Supercell, the company behind the massively popular Clash of Clans game, has one of the highest valuation per employee figures out there: they’re valued at $32mn per employee. That’s insane! How do they do it?
2/ Why are they killed? It’s because these games don’t meet their internal benchmarks (primary of which is 30-day retention). ...Read the entire post →
The caveat is that startups shouldn’t exclusively rely on a specific technical innovation as their main advantage. I’m talking about narrow technical innovations such as making a better internal combustion engine, cheaper glue, and so on. Startups generally protect such specific innovations via patents but they’re not sufficient protection and hence quite weak as moats. ...Read the entire post →
1/ Startups get funded when they’re expected to be valuable, and they’re valuable when they can generate a continuous stream of profits for its investors.
2/ With this view, the value of a startup comes mostly from its expected moat, i.e. how well can it defend its business from competitors once they take notice of the market.
3/ Startups that solve technically hard problems are often in an economically disadvantaged position because solving technical problems is hard, but once a solution is found, it’s not as hard to understand or replicate it. ...Read the entire post →
1/ Do you know how big companies make decisions? They build scenarios and models on spreadsheets.
They do this because often the decision maker’s job is at stake, so all substantial decisions by that person require justification which is often to be had from numbers.
2/ It’s a myth that big companies don’t take risks. Introducing new products is risky and so is expanding into new geographies. In fact, all decisions are risky in a way. (If they weren’t, no decision is required as it’s simply obvious to all). ...Read the entire post →
I wanted to make money by myself and was pretty happy when people paid for the first version of VWO. I remember my goal was to make roughly USD 1000 (equivalent of the last monthly salary I had drawn at my employer). VWO ended up making me multiple times my initial goal.
Last month at Wingify, we hit a million dollars of recurring revenue. I’m very happy that the team has been able to achieve this milestone, especially because we’re entirely bootstrapped and haven’t raised any outside investment. There has been a lot of enthusiasm about the million-dollar-a-month figure, and all Wingifighters are pumped up to convert the ‘m’ into a ‘b’. Amidst all this, I want to take a moment to reflect on what really is money.
Is billion dollars enough money? How about a trillion dollars?
This question sounds strange because common sense immediately tells us: ‘of course, a trillion dollars is a big amount’. Imagine all the things one could buy with a trillion dollars – islands, space ships and perhaps even Switzerland. It’s indeed a lot of money.
Let’s pause for a moment and think how fascinating it is that the world will let you buy stuff and anything else you want just because your conversion rate optimization platform and website push notifications system exist. I realize that I’m stretching the point a bit, but hang on with me for a moment.
What amazes me is this: if you had a billion dollars, you’d most probably never have a physical sensation of that money. You can’t keep it in your drawer, you can’t hold it, you can’t physically posses it. In fact, it is very likely that your billion dollars don’t even exist. Nobody has it. US Fed (as of 2016) says $1.46 trillion of cash is in circulation, while debt in US is more than $19 trillion (as of 2016). If everyone in US decides to physically possess the money they have, they will fall short of more than $17 trillion.
What’s happening here?
Ultimately,
Money is a promise that in future you will be able to claim the equivalent of value that you’ve created today
Who makes this promise? The government (but any mutually trusted 3rd party can do that; like in case of bitcoins where people put trust in blockchain).
Why we need a future promise in terms of money?
We require the idea of money because of two reasons:
Simple barter works where I make shoes and you make wheat. We exchange those objects and each one of us is happy. However, money is needed because a single individual is typically able to create far more value than s/he can consume personally. Larry Page and Sergey Brin created far more value in the world with the PageRank algorithm than their personal lifetime wheat and food requirements. Money is required for a fair exchange of value.
Simple barter may also work when I have a need for shoes right now and I’m willing to give you wheat. But what if I had a blockbuster wheat production this season, but don’t really want equivalent-value 10 pairs of shoes? In such cases, money is needed to store the value so the possessor is able to utilize it in future for something else.
Where does money derive its worth? Why is 1 dollar same for everyone?
