Advice on starting up

Feb 9th, 2024

startup

Last month, I talked to a bunch of seniors who are running their own startups, or working as a founding role in one. The aim was two-fold, (i) first to understand how they converged to their idea (alongwith other ideas they explored) and (ii) asking their thoughts on the ideas we are evaluating (which at that time was sports analytics or an AI consultancy). I received priceless advice and wanted to share it here.

Thanks Palash, Ritik, Anurag, Mukesh, Yash! I’ve compiled all the advices in this post.

Anurag (@ Insane AI)

About Insane AI

Mobile app to track fitness through camera. Focus was on gamification — post progress and compete in challenge with friends. The motivation was to do something in AI and for consumers directly.
Talked to VCs and other people and this idea garnered interest.

About AI consulting

It’s a good way to start exploring projects. The concern here is that you will not get enough projects. Early stage startups would not outsource their AI projects (Insane AI wouldn’t have done that two years ago). The target customers would be growth stage startups (series A onward) or bigger. It may be difficult to prove your credibility to them
Through this you will get to learn about the industry from a tech/product point of view. The other approach is to join a VC and look at that industry from a business point of view. This would give you the 360 view.
AI consulting might slow down the process of idea generation if you are not getting leads. Talking to people in the industry is the best way to go about it. Connect with people on linkedin and pick their brains. Investors are generally open to talking

Markets

Building for US or India has to be decided early on because the product will evolve differently. In India it’s very difficult to sell technology solutions to businesses. The persona and paying capacity is different for different markets — maybe in US you can sell directly to players but in India you want to sell it to academies. US is more competitive.
For insane AI, the market was Europe. Built the app first and then took feedback from people who installed the app in European geography

Especially helpful if you are building SaaS, as you’ll find initial customers from YC only. YC opens you up to the US market so also very useful if that is the target. There are other accelerators too (TechStars) with the same global connect.
Check investments of Center Court Capital — sports focused VC

Mukesh (@ LunarTree)

Spend as much time as possible with Cofounders. Talk about important things.
- (i) What kind of things do you care about? Assume you are going to be doing the thing for 5 to 10 year time frame, so pick something you both really care about.
- (ii) What kind of business do you want to build? Do you want to build a bootstrapped business (in a consultancy way) or do you want to build a product. Do you want to fundraise? Do you want to build a B2B or B2C business?
- Where did you (Mukesh) and Sarthak found commonalities for the above two questions? => Wanted to do something in India, (where India had an advantage). Funding is a liability so discussed extensively about when to go about it. Regarding industries, we both had inclination towards IT service industry (tech consultancy), healthcare, Indian exports and manufacturing.
Market size is an important consideration for ideas, the cofounders need to be aligned on what market size are they targeting (and are comfortable with).
There could be two ways to build products – build it in/for the US. More competition, bigger market size (go big or go home). vs build it in India (more focus on sustainability/profitability). Need to decide which way would you like to build.
Following on the above, there are some problem statements unfeasible to build it in India. Example is building some tool for manufacturers here. The manufacturers here are not at the level of manufacturers in developed markets so can’t give the product to them. Another example is building something for restaurants in India (difficult to sell, high churn)
Regarding competition, if a very close competitor is going to arrive at the same offering in a few months difference you need to consider how you are going to differentiate else they will go after the same customers. If there is time enough for you to differentiate with them (through business model or something else), then it’s fine. Otherwise competitors who are not very close will find out adjacent placements and co-exist.
Regarding Sport Analytics, looked at Videoverse for investment and subsequently looked at sports analytics companies. Will get back on this one with the research!
Advice is to be agile on the idea. Think top-down rather than bottom-up. What to build, who to build it for etc will evolve as you get closer to the Market. Maybe instead of coaches, betting companies are more interested in the sports analytics product.
The current idea on which you are working is a digital solution for Pharma companies

Palash (@ Nintee)

Talk to founders you know currently (Shobhit, Yash, Kshitij etc.) and ask them about their 0-1 journey. How did they stumble upon their idea.
You need interest / passion in an industry to stick it out until the first win. After that the pull will be strong enough to continue
Sell first, build later.
There are two kinds of founders – those who come from industry expertise, and the others are problem solvers.
As problem solvers, you should stop instantly jumping to building solutions. Everyone should be in discovery phase until you start in delivery phase
Since you come from problem solver background, you should observe people doing things inefficient stuff. Never ask about the solution directly, instead ask questions. But don’t just listen to what they say, also look at what they do.
Other than evaluating your idea, you also need to evaluate how you work with your cofounders. Treat the first 6 months as an experiment of that. If there is an incompatibility you can all walk away without much loss.
Don’t worry about the market size too much at the start, adjacent things open up as you start progressing.
With respect to (2), pick an industry where you have connects so that you can sit with different people in the industry to understand their problems. Without any connects, it would be difficult to get a meeting since you are not adding any value (the consultancy way is good because it adds value to both).
Figure out your team advantages in a particular industry, then you can iterate faster.
Both consultancy or internship are good way to get your foot in the door. The aim is to get as close as possible to the customers. Build relations in the industry.
Don’t assume it will work, always be in this state of mind. Then what can you do to make it work.
One of the biggest validator of an idea is someone is paying money or putting in a lot of effort to already solve it.
That means the problem exists. Facebook had an internal knowledge base which was maintained by 7-8 developers. That means a spending of $1M. If facebook is spending a million dollar to solve it, the problem must exist elsewhere too. Someone has to demonstrate that they are putting effort or money to solve the problem and it should be an extrapolatable problem (not niche)
Three factors to evaluate a potential idea
1. Desirability - Do people want it?
2. Feasibility - Can we build it?
3. Viability - Can we make a business out of it?

References

The Mom Test (Book)
Lean Startup (Book)
https://www.producttalk.org/2022/04/discovery-in-startups/
https://review.firstround.com/series/product-market-fit
Delta 4 by Kunal Shah