[0:07] So let’s start off with what’s your company do?
- So my company is Raika Technologies, and we’re an incubator based out of Denver, Colorado. And basically, we help build startups. I am a startup ninja-slash-junkie. I’m trying to kick the habit I have not done so in the last two and a half decades – still going strong. And my whole goal in life is to help people who have ideas that are in the technology space, avoid wasting a bunch of time and money on ideas that will never be viable. So, we do a lot of “What is the problem that you’re solving? Who are you solving it for? Does your solution resonate for those people trying to get to failure as quickly and as cheaply as we can?” To find the pivots that put people into the space where they have the most available market, and they’re able to get the most ROI. And they’re able to make that go forward decision to spend their precious time and money, building software and building a business around software without any regret
[01:17] So in the case of somebody like me, who if I didn’t have a technology co-founder or technical co-founder, but I had this idea, I would be one of your ideal customers, right?
- That’s exactly right. Yeah. So, a lot of the people that we work with are small business owners in a non-tech space. And they’re looking at a technology solution to either bring in a new revenue stream or bring in a new type of client or maybe they’re even solving a problem in their industry. So, they can start selling to their competitors and through their competitors, those clients as well. But we do work with people who have never done business at all, sometimes too, and they will have technology ideas, and they’re like, “I don’t know, you know, do I go hire a software developer?” which is what a lot of people do. They’re like, “I have this idea. Let me go find somebody to build it for me.” Let me say there’s a big gap between I have an idea and I’m ready for a software developer. And that’s the gap that we help people fill.
[02:16] Okay. And save them a lot of money in the process.
- Save them a lot of money in the process. Yeah, it’s my personal mission in life to fully eliminate the story of the guy who spent $250,000 and on software and five years of his life with nothing to show for it. I actually heard, I sat at lunch about nine months ago with a guy who told me a very similar story. And he said, “Not to mention, because I mortgaged the house to get the money to start the business. My wife ended up leaving me and then I lost half my retirement and I ended up losing the house anyway.” And I was like, “Oh my gosh, it’s like hurts my heart.
[02:54] Yeah, and you get people that are so sold on their ideas without any validation whatsoever. That happens.
- One of the tips is if you hear yourself starting to say out loud, “This will sell itself.” You need me.
[03:18] When did you start this company?
- So this company in its current form has been around for about three years. I’ve been building startups for almost 25. I started my first company at 15. Sold out about four years later, I was building websites for small businesses. And this was in the mid-90s. And so basically, my sales pitch was, hey, you’re in the phone book, right? And they’re like, “Well, yeah, of course, everybody’s in the phone book.” I’m like, “This is the phone book of the future. If you don’t have a website, you’re going to be behind.” And that was how I sold websites, right?
It was the shortest sales pitch ever, because immediately you would see people’s brains be like, “Wait, there’s a thing I’m not doing?” And so I sold that company to a major competitor of mine, I want a really big contract with a very coveted client. And so one of my major competitors came in and said, “Hey, we’ll buy all of your companies and all of your clients and all of your contracts if you’ll transition that relationship to us.” And so, I had my first exit at 19. A couple years later, I started another company doing early key encryption technology. So helping companies that had traditionally boxed software models transition into first online updates, and then into online distribution and downloads and things like that and had it you know. This was in the days when DSL was getting faster, but a lot of people were still on dial up, so some people had faster speeds and some didn’t. And, you know, if something got cut off in the middle of a transmission, how did you pick that back up without having to start over and so that company was acquired by another company that did some stuff around that area, but our technology was better than theirs so they bought us for our technology and kind of merged that and created a larger company out of it. And then about six years ago, I started my third company, which is still in operation today. It’s unfortunate that COVID happened because it totally killed the travel and transportation industry and we built software for pilots and crew members to bid their schedules to fly. Which, you know, when you reduce flying by 70 plus percent, or 70 plus percent fewer pilots, which means my revenue goes down by 70 plus. So we’re, you know, just like everybody else are figuring out, you know, are there pivots to make? Is there a way to weather this? You know, eventually it will come back, but does it come back different, you know, or airlines operated differently? Who knows? So that when we were actually were positioning to sell it. We’re kind of like, okay, maybe we need to back that goal up a little bit and figure out how we make it a little bit more recession proof than it is right now. And so then, like I said, about three years ago, I started this business.