One way to answer this question is to ask: ‘when does the other person decide to give you one dollar’. You get one dollar from others when you provide one dollar of value to them. Seems cyclical, but it isn’t. Imagine that you have a roadside stand with a banner that says: ‘Stuff for $1’. First, you put out a piece of crumbled paper on that stand and wait for customers. People come and go, they notice, but nobody buys. You wonder why is that so. After all, $1 is not a lot of money. You get frustrated and are just about to throw the crumbled paper into the trash before you spot an art collector running towards you with a $100 bill. She begs you to sell this piece of art to her and you, amazed, say why not. Being generous, you ask her if he wants 2 more crumbled papers free with that and he immediately backs off and asks you to sign an agreement that you will never make any more crumbled papers.
All this amazes you. Nobody wanted to pay $1 for a crumbled paper, but before you almost gave up, someone came up and bought it for $100. Not just that, she said she won’t buy it unless you promise not to create any more crumbled papers.
1921 Rolls Royce for $1. Any takers? Photo from FrankDale
You then put out your second item for the $1 sale – this is your vintage 1921 model Rolls Royce. It’s the only one remaining in the world as the company has stopped making them. The minute you put keys + car’s photo on the stand, you see a rush of people, each with a dollar bill in hand trying to buy the car from you. Such a huge rush of people makes you anxious and you decide to go inside and catch a breath (and drink some lemonade). By the time you come back, you see someone offering you $10,000 for something you wanted to sell for $1. Before you knew, BBC covers this and you get an offer of $1 million from an unknown source. You had a thing for lots of zeros, so you immediately take the offer and hand over the keys.
What just happened? Why did someone gave you a million dollars when you actually wanted to just sell it for $1?
Why did the world make Wingify a million-dollars-a-month company when all I wanted to make was $1000?
The answer lies in this: money is a proxy for how much value you create for other humans
Money, be it a dollar, a million, billion or trillion dollars, is ultimately a proxy for amount of value you are creating in the world.
Someone decides to hand you X units of money because you provide them with X units of value. It’s as simple as that.
Watch the video on how economic machine works. I promise it’ll be the best 30 minutes you will spend today
How is additional money created?
In most cases, economies are zero-sum games. You get $100 for doing a job, you spend $90 on pizzas, video games and movies and put $10 in your bank. The $90 that you spent is someone else’s income (which they further spent, so no new money is created in a transaction), and $10 that you put in your bank is lent to someone who must give back $11 to the bank. If the economy was just limited to $100, where does this extra $1 in the come from?
What I’m talking about here is not money-as-cash (which is easy to create – just print additional money). Here, I’m talking about money-as-value. If most economic transactions are just exchange of value, where does additional value come from? The answer lies in the question: the additional money-as-value is created in the world when additional value is created in the world.
Economic growth happens when more of human needs are satisfied. Chart from Economist
Let me give you an example. Suppose that in pre-Industrial age, you are in a sweater manufacturing business, making sweaters by hand and are the only one selling sweaters in the town. The maximum you are able to make are 10 sweaters a day, putting in $5 worth of wool and sell them for $10 each, making your daily profit of $50. Your limited capacity means that you are able to sell sweaters only to a limited number of people in your town. Some of them are able to buy, the others are left wanting. This inability to serve more people frustrates you because your money making potential is limited and you really want to see more people wearing your sweaters. So you set out to invent a machine to make sweaters.
After years of toiling on the part time, you see success – finally a machine that can make 100 sweaters in a day. You take a loan to get more wool and start producing sweaters. You are cautious first and only make 20 sweaters on day 1. Much to your surprise, even though you have 20 sweaters to sell, you are still only able to sell 10. People who didn’t buy tell you that while they’d love to buy sweaters, they have already spent all their savings on stuff they are used to paying for. They simply don’t have additional money to buy your sweaters. Next day you figure out that if you sell sweaters at a cheaper price, say $8, selling 20 of them will still make you a total of $60 daily profit – more than what you made before.
