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25 February 2022

How to Build a Startup? Answer These 9 Questions a Digital Strategist Would Ask You First

business

If you are here, you have probably recently come up with the idea to create a startup. You may be full of energy and enthusiasm, thinking that "it cannot go wrong." 

Or are you a bundle of nerves and hesitant about whether the idea will even work? If so, congratulations. You are already half a mile ahead of the others, because you have started your research so that you are well equipped for the entrepreneurial race.  

Let us get down to brass tacks. How many startups do you think are successful? It is estimated that there are only 10-20% and you want to be part of that fraction.  

But how do you do that? How do you build a startup tech company that can weather the storms? Aside from perfect timing, a vision, hard work, and a mix of the unpredictable, you need to combine good communication, the right people, and industry knowledge. And above all: strategic thinking.  

You will not get easy, ready-made solutions. However, I am going to ask you some practical questions that can get you on the right track. But first, let us take a closer look at the tyranny of choice. 

Tyranny of choice

As marketing classic, Jack Trout, wrote, "in a world of murderous competition, the way to survive is to use a good strategy under what we call the tyranny of choice." ("Trout on Strategy"). 

Your potential customers always have another choice. Even if your idea seems unique or revolutionary, you are not operating in a business void - but in a culture of abundance and a plethora of solutions. A potential investor has a similar wealth of choices when he decides to put money on the table. And you can only devote a small portion of his attention to convincing him that this decision is the right one. The multitude of options can be really daunting. 

The alternative is to strive for clarity and simplicity - but that's the most difficult of all arts. To do that, you have to play with inception - going deeper and deeper, getting a little dirty, and making life uncomfortable for others by asking tough questions. The sooner you answer them, the easier it will be for you to deliver what matters most - value. 

So, without dragging it out - let us go through these tricky questions. Since I have a penchant for documentaries, I am going to recommend a movie for each topic that does not necessarily have anything to do with business. Watching each film, however, may open your mind to the issues raised in this paragraph. 

Question 1: Why am I acting and what do I want to achieve? 

Do you know what motivates you as a person and what drives your organisation?   

You can answer ironically - you are in it for the money, of course. 

But apart from money, there should be a deeper, real reason. Only then can you think about how to build a successful startup. Because a successful startup is the one that can help its customers. When you formulate a goal based on real value, you are ready to go and can focus on how to build a startup from scratch. 

Example: 

You can build a learning app, but your real Why is not mastery of the language, but the ability to communicate freely and express emotions in life and business. Or if you are developing a medical app, it's probably about improving disease management for users, but that facilitation should allow them to live their lives to the fullest. 

Chances are you have seen Simon Sink's presentation on this topic.

You may think this is just another marketing cliché. But in reality, it's worth looking into. In a world full of unified platforms, tools and technologies, it's the simplest yet most difficult Why that can guide us. Like an invisible glue, it connects people, tactics and solutions. It also highlights similar products and services in the minds of recipients. 

This question addresses one of the most fundamental concerns - your goals. It encourages you to evaluate your current situation and analyse the future - your vision of the company in terms of the business environment and existing market trends. Thanks to this question, you can start the actual startup development process.  

Your leading questions: 

  • What makes me want to start a business? 
  • What are my motivations? 
  • What are my short- and long-term goals? 
  • Where do I stand now? Where do I see myself and my company in six months, one year or five years? 

What can inspire you? 

A film about the Why, the passion and the attention to detail that drives all life and business. 

Question 2: Do I have the right team around me? 

Every Batman must have his own Robin. Do you have yours? I am sure you are wondering how to build a startup team. Or maybe you already have people around you, but you are not sure how to create a proper culture in a startup?  

One of the pioneers of startup theory, Steve Blank, distinguished different psychological types in a team: 

  • A visionary is a person with passion and charisma who infects others with ideas but does not necessarily have the practical skills to implement them.  
  • Hacker is a person whose job is to put ideas into practice. 
  • Hustler is a firefighter who puts out fires, an organizer, and a person who tackles challenges with lightning speed. 
  • Designer translates ideas and their technical background into user interface and language. 

Sergio Marrero also adds another type known as Hound, which is the person who must analyse user needs. 

Each of these people is essential to your team. Therefore, during your startup hiring and interview process, you should not only examine the competencies in your niche, but also understand the psychological portraits of your potential employees. By getting a comprehensive picture and assigning specific tasks, you create a synergistic environment and reduce the risk of getting stuck at a particular stage. 

