Building a business is like building a settlement in the wild. The founders are the settlers. There’s a risk to be eaten, but they’re driven by the mission. Only after you have cleared some initial bushes, the migration of additional people will start and building will continue. We founded our business with 3 settlers of which 2 started full-time in 2017. By the end of 2021 we’ll be with a 24 headcount – our village was born.
You don’t start with a fancy city with skycrapers and an underground. Your fist shed will be very basic. Just enough to get started. Let’s call it the minimum viable structure (MVS). Many young founders get confused when thinking about the fancy place and talking to settlers that already live in cities. The first years can be raw and the contrast can be big: all you see is the bush, while they’re in the metro. I wanted to write this article to remove some of the confusion and panic that might be associated with starting up.
Everybody goes in little steps and starts in the bush. I’ll highlight some of these steps, categorised in:
- The foundation of the settlement
- People in the settlement
- Resources in the settlement
- The business plan for the settlement
- The structure of the settlement
The foundation of the settlement
When you start out as a founder, you have a lack of knowledge, experience and money. But you have something that others don’t have: your belief in your mission and your values. With those in your backpack, you enter the wild.
Before you settle, you’ll have to think about your mission and values and what will make your city unique. Write it down. If not, you’ll face big issues later. For example, it will be very hard to hire your the first people and you’ll make very costly mistakes. Compare it with the settlement: it’s very hard to move a village when people are already living there.
It means: literally writing them down, talking about it with your co-founders and taking the notes with you in job interviews, when talking to initial customers etc .
While you have time to erect buildings and put fancy infrastructure in place, you only have one chance to lay the foundation of your business. You can rebuild buildings. You cannot rebuild your culture and mission. Don’t screw it up.
People in your settlement
Remember, not everyone wants to settle in your settlement. Some never will. Others will wait until there’s more infrastructure in place. The ones your startup/scaleup initially needs are a special breed of adventurers that are inspired by the situation. They don’t mind clearing a bush our two with their bare hands themselves. They might not be the most sophisticated managers, but they know how to get work done and put out fires. In a later stage, you might want to attract some people that know how a great city looks like.
Also remember, you don’t want just anyone to settle in your settlement. Only the ones that match your values should be let in. Especially in the beginning you will have to look for close to a 100% match. Later it might go to 90%, but never go to 70% match. Lately I had been listening to my favorite episode of my favorite podcast: Masters of Scale. There’s a specific reason why it’s often smart as a founder to be involved in the hiring of the first 100, 200, 300, … people!! Here’s that specific episode.
1. The founders are the ones that can live with the fact that they might be eaten in the wild. They start clearing bushes when there’s not even a hut to live in.
2. The first hires are true adventurers. They don’t mind help clearing bushes and erecting basic structures.
3. Later, more risk averse people will join the ride. They might come from other cities and have a good view on how a city works.
Resources in your settlement
Just imagine yourself in the bush. Likely one of your top priorities will be to hunt for food as soon as you can, while you’ll spend the remainder of your time on clearing just enough bush so you can have a hut and some shelter. You’ll keep your spending as low as possible while securing a basic income.
How these resources are secured and spent is of course very case specific. For example, there’s a big difference between external capital and organic growth, or the expensive development of a product vs a service. But I think for every business, this key lesson applies:
1. Try to generate income (cash) as soon as you can. Without income, you are burning resources. Be creative about how you can be of service to the market.
2. Spend your resources wisely. Get your own hands dirty and use creative ways to get lots of stuff done very cheaply and fast.
As an early business, don’t underestimate your negotiation position with your suppliers (eg software suppliers, …). In a first instance they want you to succeed and grow, in a later phase they want your money. So negotiate well. Also, don’t underestimate what you can do yourself. You don’t need photoshop. Use Gimp. You don’t need Illustrator, use Inkscape, …. get your hands dirty and go through the mud. You don’t need a 5k logo. Your dirty hands will allow you to judge quality in a later stage when you start delegating or outsourcing to others.
The business plan for your settlement
In my opinion, when you start an innovative business, you have no clue about the market. When you start, you have no idea what your best offering would be because you don’t know the key pains in the market. So it’s nearly impossible to write a sophisticated business plan that matters. You can spend days and weeks on it, but you might have to throw it away 6 months later.
Again: when you need external funding from the start, you’ll need a business plan. But if you don’t, I don’t think you need a sophisticated plan.
There’s only one way to find out how your offering should look like: get out there and talk to the market, talk to your potential customers and take notes. Lots of notes!!
There’s only one way to find out what the market wants: take a notebook, go to key events or get your phone and ask lots of questions. Write everything down like a freak. You’ll uncover patterns.
Immediately thereafter, start offering basic things to the market and look how they respond. While this initial market development is key for your future business roadmap, this validation is especially important for your belief in your own mission. You’ll need confidence to proceed.
In the early days of the business, right after you made that jump, you’ll need to learn as fast as possible. The speed is not only important for your cash etc. It’s especially important for building self-confidence fast. This self-confidence will act as a flywheel.
After the initial stage, you can start with a sophisticated market analysis to quantify your total addressable market etc. By then you might have people in your team that can do better than you.
My point is: first validation and getting with your feet into the market is much more important than an initial desk market study from behind your computer.
The structure of your settlement
Every company needs tools (eg a CRM, project management tool, …), KPI’s (key performance indicators – compare it with the arrrows on your car’s dashboard) and strategic initiatives. But here’s the thing: your first focus should not be systems. Your first hut can be a very ugly one. At least, you’ll have shelter.
Buildings can always be extended, rebuilt and demolished. Your initial buildings are just few anyway, so put some temporary ones in place.
Not overthinking in the structures initially will keep your focus on the market development. However, when the migration of people of your settlement starts taking off, you’ll need to go to structure building very fast. For example, when you still have to start building workflows when you reach 20 people, it is very very late and painful. The transition from almost nothing to more structures can be very fast. Structures also include developing other business pillars such as HR, finance, …
Conclusion
The goal of this article to put some people at ease and with their feet on the ground. I think it’s very hard to build a business without making your own hands dirty. Everyone starts small. Learn from the people that built cities, but don’t get intimidated by where they are. Think about the thing you have: your mission and values – how you want to change the world for the better.
With this, I would like to thank my fellow settlers and adventurers, together with our fantastic clients and partners.
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