A T.E.C.H. Framework for Startup Founders
From idea to execution
CONTENTS
2.1 Value
2.2 Problem
2.3 Vision
3.1 Model
3.2 Team
3.3 Incentives
4.1 Product
4.2 Community
4.3 Pivot
5.1 Partnerships
5.2 Data
5.3 Fundraising
1. Introduction
Some tech startup founders see funding as the ultimate solution to all their problems. They believe a term sheet is proof of their idea’s legitimacy. However, real proof lies in understanding the target customer's needs and developing a product that effectively addresses them. From there, proof comes in the form of generating revenues.
Over the past few years, billions of dollars invested in tech startups could have misled some founders to think that investments are the one cure-all. The reality is, annual VC funding has fallen more than 50% in just the first quarter of this year.
Still, funding and investments are down in almost every tech sector. So in this bear market, what is the right strategy founders need to succeed? We have developed a T.E.C.H. framework to help entrepreneurs tackle essential questions that lead to viable success. While non-exhaustive, these tools can guide founders on the right path.
2. Target
💡 Target = Value + Problem + VisionA successful tech company begins with a clear vision of how their specific tech fields (whether it be AI, blockchain, digital assets, and so on) can help people in a way never seen before.
2.1 Value
When starting with a blank canvas, it is easy to feel overwhelmed by ideas and possibilities. This can put you in a state of limbo. To avoid this, first understand the value of the technology you are interested in. It is essential to keep up with the latest developments and trends to discover products that already exist out there in your field. Evaluate their features, strengths, and limitations to determine their viability. Assess some key aspects:
market size
competitors
price points
customer segments
geographies
product characteristics
Insights for what you should create and why it is important can come from several sources, such as everyday problems, customer insights, and trend analysis. Opportunities can arise from enhancing existing products, introducing new categories, or adopting successful models from elsewhere.
Remember that value goes beyond meeting people’s practical needs; it also includes market viability. Before pursuing a new idea, ensure that the chosen path is worth pursuing.
2.2 Problem
Even if your product turns out to be average, choosing a meaningful problem generally leads to a better and more lasting outcome compared to choosing a terrible problem with a great product.
Assess the existing solutions discovered through your prior research to see if there are any gaps or opportunities. Look for an industry that is broken. Ask lots of questions about your chosen field, like:
Is an AI-based chatbot really a game changer?
Are there any tasks or processes that are time-consuming or inefficient for crypto traders?
Can Web3 concepts, like decentralised identity, actually facilitate innovative experiences for gamers?
Are there any untapped industries or domains where VR technology can bring significant value?
Will an open-source data layer make your potential product or service more attractive compared to a commercial database?
From there, you should be able to determine a real-world problem or inefficiency that can be addressed using your chosen technology. Validate your problem by conducting market research, surveys, and engaging with potential users to gather feedback and understand their pain points.
Another important consideration is to understand the feasibility of your solution:
Do you have the skills, resources, and other advantages to make this work?
Is your solution efficient, bragworthy, failure-tolerant, and irreversible?
Unless you are confident in identifying a clear pain point and a compelling solution, it will be challenging to attract users and investors to your doorstep.
2.3 Vision
Before starting your company, part of the preparation also includes keeping your mindset in check. To do this, you will need a driving compass - a vision.
A strong vision helps in attracting the right people, unifying the team, appealing to investors, and communicating effectively to the world. If you have a vague vision (or none at all), it would be hard to get others on board. Learning how to articulate your complex ideas concisely is an art in itself. Your vision should consist of:
Why does your company exist?
What are your future goals?
What impact are you aiming for?
Everything you do should align with this vision statement.
Fostering an entrepreneurial mindset also means being open to having your ideas challenged. There is a fine line between perseverance and stubbornness. It is important to measure your progress and determine whether to persist or pursue another venture. By doing so, you increase the likelihood of creating a product that your users actually want - not the one you assume they want.
🚨 Challenges to Target: indecision, solving a problem that nobody cares about3. Economics
💡 Economics = Model + Team + IncentivesWith your solid plans in place, it is time to make tangible progress incrementally. Merely being a technologist is not enough to be called an entrepreneur. Applying technology to an idea without gauging the market is like shooting in the dark. To deserve the title of a startup founder, you must understand unit economics and ecosystem economics, and ensure they are on point.
3.1 Model
Your future users and investors eventually want to actualise significant returns. Users seek greater benefits to justify their investment of time and money in your product or service, while investors want to see positive cash flow quickly. To evaluate the potential of your venture, a robust business model is essential in effectively conveying your vision.
A business model serves as a tool to concentrate your efforts on building a sustainable business. It outlines how your startup generates, delivers, and captures value. Consider factors, such as revenue streams, cost structure, and value proposition.
From subscription-based to pay-as-you-go models, various business models are available to choose from. The optimal choice depends on your vision, unique value proposition, and target market. Some key components to incorporate in your business model:
Whatever form your business model eventually takes, it must answer:
Revenue generation: What value does your company create?
