The 4 steps to a successful startup
In this episode I go over the 4 steps to a successful startup. No spoilers here. But I also teach this as “The 4 T’s” in my book “Strap on your Boots” on Amazon and my course “Startup Essentials” on Udemy. Follow these 4 steps and you will succeed!
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Here’s the transcript from the podcast, please excuse typos!
Today, I’m going to give you the 4 Ts, or the four steps to running a tech startup or any business. So let’s jump right in. The First Tee is for the team, because without a great team, you really can’t get a lot done. Sure, you can do things by yourself. And I always tell people, as a founder of a company, you should be doing as much as possible on your own, to get as far as you can, without help. Why is that? Well, because the more you do on your own a, you’re learning a bunch of stuff, be you’re making mistakes along the way, which will help you avoid them in the future with team members. But also, you’re adding credibility to your business, which gives you leverage. So when you want to add co-founders, whether it’s a CTO or VP of marketing or a partner, you can say, Well, hey, look, I’ve already done all these different things. And I’ve already built the business up this much. So my value is very high. And so bringing you in, I don’t really need you that much. But I do want you to come in, there’s a big difference between needing somebody and wanting to add someone to your team. But when it comes to a team, you do have to have a well rounded team.
So for tech startups in particular, you usually want to have a CEO, which could be you or somebody else, we need a CTO. And these are Chief Executive Officer, Chief Technical Officer. And then of course, a VP of marketing or a CMO, which is chief marketing officer. So you want to have people who are good at marketing, business technology, and of course, social media, branding and awareness and that kind of thing. But without a good team, you’re a tech startup where your business is probably not going to succeed. It’s very rare for just one person to succeed on their own. They need other like minded and experienced and talented people on their team to help them succeed. That’s the first thing.
The second T is going to be your technology, or your product. But T for technology. This means that you need to have a really good platform that you build, whether it’s a mobile app, or a website, or if the product that you built a physical widget is really, really good. People really love it. Without the technology behind your idea or the platform or product, it’s just not going to work, people are going to see this rinky dink primitive thing that you built or whatever it is, and they’re not going to want to use it. So your technology has to be spot on. Because without it, investors are not going to invest in your idea. And that’s usually the goal with a tech startup is to get an investor to invest in your idea. So this means make sure that you’re if it’s a tech platform to make sure it’s scalable. So if you’re on Amazon, AWS servers, make sure that you do load testing, and that you can get at least a million users to use your platform without it crashing. This means that you should be doing beta tests with 1000s of people or hundreds of people, getting people to use your, your mobile app or your website and giving you feedback, right? I’ve gone through this and many other episodes. But this is really one of the most important parts of running a startup is to have good technology to backup your whole business.
The third T is one of my favorites, traction. Okay, so you can have a great team and a great technology. But without traction, that means you’re not getting anywhere, right, you need to be able to show that people are coming to use your product or people are buying your product. And you’re getting repeat business. So in terms of a tech company, or like a website, or a mobile app means that people are coming to your, your app or your website every single day. Okay, so you’re getting daily active users and use, or you’re getting monthly active users, which means you’re getting people to come to your app, or use your website at least once a month. And these numbers or metrics are very important, you need to show that you need to every month it’s growing a certain percentage, whether it’s 1% 5% 10%, or 100%, you need to show that your traction or your growth is consistently growing over time. If not, once again, investors are not gonna want to invest in your business because they’re gonna see that you’re not growing, their money is really meant to fuel that growth. So when they see that you have a great team, great technology and great traction, their money really isn’t to build all of those things, their money is to help you make that move even faster, and grow even more. So traction is key. And if you can figure out some growth hacking techniques, or leverage other platforms to help you grow your platform, or to sell your product, do those things because it’s the best way to get investors to invest in your company.
And the last tip number four is turning a profit or revenue or monetization. And this is obviously very important because if you have a team and technology and traction, but you’re not making any money, well then how are you going to grow your business? How are you going to entice investors to come give you money if you’re not making any money? Because the first thing investors want to know is how much are you making? Are you profitable? When will I get an ROI or return on my investment? You know, how much money are you making each month each day each week? What’s your projection for years, revenue is very important. So you have to turn a profit in your business. If you have a brick and mortar store, and you’re not turning a profit, and you’re losing money every month paying employees and paying for your inventory. Well, that’s not a good business model, you need to figure out what’s not working and why you are not turning a profit. If you’re selling a physical product, and you’re selling it for $20, but it’s costing you $25. To make, you’re not turning a profit, you’re losing money, you need to find a manufacturer, and maybe make them in bulk, to make them for $5, and then sell it for 20. And then with shipping costs and advertising costs, you might make $5 per unit. When it comes to your tech platform or your website or mobile app, and users are coming in, you’re getting 1000 users a day, are they spending money on your platform? Are they giving you 99 cents for in app purchases? Are they subscribing to a monthly premium account like 1999 a month or something, you need to show that you’re earning a revenue in some way, because most investors, it’s going to honor the days where it was FOMO fear of missing out where they would throw money in a wall and hope it would stick to a company that had lots of users. It’s just not the way it works anymore. investors want to see that you’re also earning a revenue. And that’s why this episode focuses on 14, not one, not two, not three. But all four, you need a good team, a solid technology, your product, you need traction and growth. And he needs to turn a profit, you just show investors that you’re earning money. If you can’t get one of these four, figure out a way to do it. Because I can’t tell you how many times entrepreneurs have come to me for help and said that they have an idea for something, they have one of the four or two of the four, but they can’t seem to get all four. But they think their idea is good enough that they can skip over two of them or skip over one of the steps. And I’m sorry to tell you 99% of the investors out there, they want to see all four of these, you need to have them all. And guess what, it’s better to do it and get all four so that you’re guaranteeing yourself a place in front of an industry. Because once they see that you have all 40s it’s gonna be hard for them to deny you that check, right? Because they say well, you already did all the things you’re supposed to do. You’ve already gotten the great team put together so I don’t have to pay you to do that. You’ve already built a great product, don’t have to pay you for that, you already got traction, so you’re not going to waste my money on that. And you’re already turning a profit. So they’re seeing their dollar signs, their eyeballs saying that’s it. They’re already making money. So my money’s gonna come back that much quicker. And that wraps it up. So if you can get the 14 in any of your businesses, you’re on the road to success. I wish you lots of luck. Leave me any comments, feedback or suggestions. I always answer them.