[06:03] What made you pick this business? Why did you pick? I mean, there’s a lot, you’ve obviously got extensive experience in a variety of industries, you had to come up with an idea. So this is something I want to drill into a bit, because a lot of entrepreneurs, they get stuck with analysis paralysis, too many ideas, too many shiny objects, and then they don’t do enough research, which is why they lose a quarter million dollars, their wife, their house, and everything. So, what made you think about doing this? And then how did you validate it before you put too much resources into it?
- So how do you pick the thing? I generally tend to go with and I encourage all my entrepreneurs to go with the thing that gets you most excited, that feels like it’s you. You know, there are lots of businesses that people have come up with and they’ve been like, “Hey, well, you should build this thing.” And I’m like, “Yeah, that doesn’t feel like me.”
[06:56] “But I love RC cars,” which I don’t, but I’m just using example. “I love RC Cars”, know what, you can’t make money at it. So
- I don’t know enough about RC cars, if I did I probably could dig in with you and find a way to monetize something that RC cars lover but see then that comes back to what do you love? Like, what’s your passion? And where is the largest market for your passion? That’s why there are a lot of ideas where you go, yeah, there’s not enough RC cars lovers for this ever to be profitable. Like I’m gonna put way more into it. So, unless I’m willing for it to be a hobby, I’m not gonna go down that path.
[07:32] But if you type your keyword into Google and there’s no ads showing up, keep on moving man.
- Yeah, don’t do that. But remember, we’re not all we’re not one-sided right? Even the even the most like RC car enthusiast, there’s probably other things that that person’s into in their life, right? So it’s something that when things get hard, or when you’re like, “Okay, I gotta like, I gotta power through today.” Because those days always come as an entrepreneur. I don’t care what you’re doing, I don’t care how much it excites you, there’s always comes that point where you’re like, “Am I really doing this again today?” And it’s like, “Yep, I’m keeping my eye on the prize. And that is enough to keep me going.” And there’s a big enough market that there can potentially be an ROI there. I’m not a fan of going after businesses, for my health.
[08:23] She use me as an example. I’m not particularly fascinated with SOPs, even though I’m known as the SOP guy. I’m fascinated with the ability to delegate and build a team and give myself freedom in my life.
[08:35] So if SOPs is the vehicle to give me that life. Okay, take a box on passion, and how many other people need SOPs? All of them, all of them is huge.
- That’s exactly right. So see, it’s not even that you have a passion for automating minutia and in rote tasks, right. That’s not a passion, your passion lies outside of that and what gets in the way of you being able to do the things that you love is the minutia and the rote tasks. And if you could delegate that or automate it in some way
[09:10] It’s just work in general that gets in the way of my wanting to ride my dirt bike, ride my mountain, bike, spend more time outdoors, it’s just work. If I can figure out how to automate all of work, which I’m on a mission to do.
- Your product, your SaaS product totally does that. So hashtag, you are winning.
[09:30] Yes, yes, we’re making progress. All right. So for entrepreneurs who are thinking about creating their own software company, walk me through, in as much detail as you can, the process that will allow them to not blow six months in 300 grand. You know, we just don’t want that outcome.
