How NOT to Launch A Business

I started my first internet business a little over 4 years ago. Since then it feels like I’ve invented and reinvented it about a dozen times over.

Over that time I’ve learned everything about how to launch a new product, and even more about how NOT to launch a product.

Honestly, those learnings and failures were the most critical in hindsight. Because they were the most painful. Unhappy customers, disappointed investors, firing employees, not paying yourself, unmet expectations. That will all make you learn pretty quick.

So, if I were to start over today, here’s the steps I’d absolutely NOT follow; or in other words, the things I would do to make sure things DONT work out:

10 Steps to Launching an Unsuccessful Business:

1. Idea: Come up with your business idea without conducting any serious research and without having any relevant industry experience (you can refine it later, just having something is good enough to start)

2. Product: Then, start building out the entire product immediately, the more features the better. Make sure to over-build and over-engineer the entire thing so that it’s completely robust before you show it to a customer so they’ll take you seriously.

3. Customer: Once you’ve got the product, go out and show it to a customer. Can be any random person, all you’re looking for is general feedback to start iterating. Ask them if they like it and they’ll usually say yes, if not dont get discouraged.

4. Fundraise: Next you’re going to need some money to iterate on the product and get it in front of enough customers to make money. Now is the time to fundraise: focus on building out a beautiful pitch deck, schedule some investor meetings, and you should be able to raise $500K if you’re charismatic and you do enough meetings.

5. Hire: Now that you’ve got your funding (nice), next thing you’ll need is some developer talent to help you build out the product incrementally until customers love it. Bring on a few salary devs, can be fresh out of school from your local university (cheaper that way). After about 6 months you should have a new version of the product to show your original customers.

6. Launch V2: armed with even more bells and whistles, the new version of your product is ready for the market. This time you can try and charge money, make it a monthly subscription, don’t price it too high or consumers won’t use it. Go out and show it to everyone, no need to focus on any one-person in particular, the more the merrier

7. Marketing: No one is signing up? Don’t worry, you just need to get it in front of more people, this is where marketing comes in! You’ll want to start running paid ads, but it’s hard to know where to start. If I were you I’d pay for a nice agency to run it all for you, the higher the budget the better the work

8. Optimize: Okay now you’ve got a marketing engine, and people are actually visiting your website! The conversion rate is low, and sign ups seem to be churning quickly, but this can be fixed! Interview some customers. Ask them what they want and how you can improve. Incorporate these extra features and spend some time thinking about how to improve your onboarding.

9. Capitulate: So you’ve implemented even more features and your marketing budget is max'ed out, but people still aren’t signing up. So now you have no choice, you’ll need to cut your marketing budget and fire your developer because you need to conserve budget while you think about new ways to monetize. Maybe instead of subscriptions you can try banner ads instead

10.  Fire Sale: Okay at this point you realize the ads just aren’t making as much as you need, and you’re out of money to scale or restart, so it’s probably time to consider other options. Best thing you can do is cut your losses and sell. Either find a nice competitor to take over, or just list on Acquire(.)com and you’ll recoup a few bucks.

And there you have it.

Truth is, this is 90%+ of the startups (including my former self).

I’ve come across over the past few years. Maybe it’s just founders in the Midwest (MN, NE specifically). Or maybe it’s the byproduct of startup accelerators run by inexperienced managers. Or maybe it’s just the way things are in the 2020’s as the world evolves past the traditional VC model.

Ultimately, it’s hard to know any better. And its hard to learn without going through it all first-hand. A great VC once told me that most startup founders will get it right by their 3rd attempt; I naively assumed he meant most wouldn’t include a genius like myself.

But that’s just the way it is — the great startup filter. Now, I know what you’re asking: if that’s the 10-step, WRONG way, then how do I do it RIGHT?

That, my friends, is a topic for tomorrow’s edition.

Peacek

Ramsey