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How to launch a successful IT startup: three tips for beginning entrepreneurs

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For those who are thinking about launching their startup, but cannot decide on it at all, I can say that all the paths are open so far. A successful business can be started today, it is realistic. The world is full of empty niches with cheap entry. There are many startups that were launched on the knee, and ideas for them were suggested by some analogs. Working with startups for a long time, I made three important conclusions that may be useful in starting a successful business.

Tip 1: do it!

The main thing that distinguishes any successful startup from an unsuccessful one is that the founder does something. If you sit and do nothing, then nothing will happen. This is even more important than thinking. If you look at the list of unicorns (companies with an estimate of more than 1 billion) for 2018, then approximately every second one implements a trivial idea.

Here are some examples. Oyo Rooms is an Indian hotel chain that helps organize online marketing and attract customers. DoorDash is a food delivery service from restaurants that was not afraid to start when the delivery market was already moving to a mature stage and proved its profitability. Medical is a Chinese marketplace that makes it easy for restaurants and farmers to buy and sell per margin. AiHuishou a service for buying and reselling with a premium of used phones. PolicyBazaar insurance marketplace.

Tip 2: Think About Business, Not About Code

People are often scared by technological complexity. The founder is afraid that without special knowledge in the field of artificial intelligence, machine learning, and so on, he will not be able to realize the idea. But technology often does not play a significant role in the success of a business, this is the case with the unicorns cited as examples above. They do not use any space technologies, and the essence of business is not in them, especially at the start. You can start without being a programmer and without understanding anything. Many people say that successful companies are often created by programmers Gates, Zuckerberg, Breen, etc. However, one can look at it differently: many smart people tend to become programmers, this is an intellectual and fashionable profession with a lot of mathematics. And at the same time, smart people are attracted to success, perhaps this is precisely the case.

Even when the business is already large, IT does not define competition. Even the newest technologies that have just appeared do not solve the success of a business. If someone is interested in diving deeper into this topic, I advise you to pay attention to Nicholas Carr’s book “Does IT Matter?”.

Tip 3: Take Only The Right Investment

The right investments are investments received at the right time, from the right investors, in the right amount. It must be remembered that taking money is difficult, you take a lot of risks when you take investments. It should be a very conscious step and a choice of how much, when and from whom. The founder’s natural desire is to get as many investments as possible for growth, and this desire is spurred by the complexity of their receipt.

Large investments allow you to win in the market competitors who have little money. However, too much investment can be detrimental to the company. A very striking example of this is the history of the American company Beepi. At the beginning of her development, she managed to get an investment of 150 million with an estimate of 500 million, much higher than fair. When the money ran out, the founders went for a new round. A reasonable estimate by that time had grown, say, to 200 million, and the founders wanted 1 billion, and the attempt failed. The founders decided to lower the rate, which alerted investors and eventually led negotiations to a standstill. The company did not survive, and all because the founders initially took too much investment with too much appreciation.

Another good example is the story of the American company Blue Apron, which delivers recipes for self-cooking. The audience was relatively small, but the company grew in its target niche and attracted another investment with a fairly large valuation of 2 billion. Investors decided that with this assessment it was necessary to expand the target market by telling all Americans about the service offered by Blue Apron and setting up an aggressive advertising and marketing campaign. So, the company began to attract a large number of low-quality customers who, inspired by intrusive advertising, tried the service, but did not come back for it again, because they did not need such a service. At the same time, profitability and business economics fell, because huge amounts of money were spent on advertising. The company showed formal growth as the number of trial users increased. To maintain growth, Blue Apron was giving more and more ads and getting more low-quality users who left even faster. As a result, Blue Apron held an IPO but raised only 600 million. An investor who came with the wrong understanding of the market and influenced the company’s policy did much harm to this business.

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