How to Waste $300k while Building your Startup
Little did we know that within a few years, we would grow from two entrepreneurs working out of a garage into an organization of more than 100 people in two continents, with clients all over the world. It all began with our passion for building high-quality software products, and the rest, as they say, is history, as word-of-mouth referrals from our friends connected us with individuals seeking help in transforming their ideas into tangible products, and our business grew from there.
Since 2017 we have spoken with more than 500 entrepreneurs who have either wanted to start their own business or take the next step in their existing business. It’s always inspiring to hear the backstories of these entrepreneurs, as they often display tremendous courage in taking enormous risks. One particular story was exceptionally inspiring, which I will share with you now. I won’t share his real name out of respect for his privacy, but let’s call him Jim.
Jim was introduced to us by a mutual friend. Our initial conversation started out as a typical scenario where he had a codebase that needed to be fixed so that he could release his product and begin generating revenues. From his perspective the product had a few poorly designed components, and a few screens experienced some latency, but his hope was that we could step in, make a few updates, and bring his product to market.
Before coming to us, Jim had spent more than $300k in the span of a year and a half in developing his idea. For many founders, it is difficult to discern a high quality development team from a less qualified team, and oftentimes a founder selects the lowest price option with a minimal team or individual freelancer. In Jim’s case, he hired a developer from Freelancer at a budget price who started developing his idea. After building and testing the first iteration, he realized that certain improvements needed to be made.
After several more iterations, Jim began to notice that updates were taking longer than expected, and bugs continued to arise. He received the same promise after each iteration, that “it will work better in the next build.” At some point Jim realized that the developer that he had hired was simply not capable of delivering the quality development that he was looking for, and so he began to search for a new developer and found an agency through Clutch. He approached the new collaboration with a more conservative approach, holding meetings with their designer and creating a prototype of the product before starting any development.
This process worked better than before, but he began to realize that updating and improving the existing code base was a complete waste of time. It was a tedious process and ultimately, almost none of the quality issues were resolved. It was at this point in his journey that he reached out to us. It was painful to hear the frustrations that he endured, and the enormous amount of money and time that he had wasted on a poor tech stack and less than average coding, resulting in a product that was simply unusable. He felt helpless, as he lost over a year and a half, was almost out of money, and had nothing functional to show for it.
After a thorough audit of his codebase, we had to break the news to him that the infrastructure was unstable, the code was poorly written, and his only realistic option was to start from the very beginning. This was a crushing blow for him, but it was a real conversation, and he appreciated the honest feedback.
We assured him, however, that with the right approach, we could help him get his product to market, even on a tight budget.
During the next few meetings, we worked together to narrow down his idea, and then design a prototype through Adobe XD (the best tool available at the time). In this way, we helped him build an inexpensive no code solution that he could test in the market to obtain letters of intent (LOI) and valuable market feedback.
As a result of this process, Jim ended up going through multiple iterations where he pivoted his idea a few times based on user feedback, and ultimately landed on a much better concept than what he had started with.
From there, we helped him create a minimum viable product (MVP), and by testing the idea first and pausing development to a later stage in the process, we were able to help him onboard users and gain traction for a small fraction of the money he spent over the last year and a half.
He learned his lesson the hard way!
In summary, it is imperative to understand the process of product development, and to start small by creating designs and layouts in Figma, building no code prototypes, getting feedback from family, friends, and beta test groups, and iterating your idea BEFORE starting any development. Only then does it make sense to engage with developers, designers, and / or agencies.
The first step needs to start with you! Take your time, educate yourself, read where others are making mistakes, and try to prevent them.
Unfortunately, I have had other similar conversations with many entrepreneurs who have spent hundreds of thousands of dollars skipping these crucial first steps of validating their concept and finding the right product / market fit, and immediately engaging with developers, designers, and agencies.
In many cases, especially with inexperienced developers, entrepreneurs are paying them without realizing that they are effectively funding their education, as they are making mistakes and learning from developing their product. As a result, startup founders have much more to lose than to gain!
If you are stuck with a similar situation, or if you have any questions feel free to reach out over email at firstname.lastname@example.org as I am happy to help and / or offer any advice that I can.