The biggest mistake most startups make—over and over again—is not digging deep enough to truly identify the problem they plan to solve, says Ray Walia, cofounder and CEO of Launch Academy.
Speaking at the TSX Ignite conference in Vancouver this week, Walia says founders often spend too much time envisioning their product or service, and not enough identifying the right solutions.
“They haven’t taken the time to truly talk to as many people as they can to identify if the problem they perceive is actually the problem people are facing,” Walia says.
He recommends entrepreneur ask “why” at least five times to “drill down and get to the core problem.”
It was just some of the advice offered by Walia and fellow panelist Hamed Shahbazi, chairman and CEO of cloud-based bill payment company TIO Networks, in a conversation titled “Transitioning from startup to a ‘legit’ company.” The discussion was moderated by Nick Waddell, founder and editor of the Cantech Letter.
For entrepreneurs to become legitimate, Shahbazi says they need to have “clear and discernable KPIs” [key performance indicators] and be able to express their business in a clear and concise way.
“There are people that are able to cut through and tell you what they’re doing,” Shahbazi says. “To me, that’s a good sign from a founder or leader.”
It means asking “why” a lot Shahbazi says, but also “what” and “how.”
“No matter the size of the organization, there has to be a clear ‘what,’” he says. “The ‘how’ can be grainer, but your vision has to be as high definition as possible. The bigger you get, the more important it is.”
How social media weeds out successful companies
Finding legitimate companies is a lot easier today than during the tech boom at the turn of the century, says Walia, thanks in part to social and digital media. Not only do these channels provide some additional transparency for investors, they’re also great venues for companies to test and measure customer engagement and satisfaction.
Back in the late 1990s and early 2000s, the industry was more focused on getting as many customers or users as possible. Today, it’s more about monetization and turning a profit, Walia says.
“It’s always about identifying who that customer base is and what the value proposition is,” he says. “For me, one of the telltale signs is revenue. How do you identify product market fit and a customer base that is willing to give you money for your product.”
Walia believes every tech startup should begin with the “trifecta” of talented personnel; a developer, a UI/UX person that understands human interaction and “an effective mouthpiece,” also known as the CEO who goes out to sell the company.
“Most of the time it’s a two out of three. If you find all three, there is some serious magic happening there,” he says.