You slash your price to $8 and this is when value is created. People who had $10 budgets for your sweaters buy it for $8 and spend the remaining $2 on stuff that other people are selling. After buying all the stuff that they are used to buying, the other people now have an additional $2 to spend and in 4 days each one of them is able to buy your sweater. You give some part of $60 daily profit as interest to the loan you took but are still left with more daily profit than what you had before ($50). You have more money, your people in town are able to afford more sweaters. When everybody wins, it’s not a zero sum game and additional money-as-value is created in the world.
Money is created when you are able to satisfy more (or equivalent) of human needs while using equivalent (or less) resources and time. The freed up resources and time is then used to do other stuff that people value.
In other words, productivity drives economic growth. People value a lot of things – efficiency, leisure time, finding mates, being engrossed, mastering a skill. Satisfying all those needs using lesser resources than before (through technology, innovative policies, newly discovered resources) is how additional value is created.
Startups are in the business of creating value for others
Today’s startups are a world apart from the simple theoretical barter system of economy. The dot com hype of 1999 sent startups to stratosphere, where many of them IPOed and made lots of money for their founders and investors. Then they came crashing down and destroyed $5 trillion of value.
So, what does it mean to destroy $5 trillion? Didn’t that money go somewhere? Even if a founder got rich before her company crashed, she must have gained the money to spend somewhere – real estate, vacations, champagnes and so on. If money went back in the system, how exactly did value get destroyed? As Warren Buffet explains in this article, “value is destroyed by any business that makes losses in its lifetime”. Taking to the extreme, for example, if I start a business where the whole proposition is to pay employees for sitting idle, I’m destroying value. That’s because if my business didn’t exist, those employees would have been employed elsewhere, would have still gotten paid (so they can buy stuff) AND would have been creating something of value for other people. By not making people create something of value, I’m destroying value. They’re consuming but not giving back. This means inefficient businesses destroy value. Flop movies destroy value. Bad plans destroy value. Irrational exuberance destroys value.
In other words, a startup is in the business of creating value. Full stop.
If you are an entrepreneur and all that reading about exotic business models (aka Zenefits) or loss-making growth (aka most public SaaS companies) or hoped-for-advertising profits (aka Twitter) overwhelms and confuses you, take a deep breath and simply think about the fundamentals: are those startups better at creating value for a group of humans than anyone else in the world? How large is the group of humans who benefit? And by value, you clarify: are they in a business of creating something that other people want.
To reiterate, I’ll quote Paul Graham from his essay “How to make wealth“:
‘Wealth (value) is not the same thing as money. Wealth is the fundamental thing. Wealth is stuff we want: food, clothes, houses, cars, gadgets, travel to interesting places, and so on. (To create wealth), you just have to do something people want.’ ~ Paul Graham
Closing thoughts: on future
I’ve been thinking about future of startups or economy in general. If we fast forward a 1000 years, how will our economy look like? Will we have the concept of money? There are two points worth exploring. The first one is that all the technological progress means that poverty is reducing everywhere and because of increased automation and productivity,
people’s needs are increasingly fulfilled using less cost and resources ...Read the entire post →
Peter Drucker is famously attributed to have said culture eats strategy for breakfast. Every time I have a discussion with my entrepreneur friends, the discussion quickly gravitates towards what we think is fundamentally important for business success. The factors usually include technical skills, marketing capabilities, culture, hiring quality, and funding. I used to think that it was the team and culture that was most important (and certainly at Wingify, we give a lot of emphasis on building the right culture). But is culture enough?
Culture is a necessary, but not sufficient
The way I see it (and manyothers agree), culture isn’t just free beer and gourmet lunch. (in fact, I think too many “free” things might attract the wrong sorts of folks to your team). Culture is having motivated employees who believe that by showing up at work every day, they are making the world a better place. Culture is being devoid of distracting office politics, culture is believing that morality trumps profits, culture is like a flywheel that like minded people make it self-reinforcing. Every company by definition has a culture. Getting the culture right means that two people add up to more than two people, while getting it wrong means people dragging each other down. Culture has very little to do with how fancy your office is.
