How to Avoid the Three Startup Danger Points

I’ve communicated with hundreds of startup founders over the past three years, and I’ve begun to notice a pattern.

There are three points during the creating of a startup where the founders are most likely to close up shop. I call these the “danger points” and this post looks at how to avoid them.

Point #1: Choosing a Product Idea

There are three types of people: those who understand binary and those who don’t. No, wait…that’s a different blog post.

There are two types of people: those who are impulsive and those who over-analyze decisions. If you’re impulsive don’t worry about this point; you’ll have no clue what it’s about.

But if you tend to over-think your decisions, then choosing a product idea is going to take months…nay, years. That’s right – odds are high that by the time you figure out what you want to build you could have built and launched multiple products in the same time frame.

This is because committing to a product feels like a permanent decision, and a decision that’s easy to screw up.

While there is a limit to what you can “know” about a product idea before you start building,  if you do your niche research you can eliminate much of the uncertainty that goes into choosing a product idea (Pamela Slim talks about finding a niche here, here and here, and Mike and I have a step by step approach for finding and testing a niche in the Micropreneur Academy).

While you’ll never remove all uncertainty, you can remove enough that making the niche decision is a bit more clear cut than the dart board approach you’re using now. Niche research can make a world of difference in your confidence level as you start writing code.

Point #2: Two Months Into Development

Around the two month mark you will hit a dip. A big one.

You’ve spent every evening and weekend for the past two months and you’re barely making progress. And with the feature list ever-expanding it looks like you won’t launch for 8 months (or more). This is a common cause of death for small startups.

The first way to combat this milestone is to have a detailed feature list and an estimate for every task on that list. This list should include marketing tasks and anything else you need to get through your launch date. This list will be large; likely 80-120 lines long.

With an estimate for each item you should be looking at 400-600 hours total. For everything.

If you’re over 600 hours you need to cut something. Unless you have multiple, commited founders each working 10-15 hours per week on your product, you will not make it to launch if your total is over 600 hours (well, there’s a chance you will make it to launch, but a very small one).

This means cutting features. It’s a hard decision to make, but the quickest way to reduce your total hour count is not to “get faster at writing code” (I say with the tone once used on me by a manager), but to push features to v2.0.

The other approach I’ve mentioned before is to outsource. Even outsourcing construction of your sales website, or the HTML/CSS conversion, or copywriting can remove 20-80 hours from your time line and dramatically increase your chance of making it to launch day.

Point #3: One Month After Launch

The main reason someone shuts their company down after launch? They thought it would be easier to make sales.

They thought people would flock to their idea, fumbling for their credit cards the moment they heard someone had developed a re-tweeting cloud app for Facebook fan pages. But alas, being heard above the din of the internet is a tricky thing. Ask any startup founder.

No, the first few months after launch are extremely hard unless you’ve planned your launch well and identified the number one goal of your website. It’s not to sell your product…it’s to get people to come back to your website at a time in the future when they are ready to buy. This is most commonly achieved through a blog, podcast, or email list.

This is off the radar for most developers – most of us just want to write code and sell it to people. Oy, if only it were that easy. (I’ve written an entire section on the “#1 goal of your website” in my upcoming book, Start Small, Stay Small: A Developer’s Guide to Launching a Startup).

The bottom line here is to take your launch seriously, as seriously as you’ve taken your product development.

A successful launch will provide motivation to continue during the rough months ahead as you begin to support your product. Having an email list to notify on your launch day will result in your best sales day ever. This is the proper way to launch.

The wrong way is to assume that emailing bloggers the week before you move your website live will drive traffic that result in sales. Or that you’ll make hundreds of sales using AdWords. AdWords are good, but you’re not going to make a big splash on day 1. They take time to hone and become profitable. Same with SEO.

The marketing arsenal of a small startup should include all of the above items, but most of them take months (4-6 or more) to become profitable. If you want to turn a profit quickly…concentrate on building an email list for your launch.

The final aspect of launching well is having the right expectations.

A Micropreneur emailed a few months ago asking how he could sell six figures worth of his product in the first six months. He’s been following the edge cases too long…reading Fast Company and watching Balsalmiq (a great product, just a very atypical first year for a small company).

I let him know he would be better off if he adjusted his expectations and shot for $6k in revenue in the first 6 months. Sound low? It’s more than the vast majority of launches I’ve seen in the past three years. But once you make it past that first six months, that’s when things get interesting.

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11 comments ↓

#1 How to Avoid 3 Startup Danger Points | Help a Startup Out on 05.21.10 at 2:02 pm

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#2 Sean on 05.21.10 at 2:30 pm

Hi Rob,

Nice post. If building a good email list is the best bet for a successful launch, what are the top 3 tips you can recommend for driving pre-launch opt-ins?

#3 Rob on 05.21.10 at 2:32 pm

1. Have a professionally designed page with a single call to action…nothing else to do on that page but sign up.
2. Give something away, a free PDF doc that relates to your startup.
3. Offer a unique deal if they sign up to be notified at launch.

#4 Sean on 05.21.10 at 2:56 pm

Awesome, thanks Rob. I suppose the real challenge then is getting folks to your signup page in the first place. Mint did a great job of driving beta signups by leveraging tons of linkbait content on their blog. Do you think it’s a waste of time at the pre-launch stage to a/b test your signup page/offer with a tool like Website Optimizer?

#5 Rob on 05.21.10 at 3:00 pm

I wouldn’t say a waste of time – it’s always worth A/B testing – but if you’re heading to launch you probably have things that are more important (such as completing your product).

I do a lot of A/B testing in general, but as a rule I do not A/B test my signup pages.

#6 Joel on 05.21.10 at 3:43 pm

Just thought I’d leave this here, as your first comment reminded me of it.

http://line25.com/articles/5-seo-tactics-that-make-you-look-like-a-douche

#7 Rob on 05.21.10 at 3:49 pm

Nice.

Actually, that first comment was a trackback from another blog. But indeed – I see many blog comments with keyword-infused names.

#8 links for 2010-05-22 « Daniel Harrison's Personal Blog on 05.22.10 at 10:01 pm

[…] How to Avoid the Three Startup Danger Points | Software by Rob Definitely see point 2 as biggest risk personally. But solvable. (tags: startups entrepreneurship) […]

#9 How to Avoid the 3 Startup Danger Points | [StartupDigest] Classifieds on 06.16.10 at 3:11 pm

[…] Choosing a product idea, two months into development, and one month after launch:http://www.softwarebyrob.com/2010/05/21/how-to-avoid-three-startup-danger-points/ […]

#10 What the Beatles Can Teach Us About Starting a Company | Software by Rob on 08.25.10 at 6:34 am

[…] I’m not a believer that you have to love the startup idea you’re working on, but you do need to love the process of starting up…the excitement of breathing life into a new idea. Otherwise you’re going to close up shop at the first sign of a danger point. […]

#11 Is 600 hours the length of an idea ? « GrownSoftware on 11.21.10 at 7:42 am

[…] The “startup for the rest us of” podcast seems to consider that beyond 600 hours you are…. Is 600 hours the length of an idea in an average mind ? […]