleaning the shop, he forgets to open the doors. Yep. And that’s that’s what planning can do. Sometimes when it comes to an early stage business. Now, overall, you know, when it comes to the plan, we’re going to go through some do’s and some don’ts and also list some of the common pitfalls that just kind of come up in the planning process. You know, Matt, I, I’d like you to be the lead off here. So why don’t you dive into the list for us tee it up for us, baby.
Matt Watson 2:23
All right, I think the first thing you have to do is, is just get ready to embrace the startup life, right? You’re gonna have to learn a lot of new things, you’re gonna have to be flexible, you’re gonna have to hustle, you’re gonna have to sacrifice some personal time, right? Like, you probably have a full time job or something else that you’re doing. And now you’ve got this side hustle, and it’s going to chew up some of your personal time. So you’re gonna have to make some time for it, you’re gonna have to have some money to invest in it too. I mean, for simple stuff, like, even could be just business cards or a website or, you know, just simple stuff, it’s going to take at least a certain amount of capital, just to get started. So
Matt DeCoursey 3:03
yeah, I think when, when it comes to the plan itself, in the reason that we kind of poke fun or poke holes and plans is, when you’re taking a foray into something that you haven’t done before, it makes it impossible to create a real plan. And the reason for that is you don’t know what you don’t know until the moment you realize you don’t know it. And I think if you know, if you have experience starting a business, it becomes remarkably easier to create a realistic plan, because you’re going to probably leave out less one time things. I think when it comes to overall plans and my experience in the past is those are the things that kind of grind on you both mentally and on your clock, you know, because you get stuck doing like all this crap that you didn’t think about or you didn’t need to do or when it comes to the finances, things you need to buy that you hadn’t thought about yet, or, you know, all of it and, and the thing is, it is it becomes very easy to get stuck in the sidecar of planning, rather than the race car of startups that you want to be in and you know, some of the things we’ll talk about. So, you know, when it comes to creating your plan, I think one of the important things to do is okay, so there’s things that you have to focus that you should focus on. There’s things you want to focus on. And then there’s things you don’t really even want to do. But you have to Yep, but one of the things that is important, earliest, you know, how are you going to validate your concept? How are you going to create? How are you going to, you know, you’re you’re going to be seeking resources or users or whatever. So how do you validate? And Matt, when you think of like, validating what you do, and we hear that term a lot, what does that mean to you?
Matt Watson 4:51
It means meeting with your potential customers more than anything. What you don’t want to do is just meet with your friends and family. We’re all going to be like yeah, that’s a great idea. Yeah, man, that’s awesome. And they don’t know anything about the problem you’re trying to solve, or the customer that you’re you’re targeting, right? Like, you’ve got to go meet with potential customers and get feedback from them. That’s the first priority. When I started stuck phi, I reached out to people on LinkedIn. I met and went and met with the IT directors and stuff like that at some local companies and just off, you know, Hey, can I buy you lunch today? You know, buy a cup of coffee, just want a few minutes of your time I got this new company and, and some of them are, you know, some of those people are a little more innovative and on the leading edge, and like, cool, yeah, I’d love to hear about that. That sounds great. And then some people aren’t into that. So you just got to chase people around to you get some people that will talk to you.
Matt DeCoursey 5:41
You can overcome those objections with volume, meaning, like, ask more people. Yeah, you know, just what you, you don’t want to ask three people. And then if they all say no, assume everyone’s gonna say no, because that’s not necessarily the case. I think overwhelmingly, entrepreneurs have this built in desire to help other entrepreneurs, because we’ve been there, you know, and the older I get, the more the more help and advice that I offer those with less experience, because I remember how meaningful it was and to get advice from others. And I still am a huge supporter of those people that gave me advice along the way. So you can create, you can create your own little angel network that way. And you know, and these people will follow, they kind of want to see if the advice they gave you was any good on someone else to
Matt Watson 6:32
especially especially when you reach out to them try to relate to the problem as it helps them right. Like, Hey, I bet you have this problem. This is the problem I’m trying to solve. I’d love to get your experience, right. Just like if somebody came to you other Matt and said, Hey, I know the easiest way to find unlimited dotnet developers and Cebu. And they’ll work for nothing. You’d be like, Sure, love to talk to you.
Matt DeCoursey 6:54
Right? I want to hear what you have to say. What do you have to say?
Matt Watson 6:57
Right? Like, you know, it’s if you can serve it up in something that interests them, right? Not like, Hey, I just want to meet with coffee. Right? Give them a reason. Get them excited to meet with you.
Matt DeCoursey 7:08
You did that on purpose. You know, I hit the coffee invite the general coffee invite sucks. Like it really does. Like, if you want to meet with me or talk to me, don’t just be like, Hey, I’d love to sit down with you over coffee and talk about what you do. That’s like an instant No, for me. Yeah. Because it’s like, what is my purpose of going and doing that? Yeah. So by the way, Matt, no one when they address me, no one says hey, other Matt. I know. That’s not That’s not I don’t ever get an email that says Dear other Matt. I probably will now probably Yeah. Now, you know, one of the things that just basic startup planning is giving consideration to how you want to set up your business. And, look, neither you or I are legal professionals, I’m not I’m not an attorney, but there are a heck of a lot of them out there that can help you get started. And when we say set up your business, you want to offer protection for yourself. You can even pick up a copy of million dollar bedroom because I talk I had there’s a couple pages in this, that about this subject. The one thing I know you don’t want to do is be a sole proprietor because all of the liability and all of the crap has a direct line of sight at your personal everything. So, you know, when it comes to whether you’re going to be a corporation or LLC, or some of that, you can you can seek legal counsel, and then there’s other there’s all kinds of stuff online that’ll help walk you through it, although like Legal Zoom, stuff like that. Right? Yeah. But you know, I mean, and I’ve had issues without that in the past too, though, because those are real, those are like, highly boilerplate. Yeah, you know, and, and they’ll set up an entity for you. But then you just kind of get a boilerplate, everything after that, depending on how you perceive the complexity of the business that you’re trying to set up. You may or may not want to choose to speak to an attorney, and they can do it for you. It’s honestly, it’s not a whole lot more expensive than something like Legal Zoom. And they can give you better advice about like, what do you want to accomplish? If you, you know, there’s big, there’s different there’s differences between owning a corporation and an LLC. And that’s not what we’re going to talk about in this episode, because like, once again, we aren’t the best people to advise you on that. I mean, I can tell you from my own experience, all the businesses that we own, including the business we own together Full Scale are LLCs Yeah. But you know, but one of the things is if we were to take in funding from institutional investors, they’d want us to change that.
