Challenges and strategies for startup founders at the nascent stage (3)
Here's an overview of my thinking as of February 2024
As part of building in public, 🛠️ I’m documenting the Nascent Startups project as it evolves and grows from this point forward. The project comes from my experience founding 10 of my own startups as well as mentoring 100 founders of nascent-stage startups at UC Berkeley and Alchemist Accelerator. Many of the founders I’ve advised really valued how I framed their challenges. Although I had been advising for years, I only started taking notes in December 2018 with the loose idea of writing a book. That book (130 pages of raw notes) has evolved into this newsletter and podcast on Substack along with support from my partner on Nascent Startups, Adam, and our first cohort of founders.
I’ve compiled my raw notes and organized them under the Table of Contents (below) to let you know my thinking and to spark a conversation. The section headings reflect the topics that I plan to address in this newsletter and podcast.
Are there any topics that you’re curious about? Leave me a comment in Substack, reply to my LinkedIn post or tweet at me. I’m easy about platforms — just looking for like-minded folks keen for conversation.
What exactly is a nascent startup?
A nascent-stage startup 🪺 consists of a founder with the kernel of a business idea, but no customers, no product and no funding. It’s a project of exploration constrained by minimal resources. By contrast, an early-stage startup 🐥 has initial customers, product and funding. Nascent-stage startups without customers face dramatically different challenges from early-stage startups with customers. Too often, innovation methodologies conflate these different stages 🐣 resulting in frustrated founders and wasted resources.
To be clear, I’m focusing on the challenge of customer discovery: the founder hopes to discover a new type of person in pain and use conventional tech tools (apps, cloud, etc.) to solve the pain. There are also founders creating startups to solve challenges in deep tech (e.g., nuclear fusion) and biotech (e.g., cure for cancer) where there are clearly customers eager for solutions. Nascent Startups focuses on the challenge of discovering customers, not discovering breakthrough technologies.
My goal with Nascent Startups is to provide a set of strategies for founders who are taking their first steps towards discovering customers. Essentially, Nascent Startups is a project searching for answers to two questions:
You have an idea for a tech startup. Now what? In other words, what’s your best first step when all you have is an idea?
Startups can consume lots of time and money so I believe that your best first step is to gauge your chances of success. How can you evaluate quickly and cheaply whether your idea is a 1-in-1,000,000 distraction or 1-in-100 opportunity?
Currently, I have three answers to those questions, summarized here and detailed below:
Anti-playbook. Most startup advice doesn’t apply to the nascent stage. This is my list of “conventional wisdom” strategies that are distractions right now.
Exploration. Focus on searching for People in Pain. Quantify their pain.
Evaluation. Based on the results of your Exploration, gauge whether your odds of success are 1-in-100 or 1-in-1,000,000.
TABLE OF CONTENTS
Finding an idea worth pursuing is like a “dumb” joke
The unique challenge of the Nascent stage
Creating something from nothing with minimal resources
Order of operations drives success
Founders’ priorities reset on April 23rd 2015: pain overtook funding.
What’s before ideation and validation? Dis-ideation, exploration and evaluation
About us
About you the founder
Three ways to start a high-growth venture-scale tech business
About “Nascent Startups”
About the author
New thinking = new nomenclature
Stand on the shoulders of giants to see farther – but don’t fall off
Anti-playbook – what NOT to do at the nascent stage
Methodologies for early-stage startups are distractions at the nascent stage
No, don’t build a minimum viable product (MVP)
No, don’t aim for product-market fit (PMF)
No, don’t “focus on customers” – you don’t have any
No, don’t state a hypothesis – instead be curious and think broadly
No, don’t run experiments to validate the hypothesis
No, don’t create a business just yet — date your idea before marrying it
No, don’t build a faux solution – that’s a Folution
No, don’t get paid — what matters now is value creation, not value capture
No, don’t build yet – right now you’re an explorer
No, don’t pitch investors – you have a project not a business
No, don’t worry about whether to raise investment or bootstrap
No, don’t run a survey
No, don’t run a focus group
No, don’t “fail fast”
No, don’t write a business plan
No, don’t build a business model canvas (BMC)
No, don’t set Key Performance Indicators (KPIs)
No, don’t plan an exit strategy
No, don’t boil the ocean
No, don’t blindly copy others – that’s Wingflapping
No, don’t pivot — you have a project not a business
No, don’t build a 5-year revenue projection
No, don’t ask for an NDA
No, don’t keep your startup idea a secret
No, don’t incorporate
No, don’t patent
No, don’t trademark
No, don’t recruit, don’t interview, don’t hire
No, don’t learn early-stage startup terms
No, you don’t have time for nice-to-haves
No, don’t try to build products that are scalable
No, don’t pursue chicken-and-egg opportunities
No, don’t use artificial intelligence (AI) or machine learning (ML)
No, don’t create partnerships
No, don’t move to Silicon Valley but maybe visit
No, don’t solve one-off problems — that’s a consulting firm
No, don’t chase requests for proposals (RFPs)
No, don’t listen to second-hand advice
Exploration – focus on this at the Nascent Stage
Pain is your North Star ✨
Pain is made of dark matter 🌠
99 problems and a pain ain’t 1
You’re searching for accessible people with excruciating, valuable pain
Dis-Ideation
Articulate an initial strategy
Minimal paperwork
Bin your market
If it’s not written, it didn’t happen
NoVC - Nothing but Value Creation
A Nascent Startup is like reinventing flight
How to collaborate as a founding team
Reduce friction in communications and decision-making
Make a plan to find people to interview
Search for People in Pain 🤕🔦
Be opportunistic – if you have resources, use them here
Quantify the Price of Pain
How much pain relief (i.e. value creation) would be meaningful?
Interview best practices
Simplify
Create initial value
Turn the crank
Tell a story
Become an expert
Focus, then focus again
Get lucky
Evaluation – are the chances of success 1% or 0.000,01%?
Characterize the opportunity
Most startups fail. Why might this be special?
Is this the right opportunity for me right now?
There’s only one investor who matters right now: You.
What are you learning?
Sugar-water vs Coca-cola – barriers to learning
How similar are the people in pain? How accessible?
How well do competitors solve the problem?
How much value are you creating?
What do I owe my stakeholders?
Bowing out gracefully
Share your data
Theoretical frameworks for an ideal startup
1 The Matching Challenge
2 The XYZs of a Crappy Idea
3 Invisible Lists
4 The Accessibility engine
Entropy, Inertia and Tikkun Olam
Affordable energy, information & intelligence
Why startups fail theoretically, not empirically
What success looks like
About you – who you need to be
Discover an opportunity worth pursuing
Customers are people, never organizations
Design partners to help prove value creation
Marquee clients to co-brand for credibility
Repeat inbound requests (acquisition 1)
Repeat qualification of people in pain (acquisition 2)
Repeat creation of initial value (clear value creation)
People in Pain who become advocates (a faint whiff of PMF)
Why now?
Aligning interests
Where does a $1B valuation come from?
Create a vending machine that prints money
Investors fund mom’s retirement (VC LPs)
Capturing the magic of Silicon Valley
From Nascent startup to early stage startup
Shut up and take my money
Appendix
Acknowledgements