Points 1 through 3 are off. Point 4 is bang on though.
You don't need 250k to 300k, and if you had it you'd wish you had 500k or 750k anyway. A longer runway puts off the scary point where you have to launch something. You can bootstrap a startup with very little capital if you have the skills to do the work yourself, or you have co-founders with those skills, or most importantly you're happy for things to take longer. You don't need PR or bizdev either if you have a wide network or good creative skills for generating marketing chatter. The idea that you have to buy that is nonsense. Very few early stage startups hire in PR in my experience.
Point 4 is right though. Raising is a full time thing that requires focus. You pretty much have to stop working on your business to raise a round. That's a big part of the risk of doing it, and one reason why it's far better to have more than one founder.
Do things that don't scale is really an absolute truth.
If you can use Excel spreadsheet or Google form to build your product. Do it for your first 100 users.
Obviously if you're in deep tech then this doesn't apply. But with deep tech and moonshots the value isn't the product, it's your arbitrage opportunity and expert patentable knowledge.
"If you can use Excel spreadsheet or Google form to build your product. Do it for your first 100 users." I did, what's next?
You need to have a MVP in the target market. You need to demonstrate that it can scale. Therefore, if your business model works for 100 customers on the web, it does not necessarily mean that it will be successful on a larger scale on mobile.
In every other industry you have to invest money upfront so you actually have a product to sell, and as the software industry matures the table stakes will continue to rise. People are only willing to use half-baked prototypes when they have no choice, but in more and more domains customers will have choice and expectations go up as a result
"People are only willing to use half-baked prototypes when they have no choice, but in more and more domains customers will have choice and expectations go up as a result"
But how long are they actually using the half baked prototype?
I thought the purpose of the half baked prototype was to validate the idea, get good user feedback and get as much information as possible before dedicating resources and making more permanent design/architecture choices.
If you are spending massive time and resources before this is achieved, you are doing it wrong IMO...
But what is and isn't "half-baked prototype"? People/users/media/investors confuse GUI with functionality with "addresses actual use case(s) for users who might pay/subscribe".
I'd rather have something with a brutal/nonexistent GUI but provides useful functionality and gives me a warm fuzzy that the developers have some use cases in mind, or a suggested workflow.
Yes there is a first-mover advantage to getting into a domain early.
For a mental health app, it does seem a bit on the pricy side, although if you're sourcing content from accredited professionals things do get expensive fast. You have to make good decisions about what's critical and what can wait until v2.
"although if you're sourcing content from accredited professionals things do get expensive fast."
Well, if you're spending significant resources upfront on content from accredited professionals for a mental health app...you're probably doing it wrong.
The problem in the mental health space isn't the lack of information, or access to information...
> A longer runway puts off the scary point where you have to launch something.
Amen. It's such a common problem. And one I totally get. The first possible MVP is so far from a founder's vision that it's very easy to say, "Well, let's just add X". And then repeat and repeat and repeat.
More than a decade ago I was the technical cofounder for a former colleague. He had an idea that was really compelling at the time, one for whom the key engine of growth would be Facebook sharing. He quickly raised $1.2m from some name-brand VCs as a seed. We both had strong backgrounds in user testing, so we looked vigorously for ways to find out if our approach made sense to users.
He hit upon the idea of getting people off Craigslist under the guise of market research. Before we had built anything, he'd bring people in and have them try out a few different sites and give opinions. One of them was Facebook, which they'd log into using their own account. But what they didn't know until after was that we used Greasemonkey to generate fake newsfeed entries supposedly from their real friends.
One of our key assumptions was around viral growth, so we wanted them to react positively and possibly try to sign up for our site. What actually happened is that most people hated it. We tried a bunch of variations and they still mostly hated it. So we went to our first board meeting on Sand Hill Road and told them that the thing we all thought brilliant 6 weeks before was actually a bad idea and we had data to prove it. They were... nonplussed. Happily by then we had our next idea ready to pitch so they didn't murder us or anything, but I did worry.
The thing that we didn't learn until later was that two other companies had pitched and gotten funded for basically the same idea at about the same time. Between them they raised something like $12 million. And I forget the details now, but each of them persisted for something like 12-18 months longer than we did before they gave up.
I'm convinced that raising less made us more aggressive in our testing and more willing to pivot. And even if it didn't, I still take pride in wasting way less money on dry holes.
I think you have to realize that time doesn’t equal money.
You can sometimes choose to sell time for money or use money to buy time, but not always. If nobody’s willing to exchange their money for your time then your time doesn’t equal money.