Yahoo gives free drinks (via Human Resources Online)
Many companies get the culture right, yet they struggle. Take Yahoo – its employees rate 4+ on Indeed.com. Remember Grooveshark? The music streaming website that was shut down. Its Glassdoor reviews are telling. One says: “awesome culture” but “obviously the lack of future for the company.” I’d bet if you do a thorough review of culture at the companies that have failed, you’ll find many of them to have focused a lot on culture. Cuil, Color, Joost, Digg — all probably were great companies to work for.
Companies fail because they run out of money, or can’t see a way to make money ...Read the entire post →
When I started Visual Website Optimizer, my sole focus was on selling to small to medium businesses (SMB). However, since last two years, we started getting interest from a lot of enterprise prospects. Of course, if a Fortune 500 company contacts your fledgling startup showing interest to purchase your product, you will be very excited about this mini-validation of your product. However, dealing with large enterprises is a different beast altogether. They don’t work like your rest of your customers and selling them is very different ballgame. So, before opening the champagne bottle to celebrate, you should keep some key points in mind.
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The single most important point is that most enterprises take ages to make a purchasing decision. They will contact you today, you will happily reply asking if they want a demo/meeting and then they will become radio silent. After days or weeks, they will reply and probably schedule for a call to discuss your product. Sometimes this call is scheduled for the same week but sometimes those big boys can schedule a call 3-6 months ahead (yep, this has happened to us!). The key point to note is that enterprises can be slow in responding (even after showing initial interest) but that shouldn’t make you give up. Use a CRM, follow up regularly and you should be fine.
Assuming you finally get a time for the initial meeting and they are impressed, they will probably ask for a trial or pilot. But, again, no matter how much effort you put into putting together this pilot project proposal, they will remain radio silent for a while until they suddenly get back to you asking for another meeting with their IT team.
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You must remember that in enterprises it is never an individual that makes a purchase decision (especially if the deal size is >$1000/month). There are committees, managers and bureaucracies that you need to overcome. Once a specific group (say marketing department, in our case) shows interest and agrees to proceed with the trial/pilot, the IT department gets involved to ascertain everything is okay with your technology and it won’t conflict with their environment. Usually this phase is the quickest but sometimes IT department can raise some special requirements that your generic product may not be able to satisfy. (For example, one such requirement for us was the restriction on number of cookies we can set.). These special requirements may sometimes become a deal-breaker because if the IT says no to a pilot, it doesn’t happen, no matter how motivated other departments are. If you sell sales automation and the sales department is super-excited about it, the deal can still fall through if the IT says no.
However, assuming your product is indeed good, in most cases you will sail through these barrage of questions from IT. This will lead you to a live trial/pilot implementation.
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Whatever time you budget, the trial takes twice as much time. Big enterprise always have that unknown contingency lurking in the dark. Sometimes their systems aren’t ready, or they don’t have approvals, or the key people are on vacations. Since large enterprises treat trials and pilots as seriously as final implementations, you would need to make a significant investment of your time and effort to get it done. Just like in sales, where you should always be closing, during the trial too, you should always keep trying to get the customer start using it. By themselves, enterprises may get really, really slow at implementing or using pilots/trials.
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Once your trial is completed, and the target customer (which may be an individual or a specific department within the big enterprise) wants to go ahead with your product, there are two ways the final purchase that can happen. If the sale price is low, say less than $1000, an individual generally can make the purchase on his/her personal card and later claim it as an expense from the company. However, if the sale price is high, individuals or departments do not have budgets for it and they have to involve a special kind of department with a very boring name called Procurement Department.
I imagine people working in the procurement departments have a funny job because things they are asked to purchase is not the things they end up using themselves. So you would find that the final stage of selling to an enterprise involves procurement department asking you for a quote and scope of services. Most procurement departments also innocently ask for discount, as if it is a requirement to do the sale. Under no circumstances you should offer any kind of discount to the procurement department because they have absolutely no influence on the purchasing decision. They are just there to facilitate the purchase. So simply tell them that you are not offering any discount, and if they ask for reasons tell them that it is a company policy.