Matt Watson 9:45
Yeah, cuz no one’s Yep. So I think the other the other topic here to cover a little bit is when to do this, right? Like, you know, if you have a startup idea, and you want to start working on it tomorrow Setting up an LLC is not necessarily the first thing you need to do. But you definitely need to do it before you start having customers or probably have a whole lot of expenses or liabilities hiring people. I mean, you don’t have to, it doesn’t have to be the very first thing you do.
Matt DeCoursey 10:16
Yeah, now, in that same boat, it is something you want to do when you begin to have true partners, like, you know, and that’s a good thing. And if you’re going to take in money from someone else, yep. Also a good marker for when you might want to do that. And, you know, there’s, I mean, those are, those are some of the things that make sense. And you’re right, you don’t need to get some one thing is okay, you’ll have to pay to set it up, whether it’s through an online kit, or, or a legal professional, you also have to pay to shut it down. So make sure you want to do it before you set it up, or you’re gonna end up with like a bunch of lingering things that are out there. And by the way, it’s harder, it’s harder to shut, it’s more of a pain in the ass to shut them down than it is to start them up.
Matt Watson 11:02
Well. And you’re really right about the if you have business partners and co founders part of it too, because that’s some of the stuff you have to get figured out up front is who owns what, and stuff like that. So the last thing you want to do is wait till the very end, and then try and do all that and then you’re not in agreement on it. Yep. So
Matt DeCoursey 11:20
yep. One other one other point that goes without in the planning is, it’s a really, I highly recommend a stay during the if you have partners. Well, this is if you have partners, if you don’t have if it’s just you, then this doesn’t really matter that much. But if you have partners or possible investors, you need to give start thinking early, about roles, like what you can do and what you can’t do. And like certain things that set up parameters, and it’s those are classified under your operating agreement, which is planning for how you’re going to operate the business. And keep it simple, you know, don’t create these, like super majority things where you need five people to vote to see if you go buy office supplies. So good fences make good neighbors. How about having patience?
Matt Watson 12:17
Patience, that’s one of the hardest things about a startup is everything is new. And it can be very frustrating, right, you want to get things done quickly. And you want to meet, you know, you want to validate your concept, you want to get the product done, you want to find your co founders, you want to raise capital, like you want to do all these things as fast as possible. But all of these things ended up taking two to three times longer than you think usually, and you got to have a lot of patience, you got to learn a lot of things. Things are not going to go the way that you planned them to go, you’re gonna have to make, you know, what do you always say, jump and build wings.
Matt DeCoursey 12:51
Sometimes you have to jump and then build wings. Yeah, the important the important part to know is that you need to have the material to build the wings, because trying to acquire the materials on your way to the canyon floor. That’s one other thing to do while you’re trying to build the wings. And so you know, that’s basic resource planning. You know, when we talk about patience, some of that is you have to be ready, I think one, I think one assumption that you can count on is that you’re going to have to learn a lot of new stuff, you’re going to have to adapt to certain things. And I can’t tell you what that list is, because it’s different for everyone. But you are going to have to learn how to do a lot of stuff. I don’t care how much experience you have. A new business always comes with, with significant learning curve. And and no. There’s definitely no owner’s manual. And I think that’s people have asked me in the past, like what’s the hardest thing about a startup and I say that it’s they don’t come with owner’s manuals. And you can you should be creative with your as you keep moving forward and you’re improving and adapting, create that owner’s manual. It doesn’t have to be sophisticated, it can be basic. But if all of a sudden you bring in resources or your business begins to grow quickly, that’s something that you’re going to end up having to do. And when I say owner’s manuals, I’m just talking about basic stuff. Like when this occurs, we do this or basic roles, or I mean, there’s almost an unlimited amount of resources online where you can grab and pull a lot of that stuff without having to dream it all up yourself. So I think that’s actually it’s not on our list. But I think that that’s probably a good part of the plan. Part of planning tip is ask Google
Matt Watson 14:42
ask Google everything.
Matt DeCoursey 14:45
Yeah, I’ve learned almost everything I know by asking Google which is sad, because that means I probably didn’t learn much before Google came out. You know, but I’m willing to own that. So this next one, I think is really important and I plan on looking for help when it comes to setting up the business. And I don’t mean just the entity of the business, I mean all parts of it like, if you if you’re going to have employees right away, and you know, like us like paychecks or ADP or something like that, that gussto, there you go, should bring up the those that have sponsored us in the past. But there are there are a whole lot of platforms and people and service providers that can help you set things up at the business, I’m talking just fundamental gears. And the reason that that’s important is that allows you to focus on traction, sales and getting your minimally lovable product out to market.
Matt Watson 15:45
Yeah, another good example of this might be setting up your website and some other basic marketing stuff, right? Like, if you’re not an expert at that, you don’t want to spend weeks of your own time doing it. If you can pay somebody else to do it for a low cost. Now, you got to have the capital to do it, or otherwise, you’re forced to spend all your time on it.
Matt DeCoursey 16:04
And now look, the more especially if you have other employees or things that are burning, you’re the burn rate. So planning your burn rate, Matt, what’s the burn rate?
Matt Watson 16:15
It’s the lack of profit on a monthly basis. It’s the money you’re losing.
Matt DeCoursey 16:22
And the burn rate? Well, a little more simplistic is the amount of cash that you have on hand divided into the number of months or divided by the while the number of months until you run out of it. Yeah, so yeah. So if your burn rate is, is currently putting you at four months till you run out of cash, I mean, who know that, understand that and plan for that. And that’s difficult. I think that’s where plans fail, though, because they’re overly optimistic. And once again, we’re not trying to scare scare you away from starting a startup. But that’s where a lot of people fail is they just assume everything’s gonna go right? You’re almost better to make the other assumption and be pleasantly surprised when everything doesn’t go wrong. It’s a better it’s a safer way to plan. And it also forces you to be aggressive with things like generate revenue, validate the product, nothing’s going to help your plan look awesome, and be believable and get people behind it more than traction and revenue. All right, you want to take the next one now?
Matt Watson 17:31
Yeah, I think the next one is one of the most important things, and that’s identifying mentors. And we talked about earlier meeting with potential customers, some of those could end up being one of your mentors. But if especially if you’re a new entrepreneur, or going to an industry, you don’t know, you know, find mentors that can help guide you are really, really valuable. So and a lot of times you can find those through your local network or startup communities.
Matt DeCoursey 18:01
The first time I ever met you face to face you were it was a mentoring breakfast of sorts, you sat down and gave me some advice about gega bug. You told me I remember you told me to because at that time, it was $8 a month per user, and you basically said you, you’re going to have to stack up a lot of users at eight bucks a pop?
