Road to my first business

[Stairs]

I am inspired by other members of thefastlaneforum.com who posted threads about their journey of building a company. I am starting this thread because my learnings might help others and it will help me to keep on track. I want to start from the beginning, that's where I am right now.

At the end of the last year, I quit my job to finally build my own company. After 10 years of professional work in the area of IT. I have tried to do that before twice but failed to even acquire 1 customer, mostly because I was working full time while doing that.

After leaving a full-time job, I freaked out and searched for other companies to join as a co-founder but I also applied to other positions, 150 in total. It was only after many interviews that I realized, I will have to go a different path. I also accidentally applied for the Early Stage VC Founder program and got accepted. The program is 11 weeks long with other smart people with the objective of forming a team, defining the problem and solution, then getting funded.

The program got started about 2 weeks ago and my journey until the start of the program was more about learning, prototyping, and market research rather than building a company (although I tried to do that). Thus far I have met incredible people and tried to build my ideas forward. 2 of which with partners outside the program, however, just very recently I realized that I can only focus on 1 thing and not more. So this is what I am going to do.

The idea is in the space of Healthtech and it's my partner's idea who I met in the VC Founder program. The questions I am trying to answer right now are:

• Do I want to work with this person for years to come?
• Is there a substantial market for the solution we have imagined?

 

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[p0stscript]

Congratulations on your first post and beginning the journey of building a company.

 

[Drwakiza]

Thank you for sharing man. Looking forward to read more

 

[Stairs]

This week started with me feeling sick (common cold) and the fact that I had a flight to another country to meet with a potential co-founder to work together for 3 days on a specific challenge and evaluate if we want to work together on the Healthtech idea.

After 2 days we realized that there was no match for us, man-cold did not help as well so I flew back. Now I am left without a problem/idea and partner. Have to start over again. Thankfully the program I am in is designed to facilitate that and there's a pool of brilliant people to match.

The big lesson to me? - Search for people first (personality, values, chemistry) and only then problem/idea and skill match. There's essentially an infinite number of great ideas to work on but a very limited number of people you want to work with. So first find people and then you'll figure out what needs to be fixed/improved in this world.

On a personal note. This process is stressful not only because I see other people around me are teaming up and moving forward but also because I am away from my family that is left in a country that is bordering Russia and my wife is stressed out about the situation. It is shame that I cannot be with them right now.

As part of the program, I still have 7 weeks out of 10 left to form a team, find a problem, solution and finally, pitch that to the VC so I am hopeful, working hard, and pushing forward.

 

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[Stairs]

My wife and kid visited me for 1 week, which was nice but also took some time away from the work. It's been very busy, I am now having parallel discussions with 2 different teams on 2 completely different ideas.

1. Two great team members I could trust my life but the area/idea (cannot be really changed) seems not to be that exciting to me
   • Helping to create more nature preservation projects/businesses
2. Two seemingly good (haven't had a chance to fully validate) team members who I haven't met in person and the area/idea is super exciting to me
   • Connecting physical commerce with the metaverse

The process of the program forces me to make a choice and right now it seems like if I choose one, I'll lose the opportunity on the other.

Following my own advice, I should focus more on people (going with 1. option) but at the same time, I am not sure if 2. option team are not as great (although it seems like that).

 

[Stairs]

So I decided to move on with "Connecting physical commerce with the metaverse", I managed to founder from 1. team to come with me. But things are messy.

• We are 4 founders in the team that I think is too many, especially because none of us are fully covering Physical domain expertise and 3D design
• The team is split between 2 different countries, which makes it harder to collaborate
• Some Founders seems not to be fully prepared for the worse times (that might happen) in terms of the short personal runway and wishful thinking
• Not everyone seems to be equally hard-working
• My family (wife) is having a hard time being away from me, even with some signs of depression. In full honesty, I don't know if I could help enough when I will be together with them. How do I build a successful company while being a good partner and father?

All these things put together creates a lot of dilemmas and stressful situations. Right now I will deal with them as I usually have, one by one, plan out actions and prioritize the most important ones.