Example

If you do not strive for the right balance of responsibilities, you may become too focused on a chosen area that is closest to your interests. You might get stuck on a particular idea or spend too long in the market analysis and theory phase. What else? You might bury yourself in application programming or get burned out by day-to-day logistics. And we would not want to deal with problems piling up and constantly forgetting schedules and deadlines, would we? And last but not least, you can focus too much on the unique design of the app. And then what happens? You tend to neglect the most important priorities - how the app should work in real life and what features it should offer. 

When it comes to Your team, don't forget about proper salaries.  As a young company, you are surely concerned with securing your finances. You wonder how do startups pay employees and how much do startups pay employees. These are key questions to consider even before you start hiring.  They need to reflect the employee psychology and your organizational culture.  

A startup is about risk and openness to new ideas. It's about believing in its mission and success. However, this should not be confused with naivety. You need to realize that transparency in your financial relationships with your employees, collaborators and interns will be the cornerstone of your team's reliability. In addition to the actual salary, you need to consider a whole system of benefits. Deal with the issue of fair salary and think about necessary salary increases when your project moves to the next stages of development. 

A simple "thank you" is a priceless currency, but it will not make your financial liabilities magically disappear. 

Take time to plan your activities and always act with the help of advisors. This is critical for both successful startups and those that got carried away with their imagination and over-hired, failed to scale their processes and to develop a culture of communication. And this is particularly risky for small teams as well, especially those working in a hybrid model. 

Your guiding questions  

  • Who do I have around me?  
  • What competencies do I lack?  
  • What team values do I care about?  
  • Do I know how to recruit people?  
  • Do I know how I will raise funds for salary? 

What can inspire you?  

A film that perfectly addresses the differences in corporate culture, the power of teamwork, and trust in leadership - or lack thereof. 

Question 3: What is my target group?  

Do you know who you're talking to?    

I assume you know the general answer to that question. You know the niche you want to fill. But your goal is not just macro data - trends, conditions or numbers. It's also about the micro-level picture. It's about qualitative data and small nuances that can create a real butterfly effect. 

The classics say that it's not enough to create a fictional persona on a slide and call her Amy the Secretary. Your audience is not a homogeneous group, even though they consume the same pop culture. They are users with very different profiles, driven by their personal and professional challenges and numerous tasks. Are you trying to get to know them? Do you know the hurdles or the overt and hidden motivations that arise along the users' journey? 

It does not matter how much startups spend on marketing and driving traffic to their product offering. If they do not know their target audience, they will not be able to engage them and keep them interested. Especially in times when attention spans are even shorter than that of a goldfish. 

Example

Imagine a user who wants to install your wellness app ostensibly for health and fitness purposes, but the real reason is to have a topic of conversation. Or an employee who only downloads your software because they were forced to by management. In real life, they will not use it out of fear or laziness and will continue to browse around in Excel.  

Dr. House would say, "Everybody lies." And he is right about that. Own up to those lies. Do your best to expose them, but without ridiculing the user. You need to make him feel that you understand his problems and his little joys. Empathy is the key here. But do not forget that decisions must also be based on real data, not just individual signals and personal beliefs. 

Do not know your target audience? That's not a problem. Gather information through desk research, analyse data, observe, track trends and review available research. Talk to people. Finally, ask, "How can I help?" (Remember, however, the truth of Dr. House - everyone lies... Also, not everyone is clear about their needs, especially in the case of innovation. You may have no idea that potential needs could even arise in this new context). Analyse the collected information, draw conclusions, discuss. 

Your guiding questions  

  • What is my target group?  
  • What niche do I want to target?  
  • What is my ideal customer?  
  • What problems do I want to solve?  

What can inspire you?  

This video shows the well-oiled empathy business machine behind coaching fame. 

Question 4 - Who am I competing with? 

Do you know your competition? 

Far too often you have no idea about it.  

Or even worse, you say that "we don't compete, because we are unique". 

It's not enough to mention the names of competing brands. You need to analyse their offer, market situation and brand perception. You need to do more than a one-off analysis. You need to have your finger on the pulse. You may decide to adopt a blue ocean strategy - be a hyper-innovative master of disruption and run away on a slippery slope, avoiding sharks and reefs. Congratulations! But you still need to be aware of them. No matter how much startups spend on marketing, their user acquisition efforts can be for naught if they do not analyse their competitors' viewpoints. 

If your team can not identify competitors and show their biggest advantages and disadvantages compared to your product offering, you will not be able to position the design well. You also will not be able to clearly present your advantages over your competitors to a potential customer - but more on that in a moment. 

Example  

You identified your competition a few months ago. You also formulated your framework strategy and discussed it with all your superiors. Unfortunately, you were so busy with your project throughout the year that you did not track your competitors. Meanwhile, one of your established rivals has taken a swing and changed its unique selling proposition from "win more" to "save more." It has introduced a number of features that enable optimization of customer costs. The thing is, this is the same functionality you have been working hard on all along. You wanted to introduce it as ground-breaking and unique. What are you going to do now? 