Profit generation: How do you capture some of the value you create?
Runway maximisation: How do you sustain yourself financially until you capture that value?
The value captured should exceed the overall cost incurred. You won’t achieve this until the cash hits your bank. Revenues do not matter if you can’t collect the money.
3.2 Team
The success or failure of your startup depends on the people involved. While pursuing it alone may seem appealing and comfortable, it places significant demands on the founder. You must juggle multiple balls, wear various hats, and balance your future on a unicycle.
To cover essential skill sets, an ideal founding team should include:
A technical co-founder, if you lack programming skills
A BD person
A marketing person
A designer
Soft-skills wise, your team should consist of hustlers, hackers, and visionaries. Hustlers are the doers - those who get things done. Hackers are the experimenters - those who find creative solutions to problems. Visionaries are the strategists - those who think ahead.
Value and skin in the game are also key features to look for. All team members should share a common vision, be passionate about the company’s tech field, and possess a deep understanding of the tech itself. There should also be alignment in terms of equity shares and role functions. Healthy disagreements should be normal, and even desirable.
3.3 Incentives
For established technologies, effective communication, persuasion, and influencers are necessary to win over users. However, for emerging technologies, where education and awareness are lacking, incentives play a key role.
While communicating with stakeholders and the community remains important, it should be focused on delivering interesting and useful information. This means less talk and more walk - achieving milestones, launching new services and features, upgrading your platform, organising events, and so on.
Take a blockchain-based project as an example. Incentives can come in the form of designing a strong token economy, rewarding users for their participation, creating network effects, and increasing the value of your token. Experiment with governance models that best fit your protocol’s decision-making processes, consensus mechanisms, and community involvement.
Incentives should be integrated into your infrastructure plan. Explore ways to reward early adopters who are willing to take a risk on your product or service. Your company’s plans, goals, and budget should take account everything and everyone in your product’s ecosystem.
🚨 Challenges to Economics: completely free offerings, not having economies of scale4. Creativity
💡 Creativity = Product + Community + PivotDeveloping a viable product that surpasses existing ones can be daunting. If creativity is lacking, competitors can easily outshine your efforts.
Working with an emerging technology poses even more challenges, as it takes time and effort to create a product that customers cannot fully grasp until they use it. This uphill battle becomes more apparent when the market turns out to be smaller than anticipated, despite signs of a product fit. This is where creativity becomes crucial.
Highly creative founders generate greater value and wealth, not only through their products or services, but also through intangible assets. They range from brand, reputation, and network to intellectual property. In this context, creativity is defined as novelty and utility.
4.1 Product
Whether your startup succeeds or not depends on the speed of execution. Consider:
How does does your product get off the ground?
How quickly and frequently can you roll out the product for user reviews?
How fast can you get feedback from customers?
How fast can you iterate and improve on your mistakes?
Speed provides the advantage of failing quickly while outpacing competitors. The key principle is to launch swiftly, beginning with the creation of a Minimum Viable Product (MVP).
Much has already been talked about MVP. It is a version of your product that allows your team to gather the maximum validated learning about target customers with minimal effort. Its purpose is not to generate profits directly, but rather to help develop a process for making money.
While you may be tempted to operate in stealth mode, doing so only hampers your progress by limiting feedback from the most important stakeholders for your success. Others may try to copy your idea, but they cannot steal your drive and creativity. Launch quickly, listen, observe, and get your product ripped apart. Then show up to the office and iterate. Rinse and repeat.
Your MVP should be built within weeks, not months. It can take the form of a single-feature iOS app, a landing page, an email marketing campaign, and so on. It may not be perfect at first. Airbnb’s original prototype was a simple landing page targeting conference attendees. Twitter’s MVP was designed for users at Odeo to send and view messages with other employees. Twitch started as a live streaming site with limited functionality focused on a single streamer. None of these examples were flawless from the start, yet they all became billion-dollar companies. The lesson to take from this: you have to start somewhere.
4.2 Community
Before building your MVP, it could be helpful to engage with potential users. Rather than focusing on a grand product launch, prioritise acquiring customers.
The concern of finding initial test users should be irrelevant. If you are solving a real-world problem, your first set of potential customers should already exist within your network.
Seek feedback and involve potential users and stakeholders in decision-making processes. Reward early adopters to build a loyal user base. Be transparent about your company's goals, progress, and roadmap. Organise forums, online events, and special promotions to encourage more people to test your product.
Establishing and nurturing a strong community is crucial for startup success, particularly in emerging tech fields. A robust community helps with user acquisition, adoption, and growth. Over time, they can organically become ambassadors for your product without incurring additional marketing costs.
4.3 Pivot
Creativity enables startups to adapt and thrive through innovation. Business challenges evolve continuously, requiring solutions to evolve as well. However, fear of failure and attachment to original ideas can hinder founders from making necessary changes. In such cases, pivoting becomes crucial for survival.