Matt Watson 18:20
Matt DeCoursey 18:23
It’s good advice. Yeah, it really was. And it was it was true. I mean, and that’s, and that’s one of the things that, you know, like you look at, well, that changed some of the approach later, because we ended up with some enterprise and custom type users later that pay 1000s of dollars a month and not just eight. Yep. Because that’s that. And the reason the some of that matters, too, is that’s one that’s one relationship and one client to service. Not 150. Yep. And that’s where that that would really water you down. Also, it’s the changes the approach of investors. So, you know, when it comes to identifying mentors, that doesn’t have to always be people that are in the industry, I mean, the first place to look that’s probably right in front of you is your own personal network. And I think you can ask with kind of a dual, a dual approach in that, you know, say, Well, would you be willing to talk to me or do you know, anyone else that would? So ask for help, ask for help, and you will
Matt Watson 19:30
likely get help. All they can do is say no.
Matt DeCoursey 19:33
All right. So now when you create your plan, I kind of mentioned this at the top of the show. Like it’s wrong, your plan is wrong. That’s one thing I’ve learned is the plan is wrong. Why cuz it changes and business plants. So look, no one’s gonna want to read your 60 page business plan. No, investors don’t and they want to see like a one pager like you know, so, you know, don’t spend all your time making an overly verbose business plan, because it’s going to change so rapidly now, there is part of that, that I do think you should take a little more seriously than the rest of it. And that’s the financial part of it, because you got to get a good idea of what you might be in for. And when you might need to add expense, how long it’s going to take you to run out of money. I mean, a whole lot of stuff with finances, that matters, because the rest of the plan is shaped by that in many ways. But, you know, overall, like, I don’t know, I see a lot of people spend a lot of time on that’s a 5060 page business plan. And the likelihood is you’re you might be the only person that ever sees it. So do it to the point that it’s useful for you. But know that the other people that want to get involved or invest in your business are going to have the same opinion that I just stated that that plan is probably wrong.
Matt Watson 20:57
It’s based on nothing but assumptions, for the most part, right? So most of those assumptions are going to happen very differently than what you thought.
Matt DeCoursey 21:05
Now, one part of your plan that you can spend, and I do recommend spending or focusing on is refining that brand message. What do you do? Yeah, dude, you know how many people I talked to that can’t tell me what their business does. And do it in one sentence.
Matt Watson 21:22
People always really struggle with that elevator pitch. And even to this day, I would say it could be something I struggle with. For sacrifi. You know, if it’s another software developer, it’s a little easier. But if you’re talking to somebody who’s not in tech, you know, you got to pitch it a little differently. So
Matt DeCoursey 21:39
I made an elevator pitch for you. Because people asked me what stack of ideas all the time, and I say it’s code that checks code. It’s true. I mean, on many levels, I know it’s, but that’s part of it. So you know, and look, you always want to make it shorter, you know, Full Scale, we help people build development teams quickly and affordably. That’s that’s the, that’s the umbrella policy, or brand message that we have, because you that that’s how you get someone’s attention. And that’s how you can make people go numb. You know, when you’re on your third minute of talking about what your business does, like, well, that’s wildly inefficient. And it also says that you might not know what your own business does. So you mentioned practicing that elevator pitch. If you think you’re going to find investors, and you’re going to want customers, that’s back to that same brand message, like, practice it, practice it, you don’t need anyone else, like do it at home, do it in your car. I’ve done that a lot over the years. And you know, I haven’t I don’t drive to work every day right now. But when I did I would I would practice stuff in my car all the time.
Matt Watson 22:48
Absolutely him always thinking about it.
Matt DeCoursey 22:51
Is that how you do it, Matt? Do you pride you drive around and talk to yourself?
Matt Watson 22:55
When I’m walking into my office down the hall, I think about my elevator pitch.
Matt DeCoursey 23:01
So your kids and your wife think you’re crazy
Matt Watson 23:03
now that maybe what I need to do is install an elevator in my house.
Matt DeCoursey 23:10
And then throw baseballs into it. So you have an elevator pitch? Yeah, there you go. I like it. I think that’s a smart plan. We should draw that up. All right. So another part of planning is, and you know, the prior episode, the one last week that you hopefully just listened to was about how to some tips for finding and looking for co-founders. Yeah, but that’s something you should consider. I mean, and and don’t, you know, don’t, don’t just assume that you don’t need them. And don’t be closed minded and say you don’t want them like who could like these are people that like they get it can be very powerful if done well.
Matt Watson 23:54
Yeah, partnerships are always tough, they can be really good or really bad. And you know, when you’re when you’re first starting out, you know if if you can find somebody that is an expert in the industry, or has the right connections and all that kind of stuff, it can really add fuel to the fire, it can be the difference of your business going nowhere. going big time. So
Matt DeCoursey 24:15
I’m gonna take a quick pause because we have a really valid question from the live chat and then someone’s Hector Crespo is asking, Hey, guys, he’s basically asking what are resources for building a business plan? I love live plan.com It’s simple. It’s easy. The thing I like about it is that it makes creating financials. way easy. And I’m old enough that they didn’t have life plans and platforms like that when I was in the last college that I went to and there was like you take a whole semester course on how to do the financials and then you’d still it was still really hard. You know, things like life plan. I don’t have any vested interest and suggesting it other than that, I’ve used it quite a bit. It really does, it really does make it easy. And you can also adjust it easily. So if you’re keeping up and building the plan, it makes it if you’re going to use something like live plan, and once again, I have no commercial interest and pushing that, but you get, it’s actually built for you to keep up with it and make adjustments and literally have a live plan. So I think it’s 20 bucks a month and 20 bucks a month, man super easy. And it also like spit out different things you need, like, the executive summary makes it simple.
Matt Watson 25:39
It makes the financials easy, but it also does some of the other stuff you just mentioned. Yep.
Matt DeCoursey 25:43
So we’re talking about considering, you know, the who we mentioned, co-founders, I think the earlier you can start building lists of potential investors, the better off you are.
Matt Watson 25:55
Well, and the first thing is figuring out for your business plan, if you need investors, and how much money you’re going to need to raise. Or will you need to raise, you know, money now or later, or, you know, figuring all that out. And sometimes you’re just never going to know that. But you may know, it’s like, oh, to get to get this to scale, like we’re gonna go have to raise money because we got to build a manufacturing facility or whatever. So
Matt DeCoursey 26:20
do there’s so many episodes of Startup Hustle that are built around an investor stuff. And some of the things we have, you know, on our list here is considering grants and incentive funding, looking at accelerators. Do you need to raise capital, as Matt just mentioned, to try and figure out what questions investors will or would ask you, I don’t think you need to get outside of Startup Hustle to get a hell of a lot of good advice about that. Because, I mean, we’ve had so many episodes for all types of alternate funding. With startup grants explained, like all of it, it’s there. And we’ve named our over the last 500 Plus episodes, we’ve been very intentional about the way we named our episodes, to make it easy for you to go find exactly what we’re talking about in those episodes. So scroll down the feed, and I’m telling you, they’re in there. And some really, really good info, especially on the investor side, people that actually make institutional investments flat out talking to us or me or Andrew or Lauren about what they’re looking for. And they all say they all say something similar. So listen, and learn. There’s good stuff. So now, what’s a go to market strategy?