 

[Stairs]

It's been quite an amazing 2 weeks working on the "Metaverse" idea. We continued with the same team and traveled to countries to have the possibility to work together.

Updates

• Family - my wife is having hard times without me and I realized that I made a mistake by traveling away again. It's painful to hear her going through very emotional and stressful times so I decided to fly back to support her and work from home. For the startup, there's no big impact because our team right now is anyway split across 2 countries.
• Team - my worries about having 4 people on the team turned out to be not that important. Every one of us is contributing in a very unique way and without that person, we would not be an effective team, this is how I feel right now. That being said, I still see some people working harder than others but now I start to realize that our contributions and working styles are different and that is ok.
• Startup - we got verbal commitments from 2 customers and soon plan to get them to sign a letter of intent. We are B2B. The best part is that it was super easy to sell and they are super excited to get us to deliver the value. The second best part is we can deliver value within 2 weeks or earlier.

Next

• Incorporate
• Get signed at least 1 letter of intent that includes minimal delivery and subscription fee
• Put together an early version of POC
• Do a proper addressable market research
• Get some bigger customers on board
• Adjust business model that would take into account the value-added for customers big and small

 

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[Stairs]

Side note, it's extremely hard to be disciplined when away from the home environment in another country. I am talking about workouts, wake-up/sleep cycle, healthy food, productive work hours, sticking to plans, etc.

It's almost as if mind and body go into "it's just temporary" mode, although for me it was 8 weeks with a little break in-between. My health for sure suffered in this period and I am looking forward going back to home (writing at the airport).

 

[Stairs]

Funding. Things moving forward, yesterday talked with our first VC that I actually tried to raise money, and things looking good, however, remember the program we are in? We signed a contract that we need to give the first hand to the VC program we are in (6 months from starting date) and if we'd follow this program we would give away the same stake for >10x less cash. We are looking at how can we get around it.

Family. Little improvements but still hard to understand how to get out of bad moods, and emotional moments for my wife. It's not directly related to the startup I am building, but it definitely affects the progress.

Team. So I am a technical founder of all 4, the only person who is building a product, yet I am spending time working on Pitch decks, designs, organizing stuff, following up on activities, and looking for VCs. Some things I just don't see being done by others with the highest quality possible, other things I don't see being taken care of at all, even if it's an area of their responsibility. At this point, I don't know if it's me or if there are problems with team dynamics. I don't know what would be the best action onwards from my side. I have tried to address that to the team, while I receive agreement and short-term improvements, things don't necessarily change in the longer term.

 

[Stairs]

Funding. Now, after talking with 10 investors, we have an indication that our market value is 4-5m, although no one is at the stage to provide funding. That's mainly because we only have had intro discussions with them. Besides, we cannot raise any money right now because of the contract we signed.

Team. Well, nothing is perfect. Plenty of improvements are needed and the speed we are moving forward is too low. Having 4 founders is not helping after all. However, we have to make it work. Splitting up the team right now would be very dangerous. Also, I don't think that the best way to split the shares would be 25% * 4 because not everyone's contributions, risks, capital investments, and critical skills are the same and that should be considered (at least in my opinion).

Customers. We have only 1 Letter of Intent signed by a small customer and with them, we are working together to deliver POC, right now we have completed 1. phase out of 6 phases. Another customer is lined up to have the same POC process. We could onboard ~15 customers per month if we would have capital invested, but we don't have yet created sales pipelines to support that.

Product. It's easy to sell the product, however, we are still looking for a product-market fit because we don't know if we are going to be able to deliver the promised value (it's tricky). We might need to pivot and most likely we are going to fail with the first customers, we learn as we go. And that's ok.

 

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[Stairs]

Been some time since my last post. We are moving forward, but it always feels to me that we could be moving faster.

Team. Now we are 6 people (4 founders, 3D Engineer, FE Dev). I have never appreciated more my network that I've built over time in real life and in LinkedIn than today. Remember that random Hackathon that you attended and met a random 3D Engineer on your team? Now he is working in your startup. A similar story about our FE Dev. Amazing world.