Lawyers and Terms & Conditions
If the procurement department okays your big ticket purchase, don’t get impatient and still don’t open the champagne bottle. When lawyers get involved, the whole initiative can get derailed because of that one specific word you have in your terms. For SaaS and software products, the terms and conditions are generally standard for all the customers. (For example, terms and privacy policy for Visual Website Optimizer is public). However, some large enterprises would have their own “vendor terms” which would be completely different from your standard terms. Now, should you sign a custom terms document with each of the big enterprise customers? Unless you are prepared, I wouldn’t recommend that as it can become a big hassle in the long term. Even if the sale price is high enough to justify detailed negotiations on the terms and conditions, you should always get your lawyer involved. Don’t try to negotiate the legalese yourself because remember you are startup, and the other company is an enterprise. They have a large army of lawyers, you have.. well, only yourself. (Also remember that if your startup raises funding or gets involved in an acquisition, all the documents get scrutinized at the due diligence stage. So don’t sign the “standard” vendor terms document supplied by the enterprise just because it looks harmless)
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Selling to enterprises can be fun and for a young company, it is definitely a big achievement. However, following miscellaneous points should still be noted:
SLAs (service level agreements): even if you do not guarantee anything to majority of your customers, enterprises would typically demand very specific SLAs for customer support and software uptime. Before promising, make sure you have resources and capabilities to honor that. Do not commit to an SLA just because the sale price is high.
Phone Support: enterprises also typically demand phone support. If you are a small startup and founders do support, make sure you are capable of providing phone support even when you are in a meeting, having lunch or partying outside. Phone support is a big commitment, so only make it if you are ready to handle regular calls (because enterprises do love to call for even the tiniest of issues).
Discounts: do not give discounts to enterprises. They value the solutions they use and cost is almost always a secondary factor for them. (This is also a big reason to have flexible pricing for enterprises so that a Fortune 500 company pays in thousands of dollars, not $15 that is your standard plan.)
Ask for their logo or case study: if you must provide a discount or an additional feature or service, ask them if you can use them as a case study or at least put their logo on your customers page or get a testimonial from them. Always do barter, never provide discounts for free.
Chief Executive Officer (or CEO in short) is that fantastically sounding job role that feels like a dream role to many. I used to fancy being a CEO one day and now when I am one (of Wingify), frankly it feels exciting and overwhelming. In fact, it is a big responsibility. A responsibility to make sure company grows, payroll is met every month in years to come, customers are happy, a brand is built, culture is well built and tens of other tasks. A CEO (especially in a small company / startup) can quickly get overwhelmed with all the different kinds of work he has on his plate. After all, in a way, everything associated with the company is in someway his responsibility.
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In the last 2 years of being a CEO of a nascent and growing company, I have come to realize that if a CEO focuses only on two key tasks and does them really well, all the work he thought he had to do by himself will take care of itself in a very efficient manner. These two tasks are:
Hiring
Setting Vision
Allow me to elaborate.
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A CEO cannot and should not do all the tasks by himself. I know CEOs (including me) generally obsess over details and perfection, and in desperation end up doing quite a many things by themselves. Initially when the company is small, this is of course necessary. But as the business grows, a smart CEO should bring in more capable people than himself for well-defined roles and then set them free. This ensures that the business slowly comes to comprise of a competent and independent team that executes on the company vision (see below). I’m trying to do that for Wingify by hiring people for sales, marketing, engineering, product management and customer service roles. (Shameless plug: if you are smart and are willing to work from New Delhi, come join us!)
So, a CEO’s role should be to obsess on hiring competent people continuously. In fact, a CEO should strive to make himself dispensable for almost all the tasks in a business. Instead of meddling into sales, technology, finance, marketing, branding, customer service, etc., why not hire specialized people for these roles? However, it is important to obsess on hiring the right kind of people because the team that eventually gets built also determines the culture of the company, and ultimately the brand the company projects to the world. Hire good people and set them free! Everybody loves freedom to perform and deliver.
