Tech startups need a new mantra to follow. For too long undergrads and recent grads have been brainwashed to believe that tech-startups is a game of funding: the winner is the company that can raise the most funding, get the most users, and exit as quickly as possible. Sites like Tech Crunch and Venture Beat glorify startup CEO’s that raise multi-millions of dollars and burn through cash as if it were newspaper to light a fire.
The venture brain-wash hits the non-technical guys (like me) the hardest. I remember being 22 years old, fresh out of college and ready to take on the startup world! My co-founder Yu-kai and I aimed to build a virtual world; our first step – find a technical co-founder.
How foolish we were: we began our startup careers already with a disadvantage. Instead of focusing on getting clients and making money, we had to focus on recruiting a technical co-founder.
I’ve seen non-technical people struggle to get funding, struggle to hire technical people, and struggle to find a business model because they play a game where they start with a disadvantage. This guide to profitability is for my non-technical brothers and sisters out there!
How to make money
Leverage your network
I am going to repeat what a lot of successful entrepreneurs say: the majority of my clients have come from referrals.
To be specific, it doesn’t happen from referrals from clients; instead, it happens from referrals from friends. My team and I do a great job with our clients and we maintain a very good relationship, but I’ve found that big companies rarely tell other big companies about who they’re using for services.
I take the following actions to get referrals from my network:
- Send an email to my most influential friends to let them know my capabilities and expertise
- Update my LinkedIn profile to display my projects, case studies, and publications
- Write on my personal blog to become a thought-leader in the industry I’m going after
Emailing influential friends has by far been the most effective method of getting clients. Here is the email template that I use:
Subject: Hi [Name]!
[Personalized email here with updates about my life and a genuine interest in the life of my friend].
Why I’m emailing you today: My team and I have successfully worked on projects with [A, B, and C] and we’re ready to expand our clientele. I’m looking for introductions to companies in the [Industry] industry looking for [Solutions]. Here are examples of my work:
- [Example 1]
- [Example 2]
- [Example 3]
Here is an email template that you can use for an introduction if you’d like:
I’d like to introduce you to my good friend Jun Loayza who is the President of Lion Step Media. He’s built social applications and run the social media accounts for Sephora and Whole Foods Market. Here are examples of his work:
I highly recommend that you reach out to him when you have social app needs for your company.
Thank you very much for the introductions that you’re able to make.
Like investors, clients want to minimize risk, and minimize cost as well. To minimize risk, I let our case studies speak for themselves:
- I ask my clients for testimonials which I bring into client pitches
- I encourage my potential client to call my current clients to get a reference for our work
The above two techniques have made it much easier to close client deals.
But most of all, I aim to become the prize during a client pitch:
- I do not overly thank the client for their time, though I’m very respectful during the meeting
- I set a deadline to close the deal that follows our calendar, not the client’s calendar
- I get the client to prove themselves to us
I use the following questions to get the client to prove themselves to us:
- We only work with companies that are forward-thinking and looking to use social apps in a unique way. Can you tell me about past projects where you’ve used social apps creatively
- We only work with companies looking to establish long-term partnerships with agencies, instead of one-and-done deals. Can you tell me about your relationships with your previous agencies
How to cut costs
Don’t get an office space
Office spaces are ridiculously expensive and unnecessary for the most part. There are plenty of cafes available with wifi that can serve as your mobile office.
It’s more important to get the right people on your team: people who can work independently and don’t need to be micro-managed at an office.
Don’t hire full-time employees
Outside of the core founding team, there should be no full-time employees. All necessary employees outside of the core team should be part-time contractors.
Full-time employees should only be brought on board when you’re ready to scale.
How to scale
It’s all about training manuals and systems. I use Google Docs to build training manuals for my part-time contractors that allows them to do great consistent work for me.
How I build training manuals and systems:
- I first do all of the work myself to understand the intricacies and complexities behind the work
- I use Google Docs to build a complete training manual of the work that i did
- Google Docs is great because you can add or remove sections of the training manual on the fly so that your contractor always has the most up-to-date information
- I hire a contractor and walk them through the entire training manual and the first project
How I find contractors: currently all of our contractors are from referrals. We don’t yet outsource our work overseas through Elance or Freelancer.com. I just ask my network if they have any trusted friends that are looking for some work in the marketing and advertising industry.
Only scale when you’re ready
One of the most common mistakes that startups make is that they try to scale to quickly. Examples are hiring salespeople when you haven’t built sales training and systems, hiring developers when there’s not enough work to keep current developers busy 100% of the time, and spending money on advertising when your business model and case studies aren’t ready yet.
To make everything move as smoothly as possible, I offer my contractors a full-time position when the time is right. I know the time is right when we’re ready to explode a certain aspect of our company.
I’ll write a future post with more details on how to know when you’re ready to scale.
I’ve used the techniques in this post to build and sell profitable companies. It’s of course not easy, but if you work hard and build systems to grow your company intelligently, then you too can hit profitability quickly.