Funding. Our pipeline is growing, we are securing 2nd meetings with more investors. I have to admit that I thought raising would be easier for us. Initially, it seemed that everything is developing fast but then you realise that there are no offers on the table. The reason is, that VCs are using non-direct language to always keep doors open, which makes it hard to navigate the space. That being said, we have VCs that are really passionate about what we do but we haven't found the perfect match for what we are looking for.

Product. Unlike many other teams, we are only now getting into the active development phase. And there are 2 reasons for that. I first wanted to make sure that we know what we need to build. Secondly, our idea allowed us to start working with customers before the product is there at all.

Customers. Ok, this is clearly our pain area right now. We started with "wow, it's so easy to sell the idea" and now we are at the point where we are struggling to convert customers from the onboarding phase to paying customers. The major reason is the fact that current customers don't necessarily understand the space (they are excited tho) and that means we have to work very closely together with them. Our solution is enabling them to enter Metaverse but what happens when you are there? - you have to create content, work on your social media presence, etc., and for example, small customers have no clue how and why to do it.

Overall things are still relatively positive but I have a ground feeling that if we'll not raise enough within 2-3 months to ensure a runway of 12+ months, we might be in trouble to grow.

 

[Stairs]

Ok, what happened in 1 month? At the time of writing this, things are looking brighter, maybe it's just summer.

Funding. This is easily our biggest pain point, not because we are doing badly but because our expectations were way higher. We were hoping to close by end of June but instead, we are still looking for someone to start due diligence. So far only one VC did that and in the end, they said no. Now we are hoping to close by end of summer. On the bright side, now we have products to show and explain to VCs.

Product. It's been around 1 month and we have done quite a good job on development. We have a platform that we are planning to onboard first test customers within 2 weeks. It's for sure something that I really enjoy doing. The building is my thing but I also try not to carry away with that because building without reasoning and business foundations would lead us to failure.

Team. Not much happened in this area, however, we are about to hire all the people I mentioned before full time and we just onboarded our 7th team member that will work on the Domain and Creative side of the things. Besides, I am actively looking for developers but it's extremely hard. Not ready to involve recruiters as well. The number one worry I have is, that if we don't find funding until October and hire as planned, we run out of money, and then it would mean that we need to burn our own cash. As for the core team, I am getting more comfortable working with them. Still many improvements and changes I'd like to see but I wonder if that will be always the case.

Customers. So we are about to book our first revenue. Unfortunately not from the subscriptions but from the POCs that we are going to do with the first customers. Existing POCs turned out to be very good for learning but not so much for traction as they haven't opted in to pay yet. The reason is that they are not the customer persona we were looking for, on the bright side, we have a much better understanding now of who is our customer.

 

[Stairs]

I just reread what I wrote before and realized that it sounds like we are doing great. Not at all. We are just about to complete our Q2 review and we have not achieved any single objective that we set out to get done. Not the funding, not customers, not tech, etc. And in some areas, we are not even close to where we wanted to be. On a team level, we are doing better and I see team members contributing more, however, things are far from good as we are still figuring out our product scope and customer persona. These things are moving much slower than they should.

 

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[heavy_industry]

What are the biggest challenges that you are facing right now?

Why haven't you reach the goals for Q2?

 

[Stairs]

What are the biggest challenges that you are facing right now?

Why haven't you reach the goals for Q2?

There are many challenges but I think that all of them boil down to a product that we can build and its market fit that. Fundamentals really. Speaking of goals, we started Q2 as a less than 2 months old startup and I guess we were too optimistic about what we can achieve.

 

[heavy_industry]

There are many challenges but I think that all of them boil down to a product that we can build and its market fit that.

I'm sure you've already planned those things out, but usually it's the market need that you have to identify first. Then there's the product which is tailored to solve the need/problem that the market has.

Good luck!

 

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[Stairs]

Still raising. Haha. Got a 58% round covered by investors but the remaining 42% seems to be far away, although, we have some ongoing discussions with VCs, there are very few, and does not seem to be likely to cover our round fully this year.