To say the last few years were good is an understatement. Rounds and valuations were skyrocketing. VCs were overflowing with cash, randomly throwing it at walls just to see what sticks. Dwarves served cocaine on golden trays while founders were shopping for company motorboats.
Then, the macro outlook took a giant dump and the money printing machines suddenly stopped brrrrrr’ing. Just like when ‘motherlode’ stops working in The Sims — you gotta get real.
Working on an MVP in these dire times?
Well, you’re in good company! Netflix started during the dot-com burst. Airbnb was born when the 2008 bubble popped. Marc Andreessen was probably onto something when he published It’s Time to Build in the midst of the pandemic breakout.
The world is still spinning, but the difficulty is set to 11. Overall, the same rules apply, with one caveat — there’s no room for shenanigans. And this isn’t a good time for larping as an entrepreneur.
Small, fast and cheap beats bloaty, slow and expensive
Who would’ve thought? Building an MVP these days means you really have to focus on the M part. Your B2B SaaS MVP will be fine without elaborate branding, gamification features and personalized user onboarding. You probably have Lean Startup on your bookshelf, right? Live by it.
Focus on what’s important: build what you need to show what value you provide, then validate whether there’s a market for it. Anything beyond that is a waste of time and resources.
- Design Sprint by Google Ventures (or the AJ&Smart variant)
- Value Proposition Canvas
- Business Model Canvas
- The Three-Hour Brand Sprint
Raise… or not
So there’s a market for what you’re doing. But you need resources to actually build a product. Well, VCs are cash-strapped and have a hard time raising themselves, as their LPs watch their portfolios shrink. It’s not going to be easy, but it doesn’t mean it’s impossible. If you want to raise a round, move fast, while funds still have capital to deploy.
Tips if you’re raising:
- Times are tough, but that does’t mean you have to accept predatory term sheets. Protect your equity and don’t go to bed with people who want to take advantage of you.
- While we’re at the bed analogy, the two rules of dating apply: 1. be attractive, 2. don’t be unattractive. You don’t need WebGL animations on your landing page, but it should be sexy. VCs want to look good when they list you as their portfolio company and a text-based splash page isn’t anything to write back home about.
- Your deck is just as important as your MVP — don’t half-ass it.
- Look for partners with a bigger value-add than just a capital injection.
That being said, are you sure you really need to raise a round and have a VC looking over your shoulder? Keep your equity and try bootstrapping.
The days of having to hire a 10-person dev team to get something off the ground are over. No-code tools are getting better day by day — leverage them.
An in-house team means burning a ton of money. Consider using ad-hoc support, whether from freelancers (even Fiverr does the job from time to time!) or agencies (well, hello there). Pay-as-you-go > fixed costs and long-term contracts.
- How to design a better pitch deck
- Do things that don’t scale
- A guide to seed fundraising
- NoCode Founders
We’ve launched! …now what?
The first thing you need to do is figure out whether your runway is long enough. This calculator will help. It boils down to a few variables: cash on hand, revenue, growth rate and expenses. The good news is, you have impact on all of those.
If you need money, raise now. Reach out to your existing investors. Most VCs will have some capital set aside to support their portfolio companies. Given the state of the market, the sooner you grab the money that’s sitting on the table, the better terms you’re going to get. Things aren’t that super gloom & doom though, especially for early-stage companies — you got this.
Revenue and growth rate
Reconsider your pricing. Experiment with new monetization channels. Improve your landing page conversion rate. See where your funnel is leaking. Identify pain points, limit churn and increase your LTV. Figure out what you can cross/upsell and do it to increase your ARPU. Use sales intent data. Set aggressive goals for your key metrics and establish plans on how to get there.
Don’t overhire. Headcount is a vanity metric that has nothing to do with real growth. External ad-hoc support might be a better choice than having a large team on payroll — you pay only for what you use, without generating unnecessary bloat (HR departments, medical plans and all that jazz).
Limit investments that aren’t business critical (another company swag drop can definitely wait). Reassess your backlog and focus on features that improve profitability. Negotiate your SaaS contracts — you’ll be surprised how much you can chew off there.
To sum up
Times are tough, but the world keeps spinning and a ton of companies are still thriving. If they can do it, so can you. Shia LaBeouf said it best: just do it.
Last but not least — support other founders. Upvote their ProductHunt launches, tweet about their products, help them leverage your network. We’re all in this together.
If you’re struggling — our inbox is always open as well. Whether it’s intros to angels/VCs, product or deck feedback — we’ll do our best to help.
Meanwhile, keep building!