How to start a tech startup and survive.Some useful experience packed in one

place

Contents

Introduction

Global Trends

Inhouse Solution

Dedicated Team Solution

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IntroductionSo you’ve nailed it, right? A crispy good-lookin’ idea has anchored in your head, provoking you to hire a bunch of enthusiasts for the end of creating new *unicorn name*.

Even if it isn’t about you, that sequence accounts for 99.9% of total paths the majority of Founders have taken chasing their dreams. Let’s be honest, unless you are a VC-backed startup, the odds are, you’ll be always checking your company’s bank account till a glorious day of break-even point comes.

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According to the concept of death valley curve, your startup will definitely require some time to bring green in your pocket while being up and running for several months (years in seldom cases) without a sign of profitability. Smart people from the U.S. Small Business Administration calculated that only 50% of businesses with employees survive past the first five years. Let’s dive into analyzing how tech startups go through these times and what strategy should be chosen to run a company in early days of its existence.

P

Success as a new product

Product Launch

Technology Transfer

Research Development

Time

C ommercializationCommercialization

Valley of Death Success as a business

Cumulative profit/loss

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In a newly-founded company, the core team usually consists of a tech guy and a salesman. Although the role of a CEO can theoretically be obtained by both of them, statistics from the National Association for the Self-Employed show that 79.7% of U.S. small businesses employ only the founder. In other words, you’ll most probably end up being a one-man army in terms of setting up the core team.

This American trend reflects a worldwide situation. Check job openings at Angel List or Upwork and see on your own the number of offers with generous ownership rights. A potential Founder has to hire a guy he had never met before for the position of either a CTO or a CMO. This is the first time a startup faces a problem of IT development. It will either do it with 1 guy or move onto contacting freelancers. The former path is proven, but slow while the latter is somewhat risky.

TheTech Guy

TheSalesman

94.4%Share Critical InformationWith Staff

77.8%Have Put Some Or All Saving TowardsFounding The Business

GivesStaff a High Degree of Freedom(89.4%)

82.8%Male

84.8%University Degree

35 YearsWhen Founding The Business

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Let us imagine, you’ve coded and designed a working prototype or an MVP, as they say. Now you must have probably reached a stage when the company is ready to prove it’s business model.The EU Startup Monitor clearly indicates that till this moment such startups have on average 12 people on board with an ambition to hire another 7 by the end of a year.

SOFTWARE DEVELOPMENT RATES WORLWIDE

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By this moment, you have an established core team with a couple of developers, a part-time designer, a marketer, and a small sales team. Now the Founder has to either raise a certain amount of money for his startup in an investment round or rely on his confidence in estimations regarding the profitability of a business. Both paths are notorious for the number of unexpected problems that will definitely appear once you have entered the valley of death. Exceedingly long fundraising process, when you’ll be forced to cut on employee’s salaries or a simple miscalculation in your business model, that can lead to a time-consuming reformatting of the whole idea, just to name a few of them.

NorthAmerica

$40$240

LatinAmerica

$15$50

WesternEurope

$40$180

EasternEurope

$15$50

Asia$15$50

Telling your teammates about salary cuts can sometimes be hard. Let’s be honest, there aren’t many teams working out there just for food and enthusiasm. That said, a severe reduction in pay (more than 20%) may cause your employees to consider quitting a job. However, there is no such problem when it comes to working with dedicated teams. Software houses are able to adjust, as they have emergency funds for their IT developers, allowing agencies to go through the dark ages together with startups. Take a look at Google. In 2018, As Bloomberg reports, Google’s contract workers outnumbered their direct employees.

‘’Everything in your business can be outsourced... if you're not emotionally attached to doing it all’’

Richard Branson

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A software house provides some consistency in technical security and makes sure that the same people are working with your IP for as long as possible. Potential losses when working with unreliable solo-coders can instantaneously sink your profits. As a rule of thumb, setting up initial work with dedicated teams always means creating accounts in a task manager (JIRA), being a primary owner of your cloud (AWS) and, most importantly, having your own repository (BitBucket). Unfortunately, it’s quite widespread for developers to blackmail inexperienced clients with the ownership rights of their code. Honest professionals would always suggest using these 3 tools to manage your development process and avoid being pushed around.

This issue won’t even arise when we are talking about dedicated teams. Whereas a digital agency has mastered it’s skills in certain fields, the architecture of your platform or an app will be consistent and bulletproofed. The only thing required is the imagination of a tech startups’ CEO or CTO. This approach releases weeks and months of people’s time, giving them an opportunity to focus on Marketing or Sales, for instance.

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DEVELOPER

TEAM LEAD

SECURITY

More than 10 years

INNOVATIONTRIGGER

Less than 2 years 2 to 5 years 5 to 10 years

Plateau will be reached in:

Bioacousting Sensing

Quantified Self

Brain-Computer Interface

Volumetric & Holographic Displays

Neurobusiness

PEAK OFINFLATED

EXPECTATIONS

TROUGH OFDISILLUSIONMENT

SLOPE OF ENLIGHTENMENT PLATEAU OFPRODUCTIVITY

Affective Computing

Atonomous Vehicles

Speech-to-Speech Translation

Mobile RobotsGamification

Big Data

Complex-EventProcessing

Augmented Reality

Mesh Networks:Sensor

NFC

CloudComputing

VirtualReality

In-MemoryAnalytics

GestureControl

ActivityStreams

Enterprise3D Printing

ConsumerTelematics

LocationIntelligence

PredictiveAnalytics

In Memory Database Managment Systems

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Wrapping UpAs we have took a look through all tips regarding the development process itself, here is a graph to navigate your choice when it will come to decide what niche to choose.

Now that you know what things are fundamental - set sail and conquer new lands with your ideas!

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