The 3 Big Struggles Early Stage Startups Will Face
I have spent the past couple of years working closely with early stage startups. Both my own and with others that I have consulted with on a temporary basis. Most of the time I’m brought in during the more hectic periods of a startups life cycle, typically when things aren’t going as planned and the founders can’t quite figure out why.
I commonly see the constant feeling of struggle that permeates the environment of an early stage company. Everyone is struggling. Either with their co-founders, employees or with their clients or even with themselves. And their product is sharing in all of these stressors daily.
I myself faced these exact same issues when running my first startup as CTO years ago, so I can relate all too well to all of my clients concerns and challenges.
So today, I want to break down a few of the most important things that have stood out during the past few years when working with these companies, just in case you ever find yourself on a sinking boat without a paddle. And perhaps, you can even catch many of these issues before they escalate into something bigger and end up costing you your potential billion dollar idea.
Everyone is going broke
Some companies start out with healthy budgets, so while not broke today, they are working their way towards it and they probably will be closer to the breaking point in 5 to 6 months. But if you aren’t making money, then you are more than likely losing money because every day there is something that depends on some form of compensation. You might have employee salaries to contend with or you might have expensive servers that need to run around the clock or you might have expensive subscription service bills.
This is typically normal as most startups don’t begin their life with any kind of cash flow coming in. Most have budgets, or should have budgets, I should say. Because often times many new players into the startup game play things too casually and just ‘wing it’.
But because everyone is going broke, it is important to monitor the monthly input and output and to have a fair idea of how much runway you actually have left. You definitely don’t want to be loose with your spending and sign up for the $1000 a month fancy new A.I. tool that all of the other startups are fiending for.
You also don’t want to be left out of the loop when it comes to new software either, because that next new shiny thing could just be the thing that takes your company up a few notches.
But if, for example, you only have enough in savings for another 4 months of cloud servers, and you need those servers to be a business, than now would be the time to address that issue and start your path towards a solution.
Again, it is perfectly fine to go broke or be in the process of doing so. But it is definitely not a good plan to pretend like you aren’t.
In the past I’ve worked with more than a few startups that had exceedingly high monthly server costs. Why, I couldn’t figure out. Most were barely live with a user base in the hundreds, yet the monthly bandwidth bill was through the roof.
After some investigation on my part I typically found that either the team developing the application had chosen the most powerful server configurations available, for whatever reason, or that they had spun up multiple servers that were no longer being used, but still being charged.
You could argue that when given the option between ‘more power’ and ‘less power’, most CEO’s would probably greenlight more power without really considering the price difference or the actual need for such power.
And all fairness to the founders of the companies as ‘shutting down servers’ doesn’t sound like something that anybody wants to do. But often times, just through some very basic optimizations a company could potentially take their runway from 6 months to 9 months and give themselves much more of a chance for success.
Outsourcing is huge
Being an idea mastermind and being able to build that idea are 2 completely different things and usually, it is different people handling those two roles. Different people if you are lucky. Outsourcing is huge in the startup game. It’s the easiest way to cut development costs, at least while you’re just starting out.
Eventually you’ll be able to hire a full-stack team and put them all on payroll. At least that’s what the common narrative is. Is it accurate? You might find a mixed bag of results and the real answer gets cloudy.
The reality is that it is probably more expensive to hire a team in another country once you add up the cost of technical debt and the typically longer development cycles when working with remote teams in different parts of the world.
Taking quality out of the equation for just a moment, because you can find both amazing and terrible developers globally pretty much, there’s alot more that comes with developing software, such as project management, quality assurance and even some level of technical marketing skills.
And often times new founders will ignore everything except for the development portion and leave themselves in a precarious situation. They might end up with a semblance of what they had in mind, but it might completely lack any kind of security, SEO optimizations or even worse end up with a non-compliant brick essentially.
There’s also much to be said about the global remote workflow, which is different than locally remote. Much different.
I once worked with a company who was outsourcing to multiple teams in multiple parts of the world each with their own tech stack and years of experience. And the project pretty much reflected that. There were constant errors due to miscommunication and the application itself had no cohesive design and/or logic.
People met at strange hours in order to meet deadlines, including myself, and you could feel the added pressure of just not really knowing what’s happening halfway across the globe.
Outsourcing can be a cheaper option to start, but it might end up costing you down the line if you don’t do it correctly.
Most founders aren’t technical
And rightfully so. This isn’t a knock on any CEO that doesn’t know Python. CEO’s should be good at alot of things, such as hiring talent, closing rounds and putting together pitch decks. And writing validation logic for an email doesn’t really fit into that skills list.
But a little technical knowledge can definitely go a long way, particularly when working on a startup. Because software engineering is complicated. Incredibly complicated. And if you have no idea what the people around you are saying or doing then you’re going to struggle with getting exactly what you want.
I’ve worked with many startup founders in the past that made bold choices based on personal preference without considering anything technical in the process, only to leave themselves regretting those choices months or even years later.
At a minimum, just knowing how your company operates from a technical standpoint should be near the top of the list in terms of priorities. Know where your servers are and how much you’re paying for them. Have an idea as to where your domain authority sits each and every month. And more importantly, definitely have an idea about what your development team is actually doing because it might not be what you think.