- Yeah, totally don’t want that. So it all starts with being able to answer these three questions as succinctly as you possibly can and feel extremely confident in the level of your knowledge and an insight into the answers. The first is, “What is the problem I’m solving?” If it takes a medical degree or a finance degree or an advanced aerospace engineering degree, for the average person who’s going to use your products to understand it, you don’t have it yet. So, what’s the problem you’re really solving? And you should be able to state it in a sentence or two, max. The second question is, “Who are you solving it for?” Okay, who is your ideal client, your ideal customer, what is that user persona? And how do they experience the problem? Understanding your target audience, understanding the market, understanding who you’re speaking to will, actually, it’s funny I just did a startup therapy couch post on this the other day. You have to narrow your focus in order to sell really well. And so if you’re starting out saying, “I’m building this for all entrepreneurs everywhere,” how do people identify themselves in that bucket? People are like, well, I am an entrepreneur, but I’m an entrepreneur who has these couple qualities that are really important to me. So do you really understand me? Or do you just understand general entrepreneurship? Whereas if you say, “We work with entrepreneurs who own a small business, and are looking to build a tech solution, you know, an app, a website or a software solution for these purposes, like what I described to you earlier,” well, now people can identify themselves when they hear me say what it is that I do. They’re like, “Oh, I’m a small business owner, and I need to build some technology. And that’s not my background, so you’re exactly who I need to talk to.” It seems like you’ve taken the whole world of entrepreneurs and narrowed it into this little tiny bucket. But when you do that you get way more sales, way more people.
[12:05] We make it easier for the founder of SaaS companies that have recently recently been funded to delegate work to employees and virtual assistants.
- Perfect, perfect. Any person reading that or hearing you talk about that will absolutely know if they are the person that needs to be working with you. And when somebody self identifies that they want or need what you have, it’s not a sales conversation anymore. It’s “Okay, what do you need? And let’s dig in. And let’s talk about it and let’s figure out what’s right for you.” They’ve already convinced themselves that they need you because they heard themselves in how you spoke. So, the first question was, “What problem are you solving?” The second question is “Who are you solving it for?” The third question, you then have to answer once you can narrow down that niche, “How many are there?” Are there 10 of those? Because there’s no business there. Are there half a million of those depending on your pricing model and how difficult it is to win that business, maybe there’s enough. Are there 10 million of those? Now we’re talking, now we’re talking. So it’s figuring out a niche that you can talk to and that’s in your wheelhouse, but also making sure that your niche has enough people to make it worth the time and money you will spend to get to market. And here’s, here’s another sort of cut at that. I was recently talking to a group that is designing a hotel concept around the sports industry, traveling sports teams, not pro teams, they’re focusing on like college teams, club teams, and stuff like that.
But here’s the thing, they want to capture 10% of that market. Marriott owns 92% of the hotel market. So in order to capture 10% of the market, you have to get 2% away from Marriott and everybody else in the industry. Not gonna happen. So if it takes 10% in that model for you to be profitable, it’s not a good idea. So it’s looking at, it’s kind of taking your grand vision and getting real about it. And that’s really what it takes. And those three questions where I start with everyone, because when we can answer those three questions, and we feel good about the answers, and we can see that there’s a real market and a real problem and real people at the end of that thing, then the recipe comes about figuring out, you know, what should be in your MVP. MVP should be for user one, on day one has to get value, otherwise your MVP is not actually viable. So if you’re looking at if you’re looking at our product that all it is about is big data and it requires like huge social media networks, you better be willing to spend a few million bucks at least, going in and buying that data in order to have that value day one. So maybe that needs to come out of your MVP and you need to figure out what are you doing on a personal level that drives people to use the product to generate all of that interactive data or whatever it is. So that then you can report on it in phase two, or phase three or five years down the road when you have enough of it, right?
So you have to figure out what’s the problem you’re solving and who you’re solving it for. And then you can dig into the details of what is really a minimum viable product look like? What is it really going to take? Who are the people I need on my team, right? Like, do I need a technical co-founder? Or can I raise some capital and hire a really good software development firm that works with entrepreneurs and understands the sort of constraints of that? And can I get the job done that way for a while, you know, there’s lots of different ways to make this thing work. And a lot of what I do with my clients and with the entrepreneurs I work with is figuring out what’s the right answer for them. Because there’s no formula I wish that there was. Just to figure out whether or not you have a market whether or not your idea has a real ROI potential. There’s a formula to that. But figuring out what the next right steps are, there’s not really a formula. There’s a lot of things to consider. And at some point, you got to be willing to be like, “I’m doing a gut check this feels right. And I’m, I’m willing to stand by the decision to go forward.”