Matt Watson 27:36
Well, it’s how do you acquire customers? Right? And, and you also got to know who is your target customer? So and a lot of this shapes your your product offering, right? Like, for example, you want to start a cleaning service? Are you going to clean one house? Are you going to clean stadiums, an office building? You’re gonna sweep parking lots like, what are you doing right? And depending on the type of service you offer completely changes your go to market strategy, right? If you’re trying to sell to a commercial building versus a residential customer, completely different go to market strategy.
Matt DeCoursey 28:14
And by the way, Hector Crespo. You’re welcome. Glad to help. Thanks for asking a great question. Glad glad to answer that. So now you talk to go to market strategy. In our episode in this series about why startups fail. It’s a poor mark that poor product market fit is was the top reason obviously they run out of money. Okay, so we eliminate that. And then that is like, I’ve looked at data and polls and like actual science behind that, and it was like one out of three. So you know, another thing with your go to market strategy is you’re forcing that issue you’re forcing yourself to focus on traction to focus on selling nothing validates your idea more and gets people interested in what you’re doing more than signing up users or gaining revenue, preferably both. And you know, having a strategy for that if you want to, okay, if you want me to invest in your business, I’m going to ask you, what’s your path to revenue? It’s almost one of the it’s a guarantee that my URL some of my earliest questions are going to be exactly that. So when it comes to a go to market strategy, another thing you know, so you started making a list of possible people you could coat as co founders, possible investors, how about business partnerships, or places like Who are your clients? You know, that’s part of a go to market strategy is who are we going to do business with because it really you know, at first and I’ll use Giga book as an example I looked, I said, Man, anyone could use this product. And then when we created our go to market strategy and had to sit down and refine advertisement, I said, Oh, man, anyone could use this product. So it wasn’t a good thing like I mean, the total addressable market if it’s everyone that well, first off, there’s already someone else out there addressable market,
Matt Watson 30:10
we have this issue with Full Scale, right? You’re like, hey, we can provide software developers, for anybody who needs software developers, and there’s like, a million companies in the world is like, Okay, wait a second. Who are we gonna call? Which, which one are we calling first? Right? Like, you got it, you got to pare it down. So when you talk about go to market strategy, especially when you’re early on, and you’re trying to figure out how you’re going to get traction and grow the business, I really recommend a book called traction. And it’s all about traction channels, and want to list them out super fast. And partnerships is one of them. But there’s a bunch more of them. So like blogs, publicity, unconventional PR, which could be like weird advertising, stunts, Search Engine Marketing, Social display ads, offline advertising, which can be billboards or radio, TV, search engine optimization, content marketing, email marketing, viral marketing, engineering, as marketing, which is something sacrifi uses business development, partnerships, sales, affiliate, affiliate relationships, integrating existing platforms, trade shows, offline events, speaking engagements, community building advice, like there’s all these different things, you can’t do all of them either. So you got to pick one or two of them. And that could be your go to market strategy, right for for certain industries, things like trade shows before COVID. Anyways, we’re super valuable. I know people that their whole business actually revolves around a trade show every year in your industry. And what you do is completely different at stack fi, we rely a lot on content marketing. But again, that shapes who your customer is to, at stack five, we have a lot of small customers, you don’t do content marketing to usually attract C level executives, if you want to target C level executives, you might be, you know, a totally different model. So
Matt DeCoursey 31:57
you know, speaking of seen and then doing, we’ve started a TV show, Startup Hustle TV, and it’s the it’s a look at entrepreneurship through the lens of an entrepreneur and come check out what we’re doing on YouTube. But we get a lot of compliments and a lot of people interested in what we’re doing. Because guess what we’re telling you, it we’re showing it to you like it is wins losses in reality. And some of that is as we’re, well by the time this episode comes out, there will already be episodes live that show our cast members working on content marketing. And that’s a big part of things. And you know, the thing I like about content marketing is anybody can do it. It can be paid for with your own time. But one, the flip side of that is it takes time, or you have to pay someone else to do it. So you can’t just no one just has 500 blog articles that they publish. You got to build that stuff up over time, no matter how many visits do you get a month to stack. FYI, from blogs that you’ve published over the last three and a half years?
Matt Watson 33:01
It’s close to a million visitors a month? On our blog.
Matt DeCoursey 33:05
What what a million visitors a month duty your bit for your business people? And those are those are people that you’re not paying for those million pounds, right?
Matt Watson 33:13
Nope. It’s all organic from from blogging and you know, search search engine traffic, mostly Google.
Matt DeCoursey 33:18
Yep. And how long did it take to build up that library?
Matt Watson 33:22
It took a year or two to get it going. I mean, Full Scale has done the same thing, right? That Full Scale gets quite a bit of traffic. And it’s slowly slowly growing, right? Create, keep creating more content. And
Matt DeCoursey 33:33
yeah, and so that’s and that’s what Matt and I, you’ll hear us refer to as evergreen content, meaning like it it’s like a pine tree on a mountain. It’s green all year round. And it just kind of stays that way. And I think overall, when it comes that you can never start too early without part of your plan. So and another thing too is you got to figure out what works. So one thing about content marketing is it’s not fast, like meaning like you just don’t, oh, I’m going to start my content marketing plan. And then and then two weeks later, you’re like Baba, Al, a million visitors a month? No, that number creeps up and you learn you will find out what works, what doesn’t. And you know, Matt, you know that book traction, which is a great book, and I recommend checking it out as well. He basically just listed a that was a hype plan. Like how you’re going to hype a business like that was a rapid fire list of ways to get people to know what you’re doing. Now back to a prior item on the list. If you don’t have a refined brand message and an elevator pitch, you’re not going to be able to create content, you’re going to be in front of a camera or behind a keyboard going. We do a lot of stuff for clients and they like some of it. And one thing too is is while something like a podcast is is intentionally long form like this is modern talk radio, by the way, you can start your own podcast and have it on and have it on Apple podcast in two days, if you sit down to do it, but if you’re making video and doing other stuff, especially impression-based ads, meaning like social media, keep it simple. And to the point, like the ad that drove this podcast, on to Apple’s top entrepreneurship charts, was literally just a picture of a microphone, our logo, and it said, a podcast for entrepreneurs. Because that’s what it is. Simplify the message, don’t make people gasp, you don’t win, you don’t win at the image, you win at the click, and whatever happens when they arrive, wherever it is that you want them to arrive to, okay. So plan on focusing on solving the problem that you intend to solve. Like, that’s how your bet your business makes money because you solve a problem. And your plan needs to revolve around getting you or your team or whoever centric on that.
