A Look Behind the Curtains: 10 Things we Learned While Creating a Startup
We’ve been working on Euforio Music for just over a year now, and although we aren’t a bonafide success just yet (we’re getting there don’t worry), we’ve learned a lot of keys for being a successful entrepreneur, so we figured we’d share.
This blog is going to be a little different from others you may have read because we’re going to be sharing actual concrete steps and Pro-Tips for each section. We’ll also be mentioning some advice from mentors we’ve met through the Founders Institute, so enjoy, and check out our website at https://eufor.io.
1. Understand What it Means to be an Entrepreneur
So you decided you want to work for yourself and create your own company. You want to live that Facebook/Snapchat/Instagram dream of hitting 1 Billion dollars overnight. You’ll be driving around in your Ferrari in a year, so why are you even reading this blog post? Well you’re wrong. So wrong. Like more wrong than people who eat the pizza crust first, or when Donald Trump said he was the winningest president in history. Being an entrepreneur is really really hard, and companies like Facebook, Snapchat and Instagram who hit that multi-billion dollar valuation are 1 in a trillion. You know how they say “needle in a haystack”? Well try a very very very tiny needle in a Mount Everest of hay.
You’re going to be working at night, during the day and on weekends - you’ll have to cut down on time you spend with your friends or on your hobbies and you won’t get anything from it for a very long time. You’ll need to have your life partners support as well. If they don’t understand that you’re going to be spending more time with this new mistress, you’ll crash and burn very fast. It’s a struggle and you need to be ready for it - don’t expect less.
2. Test Your Market
Ok now you’re ready to be an entrepreneur and you have an idea. You think ‘This is the greatest idea of all time, I’m going to retire off this idea in 5 years and play golf for the rest of my life’. First things first, you need to be sure this is a real idea. Make sure that people will actually pay you for your service. Sometimes people will tell you how great the idea is to your face and then not drop the cash when the time comes. People don’t like to be mean in general, so if you bring someone an idea, they may say ‘Oh my god, that’s such a good idea I can totally see it being successful - let me know how it goes’. But if you say ‘Hey here’s this idea, will you pay me 10 dollars for it right now’, well then people might not be so excited about your idea after all. So be sure to be really honest with yourself, ask people you don’t know and people you do know and dig really deep. Even go as far as getting them to sign Letters Of Intent (LOI) if your product is a B2B offering. An LOI isn’t very strict but it will give you a great idea of whether or not the market wants your product.
Pro-Tip - Setup a Facebook page or a Kickstarter for your product and use that to gauge how much interest you may have in your idea - you can spend under 50 dollars on Facebook/Instagram ads to test out an idea fairly accurately.
3. Knock On All The Doors
To go along with testing your market, you need to make sure you knock on every door. Now I know what you’re going to say, it’s weird and uncomfortable to just go to random people and talk to them about your company. What if they don’t like you, or your company, or they don’t want to talk to you, or they’re selfish. Well you just have to suck it up, unless you’re Kim Kardashian and already have all the contacts and audience in the world. No one knows about you or your product so you have to get it out there. Get good at being rejected (I was a nerd in school, so I was already really good with rejection). Remember when I said being an entrepreneur is hard, well here you go; this is the first test of whether or not you can weather the storm. If you can’t handle knocking on random people’s doors, maybe being an entrepreneur is not the best option for you.
Keep in mind, when I say knock on all doors, it includes cold calling potential clients and advisors, cold emailing people, asking all the people you know for contacts and emailing them too. This is where the grind starts, and make sure you record everything. Keep track of all your contacts and notes from all these meetings. Use tools like Google Drive or CamCard to keep track of things.
Pro-Tip - Everyone loves to give their advice because people are inherently selfish and vain, so make sure you always ask for people’s advice instead of handouts.
4. Set Up a Landing Page
Ok now you have an idea, you’ve tested the market, and you’ve gotten some really positive feedback. It’s time to start getting hype for your idea. The easiest way to do that is to set up a landing page. Euforio’s running a music summit and we made a landing page for it, that you can see below. It’s really simple and the only thing we have on it is a description of what we’re doing and a field where the user can put their email to be added onto our mailing list.
Something like this is super easy to do, you can use a service like SquareSpace, Wix or Landingi - there’s thousands of them if you google ‘landing space generator’. We got this advice from one of our mentors, Lee Silverstone. To get the mailing form, we used MailChimp , which has a free tier for small startups. They have tons of great features like embeddable forms, a mobile app so you can carry around your subscription form with you and really great analytics. In fact when we went to a conference recently, we had an iPad with a form loaded on our MailChimp app that directly connected to our mailing list.
