HOW TO BUILD A TECH STARTUP THAT CHANGES THE WORLD: 8-part checklist
There’s a reputation in building a tech startup — these businesses are innovative and change the world we live in. Successful startups can scale quickly offering an uptick in job creation while enhancing our overall quality of life. Think Amazon, Apple, Facebook, Tesla, Uber — the list goes on with these groundbreaking tech businesses.
Yet, these companies are the minority of successful startups. The U.S. Census Bureau reported a record high of 1.4 million applications to form new businesses in the first months of 2021. The reality is that 90% of those new businesses will fail.
At the Intuitive Foundation, we prepare our founders for success. We are transparent with our entrepreneurs in what it takes to launch a tech business — from the lifestyle commitments to relationships that need to be established. Building a startup with no experience, no money, and no background in entrepreneurship is possible. Yet, preparing for every step is the key to running a successful tech business that will transform the world.
The Intuitive Foundation’s 8-part checklist to build a startup from scratch — we intend to prepare you with the know-how to thrive.
1. DETERMINE YOUR WHY.
It’s a simple question that we always ask our founders, and we will ask it often. Why is your idea unique? Why will your startup rise to the top among a sea of competitors? Why is the market ready for your service? And most importantly, why do you want to build this startup? At the end of the day, your why is the foundational building block for your business. It will be used to assemble a team, create a flawless business plan, and develop an incredible pitch deck.
“People don’t buy what you do, they buy why you do it.” – Simon Sinek
The top reason we see startups fail is due to burnout — there is no shortcut to the work. For a founder to return to their “why” during moments near collapse, that provides them with a reminder of their purpose. In the most trying times, fulfilling that purpose can make all the difference.
2. REFINE YOUR IDEA.
Each year, we encounter hundreds of individuals that have wonderfully imaginative ideas. Do you have a revolutionary idea? Do you believe in the idea? If so, the next step is answering honestly just one simple, yet important question:
Is your idea going to make money?
We hear plenty of, “it’s not about the money” responses. Yet, the reality of building a tech startup in a free-enterprise economy is that money is vital. Forbes recently reported the importance of money in the different startup stages — having a crucial role at every growth step. Money decides how long you will be able to sustain yourself before making a sale or gaining funding. It determines how many employees you can afford so that you can delegate work. Remember, at the end of the day, your ability to pay yourself depends on the cash flow.
If your idea can make money, you are on the right track in building a startup. Consider how to begin earning as quickly as possible — you want to refine your idea to prioritize positive cash flow. On the other hand, if you are unsure whether your idea will make money, it is time to reconsider. You will want to evaluate all ideas and their ability to generate sales or secure funding.
3. DEFINE SUCCESS.
Imagine this: You secured a meeting with a top VC firm and you have just presented your pitch deck. The team around the table loves your idea and they are immediately ready to make an offer. While you went into this meeting with the goal of securing $500,000, they are offering a tremendous $5M in funding for more stake in the company.
Was that a successful meeting? It depends on who you ask. While the capital offered is 10x more than what you were looking to secure, the tradeoff in losing significant ownership in your startup can be seen as a loss. Before sharing your startup with investors and customers, think about your goal. Ask yourself:
- Who will have ownership of the business, and at what levels?
- What is the goal for the business in 3, 5, 10 years?
- Which stakeholders should be involved in the strategy of the business?
Success in building this startup is yours to define and yours to achieve. It can come in so many different ways and your decisions determine the outcomes.
4. COMMIT TO ENTREPRENEURSHIP.
We often see misjudgments of how difficult it is to manage all the moving pieces of a new business. A tech startup is not a nights and weekends project — rather, your entire focus becomes dedicated to the work. To build a startup successfully, you need the will, the heart, and the drive to do something phenomenal with your idea. Are you ready to become an entrepreneur?
Without commitment, your idea will sit there. To begin a startup venture, the questions you need to ask yourself are:
- Am I willing to give this idea 100% of my time?
- Do I have enough money to sustain myself while I manage the next steps?
- Do I have the business resources I need to help me?
- How will I take care of my mind and my body during intense periods of stress?
- What type of balance do I need to stay effective?
Taking a moment to honestly commit to the lifestyle of an entrepreneur may seem so simple. Yet, it is this deep self-awareness that conquers the underestimate of what it takes to build a startup.
5. BUILD YOUR TEAM.
Beyond the personal undertaking of building your startup, the most important element of your business will be your team. Comprehensively, a team includes friends and family, employees, investors, mentors, and business contacts. Our entrepreneurs put a laser focus on surrounding themselves with multi-faceted individuals with each person excelling at their responsibility.
As our founder Bob Dobkin would reflect, “If you’re an entrepreneur and you’re starting a company, you can’t do it all by yourself. You just can’t. If you don’t have a team, you’re losing a big part of what it takes to be successful. I know that I couldn’t have done it alone.”