Your guiding questions  

  • Who are my competitors?   
  • What do they offer? How is the market responding to them?   
  • How do they change over time?  
  • How do they communicate?  
  • What are their strengths and weaknesses?   

What can inspire you?  

A film about struggling, succeeding, failing and redefining yourself in business.  

Question 5: What do I promise? 

Can you summarize the core idea of your startup in one sentence? If you asked five people around you to define it, would you get consistent answers? 

This one sentence should be recited like a mantra at all levels of your organization. It should be understandable, clear and unambiguous. Will your sister, who knows nothing about marketing, understand it? How about your mom? 

Let me show you a very simple but extremely compelling exercise in entrepreneurial thinking. Try to formulate a positioning sentence according to the following model: 

Example:  

Do a hallway test. Try assigning the above task to several people on your team. The results may surprise you - chances are, there are many different definitions floating around your environment. And let us face it - every word and punctuation mark counts here. Then, try rewriting that sentence after you have done the essential strategic analysis. I am sure you'll see how it evolves as your company moves into the next stages of development. It really is that simple. 

When you talk about your startup, it isn't just about covering the underlying ideas. . In fact, how you describe it will determine how you communicate your brand to your audience and form the basis of your startup marketing ideas. Your digital and content marketing is the result of how you have defined your brand, both on a textual, visual and operational level. Consistency of message and word choice is critical here, like a colour scheme in a well-coordinated palette. Remember the tyranny of choice and customers confused by the plethora of options? 

Your job is to capture a fundamental truth about your brand. Once you have formulated this, other strategic solutions will gradually emerge - and they must be consistent with your brand's identity and values. 

Your supporting questions:  

  • What do I want to promise my audience? 
  • Can I define my business in one sentence?  
  • Can the people around me do it too? 
  • Do we have a common understanding of our business and the offered services?  

What can inspire you?    

A documentary that presents the difference between giving a promise and delivering real value to the customer. 

Question 6: What am I offering and how do I want to sell it?  

Hopefully, you are already familiar with the WHY that underlies your business plan. You may also already know how to define the big promise behind your idea - it's colossal success! And finally, you have summarized for yourself how you will deliver on that promise. 

You can do something better, faster, cheaper, more efficient, more professional than the others. You can be the first. You can be the best.  

Or, on the contrary, you can be second in the race - slower, more modest, highly specialized in your niche. There's nothing wrong with that. But there has to be a differentiator that makes you known to your customers. 

But now the most important question arises - how exactly will you implement the solution you want to offer? Can you specify any functionalities? Can you define it properly, put it together and brag about it in a way that a layman can understand? 

It should be noted that by answering the above questions, you are making your marketing decisions. Therefore, you should surround yourself with people who have in-depth knowledge. Strategic marketing competence is essential in the field of branding and communication. But, of course, that's not all. You also need to draw on the expertise of growth marketing specialists who combine strategic and operational skills.  

Your main communications team needs to have a good understanding of your offering, its pros and cons, and your company's overall growth plans. This knowledge needs to be standardized across your organization and translated from technical language into the everyday language of your target audience - and then it should be transferred into the official communication channels. You do not need to explain why digital marketing is important for startups, don't you think? 

Your supporting questions:   

  • What market gaps can I find?  
  • How does my offer differ from that of the competition?
  • What arguments do I have to make my promise to the user credible? 
  • Which functionalities can help fulfil my promise? 

What can inspire you?  

 A documentary on consumer fever and the role of product quality. 

Question 7: Show me the money! 

Do you know where the money is?  

We are talking about two aspects here. First, you need money for day-to-day operations to make your business idea a reality. And this is where financing comes into play. 

US Bank estimates that 82% of startups fail due to cash flow management issues, while 73% of them fail due to over-optimism or a sloppy financial strategy. 

And what percentage of startups receive funding? There is no single figure here, as this depends on many factors, including the stage your company is in. The data changes depending on economic trends, and the pandemic has played an important role here.  

Before you embark on the project, you need to consider the most current data about your market. Make sure you know what types of funding are available and how the funding works. Knowing the phases and procedures, as well as the evaluation criteria, is essential to your company's finances. 

The second, equally important point is to ask yourself the following question: Have you thought about how your business idea will actually make money? What do you want users to pay for and in what form? With cash or perhaps with their time, data and commitment? 

  • Do you want to use a subscription model or a per-station license? 
  • Should there be a one-time fee option for lifetime access? 
  • Or will you work in a promotional model and offer the solutions for free to the end user? 
  • Will you choose a hybrid solution?   
  • Or will you implement a set of complementary services and products available through different models? 