[16:21] So we left off on number three, I think you said there was six, right?
- Yeah, there’s six. Okay. Yeah. So who what’s the problem and who were solving it for? I have skipped over one getting to MVP, I guess we did talk about user personas. That’s number two. Then there’s Blue Sky which comes after user personas but before MVP. So Blue sky is if you don’t get out of your head, all that stuff that’s rolling around in there, you will always be distracted. It’s like trying to aim at your MVP and they’re squirrels and shiny stuff, passing you by on every side because you have never gotten it all out, and you’re worried that’s going to get lost. That’s how our brains work. Blue Sky is literally, I do with sticky notes because I’m a very tactile learner. I write out sticky notes of every possible thing I could ever want to see this thing do. If you could wave a magic wand today, and your software would be perfect in your mind, what’s all the stuff that it does, and every one of those goes onto a sticky note and gets stuck in a bucket or, you know, on a whiteboard somewhere in groups or whatever. Because then it’s out of your brain and you can do that slash and burn like we were talking about. What really creates value, user one, day one and come up with your MVP. Okay, so “What’s the problem?”, user personas, Blue Sky, then MVP. Then you need to talk to people. Because once you have an idea what your MVP needs to look like you should build a prototype of it. This is not something that’s connected to a server typically, this isn’t something that somebody could say, “Oh, where can I buy this?”
[18:02] It could be just wireframes, could it not?
- That’s exactly right. Balsamic is a tool that I use all the time for this process, which is customer and product validation. Talking to a body of real people who are your real end users who have the real problem that you’re trying to solve, because we need to decide whether or not this solution resonates with them. If you’ve missed the mark somehow, they’re going to tell you or it may be that you thought the problem was the way you originally defined it. And in 90% of the cases, they’re telling you, well, actually, “This over here is a much bigger problem and I pay a lot of money to solve that.” So it could be you have the right target audience and you’re in the right thing, but you need a two degree pivot, you know, in one direction, and all of a sudden, now you’re really hitting the mark every time right? So customer and product validation. And then the last step is to look at all of that body of data and come up with, “What is the right pricing model?”, “What is does your pro forma look like?”, “What is your go to market strategy?”, “Does that fit in?”, “Does that strategy fit in with what your MVP is?” And then being able to say, “All right, I’m ready, let’s pull the trigger and get this thing built and execute on the plan.” So the six pieces are building the plan to get you to a place where you can confidently say, “Yes, I’m going forward, I believe in this plan. And all I have to do now is execute on it. And I’m putting all I have to do now.”
[23:14] So let me give you a hack for a good chunk of that I discovered, a long time ago when I was trying to start my very first company and I really had no idea what I was doing. I went to a trade show. So I love to talk about passion. I love fast cars. I like the internet. So I went to the SEMA show in 2000. I think. And I walked around with a simple question for all these manufacturers, “What are you doing to integrate the internet into your business?” Because at the beginning, I didn’t know how to ask a smarter question than that. And as I, as I spoke to each brand on this massive trade show floor, I would get little pieces of information, feedback. And I slowly got it figured out that at that point in time, because of the lack of technology that manufacturers had to, they’d make too many of these widgets and not enough of these widgets, and that would cost them profits. So what I figured out in talking to this one company, which was way towards the end of my visit, to the show was, that if they could figure out how to not make too many of these widgets and make more of those widgets, they could save about 10 million bucks a year. Now, here’s where I was dumb. Where I was dumb was, I said, “Okay, sounds good. Let me go see if I can raise some money and then I’ll come back to you.” Stupid, stupid, stupid, stupid, stupid. What I should have said was, “Great. If you fund the the prototype of this, we will build it with a heavily skewed to solving your problem. We’re going to sell it to other people, but I’ll give you some equity as an exchange for that. When you say, yes, instant validation. And you’ve raised your money, and you’ve got your beta customer.