A pivot happens when you realise that you dislike your problem or target audience. If a new direction can be treated as an entirely new business, a pivot is likely needed. It is important to distinguish between iteration and pivot:
Iteration: when you change your product to better solve your target problem
Pivot: when you change your target audience and/or problem that you are solving
Once you have a solid idea, iteration should occur more frequently than pivoting. Iteration can happen every one to three weeks, while pivoting should occur within one to two years. Avoid abandoning existing customers too quickly, as it takes time to truly understand product fit.
Some actions to take before pivoting:
Conduct further market research and analysis
Gather feedback from existing and potential customers
Develop a clear and comprehensive strategic plan
Evaluate the potential risks and challenges
Assess resources, capabilities, and expertise required to execute the pivot successfully
The quality of your innovation directly correlates with the extent of pain induced by your target problem. Even a small incremental change in an existing solution, product, or service can be considered innovation. As long the increment adds new value and customers pay for it, you are on the right track. However, when your customers pay for it but don’t use it, your innovation cannot sustain. Pivoting could help you search for a more scalable model.
🚨 Challenges to Creativity: procrastination, stealth mode, perfectionism, emotional attachment5. Hack
💡 Hack = Partnerships + Data + FundraisingMost small startups do not have big funding. That is why growth hacks are so important. Employing diligent customer engagement strategies alongside hard work establishes the foundation for gaining market traction. It may take time for results to materialise, but this is crucial for building a sustainable business.
It is important to note that there is no universally guaranteed startup growth hack. While there are well-known strategies and frameworks, they are not all replicable. Each startup must discover its unique formula consisting of foundational elements, customer-centric approach, favourable timing, and a touch of luck.
5.1 Partnerships
Business alliances and partnerships are powerful growth hacking strategies to generate buzz among potential customers online. You are not finding direct rivals to work with. Instead, focus on finding companies that complement your product or service.
By forming partnerships with companies that have common target markets but are not direct competitors, you can collaborate, share resources, and explore marketing campaigns. Leveraging each side’s audiences through integrated sales opportunities, promotional activities in newsletters and social channels, and bundled offerings can establish a trusted and targeted channel at minimal to no cost.
To collaborate effectively, explore organic strategies to merge your followers, such as social media mentions, product packages that include products from both sides, or cross-posting on each other's platforms.
This approach not only generates attention among your online audience but also drives relevant organic traffic to your website. It enhances global exposure for your product or service, further opening opportunities for media coverage.
5.2 Data
To effectively hack your growth, it is essential to measure and track it. Monitor key metrics, such as visitor count, landing pages, conversion rates, and more. Create a dashboard that integrates all growth channel metrics to present a holistic view of your business. Benchmark these numbers against your competitors. However, avoid spending excessive time piecing together data. Keep it simple to quickly assess your performance while focusing on activities that drive business growth.
You should also shift your focus from summarising monthly metrics and milestones to emphasising the learnings from each month. What insights can be applied for future activities? What additional questions do these numbers raise? This approach helps to trigger more iteration.
5.3 Fundraising
In reality, self-funding is often insufficient to cover the expenses required to make your startup profitable. Once the initial chaos of building your business settles, you should have a compelling proof point to present to potential investors.
While some founders may rely on their brand and reputation, most will need a strong idea, product, and evidence of user adoption or traction to attract investors. Demonstrate how your company can thrive through resilience and growth.
Some tips:
Align your timeline: Coordinate your growth and fundraising cycles. Keep in mind that fundraising conversations typically span at least a month. As you fundraise, new data will come in. Ideally, this data - whether it be user growth or new partnerships - should be positive and indicate an upward trend. Update your pitch deck to reflect these favourable developments.
Target the right investors: Invest time in researching potential investors to gain an outsized advantage against top startups. Examine the firm’s portfolio for similar business models and their outcomes. Be aware of competitors within an investor’s portfolio and highlight them. Take the initiative to contact and learn from founders of startups backed by your target investor.
Generate demand: Capitalise on FOMO in the VC world by creating a sense of demand for your startup. Stack meetings back-to-back to ensure that your startup becomes the hot topic among similar investors simultaneously. Set deadlines for responses and stick to them. This communicates that you have other options and will not wait around forever.
Craft a winning pitch: Your pitch has failed if an investor is unclear about what your company does after 10 minutes. It is the founder’s responsibility to make a simple and compelling case for the startup. Present the problem in an original way, quickly explaining the user pain point with emotion. Highlight your important data early in your presentation and address your competition throughout your deck, not just on one slide. Anticipate and address any objections.
🚨 Challenges to Hack: indecision, greed, being unprepared, taking a rejection personally6. Conclusion
While fundraising is an integral part of a startup founder’s journey, it is best to first focus on the basics. Regardless of the framework you follow, avoid getting distracted by the hype. It is unlikely your first product will be perfect, so the process you take should at least be agile and bulletproof.