Matt Watson 36:06
Well. And one of the things we’ve talked about in our previous episodes many times is you got to figure out a problem to solve the people are willing to pay for it too, right? So he’s talking about your business model. You know, if your go to market strategy, and your product revolves around consumers, you don’t pay for anything. And it’s all supported by ads or, you know, weird affiliate relationships or whatever. That might be the case. But you’ve got to understand that and understand how you get to revenue. Versus if you’re selling a, you know, a b2b, it’s a business, the business product, and people are willing to pay you for it. And that’s a totally different, you know, product and go to market strategy. So, you’ve got to understand, understand if, as you know, b2c or b2b is ad-driven, like all that stuff, you really got to understand those things.
Matt DeCoursey 36:51
And that’s where the pivot can change that too. I mean, we’ve seen people shift companies that happens all the time. They were Amy, so b2b business to business, b2c business to consumer, you’re one or the other. And then other things, too, is defining what it like, Are you a service company? Are you a SaaS company? I mean, some of that little stuff matters. Especially when you’re trying to recruit people to come with you. And, you know, that’s another thing for planning is what kind of help do you need? You know, you could Okay, I need developers. That’s a shitty answer, Matt. Like, what kind? What price? For how long? When do we need them? You know, Warren Buffett is pretty, pretty famous for saying that nine women don’t make a baby in one month. You can’t just throw manpower at everything. Like if we’re digging a hole in my yard. Yeah, nine people will probably dig it faster than then one. But if we’re talking about how to start a tech company, Matt, does nine of do nine developers always build it faster than three?
Matt Watson 37:55
No. Why not at all? Well, I mean, nine people can’t type code in the same file for n, you just have more meetings and bureaucracy sometimes of just, you know, it’s just like having brain surgery. You want one doctor with the steadiest hands? And that’s everybody else good either way. Right? Like something right?
Matt DeCoursey 38:22
Yeah. So all right, this is something that that’s got to be part of your plan. Who’s your competition? What do they do? And what are they doing?
Matt Watson 38:32
Yeah, this is a big one. And it can be really problematic for some people to have being too obsessed with their competition. And thinking that like, Oh, I’m gonna, I’m gonna do the same exact thing that Apple does. But I’m gonna do one little thing different. Like, that’s not enough of a difference. And you can’t, you don’t want to just copy somebody else’s product either, like, take apple, for example. Are you going to out Apple Apple? Like, no good luck, right? You’ve got to create something new and unique. If you’re not creating something new and unique, then why would somebody buy your product compared to the already industry standard, you know, best best of breed product that exists? There’s got to be something unique about your product. And it can’t be like one gimmicky little thing, it’s got to be like 10 times better, or it’s got to be, you know, a very specific niche audience that, you know, when they see your product, they know immediately, like, oh, this was built for me and I need this thing. You know, you’ve got to really focus on the customer you’re trying to solve you’re the customer you’re trying to sell to, but you got to be careful about your competition. Some people get really infatuated with their competition and obsessing about it, but you really got to find your own, you know, they call it the blue ocean, right? Like, you want to find your own empty blue ocean you can go swim around in instead of the shark infested red ocean.
Matt DeCoursey 39:54
So on the on the flip side of that coin Matt, you can certainly see what your competition does to market promote develop business and copy the shit out of that if you want to people like it doesn’t absolutely steal their ad and and use the exact same words but see what they’re doing because if you see your competition like all the time on Facebook ads, and that’s scary to maybe assume that those may be effective for them,
Matt Watson 40:21
it may work. Now there’s one caveat to that, right. So take sacrifice as an example, our average customer pays us a $5,000 a year. So if I advertise on Google AdWords, my average customer is going to pay me $5,000 A year, if they convert, well, one of our competitors, they might sell their product for $50,000 a year, you know what that means? They can afford a lot higher pay per click budget than I can. So I can’t outspend them, and rank well in AdWords because they can just throw more money at it because their customers pay them more and whatever you see my point. So it’s also can be really difficult from that perspective. But you’re absolutely right, understanding what your competitors do, and maybe what works for them. One of the things that we did a lot in sacrifice content marketing strategy is looking at our competitors websites and finding content that ranked really well on their site. And then like making our own version of it, but making it better figuring out certain keywords that they rank for and figure out okay, how do we how do we steal some of their traffic on those keywords? We know people are searching for those keywords. So there’s a gazillion
Matt DeCoursey 41:25
tools that will help you figure that out. You have to, you know, like I mean, there really are like, I mean, these same tools, these SEO type tools, they’ll even tell you what the keywords are that your competitors are using an advertising because Google sells that info and yep. And that’s what kind of like what Matt’s talking about, I’ll look at stuff like that. And okay, so this is where we’re going to our content creation becomes centric around this. And it also is a good, it’s a good indicator of, like, what kind of what, in this day and age with search engines, people just ask him questions. You know, so what are those questions that are that they’re asking? Yeah, and so now, the average Full Scale client spends over $10,000 a month, that means we get to do all kinds of wild stuff, like start TV shows, and do a podcast and have sweet and greet, you know, that? Yeah, we might want to do those again this year.
Matt Watson 42:25
Well, and to that point, right, how much money your customer spends dramatically changes the type of advertising and marketing that you do. If your customer only pays $8 a month, that’s pretty hard to have an advertising budget and return on that. But if they spend 10,000 a month, it’s a lot easier.
Matt DeCoursey 42:42
Well, and it’s also about it’s about how long will they spend it right? Yeah, that and every business is different. So like, way back in the day, which was like, when the internet had just come out, Matt, I want to I sold pianos. If you sell a piano to someone wants, like, that was a product that lasts like 70 years and is often handed down. And even a digital product, like people buy it, and they they don’t just come right back. Now the made, that’s a completely different approach to selling. Now at that at that same at the in that same vein, you only need to have a couple people come by them because they’re expensive. Yeah. And so like for us, like in some of the stores that I worked out, if we made 20 sales in a month, that was actually pretty good. Now, and I don’t mind being transparent at Full Scale, our goal is to add three or four new clients a month, why? One, we want the right kind of clients and two, we can’t exhaust our bandwidth available developers to the point where we can’t still take care of our existing clients. So some of that is, you know, like, you got to think about like, it’s almost like a negative burn rate in any in many regards. Now, we’re a little Yeah, we’re an established company. But in the beginning, we were just trying to Okay, clients, clients, clients, clients, and we very quickly refined everything from our billing to cut. All right, well, let’s talk about that for a second. How do you collect money? And how do you deal with it because we were three clients and and we were billing people in arrears. And I sat down one day, and just did some math. And now I’m talking like on the back of a napkin kind of math, and I realized that we were on a trajectory to have to have to have to have a million dollars. We had to, we’re gonna have to very quickly have to figure out how to finance a million dollars, or 500,000 to a million dollars a month in receivables. And we sat down and talked and we we knew right away we had to change our billing practices because we had to collect money at the beginning of the month that we were about to provide service in AND or OR we had to go find a way to finance a million bucks, which also was a big risk because it could we could Have people 10s of 1000s of dollars in to our service offering before we realized that they weren’t going to pay?