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No team can work without knowledge of the final objective. Without a clear idea of what a team is expected to deliver, even the smartest of people will fumble and struggle to deliver results (because, of course, they have no clue what results are expected of them!) So, while assembling and expanding a world class team, a CEO’s second and final task should be to show them a clear, cohesive vision of what the company expects to be. I’m not arguing for micromanaging the team, rather I’m arguing for deciding a strategic vision for the company and then letting individual teams set milestones for themselves to achieve that vision.
Once a company vision is set, different teams interpret the vision according to their own functions. For example, if the vision of the company is make $X million in revenue in next two years, sales, marketing, HR, customer service and other departments will decide what activities they need to plan in order to make this goal a reality. They will also set their own milestones and benchmarks. A CEO would need to overlook cross-team talk and guide it, but even that can be delegated. Strategic vision of a company could be of release of new products, entering new global markets or becoming a leader in a particular domain. But whatever the vision is, it must be clearly and thoroughly communicated to the whole company so that all the smart folks that you have hired and the teams that are operating can set their individual goals and milestones.
Once you hire a good team and show them a vision to work towards, your role as a CEO reduces to making sure everything is on track and meddling only when something seems to be going way off-track (say if an unexpected event happens in the market: a new competitor emerges or a new game-changing technology is developed or global recessions starts).
I was recently thinking about what would a minimal, initial team for a software startup comprise of. Imagine you have a brilliant idea for a startup and you have some funds to hire an initial team. But like most smart entrepreneurs, you want to hire a minimal team first and only expand later, if and as needed. So, what would be the essential, minimum team for your startup? Of course, technically, the answer is one. Minimum number of people you need for your startup is you (and possibly a cofounder). But, I am more interested in exploring what functional roles need to be performed in an early startup that is just getting off the ground. You could be doing all roles yourself, or you could be having different people for these different roles, but in my opinion, following roles define an essential startup team:
Content expert
Analytics and marketing expert
Designer
Engineer
=&0=&: As pointed out in comments, at extremely early stages, product/market fit is what you should be aiming at and for that matter “product manager” (which is founder in most cases) is the person who will test and refine the startup until that fit is achieved. The team I describe is relevant once you know you have discovered the right market and have a pretty good sense of what product is going to look like.
Let me describe these roles in details and comment on why I think these are absolutely essential for an early stage startup.
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What s/he does? This person owns every aspect of your startup related to content. Activities include: writing amazing posts on your blog; writing guest posts on prominent industry publications and blogs; copywriting for website and landing pages; managing and engaging community on Twitter, Facebook and other social media channels; engaging your startup online (by commenting on relevant blog posts, forums, Quora, etc.); writing whitepapers, case studies, etc. (if yours is a B2B startup). This person also interacts with the analytics expert to A/B test and refine headlines/copywriting and supplies content for email newsletters. Essentially, this person understands and gets what compelling content looks like and also understands why good content is so important to the startup’s success.
Why is content expert important? Content does two amazing things for a startup: a) it is super important for SEO purpose; more content you have on site and off-site, more likely are you to be ranked highly on search engines; b) good content helps your startup gets noticed. Companies like SEOMoz, Unbounce, Mint, OKCupid, etc. have shown what wonders good content can bring. With our product Visual Website Optimizer, I am trying to do the same by writing weekly posts on I love Split Testing blog. From my personal experience, I can tell content helped people notice our product as a serious A/B testing contender. Good content attracts much needed attention towards your startup and consistently good content helps create a nascent community around your startup. What more could you ask for?
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What s/he does?: This person is responsible for everything related to analytics (and marketing) in your startup. The list of what work needs to be performed is huge: properly utilizing Google Analytics to optimize funnels and understand where traffic is coming from, taking care of SEO, A/B testing different pages to maximize conversions, designing and implementing user engagement strategies (through email/retargeting/etc.), designing strategies to maximize retention of users/customers, increasing engagement on pages, doing PPC and display campaigns which show ROI; designing effective customer feedback loops. This person needs to work with content expert and designer to make killer landing pages and website structure. And s/he should also work with engineer to design retention strategies (trigger emails or badges or to implement any other novel strategy analytics expert may think of). Bottom line is this: analytics expert is responsible to maximize your conversions, sales and retention in any way s/he can.