This kind of landing page can also help you test different website names and concepts - you can set up a couple of landing pages and test which ones get more traffic.
Pro-Tip - Set up Google Analytics on your landing page to track traffic, clicks and flow of users on your landing page. Google Analytics is super easy and quick to set up and is really powerful.
5. Nail Your Product Name
Your product’s name is one of the most difficult things to nail for a startup. It has to be simple enough that people will understand it, and unique enough that people will remember. One of our mentors, Dennis Van Staalduinen, mentioned that there are 2 different kinds of names - descriptive and unique, if you can nail both factors you have a winner for sure. Examples of extremely unique names are Google, Zynga, Hulu, and Twitter. These companies have ridiculous sounding names, that mean absolutely nothing but stick in your head. Now these companies are super successful so their names are verbs. These names are great for social media platforms, entertainment platforms, or any other product that’s meant to portray a ‘fun, cool attitude’. Then there are really descriptive names like ‘The Canadian Encyclopedia’ which is a Canadian Encyclopedia. See how that worked out? These kinds of names are really great for companies that want to portray a super serious and businesslike image. However, if you’re trying to create a social app, calling it ‘JonnysSocialMediaApp’ is probably not the best idea.
Now one of the most annoying parts of picking a name is picking a domain - that’s because there are companies whose entire business model is buying up empty domains and then selling them for a lot more later. Which sucks, it really really sucks - we spent 8 hours in a room trying to find a name before we came up with Euforio Music. We had a few names that we really loved but the domain searches killed us.
Pro-Tip - Use a random url generator like BustAName to come up with your domain name. Sometimes these websites will even check with the hosting provider if that name has been taken - reducing a step for you.
6. Scope, Scope, Scope
Great, now we have an idea, a name, and a landing page to start creating hype, you’re almost there right? NOPE. Now you need to launch your product, but you have all these amazing ideas in your head. You have features upon features that you know your customers want. You may think you have to finish all of those features before your customers see your website, but you don’t, and you shouldn’t. At this point, scope is really important. You need to outline different phases of your launch; you should start with an MVP (Minimum Viable Product). An MVP is a set of the core offerings of your product, without which you cannot ship. You need to be really critical and cynical in deciding your MVP. After your MVP, you need to create a roadmap of features and how you want to role them out by priority. Splitting them up into Phases will also help you allocate your resources and time. It also helps you avoid feature creep, which is when features keep creeping into your product before you ship. If you hear yourself saying ‘oh let’s add this feature, and this feature and this feature and then we’ll finally be complete’, take a step back because you may be being affected by feature creep.
A great piece of advice from one of our mentors, Alain Goubau, was to make sure you don’t spend a lot of time and resources developing features that other people have already done. For example, we wanted a feature on our website that allowed visitors to message us directly if they had questions. It would have taken forever for us to develop, so instead we used a company called Drift which let us embed that feature in our website in about 5 minutes. If your website is selling products, don’t spend time creating a marketplace - use Shopify. The list goes on and on but my point stands - your full product is not each individual feature, it’s the sum of all the parts.
Pro-Tip - Instead of waiting for your entire product to be finished, ship an MVP and then keep your contacts updated with your progress on a consistent basis.
7. Have a Slick Pitch and Know it Blindfolded
Now you need a pitch and a deck. This is going to be the first visual point of contact for a lot of investors or contacts into your company so make sure it looks good. If you have a design focused person on your team that’s perfect, if not buy a designer friend of yours dinner or better yet a couple of beers and ask them to do it for you (nicely). You should not give up equity for something like this - worst comes to worst just use Fiverr. In general the formula we like to follow for a pitch deck is: Create urgency - Problem - your solution (with a story) - why your solution is awesome - how you’re going to make money. This is a general guideline, but you also want to include things like a go-to-market strategy, any beta you’ve launched and any stats you may have. You’ll also want to have appendix slides that you can bring up if someone asks you about your revenue projections or more details about a part of your company.
You’re going to need to know your pitch inside and out, forwards and backwards. Doing it in front of a mirror isn’t enough. Do it in front of your friends, your family, people you don’t know. I like to do it in front of my girlfriend and get her to try and distract me because she knows me best. Do it over and over again until you know the whole thing but be careful - you don’t want to be robotic. Almost every mentor we’ve talked to has told us that people like to see authenticity; I like to remember the major points in my pitch and speak fluidly through that. Being able to do that takes practice, but if you do your pitch enough times anyone can get there.