Man goes to doctor. Says he's depressed. Says life seems harsh and cruel. Says he feels all alone in a threatening world where what lies ahead is vague and uncertain. Doctor says, 'Treatment is simple. Great new app InnerSense is just scheduled to release tonight. Go and download it. That should pick you up.' Man bursts into tears. Says, 'But doctor… I am InnerSense founder.'
I'm not sure this article has much insight, rather appears to be content for the sake of content.
"Right now, $300,000 is not enough to create a prototype and show traction on the global market. It’s a simple math. Let’s say you need three developers."
That's not simple math - that's faulty assumptions.
While there are always exceptions, you don't typically need to hire 3 developers to build a prototype!
The biggest thing missing from this article is customers - who are they, what do they want, and how much will they pay?
$300000 is not enough. It depends. If you’re a dev and planning to build something with another dev, then that’s plenty. If you’re just a guy with no idea how software works, then it may be less. If you’re a dev and your startup has nothing to do with software then also, that money is less. If you’re hiring exclusively from Bay Area devs it is less, if you’re open to contracting people from elsewhere, it is sufficient. If you’re open to hiring students from Bay Area for internships, it is sufficient. If you immediately jump on the cloud, that may not be enough. If you know how to provision a server in your garage, it may be enough. There’s a lot that goes into how much money you need, and it really depends on you to manage it.
I note at no point did you mention customers, or revenue.
It's trivial to spending essentially unlimited sums of money building products no-one wants - I've seen it done with tends of dollars and millions of dollars.
However, that has very little do to with building a successful startup - where at the end of the day what matters is customers and revenue, not lines of code.
"While there are always exceptions, you typically don't need to hire three developers to build a prototype.”
However, prototypes often don't show any traction. In addition to developers, you need marketing, design, and other people. Thus, three developers is just a simplification.
My main point is that the current market is highly competitive, and products are becoming increasingly complex, so more money is needed to reach our first customers.
Especially as the app is failry simple looking. Probably buildable in React Native in a month. Pay a good developer and you can probably get a prototype out for $10-$20k?
Trying to improve mental health using an app is like trying to cure alcoholism with vodka. Societal addiction to devices is the reason why we've had an explosion in mental illness.
We haven't had an explosion in mental illness. We've had an explosion in the number of people being able to recognize they have an issue, understand that help is available, and being willing to speak about it publicly. The problems have always been there.
I don't believe that to be true, mental health amongst teens has had a rapid decline in the past 10ish years, social media and always connected seems to be a major part of that.
The truth includes both the other comments to this reply: modern science has given us more insight into our long standing problems (and some solutions too), but also technology that can be detrimental to our mental health.
Yes it's true that both a poison and its antidote can be drunk from a cup. But people might be aversive to the cup they drank the poison from, even if it now contains the antidote. And to think the cup is the only way to administer the antidote may exclude a lot of people who might other benefit from the service
exactly.. in the luddite era dyslexia wasn't recognized and people assumed you were dumb. Likewise in the 70s and 80s ADHD/Depression/Anxiety etc were thought to be harmless and associated with "laziness/bad parenting" etc.
Now, we are more intelligent and the average person knows better than to downplay mental health challenges.
I'm sympathetic to the idea that social media apps are designed to be malware for your brain, but it's a long long stretch from that to the argument that having a pocket computer is inherently bad.
I have a great solution for todo lists and it helps mental health a bit. Unfortunately I cannot make a startup out of it because it is this: use a pen and paper for your todo lists, and make plenty of them. I could create some weird elaborate todo system and sell that, but really I just do square boxes with writing next to each box and tick it off, so there you go!
There are two views on the point. One is that we should stick to traditional in-person therapy, use pen and paper, and be strict. The other is that we should help people wherever they are. If they use mobile devices, let's try to help them there.
Theres unfortunately nothing here related to building in the space of mental health. Would love an article that actually dives in to that instead of fundraising.
> If you are a good seller, your product will always be worse than your narratives. Everyone you sell your product to will be disappointed when they start using it...
> The market lives in an atmosphere of inflated promises... Anyone who can only tell the truth about their projects will not look ambitious and convincing enough. Nobody will invest in those projects.
Agree? Disagree? I personally have limited experience but tend to dislike startups that oversell and promise lalaland with nothing to back that up. Not every startup is like that imo.