While friends and family provide emotional support, employees carry out the operational needs, and investors back your idea financially, one of the most important resources you will need is a mentor, multiple if possible. Knowing that founders of a previously successful business have a 30% chance of success with their next venture, we believe mentors are critical to opening doors and overcoming obstacles. Did you know legendary pairs include Warren Buffet and Bill Gates, Maya Angelou and Oprah Winfrey, Gandhi and Nelson? Success does not come from one person alone.
There are two reasons we often see founders hold back from finding a mentor: Money and Ego. It is often assumed that the advice from mentors requires monetary compensation. Yet, many mentors offer input and feedback purely as support for a fellow founder. On the other hand, many entrepreneurs have an ambitious Type A personality and find it impossible to drop their ego. While they may have done everything on their own thus far, this method does not scale. Adding a mentor to your team is one of the greatest investments for building a startup and growing your business toolbox — it provides knowledge and experience in areas you are just learning for the first time.
If you are wondering where to find your mentor, this is where your network comes in handy. One option is to go the university route — consider someone you were close with, whether a classmate or business-minded professor. Additionally, look into the major startup hubs such as Y Combinator and TechStars, while combing through your LinkedIn connections. Finally, use the power of Google with a simple “I am a startup looking for mentors” search. As you reach out to contacts, introduce yourself and your idea, be clear on challenges you are facing, and be mindful of their time.
While you may be well-equipped to oversee many parts of your business, there are always responsibilities that are more difficult or nuanced. Rather than delaying those tasks or putting them off, build a dynamic team and cover the skill sets you may need. Be brave — it is wise to ask for help.
6. MAKE A BUSINESS PLAN.
With a refined idea and a thoughtfully built team, you are on your way to making your business plan. This is the strategy behind building your startup and the tactics that will get you there. As you implement your plans, this is the backbone that aligns your work.
From defining your mission and vision statement to establishing goals and objectives, this plan is meant to be comprehensive. The plan will identify any opportunities and gaps through market analysis. It will help determine the cost of your service and expected profitability. If developing this plan feels overwhelming, this is where you utilize your team.
A business plan can validate some decisions while deconstructing others. Perhaps a budgeting exercise uncovered the true cost of developing your technology. While creating a business plan can come with unexpected surprises, this is the due diligence you must pursue to ensure you have a solid model. This is your opportunity to correct any misjudgments you have established early on. Does your business plan cover these essential elements?
Once your plan is ready, share it with a friend. Share it with a business acquaintance. Share it with your mentor. See whether they clearly understand your plan to build a startup. The goal is to field any and every possible comment that could arise.
7. CREATE YOUR PITCH DECK.
When you are confident about your business plan, it is time to build your pitch deck. This is the presentation you will share with investors, whether it is a personal relationship, an angel investor, or a VC firm. The funding you will secure gives you security and more importantly, the traction you need to propel your tech startup forward.
Gabe Fenton, President of Intuitive Private Equity, has reviewed thousands of pitch decks as an investor. He shares the core elements of a pitch deck that he expects:
- “I want to see the problem that’s being solved,” Gabe says simply. He wants to easily understand the problem and see an actionable margin of market size.
- “I want to understand how the entrepreneur plans to solve the problem,” Gabe continues. He is looking for how the founder will make money solving the problem identified. Further, Gabe explains that for an investor, knowing how much money is crucial.
- “What are their key advantages?” Gabe asks. By asking this question, Gabe is interested in whether your company is early-to-market, intellectual property, or something else. Investors want to know what the key differentiators are for your business.
- “I want to clearly understand the ask,” shares Gabe. He wants to know what is most useful for him to provide to your company. For example, if it is money — how much? When? Why? How will it be used?”
- “Tell me about the team, but more than where they’ve worked and their education,” Gabe comments. He wants to know about their ability to perform and be successful. He would like to know if they’ve spent time together specifically working together and how they did. Further, he wants to see roles that are clearly defined and people are staying within their strengths and skillsets.
- “Finally, I want to see an entrepreneur put themselves in the shoes of the investor,” Gabe offers. He wants to know why an investor would choose your company versus other opportunities that could be bigger growth?
Some of the best pitch decks we have seen start with storytelling and efficiently move towards proving an income stream. While these meetings can feel high stakes, keep in mind that investors are humans, too. Being personable while knowing your startup inside and out is the approach you will want to hone. Show all the research and planning you have done that will achieve revenue and allow you to build your startup. Remember, this is your time to shine.
8. LAUNCH YOUR BUSINESS.
Many founders find the final checklist item to be the easiest one — to launch. With an excellent business plan, a detailed pitch deck, and all the paperwork to incorporate your business, your role is to now let the world know.
We are often asked, “How hard is it to build a tech startup?” While the U.S. ranks in the best three countries for entrepreneurship, the commitment to the work can be grueling at times. Prepare by using this 8-part checklist and you will have all the fundamentals to create your tech startup with minimal money and resources.
Being a founder is all-encompassing in that you are the leader of a team and the voice of a company. The momentum in which you scale is yours to control.
The Intuitive Foundation identifies and connects top science and business students and provides them with training on entrepreneurship through innovation fellowships, courses, and mentorship, so they can launch successful startups and achieve greatness together.