Part 2: A Build-First Approach is Backwards
1 year ago…
Steve is in his cubicle lost in thought. Earlier that day, his manager told him that their parent company (from a recent acquisition) would be shutting down their offices in a couple of months. And Steve was given a choice to either relocate to headquarters or take a severance package.
Steve reads this as a sign.
He had always planned on starting his own company when the timing was right. After graduating from university, he made a conscious decision to join a promising startup in order to gain some first-hand experience, before venturing out on his own. Even though his startup had a few bad product starts, they did eventually manage to get acquired. Steve felt really proud to have been part of the core team.
“This may be as good a time as any…” he thinks to himself. He decides to take the evening to think things over.
Steve estimates that if he keeps his expenses in check, the severance package and his savings would provide him with a year of runway to get something off the ground. He does have this one idea that’s he’s been noodling around in his head for a few months already…
He decides to take the plunge and takes the severance package the next day.
Off to the races…
Steve wastes no time getting to work and immediately starts building out his product. He anticipates that if he stays focused and works full-time without distractions, he should be able to launch his first version in three months.
Steve in the metaphorical garage
He wants to build his product the “right way”, so like a crafstman, he meticulously goes about designing and building his product. But little things start taking longer than expected and start to add up — weeks quickly turn into months.
6 months later…
Steve is starting to get nervous. The product isn’t up to his standards and his revised estimates put the product out at least another three months…may be even six months. He’ll be out of money by then.
He realizes he needs help. He hits up some of his close friends and tries to recruit them — offering up generous equity in exchange. But they don’t see what he sees, and find it hard to justify leaving their well-paying jobs.
Nobody sees what Steve sees
Steve attributes this setback to a “lack of vision” on his friends’ part, and is even more determined to find a way to finish his product.
He decides to hit the pitching circuit and raise money.
He starts by contacting his previous startup’s founder, Peter, who readily agrees to meet with Steve. Peter likes the idea and offers to introduce Steve to a number of investors and leaves him with this advice:
“Make sure you put together a bullet-proof business plan first.”
Steve has never written a business plan before. So he downloads a few templates and picks one he likes. As he starts writing, he finds that he doesn’t know many of the things being asked, but does his best anyway to complete the plan. He’s especially encouraged by the financial forecast spreadsheet. The more he plays with the numbers, the more he’s convinced that he’s on to something really big. He even has to tweak a few numbers down to downplay the fantastic numbers he created.
He knows a lot is riding at stake, so he spends many more days developing his elevator pitch, outlining his product roadmap, and polishing his 10-page slide-deck.
Crafting the perfect pitch
He reaches out to Peter a few weeks later who helps him set up half a dozen meetings with investors. Steve is a nervous wreck during the first few meetings but thinks they go okay. He starts to get more comfortable with practice and feels a lot better about his later meetings.
He doesn’t get an instant yes. But at least he doesn’t get an outright rejection either. He debriefs Peter later who reluctantly bursts his bubble.
…Sorry Steve, but “you’re too early for us” and “come back in two or three months time” are code for “we’re not interested, but too polite to say no”…
Investors have mastered the art of the polite “No”
Steve is in a classic Catch-22. He can’t make people see his #vision until he completes his product, but investors won’t give him the resources to complete his product.
What is he to do?
Steve still believes in his product and is determined to build it. He retreats back into his metaphorical garage and decides to self-fund his idea with part-time freelancing.
Progress is slow, but at least he’s still working on his product, nights and weekends, towards moving his idea forward…