Pro-Tip - Print out your deck (with slide numbers). Powerpoint and pdfs have the feature that allows you to type in a slide number and hit enter while in presentation mode and it will jump straight to that slide. It makes you look super slick when you don’t have to click forward and backwards a bunch of times.
8. Don’t Take an Advisor Too Early
People get stuck in this trap a lot with startups. You have a product, it’s on the market or about to be shipped, and a friend of yours knows a guy who knows a guy who would be just perfect on your team of advisors. Whoever this person is will probably want a cut of your company and will often come to you with a grand list of things they can do for you. They will know the Queen of England and Beyonce and the President of the United States and they will absolutely for sure get you in a meeting with them for 25% of your company - and you’re so pumped you may scream. For the love of god don’t fall for it, don’t give away equity unless you absolutely without a doubt have to. When you give up equity to someone, that’s stock you can’t give to someone else who may actually provide you value.
You should do absolutely everything you can do in house, don’t spend money (unless you have capital) and don’t give away equity for no reason. If you’re going to take on an advisor they better be giving you money immediately or something concrete that you can measure - vest your shares depending on those metrics. A lot of the advice in this section came from one of our mentors, Jeff Bennett, who also emphasized that an advisor isn’t just a bag of cash - they’re a human being. Make sure that they fit in with your team and your vision for the company - they should provide value outside of just money.
Pro-Tip - Before taking on an advisor DO YOUR RESEARCH. Talk to people that have worked with this person in the past and make sure they are the real deal.
9. Become an SEO and Social Media Wizard
SEO (Search Engine Optimization) is one of the most powerful tools a startup can employ. A good SEO strategy will give you better exposure on search engines like Google. There are concrete things you can do to make sure your company shows up higher on Google’s results. One of our mentors, Shawna Tregunna, showed us this list of concrete, super powerful steps you can follow to improve your SEO - it’s a godsend.
Now we all know social media is king in today’s industry - people spend inordinate amounts of money on social media strategies but it’s incredibly easy to get lost in a world of buzzwords and not actually accomplish anything. We aren’t social media masters yet (we’re working on it) but we did find and start using a bunch of tools that are helping us get there. Hootsuite is a really useful website that lets you monitor and schedule your social media posts on Twitter, Instagram and Facebook. You can use it to schedule posts at the best time based on which platform you’re using, and track the success (or failure) of your post. Crowdfire is another great platform which specializes in driving traffic and followers to your social media applications. There are a lot of similar platforms out there right now, but the point is get good at social media.
Pro-Tip - Find your competitor on Instagram, and start following all the people that follow them. A lot of these people will follow you back - we increased our followers 167% overnight using this technique.
10. Equity is Not King
There’s this preconception that when you raise money, you have to give up equity. We thought the same thing until we met Colin Wrynn, who’s a partner at Labarge-Weinstein. Turns out there are a ton of options for investors when you raise funds. We’ve outlined some important ones below in some simple language:
Equity Someone gives you money, you give them a part of your company. The more you need the money, the more of your company you’re going to have to give up. Angels are people who invest with their own money, so they will give you less money, but take a smaller percent. VCs are heartless machines who represent a bunch of people or companies - they will shell out a lot of money and take a massive chunk of your company.
Convertible Note Someone gives you money as a ‘loan’. Your company becomes successful, and is worth some money. The person holding the note can say ‘I want to turn my loan into x% equity instead’. This is super popular amongst angels who invest in early companies.
SAFE Note Same as a Convertible Note except the SAFE isn’t a debt. Because the money invested in a startup via a safe is not a loan, it will not accrue interest. This is particularly beneficial for startups, but also better embodies the intention of investors, who never meant to be lenders in the first place. A SAFE note was first used by YCombinator and you can read more about them here - https://www.ycombinator.com/documents/
Loans A bank gives you money, you have to pay them back before a certain date. Each month the amount of money accrues interest, so you end up owing more money than you originally got. Most people frown on loans for startups because you have to put something up for collateral amongst other things. In one of our Founders Institute sessions, Nazim Ahmed from CanvasPop said, ‘Build the raft before you jump off the yacht’ - we agree wholeheartedly, so be careful with loans.
Conclusion
So there you have it, 10 things we learned while creating a startup. This was just what we learned at the beginning of our journey, we have a long way to go and so much still to learn. Running a startup is not easy, you need to be aware of the grind and how much fluctuation you’re going to face. Sometimes it feels like you take one step forward and five steps backwards, but just remember it’s not the destination that’s important it’s the journey. We hope you learned something, leave a note below to let us know what you think and keep on swimming!