Why is analytics expert important? In early days of startup, there is a risk of settling down towards a “good enough” framework. You have a website and you get a few signups daily, some of your users are canceling and you seem to have a vague understanding of what your users are doing on your website/app. All this process/information can quickly become de facto in your startup. As a startup, your team may be busy adding features, getting press and responding to customer queries. With all these day to day activities, analytics and optimization can take a back seat. Imagine how beneficial would it be for your startup, if your traffic increases from 10 hits to 1000 hits a day, conversion increases for 2% to 8% and churn reduces from 10% to 2%. Isn’t all this worth having a person doing the analytics and optimization job?
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What s/he does? Obviously, this person is responsible for everything related to design. Tasks include: designing website, landing pages, application, email newsletters, banners, mobile app/website. Designer works with content expert to create visuals/images/infographics to be used in the content. S/he is also responsible for layout and visual appeal in whitepapers, case studies, etc. Designer works with analytics expert to create effective landing pages and call to action buttons. Designer works with engineer and analytics expert to skin the application and make it usable. A good designer intuitively understands the importance and impact of good design on how a startup is perceived.
Why is designer important? Needless to say, visitors and potential customers will judge quality of your product/service from design you have. In an era of design made popular by Apple and other companies, the bar for good design has really gone up. No longer can you hope to slap a basic HTML/CSS skeleton on your application and expect it to be received well. More than ever, design has become a significant competitive advantage and startups that realize this will be more successful than the rest.
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What s/he does? This person is responsible for technology and engineering behind your startup. Responsibilities are numerous: choosing frameworks, programming, server administration, maintaining databases, testing, QA, scaling operations, etc. The person should be smart enough to not over or under invest in engineering. Engineering and codebase evolves as startup evolves, so the person has to have a long term vision and give your technology an appropriate structure.
Why is engineer important? Initial choices you make in your engineering will have a long term effect on your startup. The programming languages you choose will define what kind of talent you attract. The framework you choose will guide direction of your code base. Choice of server architecture will become semi-permanent. The concept where your choice of technology/engineering effects your future decisions and efforts is called Technical Debt. So having a right engineer with good perspective on things is very important for a startup.
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Technically, you don’t need a dedicated customer support person. In early days, it should be performed in rounds by everyone in the team. It helps the whole team be closer to the customer and understand (and hence fix) her problems and needs. However, if you really have to hire a fifth person in your team, I’d say hire a customer support expert. Keeping existing customers happy with swift and intelligent responses is sure shot way to differentiate from competition. Customers today are generally immensely unhappy with support of most (large) companies, so if you manage to surprise them with a good customer service, you may win much needed evangelists for your startup. In early days (and even now), this is precisely how we got people to love Visual Website Optimizer. We aim to provide absolutely the best customer support people may have seen.
Last week, I stumbled across a personal post from a founder on his thoughts after first month of his startup. He writes in the post that he hasn’t been satisfied with the traction received so far and wonders whether existing product is the right path to continue on. I had exact same questions when I was starting up Wingify and now that we have seen some traction, I thought I should expand on a comment I made on how to know if your startup idea is the right one.
When doing a startup, it is perfectly okay to wonder whether you are on the right track. It is not a sign of weakness. In fact, being too attached to one’s idea is a sure shot path to failure. Honest introspection into your startup should be done regularly to have a clearer perspective. After all, startup is a lot of effort and hard work. What good it is if you don’t know whether that effort is in the right direction?
Like many entrepreneurs in their initial stages, if you are feeling doubtful about your startup, ask these 3 questions to yourself (and your co-founder):
Do you think what you are providing is creating significant value for anyone? Value should be so significant that people should curse you if you take that service away from them. Do you think it could happen?
Do you think there is big enough market for the service AND the market is easy to reach (without spending bootloads of money)?
Are you enjoying doing this? Do you see yourself doing this for several next years?
