I don’t know anything about building a tech startup company. I’ve never done it. So I’m the furthest thing away from authority on the subject. However I read a lot and I know people who have done it. You picked up on what helped them succeed. If I was to do it this one way I would approach. There are tons of approaches and many people have done it. I would recommend studying successful people.
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This is the approach I would try if I was starting an AI software startup from scratch. It’s more of a strategy than a business plan. It doesn’t have to be complicated (easier said than done). Here’s the template.
Phase 1 - Have a workable product
Have something to show. A prototype. Everybody has good ideas and good intentions (e.g. peace on earth). Executing is the important part. You need to deliver something to demonstrate that the product could be applied successfully to solve a complex problem (or save money, or to deliver substantial economic value in a short period of time).
“AI-X: Our application address a wide range of predictive analytics use cases. The app is designed to integrate and process highly dynamic data sets from networks (e.g. sensors, satellites, enterprises), and enable advanced machine learning capabilities.”
How do you get started? Do a trial. It’s those sample stands at Costco or when you take a car out for a test drive. Trial projects typically consist of several phases including project kickoff, design, data integration, configuration, validation and final demonstration.
Don’t try to do too much. You lose focus and important resources. This sells well and attracts attention. Do one thing and do it very well. People are attracted to success and VCs will start replying to emails.
Stripes, Shopify, Square all started with a single product addressing a problem, then expanded to solve other business needs.
Phase 2 - Customer concentration
Get a few high profile clients. You want to focus on “lighthouse” customers. They are a trophy you can display. If bank X likes us, then that’s a seal of approval. Try to get clients from a few different industries (banking, energy, industrial, military, government etc..). Get them as partners if possible. If you are trying to save the planet, it will look good for them in their glossy ESG report. It also gives your product credibility. Having a solid partner sends a signal to the market “hey, this is important, pay attention.”
Phase 3 - Scaling the business
After having a few juggernauts clients and establishing your credibility, start going after middle-sized companies. The business is not a startup anymore. It’s on the path to be structurally profitable and cash flow positive. If you are doing financing round, by this time you should be a hot ticket.
Article by Brian Langis
