How to (not) start a startup

This is written primarily for myself, and it may or may not benefit you in your journey. As I continue to make progress and learn, I will update this guide with more insights.

My story

Data engineering at dv01

My career started as a client-facing data engineer at a mid-stage startup called dv01. I joined at the age of 21 as the youngest employee. There I worked directly with our clients, including Upstart and Goldman Sachs, on the integration of securitization products into our platform.

After 9 months I felt like I had mastered my job, and after a lot of complaining to my manager, I eventually started to build tools for my teammates to improve their workflow. I eventually got bored with this too. Over time, I realized that I was too late to the party - I joined the startup at too late of a stage to learn rapidly and make a monumental impact. So I left to start my own company.

In one ear and out the other

I dove into the deep end without connections, financial resources, or startup knowledge of any kind. I simply had a vision of the world that I wanted to execute on. It took me 2 years and numerous pivots to realize that I wasn't listening. I was so busy building my vision - something that often happens to technical founders obsessed with building cool shit - that I forget to talk to my customers and see if I was actually building something useful.

My first product that ever made money leveraged my expertise of financial data engineering. I built a search engine for OTC commodity derivatives to improve the derivatives sales process. It was so useful that when I foolishly decided not to renew the contract, the CTO of the firm texted me this:

Hey man - is there any price where’d you be interested in fixing up your SDR tool and operating it? People miss it... we’d be curious what number would be interesting to you to fix it and keep it rolling.

I ignored this text for another 6 months. Since all of my other products failed to get any traction, I was going through an existential crisis. I eventually reflected deeply and realized the solution to my problems was right in front of me. People at one the world's largest private companies were begging to use my product again.

On the right path

Recently I have shifted my focus back to the one product I have ever built with traction. I am working intimately with my client, listening to their problems, asking lots of questions about their workflow, and improving the product. Realistically, I am not sure how scalable this idea is. But the important thing is that I am building something people really want, something that 95% of startups fail to ever see. For more information on the product, check out spotlight.dev.

Lessons Learned

Below contains the most important reminders while starting a startup. Note that I am a technical founder selling financial technology to financial services firms.

Concept doesn't equal reality

Entrepreneurs need to live in a different reality. If you intend to materialize something into existence, you need a unique conception of your idea transforming the world. But taken too far, you start to become delusional. Remember that concept doesn't equal reality - you may think you have the perfect idea, but until you release and test it in the real-world, it is merely an abstraction.

The difficulty with starting a startup is balance. Balancing your insanity with the rationality of the world, listening carefully, and staying motivated while the world is telling you "fuck you" along the way.

Talk to your customers

Talking to your customers is the single most important part of the process. Without validation (active users and revenue), your idea may belong in the trash. Talking to your customers up front will save you time from not pursuing a dead end. The best book on this topic is The Mom Test by Rob Fitzpatrick.

Building product

Do you really need to engineer a masterpiece? The MVP should be simple but unique. Generally it shouldn't take more than one month to build. Forget good engineering practices and just crank out a shitty product. It might hurt your soul, but it will save you precious time in the long run. What makes your product 10x better than what already exists? Focus on that in the MVP. The best book on this topic is Purple Cow.

Do things that you don't want to do

Creating momentum is hard. Once you have it, you need to keep the train running. This means you need to do a bunch of shit which you really don't want to do. Get used to this, since this is going to be the main part of your job.

Sales

I sold software to the world's largest private company. It took me about 6 months to get through legal. About 4 months could've been avoided if I had realized that internal politics matter a lot. You must find your internal champion and make sure they have power to push your sale along.

Intellectual honesty

Everyone can tell when you're lying. Passion is a fire that burns bright. If it's dim or nonexistent, everyone can tell that there's nothing there. More than anything, make sure you're not lying to yourself.

Fundraising

After raising from Angels and Venture Capital, I believe the fundraising process is backwards. The majority of entrepreneurs raise before executing. If possible, do this in reverse order. Prove to yourself that your idea works, and you have some form of traction (ideally increasing revenue) before fundraising. The process becomes way easier if you are building something people really want. As far as fundraising:

Demonstrate traction: Revenue is king, especially in this high interest rate environment.
Story is everything: Talk about your idea to everyone to refine your pitch. Remember that less is more.
A pitch deck doesn't matter. Nail your verbal pitch before creating materials.
Networking: Become friends with as many other founders as possible. Founders are extremely useful not only for insights into running a startup, but also for connections to investors.

I would suggest reading two books on this topic: Fundraising by Ryan Breslow, and Pitching Hacks by Venture Hacks.

Motivation

While running a startup is exhilarating, it will eventually get tough. Before going on the journey, start with a deep reflection and answer the question "Why do I want to do this?" This eternal truth will be a pillar you can always stand on when the going gets tough. As discussed in The War of Art by Steven Pressfield, as long as you stay motivated, it may take decades to refine your craft, but you will eventually get there.