To answer these questions, you need to conduct a thorough investigation. One of the key factors is how customers perceive the value provided by your services, which is also shaped by price skimming and access to the product. Build on this knowledge to make your idea a reality. Remember that an easy-to-understand and user-friendly offering will have a significant impact on the success of the project. 

Your supporting questions:

  • Do I know how to secure funding for my project?  
  • Do I know the basic terminology, principles and processes?  
  • Do I have the necessary contacts in the business community?  
  • Do I understand startup funding and have people who will look after this area on my behalf?  

Do I understand startup finance, and do I have people who will take care of this area on my behalf? Do I know how to make money with my idea, when to start and how to make this concept a reality - from functionality to communication and pricing? 

What can inspire you?  

A film about crowdfunding, money, relationships, chain of dependency and trust. "Nothing attracts a crowd more than a crowd. 

Question 8: Am I willing to adapt and change?  

Are you resilient enough?  

Imagine that business is a fairy tale. But it's more like a story from Andersen's cruel world. 

There are princesses and a whole lot of people with bad intentions. A little bit of magic and a pretty big pinch of bitterness. So, we are talking about resilience in many dimensions here, including the basic psychological dimension. 

Do you know the reasons why startups fail? One of them is precisely the lack of resilience to challenges and surprises. It's about the willingness to accept your own and others' mistakes, to be prepared for trend changes, financial fluctuations, misunderstandings and a lot of daily grinds. You also need to be ready to accept immense changes, to turn around in life and say to yourself - let us go back to point A. 

But it's also about having the courage to say stop when you feel the changes do not align with what you defined at the beginning - your Why. 

Your guiding questions 

  • Can I adapt to the situation?  
  • Am I able to change?  
  • Is my idea scalable?   
  • Do I have the strength and resources to handle my project as it evolves
  • Am I ready for success? And for the possibility of failure?  

What might inspire you?  

A film about when the idea is bigger than the opportunity and the lie is too big to call it back. 

Question 9: Can I assess the effectiveness of my idea?  

All right. Are you tactically prepared? 

Do you speak the language of this war: are you familiar with startup terminology? Have you delved into the nuances of the startup scene, talked to people like you, shared experiences? But not only that - do you talk to people who are different from you, but who can open your eyes to other circles? Have you stepped out of your comfort zone and information bubble? Do you know your niche and are you equipped with theoretical and practical marketing knowledge? 

And most importantly, are you prepared to measure the progress of your efforts? If you cannot, do you have people who will be your eyes and ears? Can you find the right informants who can spot events and trends worth paying attention to? 

All of this is critical not only for project development, but also for valuing your startup. How do you value a startup with no revenue? You need to consider many factors, such as the quality of the concept, prototype, technology and team solutions, team management, business relationships and partnerships, marketing communications, strategic planning, management's understanding of the market, trends and the needs of the target audience. And that's just the beginning 

Assessment is dynamic and depends not only on what you do, but also on macro and micro trends. The more components and evaluation methods you know, the better prepared you will be for the next stages of development. How long is a company considered a startup? There is only a rate of 3 - 5 years on defects. Take advantage of it. 

Your supporting questions:  

  • How will I measure and verify my idea?  
  • Do I know what I should be testing and how?  
  • Do I have data to use as a benchmark? 
  • What is the definition of success for me? How will I measure it?  
  • Do I know how to define indicators to measure the effects of my actions?  
  • Do I understand the relationships between the indicators?  

What can inspire you?  

A documentary about the power of user data, which is not always used for the right purposes. 

Final word

Do you keep asking yourself these questions? Why do investors invest in startups? What are investors looking for in startups? What do you mean by "good startups to invest in"?  

I would say that the answer lies in startups that respond to user challenges in a unique and specific way. The specificity might be in a unique idea - but not necessarily. It could be in the functionality of the communication, the understanding of the user's real intent, the process, the methodology, the honesty or the price, etc.  

The uniqueness of your startup also rests on your individuality, your personality, and your assets as a person. If you think strategically, you can consistently create real value for the user. This, in turn, will make investors believe that your idea is worth investing in. 

But even the best plan is just a plan if it's not put into action here and now. That's because the crucial factor that determines success or failure is something you have no control over - the right timing. 


Author
Joanna Szumowska
Head of Strategy

A strategist with several years of experience in digital advertising agencies and B2C marketing. She has been involved in B2B marketing in the IT industry in the last few years.  With qualifications in UX, analytics, advertising campaigns and skills such as copywriting and market research, she is systematically evolving towards growth hacking. She is an advocate of clear communication that extends and reinforces brand values. For her, it is important not only to find and cultivate the right qualities, but also to focus on their consistency and true understanding.