That second to last sentence dives off the deep end where I can't endorse it, but there's a large kernel of truth to the idea. As a new startup, your greatest competitive advantage is your ability to move fast. Marketing speak, on the other hand, is typically understood in terms of medium to large corporate timelines, where fast delivery simply isn't a thing:
* "we're actively developing this feature" means it'll be available in a few months
* "we're designing this feature" means it'll be available in 6 months to 2 years
* "this feature is part of our vision" means it may never be available
So if you have a feature that you're planning to release in a week or two, you can't just call it "under development" and expect customers to understand. You have to emphasize that it's practically right there, it'll be ready long before you need to do anything with it, and by the way here's a slideshow of what we'll have available next month when you want to go live.
>your greatest competitive advantage is your ability to move fast.
I don't want to come across as overly cynical, but I feel like there is a natural friction between this competitive advantage and certain domains in the health and/or critical infrastructure space, especially when "moving fast" can be at odds with quality. Safety-critical and regulated health domains don't seem like areas where moving fast is always viewed as an inherent good.
The 300k thing is interesting because it speaks to how the concept of a "startup" has evolved. Everything he says is correct in the sense that qualified developers aren't going to come to your startup for below market wages or equity, and if you're going out into the market to hire, you have to pay. This is from personal experience.
Otoh, going into the labor market and trying to buy a team is not really a traditional early stage startup activity, in the sense that you'd normally expect the founding team to take this on and pay themselves a minimum living wage. At least in the startup bubble, the concept seems to have shifted from bootstrap in the garage to get money and buy everything, while also producing job security and career growth and the other stuff generic labor market participants want.
I do agree, the worst idea is to try and underpay or use (truly) unqualified people
Technology is becoming increasingly complex. Customer expectations from the products are rising. 10 years ago, I single-handedly coded all the web components for a brokerage startup. Now, it seems impossible, perhaps only achievable with no-code tools.
Building something from nothing is very hard. The only thing that prepares you for it is building something from nothing. Being an employee at another start up doesnt really give you the right experience. I am on my 4th try and have learned many lessons. Each time applying those lessons to the next venture. Finally we might be close to success. The number 1 lesson is to do as much as possible yourself before raising money and hiring people.
I'm more like a crafter, so no code tools have provided me with the UX quality I was aiming for. But I was naive, thinking that experience would be enough. If I were to start now, I would definitely choose a simpler stack.
AI is pretty helpful right now (I'm proofreading my comments with Notion AI as we speak), but I think it will take a couple of years to really deliver quality output. I'm eagerly awaiting this moment.
Cynical better title: Things I wish I knew before paying other people to build my startup for me.
If you don't have the skills or co-founder(s) to get a prototype off the ground with ramen money, that should be your #1 goal. Or, if you really hate that idea and want to pay other people to develop things for you, at a minimum look at paying developers in cheaper places to do it so you can at least vet your idea for a low price before going all-in on expenses.
You talk about hiring developers, all kinds of marketing strategy... do you know anything about mental health? What makes you qualified to run a mental health company? Where do you discuss bringing in doctors, or mental health specialists, instead of FAANG devs? Is the "health" part just an afterthought?
> investors may not be impressed by the quality of your product
yea, when the founder doesn't seem to think that mental health expertise is important for a mental health startup, investors might be unimpressed.
> It’s ok to mention in your presentation that you have people with FAANG experience in your team
Maybe mention people with, you know, mental health experience?
Even your web site only refers to questionnaires and approaches "approved by" mental health professionals... No claims you have even a single one on staff.
Some fintech washout thinking he can immediately pivot to health of any kind, I hope people can see you for being the total fraud you are.
Yep - I am curious as to where the mental health subject matter expertise and validation of outcomes fits into your budget (unless it is more a directory or something more “benign” not requiring that).
It took me four years, starting with personal therapy and continuing with education in psychology and CBT, to switch from fintech to health tech. So no, it's not something you can do immediately. I also have an experienced psychologist on board.
You don't need 250k to 300k, and if you had it you'd wish you had 500k or 750k anyway. A longer runway puts off the scary point where you have to launch something. You can bootstrap a startup with very little capital if you have the skills to do the work yourself, or you have co-founders with those skills, or most importantly you're happy for things to take longer. You don't need PR or bizdev either if you have a wide network or good creative skills for generating marketing chatter. The idea that you have to buy that is nonsense. Very few early stage startups hire in PR in my experience.
Point 4 is right though. Raising is a full time thing that requires focus. You pretty much have to stop working on your business to raise a round. That's a big part of the risk of doing it, and one reason why it's far better to have more than one founder.