Once in a while, I would have the pleasure of being invited to give talks to aspiring and current entrepreneurs. During my talks, I usually cover what it takes for an individual to succeed or at the very least, know what resources he/she should have before jumping in.
One takeaway that I’d share is this triangle that I lovingly drew in MS Paint:
In fact, if you understand this triangle, you’re done for the day and you can stop reading.
For the rest of you, this triangle outlines what resources an aspiring entrepreneur should have before considering founding a startup. Undoubtedly, there are many factors that go into building a successful company, but I have distilled these three things for consideration, at least at the individual’s level. As a founder, you should have three of these things, or at least a minimum of two.
What do they mean?
Sales/domain: knowledge of the vertical that you’re addressing, and the ability to sell that idea. I decided to lump these two because domain knowledge and the subsequent ability to sell are closely related.
Tech: knowledge on not only the area itself, but also how to code for it. Knowing the tech on the surface level doesn’t count (I’m looking at you guys, blockchain “experts”).
Money: The lifeblood of anything in this world – $$$. I keep $ vague because it’s very hard to gauge how much you need at the minimum.
In the rough order of increasing desirability, we explore the possibilities when you possess combinations of these three things. Like any pieces out there, this article is not 100% prescriptive and does not claim to address everything you need to have before doing a startup.
But I think this provides a good mental heuristic to think about whether you have the required parts in yourself to start up properly, and to manage your expectations for your journey ahead.
1. Sales/domain only
It is said that the ability to sell is the number 1 skill that entrepreneurs and CEOs should have. Generally, that’s not a wrong thing. But if you only know how to sell, you’re in for a rough ride.
Here’s the thing – you have big ideas on how to solve problems in your domain. You go around, pitching and selling that dream. However, there is only so much you can do by selling. The main challenge is, after you sell you’ve no idea how to build it. All you can do is flail your hands around, lament the lack of talent available to build what you want, and advocate for your idea/product/solution/vision. Most of the time, you see these people milling about in networking events and looking for their tech co-founder. Or trawling CofoundersLab looking for someone.
Even if you do secure a tech co-founder, chances are that you’re going to lose him/her soon after, usually from miscommunication and mismanaged expectations – your co-founder’s of you, yours of your co-founder, and the product that you want him/her to build. I’ve seen enough companies crumble before even first flight because of this. I knew of people who spent years looking for people with tech and/or money to fund their idea, without any validation nor MVP.
The thing about being only sales-oriented is that once your technical workforce stops working, you’re stuck. Without technical expertise to continue, nor the money to fund your operations, you will find yourself never moving past square one.
Anyone can form an idea, but to execute it is another whole matter altogether.
2. Tech only
“Build it and they will come” is your mantra. That line came from a movie, and it should have stayed there. In reality, nothing can be further from the truth.
Being technically inclined comes with the constant desire to build. In addition, the danger of being a purely technically oriented individual is that you will inevitably commit the gravest sin of starting up – building without validation. According to CB Insights, the top reason for startups failing is having no market need and is usually caused by the premature building of a solution. In addition, without the ability to sell not just the product but also yourself, your product will be left on the shelves.
Again, I’ve seen enthusiastic and technically capable individuals build things and then moving on to the next shiny thing after encountering stumbling blocks and frustrations with potential customers and/or users. I have also seen builders build websites and products and claim that their products are the best when there is absolutely zero use case for it. It’s very hard to build something first then find a reason to sell it because it’s fundamentally putting the cart before the horse.
On a side note, where to find these individuals who are purely technical? They’re pretty much hidden. If you’re lucky, you can find them on online forums. You can also find them milling about during hackathons, looking for a team so that they can build build build.
3. Money only
If you have nothing but only money, lucky you. You could be a Scion, an oil sheik (call me if you are either), or an ex-banker. This is a very enviable position since money solves a lot of problems when it comes to filling gaps in people or technology.
If you have half a million lying around, just hire people to do your work! The only thing is hiring poorly and engaging mercenary individuals who are working for you only for money.
