How to Start a Startup
In my home country of Ukraine, corruption is the single biggest obstacle to the nation’s economic and social development. For this reason, it was life-changing for me to see how the U.S. government supports young entrepreneurs and the startup ecosystem, not only in the United States but worldwide. Somehow my life and work has always kept me in touch with the United States, first as an exchange student at MIT and most recently as fellow of the Young Transatlantic Innovation Leaders Initiative, which was kindly funded by the U.S. Department of State and organized by The German Marshall Fund of the United States.
My preconceived notion that politics and business are completely separate entities that cannot cooperate or support one another was completely dissolved when I saw how it works in the United States. Through the course of a number of meetings with top U.S. government officials and prominent business leaders, I saw first-hand that politics and business not only can but must work together.
The key to efficient cooperation is the ability to listen and understand each other on an ongoing basis. I was truly impressed how efficiently and diligently the U.S. government was in supporting the startup ecosystem and how well they were informed of the numerous challenges startup entrepreneurs face. Without this continuous dialogue and synergy, it is extremely hard to maximize the economic potential and the human resources potential. The misconception that politicians and businessmen and women speak different languages turned out to be simply not true. On the contrary, while the functions of one and the other are very different and at times contradictory (one regulating the other), the solution is to convert the word “contradictory” to “complementary.” I guess it is easier said than done, but one thing remains true — once you see how the U.S. system works, you will know that while it is very difficult to quickly make all the needed changes in Ukraine, it is possible. This is the main message I left with. Within my personal network and professional abilities, I plan to play my small part in building out the future of Ukraine.
The three-week program included a trip to Washington, DC and to Salt Lake City, Utah that I will never forget. It was packed with amazing events, trainings, and unique meetings with exceptional people. The first few days in Washington, DC were the most inspirational, rewarding, and busiest days of my life. GMF organized a series of amazing hands-on training and masterclasses, introduced us to the U.S. startup ecosystem, as well as to many business and political leaders of this truly amazing nation.
As any young starting entrepreneur, you have more questions than answers on how to start a business, and how to grow it in an efficient, fast, and sustainable way. These are not subjects one can learn in even the best universities of the world. However, during those few days in DC, all of my questions and concerns were addressed in full. By the time we left for Salt Lake City, I knew exactly what needed to be done. I was ready to get my hands dirty in order to build my new business venture. When starting a new business, each case is unique and each entrepreneur will need to answer some basic questions from the start. I had four questions:
1. When Should I Start Raising Money?
I was advised not to raise money at the start when all I had was the business idea. As a developer, by trying to build a minimal viable product (MVP) I have learned so much about the best technologies to use for my product, which would not be possible if I would have hired someone else from day one. Second, as I was building the MVP, I tested it with a small group of early adopters, whose feedback significantly improved the product and my business model. Once that part of the job was complete, I could go out and start to raise money, with a better business plan, an MVP, and grasp of the market. My chance of raising money, and from best investors, has significantly improved.
2. Who Should I Take Money From?
When you are ready to raise external funds, be very cautious with your future investors. Look for smart money, as well as industry expertise. This was especially important in my case, as my industry is extremely niche. Investors are not just about money, they should be your partners and best friends likely for the next four to five years, so choose them wisely. Also, when you start raising money, and you have your list of 10 to 20 potential investors, start with at the bottom and work your way up the list to those top 1 to 3 investors who you think would be the best. Do not be scared of rejection, each investor meeting is a valuable experience to a starting entrepreneur, so use those “so-so” investors to train you before you enter the room with your dream investors, and nail that meeting.
3. How Can I Prove Product-Market Fit?
This part is unique to each business, but I have a few take-aways from my fellowship: Narrow the product/service focus — it is always tempting to offer everything, but you need to start with literally just one thing. Second, try to narrow your market geography — you can and should aim big (like addressing the whole U.S. market), but this will not happen on day one, so start with Salt Lake City, Utah and get a solid product-market fit there, before scaling.
4. How Should I Assess and Track My Progress?
Well, the answer is data, data, and data again. You must keep track of every number that goes through your business, be it the number of page view, conversions, users (daily/monthly), sales, sales per user, LTV, CAC, churn rate, retention rate, and many more terms you should know and track on a regular basis. In business, gut feeling is good, but real numbers tell you exactly what is happening and what you are doing wrong. Never forget, that a startup is a continuously running experiment as you are testing many different things until you find that winning formula which will enable you to build a big and profitable business.
Upon completion of the trip, I had a minimal viable product ready, a detailed action plan on how to launch my startup, a strong network in both Washington and SLC, and a few potential investors who were keen to take a look at my startup after the launch. A success to say the least.