- That’s exactly right. That’s exactly right. So a lot of b2b solutions can be done that way. Where if you have like, I have a client right now, if we get two or three small regional banks to sign on the dotted line, that’s all the money we need. And actually, one or two of those banks really wants to partner with us and wants to put in some capital so you’re absolutely right. There are strategies like that. Typically, the customer validation and the product validation piece, the the interviewing, that’s more about end consumer stuff, and it’s ironic because it takes a lot more work when you do it that way because you have to talk to more people to get the data. But you also get pretty good data. So yeah, I love your hack. Totally pre-selling. That’s exactly, I think that we talked about that last time we talked, is I am a huge fan of bootstrapping, and I’m a huge fan of pre-selling. You know, when I first started out in software, we used to call that vaporware. And it came with sort of like a smear and, uh, you know, back at the throat, whatever, you know, and now I’m like, man, technology moves fast. Yeah, I can build it faster. If I know that I have somebody sitting out there ready for it?
[22:39] Yeah, if you’ve got detailed enough wireframes and you have either the track record of making software before or you’ve partnered with a firm that has a track record of making software before, there is not a reason in the world why you shouldn’t be able to get a check.
- That’s right. That’s exactly right.
[22:57] You won’t get it from the first company you talk to but that’s why you go to trade show. these days. Although we don’t have trade shows these days
- I know, especially with all this.
[23:05] Yeah, it will happen again. You know, well, year two or three, hopefully not that many. All right. So in terms of developing the tech specs of the MVP, I know you talked about that a bit. Is there any color you want to add to that?
- Like digging in and saying what really needs to be part of the product? And how do you kind of get an idea for scope? And yeah, and like
[23:34] Obviously, scope is going to proceed budget and if you’re gonna think a little with your company you founded at a trade show. They don’t want to see a budget and a timeline.
- One of the ways that I actually really love to figure out what technical requirements I need, and this is really only a modern era thing, you couldn’t have done this even five to seven years ago. I love to go out and look at what kind of SaaS and platform as a service options exist in the world and figure out what of those do have things that I like or need. And where do any of those fall short. And that is a really good way of getting out, okay, I need to have these kind of features and functions, and here’s sort of what they need to do. And is looking at what exists in the world. In fact, I have a client, who when I first started working with them about six weeks ago, I was like, “Phew, this is like, three quarters of a million dollars worth of software we’re talking about,” and I was like, “But let’s do some research. And let’s get creative and, and we’re going to end up being able to put it together for about 50 grand because we’ve got two strategic partnerships with people who already do this stuff in the industry. And we’re just bringing those two people together and leveraging the platforms they already have.” So understanding what exists in the world and being able to be honest with yourself about your real competitors will go a long way to helping you design and put down on paper what your requirements really need to be, which will narrow your scope down and it will help you get it will help you get a better cost. In the end, the more detailed you can be with that.
[25:13] Not to mention reading negative reviews on sites like G2. Or you can see for competitors what people aren’t happy with. Also, gain an understanding because like I have a competitor, that their software functionally does very similar things. But their go to market strategy and their target market is wildly different than mine is. So we’re obviously doing very different things. And by looking at G2 or sites like G2, you can see who is leaving the reviews, then you can look up where they work and then you can sort of back your way into. Well, my competitors target market is probably, you know, enterprise in this case, where my target market is more SMB.
- Yep, totally. Totally. And one of the one of the things I do when I design customer validation interviews is I always ask, Are there things that, “What are you doing to solve the problem today?”, “What do you like about those solutions?”, “What do you not like about them?” Because sometimes the way that you compete with your competitors is to just do it better. Like it could be the same, but you do it better. And you’ll gain 15, 20% of their market just because you’ve solved a problem that they haven’t solved yet.
