First Time CEO – The thrill and responsibility of building a business from nothing

There are few things in life that are as exciting as the path I’ve walked to build a company from nothing.  Having built small little businesses from as young as I can remember, and specializing my business degree in “Creating a Company” from idea to revenue, it’s safe to say I have a knack for starting things. On a divine note,  I see my opportunity and privilege as responsibility to steward, like a gift. Everything from:

• the skills and gifting’s God’s given to me from birth and helped me develop
• born into a position of cultural privilege (more on that in a later post)
• the great idea to start with
• and the team of founders, employees, investors and mentors to build it
• and did I mention my amazing wife for building up the next generation of God-honoring, entrepreneurial Lowndes kids?

For those of your who are who are considering building a business, you should know it’s hard. There’s a reason why 98% of people work for the 2% that work up the unction to build something and run it. But take note that I couldn’t not write this post without God’s sovereign help and the support of a large supportive, community along the way.

So what’s so thrilling about building a business from nothing? Without writing an exhaustive novel on the topic, I’d like to share some key things CEOs must wrestle with in building a technology company.

The Idea

Great companies come from great ideas. Being observant about the needs of a market you care about is key here. A good marketing friend of mine once attempted to come up with a list of 100 problems, pains or challenges related to parents caring for babies. As much as possible, try to pick something that energizes you, or gets you excited. You’ll need some motivation that will help you persevere when times get difficult.

For me – I love the idea of helping people not waste money, and get more out of all the money they’re spending. I hate waste and promises that fall short for something I bought. (turns out many customers of SaaS products aren’t getting what they’re paying for – it’s a travesty!) – see my passion there?

Co-Founders

Once you’ve found a problem worth solving, before you validate it, you should put some feelers out to your network and see who might want to help you validate the idea. Ecclesiastes 4:12 “Though one may be overpowered, two can defend themselves. A cord of three strands is not quickly broken.” If you’re building it by yourself, it will be hard to keep the momentum going when things get tough.

For me finding a co-founder who loved Jesus was really important to building a company that honors God. Besides, I’m going to mess-up, mistreat customers and employees and be tempted to take stupid shortcuts and I need a brother/sister at my side to hold me accountable. Finding someone you respect and trust matters. You should function as sounding boards, cheerleaders, and partners in the hustle. Also, the “built-it, sell-it” combo works well for a co-founding duo, meaning one focused on technical stuff and one focused on sales/business development stuff. Both, however must be equally committed to creating success for the customer. It helps when each of you have equal amounts of time and skin in the game as well.

Validation

Back to my marketing friend: he wisely whittled down the list of pains related to baby care to the top 10 ideas and then tested them. If you’re not solving a problem people are willing to pay for, people will say things like: “huh, that’s interesting.” Try to find a product or service that truly excites people – something that changes their day-to-day or a major part of their life. How do you find a problem worth solving? Go interview 20 potential customers of this product/service – yes 20 – and focus your questions on the problem you’re solving. If you focus on the product/service, you’ll taint the responses and won’t get an accurate read on their interest for a pain.

Asking open-ended questions is key – trying not to lead people to your specific product/service idea. The more you ask you’ll learn, refine, maybe ditch the idea completely as a result of good interviewing. Good ideas worth dumping capital, and weeks/months/years of your life are validated ideas. There are whole blogs, books and even companies that help you work through this (startuprocket.com is a good one), so dig deeper on this.

The Early Customers

Once you have your validated idea, you also have a set of early potential customers you’ve interviewed. The exciting thing here is asking for pre-orders. When building VendorHawk, we had our first two customers pay us before we had even wrote the first line of code (I was demoing interactive wireframes). Getting pre-orders in advance of your launch (say 2 or 4 months away) is powerful because these customers become your sounding boards for building something they actually want. One entrepreneur said to treat early customers like a newborn baby. Pay close attention to their needs, what they want and do everything you can to keep them alive and healthy – you’ll learn a lot. Really serve them.

I’m reminded of an ancient Rabbi who once said: “Greater love has no one than this, that he should lay down his life for one another” – how are you serving your customers to get them to success?

The Product

Once you have some early customers who have paid you some money in pre-orders, it’s time to build the real MVP (the minimum viable product). This has been one of the most fascinating and exciting parts of building VendorHawk. When building an existing product, you can basically build the same features in your competitors and aim to make meaningful improvements that people will switch to your product.

