How did two family men develop a SaaS startup that powers the biggest sports and entertainment brands in North America without any investor funding? Darshan Kaler, CEO of Tradable Bits (a digital marketing platform), provides his insight.
Young entrepreneurs are obsessed with funding. Yes – sometimes it’s necessary, it accelerates your growth and it often earns you lots of free press. But new founders often fail to realize that it can also distract from your core objectives, cripple your autonomy and ultimately cause you to crash even faster than you grew. Securing funding is a full-time job that too often distracts from your essential CEO duties.
I challenge you to seriously ask yourself if your startup idea requires funding to deliver.
If it doesn’t – then wait. All you need to develop a successful self-funded startup are these three essential ingredients (spoiler alert: none of them involve investors).
1. Dream Team that Delivers
Everyone has an idea; only a select few can actually execute. Making your idea a reality requires a dedicated, talented team. You won’t succeed without one. As ego-boosting as it is, you can’t be a one (wo)man show. Find a partner that complements you – if you’re a big ideas optimist, find a critical, detail-oriented doer.
Once you’ve found your partner, you’ll need supporting staff: design, marketing, and extra development as required. These people don’t have to be experts in their fields – they need to be self-starters that genuinely believe in your company.
If you hire people with experience that only care about a pay check you (a) will bankrupt yourself trying to afford them in the first place and (b) will lose them as soon as a bigger offer comes along – both of which seriously cripple your growth. Learn more towards passionate recent graduates over industry superstars for your supporting staff.
2. Real (Free) Customers
These cannot be your family and friends. Your first customers must be objective companies with real business problems. This guarantees your product will actually solve industry challenges – and when it does, they’ll be so grateful that they’ll be personally invested in your startup success.
Pick a few key companies that suit your target audience, and give them an offer they can’t refuse (likely everything you have, for free). I can’t emphasize enough that in these early stages, you must under promise and over deliver. When looking for funding, entrepreneurs often do the opposite. Although this may work for VC’s, it absolutely won’t work with customers.
Give them your product and listen to every single piece of feedback you receive. You don’t have to implement it all – but you must listen with great appreciation. When you both agree your product is acceptably complete, ask them honestly what they would pay for it. Pricing is hard in SaaS – it’s not like a burger shop where there’s a standard. Associate the price of your solution with the cost of the business challenge you solve.
3. Built-In Brand Awareness
We live in a connected world. Development in the 80’s to early 2000’s was all about the individual. Today, new technologies are about communities. Build your product to be shared, seen and sent to others – even if it’s B2B. Positioning yourself ahead of this wave of connected businesses is the easiest and cheapest way to gain major traction.
One of the biggest struggles we had at Tradable Bits when we moved from freemium to the enterprise was we lost much of our “built-in brand awareness”. When you give products away for free, you can justify putting your logo all over them. People stumble upon you much more easily when every product isn’t customized and white labeled.
Now we must rely on our crucial mantra: under promise and over deliver. When you exceed customer expectations, even major brands are happy to sing your praises. In a saturated space like B2B SaaS, you have to work extra hard to gain credibility. Quotes from the VP’s of happy clients are worth millions in paid search and social ads.
If you can secure these three must-haves without funding, you’re set for a much more successful business long term. You maintain complete control of your direction, you have the time and power to develop a great product, and future investors will love you because your cap table is clean. You’ll be in a much better position when finally negotiating investment because you own your entire company and can demonstrate proven success.
Contrary to popular belief – it takes a long time to become an overnight success (did you know Slack is actually over five years old?) Be patient, work hard and I promise organic growth will pay off… in 100% ownership of the company when you eventually exit.
Don’t believe me? Chat with Markus Frind – the recently very rich owner of Plenty of Fish.
Now over to you, apart from investment what other must have’s do you think is needed to have a successful self-funded startup? Add them in the comments below.