Service First: A Startup Without a Product
This article has been moved and will continue to be updated at my new authority and content marketing team’s website: Callforcontent.com.
So you want to found a startup? The next big thing… A unicorn. Don’t. Just start a company, a small one. Maybe find a partner or two to join you. No more than that, you won’t be able to support yourselves. Thinking of raising money? Ask your rich uncle for $20,000. When he asks “what does that buy you?” answer: enough time to find our first few clients.
Find your clients. Tap that network you’ve boasted so much about. Hustle. Call every business that you could serve. Have an idea for a product? Find the customers you’d sell it to. Make them your first clients. Get some revenue. Make a good profit. Rent a small office for you and your partners. Keep finding new clients.
Can’t handle the workload anymore? Everyone is working 60 hours a week. You didn’t go home last weekend, just slept on the beanbag and raced to meet the deadline. It’s time to hire new staff. Just 1, maybe 2. Make sure they can pay for themselves. Keep finding more clients. A client wants you to build an app for them? They say it’s going to be the NEXT BIG THING. You know it isn’t. They aren’t the first one who has said that. You build it anyway, and maybe you do their marketing too. They’re a good client. They introduce you to their investors.
That idea for a product you had? It’s changed. It’s changed a lot. It isn’t the product you thought it was, but when you pitch the idea to your clients they ask you “when can we start using it?” This is a product. this is a good idea. It took a little while, but you aren’t out of pocket for it. Your uncle has already been paid back a few times over. He’s happy with his investment. You have some money saved up, a good team (10 of you now). Your customers love your idea. They want it because it’s the product you learned they wanted. They already know you, they’re already your customers. They know you do GOOD WORK. They TRUST and RESPECT you.
It’s been a few months. You haven’t made a profit in a while. Why? You hired a few people to build your product. It’s coming along well. You know how to build things, you’ve been doing it for your clients for some time now. As you’ve been building it, you ask your clients for advice. They are your future customers after all. They tell you exactly what they want. That’s what you build.
It’s time to launch the beta. You’ve got 50 customers chomping at the bit to get a hold of this. They’ve been asking about it for months! You can’t have a meeting with a client anymore that doesn’t end in “when is that product of yours coming out?” They product goes live at midnight. When it does, you’ll be a third of the way to break even. Your customers have already signed up. They’ve been with you since you founded your company, and now they’re bragging to their peers about how they found a great new product. “It finally solves our problem!” they say.
You didn’t found a startup, you started a business. You’re a successful entrepreneur. Most ideas are wrong. It takes time for them to become good. You know that now.
Don’t build a product based business first! If you don’t know the industry inside and out, have an extensive network in that same industry, and know how to build products people want… You’re probably not ready to build a product focused company. Start with a service. Don’t have any you can offer? That is a sign that you’re probably not ready to offer a product either.
The two best kinds of services for most software startup founders-to-be are digital marketing and software consultancies. They’re not easy to build. They’re actually quite difficult. That being said, they do teach you a lot about running and growing a successful business. If you have an idea for a product and you want to focus on a single industry, then just offer your services to that industry. Get to know the people in it. Most of the time, they will happily tell you what product they want. Are they always right? Of course not! But they probably have a better idea of what they’ll buy than you do.
Marketing will teach you how to get customers, launch new products, and build a brand that people respect. Those skills will help you with whatever you do next, whether it’s building a product or growing your agency. Without good marketing and the traction it provides, a company will fail before it finds its first customer. A great marketing plan and a skilled practitioner, however, can make a mediocre product outshine even the toughest competition.
Software and web development can also provide many benefits. They’ll teach you how to build new products from idea to production many times. They’ll help you learn the issues that come with scaling. Having a loyal team of developers will help mitigate many of the early pitfalls companies run into, such as poaching or lack of cohesion. Finally, you’ll have a strong understanding of technology and be better able to position yourself as an expert in a more technical space.
Both kinds of businesses will help you learn to manage small teams, work with cofounders, and learn how to provide excellent customer service. All of which are skills that can help set you up for success when you launch. The best part about both businesses is that they only take some knowledge and bit of hustle to get started.
Starting a service business before you try to build a product will allow you to perfect your idea through customer development. The same customers paying you will help you figure out the product you can build and sell to them. Speaking of pay, did I mention that people will pay a lot for quality services? A well built agency can pay for your product development, save you equity before you have something you need to GROW FAST, and give you a pool of experienced staff to bring onto your new product division.
If you build a great agency, you’ll be well known. If everyone knows your business, they’ll be excited to use your product. If you need beta testers, you’ll have plenty. If you need evangelists, ask the same people you’ve been asking for feedback the whole time. They’ll be happy to join your advisory board, they already feel like they’ve helped build the product anyway. When you need money to GROW FAST, you’ll be able to find it in your industry! That’s not just a VC, that’s a strategic partner. That’s the same company that might acquire you some day. They want innovative people like you on their roster, it’s what keeps the industry moving forward.