In my case, my co-founders and I built a product for a new category altogether. The hardest thing here is to rigorously collect as much data as possible to figure out the difference between signal vs. noise. With only 5 potential customers it will be hard to understand where the trend lies. Our team did our initial 20 interviews and then continued to throughout the early stage of the product until we reached 100 interviews (many of which were interviews plus product demos).

Constant Re-prioritization of Needs

One of the hardest things in building a software startup is the constant and growing backlog of ideas and features we could built. An advisor of ours reminds us to put things on the ITINDY list (“i-tindy”) – Important Things I’m Not Doing Yet. Setting up a few Trello boards helps you keep the big picture (Roadmap) separate from the next micro-steps in your engineering operation, which are the bite-size cards that build a value-delivering feature.

The CEO’s Hat Wardrobe

Probably one of the most attractive parts of building a company was the chance to execute in a bunch of different roles, all at the same time. Someone once shared with me that multi-tasking has been scientifically disproven – that no one can actually “multi-task” (doing two or three things at the same exact time). It’s the ones who can quickly switch back and forth between tasks that makes this hat-juggling exercise more successful.

In our company, as a CEO, I’ve worked out with co-founder, Brian (my CTO) the things he’s good at and what I’m good at besides our core value add, which was me in selling, and him in building. Watching cash closely, forecasting where the ship is headed, how the vision is communicated to investors, customers, and the team are things CEOs should lead in the early days. I do sales/marketing tech, customer success, HR/payroll (part of cash), taxes, occasional party planning, team development/recognition and recruiting and “strategic  stuff” or dealing with those unplanned fires that need more attention. Dividing the work with co-founders and early team members is worth it’s own post for some other day.

The Need to Move Quickly

Since new SaaS products have low barriers to entry, without highly regulated barriers, or crazy patents, the two things that are critical for success are speed and knowledge of the customer. When combined, the feedback loop shrinks and you reach product-market fit faster, while building your brand and customer base along the way. Be forewarned: you’ll be tempted to take short cuts! You want to ship he product before it’s “ready” to make adjustments as you iterate, but you don’t want to be so minimal that you never actually solve the problem the feature was solving.

A great counterbalance we introduced to moving quickly is our core value of “Excellence”. We like to find a healthy balance of tension between the “need to be perfect” and what’s “good enough for now.” This is especially important for complex enterprise apps that require diverse feature sets.

Continual Learning

Speaking of tension, how about the challenge of switching between “learning mode” and “teaching the market” what you know? Journalists are great at this: They are always talking with experts, both learning new insights – while using their questions to show their knowledge and own thought leadership/opinion on the topic. It’s quite the skill when you’re creating a new space. The posture that thought leaders take is one of being continually inquisitive –  the lifetime learner approach. Share insights as you find patterns, but also get good at finding experts in the field and drawing out their wisdom (even using it for marketing content). Just look at what many podcaster’s do who constantly interview pundits and experts.

On the flipside, startup CEOs must spend a good amount of time learning from their current customers. Ask the hard question: what measurable results have I specifically driven for my customers? If you’re not creating success, you need to learn why. I think the CEO must be the chief learning officer, and your team should mimic this as well. At VendorHawk we call it, “Hungry to Learn”. When everybody learns and takes time to share learnings in a weekly or bi-weekly meeting, you can move more quickly.

Casting Vision for the Industry, with Stories & Stats

If you’re doing a good job listening to customers, you want to talk about it. However, it’s healthy to step away from the problem you’re solving. Observe the most basic question businesses are trying to answer: What do people want? You might do well to ask why 5 times to dig past the symptoms to the root cause. As CEO, you have that fun role of bridging the gap between what is and what could or should be. Telling stories that people can relate to is a powerful way to do this, separating you from the Adding your voice to the current industry jargon

Almost as if it’s a whole separate job, having an opinion on the hot topics your industry cares about is critical. The more you use stories from customer conversations coupled with industry stats you’ll hit both points of credibility (on the macro and micro scales). President Obama was great at articulating in these extremes to make his point both authoritative (macro) but relaeable (micro). There never seems to be enough time in the day to learn, so picking the major things is a good start.

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These are a just a few ways I’m reflecting on what I’ve learned. I want to leave you with two reminders: 1) I’m definitely not an expert of any of these areas and 2) any progress or insights or wisdom I’ve expressed have purely been by God’s grace in action – working through mentors, investors, other co-founders and friends along the way. He is abundantly gracious.