12 Questions Before You Launch a Startup
Starting a company is one of the most rewarding, amazing and hardest things you can do as a human being on this planet.
You have a shot at changing the world, creating wealth, fulfilling your dreams, learning and growing. You also need to be ready for incredible obstacles, mental and physical exhaustion, and a real potential of a failure.
At times, founders start companies out of pure passion, a blind belief that they just have to do it. They are driven by a combination of a passion, creativity and obsession. It is like poetry, painting, or another form of art - it just has to come out.
Thats how I was when I started two of my startups, but in retrospect, while I think that passion and obsession are critical, preparing and thinking things through is really important.
Startups are COMPLEX, and require INCREDIBLE COMMITMENT. There are MANY things to THINK THROUGH before launching a startup.
Here are some things for you to consider before you jump in:
🧬 Why YOU?
What is driving you to start a company? Is entrepreneurship in your DNA?
Did you always want to be a founder?
Was this your childhood dream to own your own business? Did you see a friend or someone in an industry start a successful business and you said to yourself I want to be like them? Or was the entrepreneurship part of your growing up experience because of your parents?
Are you motivated by money? Do you want to create a lot of wealth and become wealthy? Or is your mission to change the world, to make people’s lives easier?
Do you have a Strong Founder Market Fit? If you don’t your road maybe much harder as you’d need to learn the intricacies of the market.
Is this an opportunity you simply can’t pass on? Have you been dreaming about it, thinking about this problem non-stop?
Are you sure you want to start THIS specific company or you are excited about starting A company and being a founder and an owner?
⏱️ Why NOW?
What is your opportunity cost? What else could you be doing? Every time we make a decision in our professional career, it is rational to evaluate the alternatives.
Are you starting the business now because of you or because of the opportunity? Do you believe that the time for you idea is now, or you just want to start a company now. If it is the latter, spend more time thinking about the timing of your idea.
If you get to market too early, customers may not be ready to buy. If you get to market too late their maybe too many competitors. In either case you might not win.
Why NOW is really Why THEN - why 5-7 years from now something you are starting today will get big.
The timing of your startup is really important. Think about all the tailwinds and all the the headwinds.
💵 Can you afford it?
Are you in a financial position to start the company? This is a very serious consideration. Can you afford to go without salary while getting the business off the ground?
Do you have to pay rent, repay loans, or have other financial obligations? How will you manage them?
Depending on your answer, you will need to decide if you can jump in full-time or will need to have a full or part-time job and work on your startup nights and weekends.
If you can’t afford to quit your day job, do you have access to capital? Will your friends and family want to invest in you? Will you be able to raise money from angels or VCs?
💡Do you have a good idea?
What is your idea and why do you think it is a good idea? How have you validated it? Have you talked to customers? Have you experienced the problem first hand?
Have you thought about this idea deeply or did it just come to you? Do the work and really think things through.
Regardless, startups are NOT ideas. They are so much more. Even if your idea is great, your success will depend on your unique execution of this idea.
🔮 What is your Vision?
5-10 years from now what will the world look like if you win?
This is such an important question and yet some founders don’t bother to think about it.
Think about whether what you are thinking about is truly needed in the future? Is your idea forward looking?
If the idea is backwards looking you will be in a shrinking market and it will be hard to grow and hard to attract investors.
Have a clear vision, a true north is critical. It will help guide your path, it will help you attract capital and talent, and it will help you pull through many challenges and obstacles along the way.
Without strong vision you are running blind into the future.
With a strong, clear vision you could be charting your path backwards, and have much more control over your destiny.
👊 Who will be on your Team?
Startups are really hard. While some founders go at it solo, it is much better to have a founding team, because you can go faster.
Choose your co-founders carefully. They should not just be friends. They need to be people you know, and trust. Make sure you and your co-founders share the same vision and values.
Most importantly, choose co-founders that are complimentary to you and have super powers that you don’t have. That way you can go faster.
Choosing your co-founders is the second most important decision after deciding to start the company.
🤝 Who are your customers?
Who will be buying your product?
How well do you know your customers? Do you truly understand their needs? Have you experienced a problem first hand?
How are they solving the problem now, without you?
How big is the need? Will you be selling a pill or a vitamin? If you are not addressing an acute problem, customers will not be compelled to buy your product.
Do you understand HOW your customers buy? Who makes decisions, what is their budget?
Know your customers cold. That’s table stakes.
📦 What is your product?
How are you going to package your solution? What makes you think it is the right solution?
How and why will you make certain product choices? Which features will you choose? What will be the user experience?
What will make your product unique and stand out among competitors?
What is your MPV? Why do you think it will work and be sticky?
What will be the key things in your product 5-10 years down the road?
Product is the foundation of every single successful startup. Make an awesome product.
💰How will you make money?
What is your business model? How much customers will be willing to pay you and and why?
What will be your unit economics? How much will it cost to acquire customers (CAC) and how much you expect from each customer over the lifetime (LTV)?
Will you be selling a one time product or will you have a recurring revenue? Are you a marketplace or SaaS? Are you an API or an enterprise sale company?
Build a financial model to understand if the business you are thinking about is actually a good business.
⚡What is your unique insight, moat, and why do you win?
We live in the increasingly competitive world. Why will you win?
What is your unique insight and why will you be better than the competitors in the near term? How will your company create a moat and become defensible over time?
Have you created a unique / patented IP? Over time, will you get an unfair advantage through data? Network effects? Strong brand?
What fundamentals do you have to build a lasting business?
🗺️ What is the market dynamic and size?
Who else is going after this problem? Who are your competitors? Why do you think you can beat them?
Is this a Blue Ocean -- a brand new opportunity, or an Innovator's Dilemma - are you disrupting entrenched competitors?
How big is this market? Do a bottom up calculation and decide is this worth while spending time on.
Spend a lot of time analyzing the market, both competitors and the market size.
✈️ How will you get off the ground?
How are you going to make the early version of your product? Are you going to bootstrap? Can you afford it?
Do you need to raise angel or venture capital? If you do, how are you planning to go about it? Do you have support from family and friends? Are you networked with other founders who can make introductions for you?
Do you already have customers lined up and ready to pay? Have a plan and figure out your path.
There are so many questions and things to consider!
As a prospective founder, you are in the beginning of one of the most important decisions and journeys of your life. Spend time preparing and thinking things through!
When you are ready, if you’ve done all the work, please reach out to me, I’d love to have an opportunity to consider an investment.
Good luck!