Matt Watson 45:06
Yep. So these are all parts of that model in the plan, you got to understand.
Matt DeCoursey 45:11
You know, okay, so before we get into what not to do, and you know, we’re trying to be uplifting and positive about this. So look it by the way, in regards to the series, we’re finally getting into the exciting stuff, in my opinion. We weren’t trying to be Debbie downers. In the early episodes, I just feel responsible. I actually tried to scare people out of starting businesses, because I want them to really realize the gravity because, you know, when it comes to your plan, are you playing it? Like, what are you getting into? Can you afford to run the business because I’ve had multiple times where I, over multiple businesses over and over a decade of starting and owning businesses, where I have to stop paying myself. You have to make it to loosen the burn rate. And now how much in the first five years of Stackify, How much salary did you earn?
Matt Watson 46:04
Zero? Not at all again, zero.
Matt DeCoursey 46:09
Okay. All right. So if part of your plan requires that you have to pay yourself to live your life. Just give it consideration. Yep. Just that’s all I’m saying. Just give it some thought, you know, before we move into the don’ts, I want to go back to like the MVP, like your plan should be that’s what you should be obsessed with the MVP and getting it out there and the minimum product, the minimum lovable product as well, like what do you need to build to make someone love this? And, you know, that’s, that’s, like as viable so they can something that’s viable, and something that people love it? I think that can be different,
Matt Watson 46:48
right? Well, and this goes back to what you mentioned earlier in the episode about the person that’s all that spends all their time cleaning the restaurant and never opens the door, right? Like, you got to figure out, like, what is the minimum we got to do to get customers and figure out do they even like our food, and they will buy it? Before I worry about, you know, buying the best stove and polishing the floor and remodeling the place. And it’s like figuring out if somebody likes our food first.
Matt DeCoursey 47:16
Yeah, the smartest, most successful, wealthiest tech founders that you are, you can invariably find quotes from all of them on this one. And they say things like, I think it was like Steve Jobs that may have said, If you don’t look back at your first product release and absolute terror, like oh my god, we released that. You know, because it was like so rickety, or something, then you waited too long. And I’ve seen this happen a lot, a whole lot. And I’ve done it myself, you know, I’ve done it myself. We did it with Gigaba. We built way too much shit in there when we should have done what Calendly did, which was just be aces at one thing. Yep. And that one thing drove that competitor of ours to a $3 billion valuation recently.
Matt Watson 48:04
Yep. And they have the right approach. If you’re solving a unique problem, and you reach the right market that’s dying to have that, that that product, they will put up with all of your beta crap and all that, like I’m, I’m using a product I finally found online that had to do with cryptocurrency investing. And after searching forever, I finally found the thing I was looking for. And it’s in beta, and it’s got some bugs, it’s got some issues, but you know what, I’m their biggest raving fan. And I will go through all of it. Provide feedback. I’m like their QA team. The victor, they solved the problem.
Matt DeCoursey 48:40
The very first paid gig a buck user, after a year, we gave her what we called the golden ticket. And because we had other than had other people paying this is the first year after we actually had revenue. She put up with so much crap, we said, you know, we’re just making your account free for eternity. Thank you. Thank you, cuz she would, she would tell us and there was a couple, there’s a couple people like that. Their feedback is so valuable. It’s easy to want to look at those people as being a pain in the butt. But there, but they’re not. They’re telling you. They’re not complaining. They’re trying to help. Yeah. That’s the way you got to look at it. And by the way, those people be they they, when you treat them well, and you thank them for the input and all that. Because as Matt said, it’s invaluable. They also become your biggest supporters because they kind of feel an attachment to the growth and the improvement of the product. You’re helping Yeah. And they also see someone helping them fix the problems that are important to them. Yeah, with that there is there is one thing, listen for the echo. Don’t you can’t chase every single piece of input, but when you start hearing the same thing and it sounds like an echo over and over and over. That’s now you’re on to something. Well, now your plan now your plan can change, adapt and And wrap itself around. That’s a problem we’re solving in most cases. So you
Matt Watson 50:04
bring up a great point we need to cover. And I think this is a perfect time to transition into the what not to do. And one of the biggest mistakes that early startups make is doing too many things. Right? Like, every customer keeps asking us to do this thing and this thing and this thing and this thing. And next thing, you know, you’re doing all these various things, but you’re not necessarily very good at any of them. And you may have never perfected what the original goal was. Right? Like, take Twitter versus Facebook and example right, Witter does one thing really simple. That’s the only thing it does. Facebook does all sorts of things. But that doesn’t mean that Twitter doesn’t still exist, right? Like, to some degree, you have to figure out your business and your model and stay in that lane. And not, you know, chasing shiny objects, and everybody’s feedback and advice for everything.
Matt DeCoursey 50:55
Well, it’s kind of like I mentioned with Giga buck and Calendly I remember when Calendly came out, we were talking about it. And we kind of like it’s it’s it’s, yeah, we did, we were like, How’s anyone gonna want to use this, it doesn’t even do anything but connected Google Calendar to a booking link. And that would have been the easier play, but they got really good at that. They got really, really good at that. Now, they also there’s a lot of clients and now we kind of pivoted Jaeger, about to two, we are our clients and users are people that want something that’s highly customizable. Just by the way, we overbuilt it from the beginning. So we have a lot of shit in there. And we’re like, okay, so we built a whole lot of stuff. Who is this going to be good for? And we look for users. And we asked him, we said, Why do you like this? And they said, invariably, it was always one or two weird little things that they could do and Giga book that they couldn’t do it on other platforms. Yes. Yep. And it was like it was it. I’ll be honest, now, almost 90% of 100 items on that list, 90 of those, we never would have thought of ourselves, we kind of solve someone’s problems accidentally. Well,
Matt Watson 52:05
the flip side of this is, and that gets back to my original point, too, is now somebody may sign up for something like Giga book, and they were like, Oh, my God, this is so complicated. It has all the shit in here. All I really need is Calendly. Yep. Right. And that’s where you get the flips. Yeah, you get the flip side of it, too. And you’ll make your product all complicated. And then certain users are going to come in and it’s just so complicated. They’re like, I need to find something simpler.