Alternatively, instead of starting up, do consider being an angel investor. Not that founding a company and being an investor are mutually exclusive, but you’d bring more to an ecosystem that’s constantly hungry for money. Think about all the starving entrepreneurs.
4. Sales/domain + Tech
Now we’re talking. Your chances of making things happen to improve when you possess two of these resources/skills from the triangle. Let’s start with having both technical and sales/domain skills. In this case, you can be either a domain expert who learned how to build or a technically capable person who decided to dive into a vertical after extensive research and domain expertise acquisition.
One of the things I advise non-technical founders is to get acquainted with being technical while validating the idea using some low-fidelity prototype like a landing page and Google Forms or Google Sheets. It may come as a surprise to you, but your product doesn’t have to be perfect in the beginning. Early users are very forgiving, especially if you’re new on the block.
Incidentally, it’s also a piece of advice that is usually brushed off because of the sheer amount of effort and time that goes into learning to code. Think about it, because it’s hard no one else will be able to replicate what you can do as a person.
You’d also be an elevated breed of founder if you manage to be both business minded and technically competent. Even if you do not end up doing development work full time, you’ll be able to contribute to your company’s technical vision and communicate well with a tech co-founder.
I dare say that having the ability to sell your idea and being able to back it up by building it improve your odds of surviving the early phases of starting up.
5. Tech + Money
This is a rare combination, and is usually more common in Silicon Valley, where engineers who were given equity cash out and get literal millions. The advantage of being technically competent with money is that you can start hiring immediately to make up for the lack of domain expertise and other gaps. In addition, it’s easier to pick up domain knowledge than to pick up technical knowledge. Random fun fact: the CEO of Quora, Adam D’Angelo, was formerly the CTO of Facebook.
6. Sales/domain + Money (Bonus personal stories inside)
This is a potentially powerful combination. For example, you might be in your 30s, after years of being in a particular industry in a senior role. Armed with money and increasing restlessness in your professional life, you seek to make a difference in your vertical. What better way than to start something yourself and Change Things Up?
I’d still highly recommend this person to be intimately acquainted with coding first before venturing outwards. You don’t know what you don’t know after all. That said, while you’re not acquainted with tech, you do have that one major advantage – money. With all that money, you can now hire someone to build your product. If you’re careful and choose the right people, you’ll make it.
Otherwise, when you run out of money, so does all of the development work as well. Two fun personal stories to share which are also instructuve.
In the early days of my startup, my co-founder and I met the CEO of an insurance agency, in hopes of onboarding his company as our customer. Instead, he casually mentioned that he was building something similar to what we did and that we should quit and join him instead. Of course, we politely declined his offer and parted ways.
This was not a simple decision – he was, after all, more experienced and way richer than us. The only difference was that my co-founder and I built everything in-house whereas he outsourced his development work. Long story short, we succeeded where he did not and he eventually had to pivot to something else because of how quickly we responded to users and customers. My story could have gone differently if he was more technically oriented and did not have to depend on outsourced work.
Also Read: Women in tech: A global evaluation
In addition, I also encountered a competitor that was almost a carbon copy of my site. It was a promising competitor as well because the founder had a domain advantage over me, i.e. he was more acquainted with the space than I was, but he was not technically competent so he spent his money on a lot of outsourced tech help. When he stopped pouring money, so did the site and eventually it just died.
7. Sales/domain + Tech + Money
The most amazing (and rarest) of all – having all three resources at your disposal. If you check all three parts in the triangle, you have the business acumen and domain expertise to identify problems worth solving, the tech knowledge to build and design solutions, and finally the money to kickstart and grow the company. You’d be a force to be reckoned.
If you feel what I said resonated with you (and hopefully inspired you as well), it’s time to reexamine your current resources and how you can improve yourself to reach the next level. Sure, it’s definitely hard to get the “money” part of the triangle in a short time, but you can definitely develop the other two resources, given enough time.
Whoever is reading this, keep going – you got this.