Matt DeCoursey 52:29
Yeah, like Giga book will help you geofence the, the potential people that can book your anything. Yeah, you know, that’s not that’s not what things like Calendly do. Calendly is to make an appointment for a 15 minute zoom call, which Giga book does as well. But that’s also not that advanced stuff. And that’s also helped us get that what helped us get enterprise users and a lot of stuff like that. Alright, so we’re talking about things we don’t want to do. As much as we poopoo the the complex plan, don’t skip the planning phase, don’t just skip it. That’s bad. And also don’t skip creating basic. And I want to key on the word basic and simple goals. I think those are the most important five years from now. Yeah, like,
Matt Watson 53:19
those are the most important things. And the most important thing in the early plan is proving out assumptions, right, like how much money do I spend on advertising to acquire a customer? You know, how many salespeople do I need for a certain number of customers? I mean, support people do I need for a certain number of customers, right? Like, you’re trying to figure out how the business scales and grows and how I have to hire people, how much money do I need, like, you got to figure out all the different levers and how those things work. And you don’t have to overly plan those things out. Because whatever the plan is, is totally wrong, right? Until you start to go through it. But you need to have some basic goals and assumptions.
Matt DeCoursey 53:56
I’ll give you an example. Matt, our goal is to acquire one user.
Matt Watson 54:02
Let’s start there.
Matt DeCoursey 54:04
I’m just saying like, that’s a simple goal. And that’s because the thing is, is if you’re like yeah, we’re going to get 40% of the market. How about start with one and look and look, celebrate these things, you know, doesn’t mean you stop the you close the business down and go Mardi Gras style for like a week, we can do that. If you want. I don’t want to tell you what to do with your life. But you know, but overall, like celebrate these little wins, because there’s a lot of frustrating stuff that comes with a startup and business in general. And it’s okay to smell the roses every now and then. Yep. Yeah, you know, and that’s and just like, hey, we got $1 Like, you know, or got one user or we launched our MVP, or you know, and some of those things like, look, it has to start simple. Your mind doesn’t wrap itself very well around. Things that don’t feel like it can grasp. It’s like the idea of a diet people want to lose 50 pounds. How about we start by losing five? Yeah,
Matt Watson 55:03
absolutely. And then figure out the next step once you get there.
Matt DeCoursey 55:07
I started the diet on Monday mountain. I’ve already lost eight pounds. Can you tell?
Matt Watson 55:12
No. Can’t tell. Sorry.
Matt DeCoursey 55:15
Dang it. Dang.
Matt Watson 55:16
Sure wearing Blanda.
Matt DeCoursey 55:18
That’s a true story I’m wearing to stack if I cold blooded killer shirt actually which is, which is a primary part of it. And for those of you that may see pictures of me or see me on Startup Hustle TV, I have about seven of these I don’t just wear the same shirt every day. Same with through their respect the hustle shirts or Full Scale shirts. Yeah, so I Yeah,
Matt Watson 55:39
so the next item on our list here is a really good one, don’t undervalue your product or service. And this goes back to as well who your target audience is. So it takes sacrifice an example, we had like a couple 100 customers that were paying us 50 bucks a month, they were the biggest pains in the ass in the world. And we did a price change and quite a few of them left and then quite a few of them just stayed and started paying more. And that if you give your product away for free or too cheap, you are going to get the cheapest assholes that are going to use your product they provide way more, you have to give them way more support or a headache, everything about it. Okay, I’m telling you, and people that really care about what you do will pay for it, you can charge them. And the difference to most especially if it’s a corporate, you know, customer that you’re dealing with the difference between $100.03 $100 is not much. It’s basically nothing. And don’t don’t be too cheap or undervalue yourself, you know, charge for what you do.
Matt DeCoursey 56:46
I talked about that recently. You’ll see it on Startup Hustle TV, and I don’t mind talking about it that turned on so Hernan of the business bros podcast What’s up Hernan. And if you want to break from Startup Hustle business Bros has a lot of great content, but he’s got a content creation service, he launched and I talked to him, I was like, Dude, you gotta raise these prices, because you’re gonna end up with like, a whole a really long list. And he and he thought about it, call me back the next day is like do that some of the best advice I might have might have gotten, because you can get too far down that rabbit hole, and then you got to kind of back your way out of it. You know, when it comes to, you know, I think what tends to things to not do like, Well, don’t be afraid of marketing. You got it, you got to get out, you got to try things. I have three simple words that should and can define your approach to marketing Test, test test. Yep, yep, yep. And then you can never start testing out too early. And you know, it makes it so easy to do that, like, on on a lot of different forms of digital marketing, you know, and just kind of see what people engage with what they like, and then you find one that works. And it’s really can be a beautiful thing. So now what I think it’s, you alluded to this earlier, but don’t, don’t lose your focus on who your ideal customer is not just a customer as we did that pretty quickly at Full Scale. Like, we know who we want. As a client, we know who’s the what kind of companies and clients are the most successful with us. And we certainly know which ones aren’t?
Matt Watson 58:23
Matt DeCoursey 58:25
All right, your next.
Matt Watson 58:28
You know, one of the other items we had in the in the list here, I think that’s actually important is be really careful, if you’re starting a new business about using new technology, using new technology that you’re not familiar with, or don’t know how to use, the last thing you want to do is spend a whole bunch of time learning some technology by what use what’s tried and true, if you can, right, like don’t reinvent things that you know, have to go learn a whole bunch of new skills, instead of focusing on your business. I think that’s that’s a mistake a lot of people make is they see their new business as also some way to go and learn all these other things. But all those other things are kind of distracting away from the business itself.
Matt DeCoursey 59:07
Well, and some of that, too, is if you’re starting a tech company, maybe don’t build your entire platform was something that’s brand new, because if it doesn’t become part, it just difficult to find people to work on it. Yep. So like when I talked when I talked to people that want to seek my advice, and we’re talking about Full Scale. And once again, today’s episode, Startup Hustle is brought to you by FullScale.io. Reach out, I’ll give you good advice about how to start your tech company. And one of the things that I tell them is, you know, certain types of developers, you’re going to be you’re going to pay less, you’re going to pay less to get great ones because there’s a lot of them. There’s a simple supply and demand economics. So I think a lot of people that want to start a startup go in and overspend. They also understand
Matt Watson 59:52
Yeah, it’s both it and that I mean, you see these companies that also raise like $10 million $50 million, and then they go broke Right, it’s it could be they just, they hired a ton of people, they spent money on a fancy office, they spent all this money on all these things, but they’re not growing revenue. They’re not getting sales, but they’re just spending a lot of money.
Matt DeCoursey 1:00:13
And at the same time, you can understand and I think talent, don’t underspend on talent. Yep. It’s easy to want to be really cheap. You look at an employee, and you’re like, this one’s half as much as the other. Why? Yep. I mean, ask why. I mean, it might be a better deal, but it usually it often isn’t like, you want the best people, especially in the beginning, because that’s the foundational elements of your business. And the best people usually come with experience, don’t overpay for no experience. That’s one thing you do. You don’t want to overspend on. And, you know, in Congress with what we just mentioned, like, I mean, I think that at this point, all right, so when I was 30, I didn’t want business partners. Now I’m all for it. I’m like a huge co founder advocate. I didn’t think I needed help. When I was younger, I just thought I could do it all and why would I want to share ownership with someone? There are a lot of reasons you want to share ownership with people go back and listen to the episodes about co founders and finding them. And if you’ve already been following the series, then you already know. But you know, doing it alone just means you’ve got that much more to do. And if you’re not, you’re not good at everything. I don’t care. If you think you are, you’re not. You got to know what don’t do it alone.
Matt Watson 1:01:37
Yeah, you got to know what your weaknesses are and find people to surround you to help help do those things.
Matt DeCoursey 1:01:43
Alright, so in lieu of the founders freestyle, today, we’re instead going to have a rapid fire approach to helping you understand what some of the common pitfalls are that come with planning for a startup, and maybe you can use some of your planning bandwidth to mitigate the downside of those would you like to lead, Matt?
Matt Watson 1:02:06
Yeah, absolutely. I think one of the most common pit pit pitfalls is going to be simply a lack of finances of personal or money raised from investors, and you can’t see your business succeed, because you just don’t have the funding to do so.
Matt DeCoursey 1:02:19
It’s gonna take longer and cost more. Yep, simply, but that’s just something like I’m mad. I think I see that all the time. Every time you know, and, and if it doesn’t work out, Oh, great. You have a longer runway, or he made more money good for you, but don’t go out of business. Because you grossly under you were overly optimistic about that, oh, nothing’s gonna go wrong. It’s because you don’t know yet. You don’t know. Port jet poor business planning in general. And you know, like, even in the most experienced years of my life, these things still come up. And you know, it’s just like, Okay, I’ll give you an example. We send a lot of money over to the Philippines because we have a lot of employees there. One thing we certainly didn’t give a lot of credence to early was how the exchange rate between the US dollar and the Filipino peso could affect everything we do. And overhead, and value went from being in our favor to not being in our favor, and it literally cost us 20 $30,000 a month more just to exchange money. And some of that is Yeah, and it can really, and now it’s going back, it’s coming back for us. And I look at it every day. And I’m like, Yes, please, go up, go up. Because that’s just like not great business planning. You know, once again, lack of a proper marketing strategy and lack of a dedicated team to help you. So many early stage businesses want to they’ve got all these part time people, they’ve got like, nine fractional people involved. And the thing is, is like 50% of focus gives you 25% of results, and all the way down the line. So you I think you’re better off to have two people that work with you full time like that wake up. Now, as you would say, in the past, this someone needs to wake up every day obsessed with solving this problem or doing this for our company.
Matt Watson 1:04:18
Absolutely. And there are weirdos that are excited about all of those things that you don’t find exciting.
Matt DeCoursey 1:04:26
Like accountants Yes. All right. How about fierce competition?
Matt Watson 1:04:35
That yeah, I mean, that’s one of the things we fought at sacrifi you know, with new competitors you know, competitors kind of come and go or people change their business model or pricing or people just new competitors like you just never know.
Matt DeCoursey 1:04:49
I believe it was ice cube who wants gave the prophetic startup advice of big bank take little bank? Yeah, true, man. It can happen you No like, and then yeah, that’s what you do. That’s part of why you got to know your competition. And then I think the last Well, I don’t think I know, the last common pitfall to expect is you’re probably going to grow at a slower pace or rate than you hoped for.
Matt Watson 1:05:18
And that can kill you. Because you’re not, you’re gonna run out of runway or you’re not growing fast enough for investors, you know, some investors are gonna look at it and be like, you’re just not growing fast enough. It’s not attractive.
Matt DeCoursey 1:05:30
Yeah, and it can also create things like down rounds. And I talked to Ryan Larson from Silicon Valley Bank, and an episode about that recently, as well. And you know, like, these are the things is, if you are raising at a certain rate, now all of a sudden, you get, you know, I’ve invented a word for this, I call it middling, it’s like the worst place to get stuck, in my opinion, because at least if you’re failing, you can do that quickly and move on to do something else. But when you get stuck in the middle, it’s tough because people don’t want to invest. It’s just not, I don’t know, there’s a lot of different problems with getting stuck in the middle. So try to wrap your arms around where that growth speed goes. Now, anything else you’d like to say on the way out?
Matt Watson 1:06:08
I think one of the biggest mistakes that startups make and I can be as guilty of this too, is you always want to sell your product or service to everybody. And you’re much better off actually targeting a very specific group. So when that group comes to your website, they know exactly that you solve their problem immediately, right? Not that like maybe they do, maybe they don’t I’m not quite maybe, maybe they cater to this other kind of bigger company or smaller company or this service. I’m just not quite sure they really do what I need them to do. Because most people aren’t going to call you and find out. Right? Maybe you do, maybe you don’t, but they’re not going to find they’re just bail, where if I jumped your website, and within the first 10 seconds, I’m like, oh, yeah, they solve perfectly what I need, they’re gonna they’re gonna buy and to some degree
Matt DeCoursey 1:06:56
That’s part of your brand message too, though. Like, what’s the benefit? Like tell me what the benefit is and and and at Gigabook we it took us a while but we finally arrived. Hey, peace of mind. Yeah, people put more value on that, like, unchained yourself from your business terms like that. We felt we did way better than a list of features that didn’t describe the benefit.
Matt Watson 1:07:23
And I got to
Matt DeCoursey 1:07:24
Don’t be afraid to typecast yourself.
Matt Watson 1:07:26
I don’t I got a I got a speeding ticket. And so I was looking for lawyers. And yeah, a lot. A lot of law firms. They don’t necessarily say much about that. They handle speeding tickets, right. But if I land on their website, and that’s like, front and center of like, yeah, we specialize in speeding tickets and like, all right, found that one
Matt DeCoursey 1:07:41
That’s what I need. That’s what I do they charge you $600 an hour.
Matt Watson 1:07:48
No, they told me they can’t do anything about it. I guess if you speed through a school zone.
Matt DeCoursey 1:07:55
Slow down, bro. Slow down. Matt, I enjoyed sharing the last 68 minutes with you. This ran a little longer than the normal the show. But you know, we’re here to get through that get through the real thing. So you know whether that occurs in 32 minutes or 69 minutes or however long. I mean, I’m committed to that and I think it is time to say goodbye until part nine is upon us.
Matt Watson 1:08:25
All right. See you next week.
Matt DeCoursey 1:08:27
See you, buddy.