[26:26] Yep, absolutely. So in terms of the budget, because this is fraught with errors, especially when it comes to building software, because everything is more complicated, and you think everything takes longer than you think. Is it really feasible to come up with a budget? Or do you then triple it when you’re done because if you’ve got investors, or you’ve got your beta customer, like we talked about a few minutes ago, and you, you know, wildly miss expectations, you might as well have just shot yourself in the head because now they’re going to be so unhappy. Happy that they’re not going to want to continue.
- So the problem with the way people think about software development budgets is that they think about it as once the software is built, I’m done. You have to sort of like thinking that once I build my house, I’m done. That’s not true. Like they tell you to build in a certain percentage every year for maintenance items. And you know, that in 10 years, all of that lovely travertine that you put in your house is going out of style. So you’re probably going to need to make a plan to have a renovation budget at some point. And probably before you sell, you need to make sure like, there’s lots of things over time that go into maintaining it. It’s the same with software. Is it realistic to come up with an initial MVP budget that you can pretty much count on? Yeah, I would say you should always have about a 20% reserve. Because just like when you’re remodeling a house, and even when you’re building something new when they start digging up the land or when they start digging into the requirements, you know, whatever it is, they’re gonna find stuff that we’re like, “Oh, we don’t actually know how to solve that, because we didn’t foresee that problem.” So acting as if that wasn’t preventable is part of the thing that gets people frustrated saying that I have 20% over my original budget set aside for things that may come up will help prevent that.
And then realizing technology moves really fast – servers are constantly being updated. API’s to products that you might be using are changing, the underlying security mechanisms of stuff that your software is sitting on are changing. You have to be putting money into active development all along the way. How you decide whether you bring that in house versus whether you continue to use like a contractor or something like that. It’s just about the amount of time and energy you have to put in to upgrading features, adding new stuff or maintaining or your software. If it’s, you know, less than 50 grand a year, it makes no sense to hire a person to do that work. Whereas if technology is the core of your business, and that is the thing that creates the value, you should probably have a full-time team on staff working on that thing all the time, right?
So the problem that people get into is thinking, one that, that they don’t need a buffer, that’s a mistake, you need to have a buffer, I say 20% depending, you should look at the track record of the partner that you’re using. Because if they can’t show you their on time record, if they can’t show you their budget, you know, over under record, it’s probably not a great partner to work with, because they’re either hiding something or they just aren’t tracking it, which means they aren’t keeping an eye on being efficient, and doing well with your time and your money, right? And then the other mistake is thinking that once it’s done, it’s done. Because that’s just not the case. There’s always things that have to be done, and there’s always money that has to be spent and so you need a budget for it. And when you have to budget depends on the project.
[29:56] So let’s talk a little bit about vetting a developer because a buddy of mine is actually developing an app and he literally had to start over. Because the first four he hired a firm in India. And they were making great progress. And I was getting all these updates. And he’s like “Trent, we’re like three weeks from launch.” And then I’m like, “So what’s going on?” like a month later. “Oh, they ghosted me like I don’t know where they are. I can’t get a hold of them. I got to start all over again,” which I can’t even imagine. Anyway, when it comes to vetting developers, what are the must ask questions and the must have proof of credibility that you look for?
- I love offshore development teams. When they are managed and trained and run by somebody I can sit in their office and look them in the face. So I have no problem with companies that I work with or developers that I work with, using offshore teams. I don’t want the officer team being the one doing the management. And I’ll tell you that there’s a very good friend of mine here in Denver, who runs custom development shop. She uses all offshore developers, but she spent the last six years training these guys, what American specs look like. And what when somebody says these terms, what do they mean and working on refining that process with them?
So what you’re really looking for, like I said, is you want to see an on-time, on-budget record. “Are they consistently 20% above their budget, but they’re always on time?” Well, that speaks to the 20% that you know, I told you to block right? Are they consistently on time and on budget and how they’re showing you that is, there are some people who keep a scorecard and it’s super brave and super vulnerable, and I love people like that. It’s kind of rare too because it takes being pretty honest about what you’ve really done with your projects and mostly in business. We want to paint ourselves in the best light possible. So what’s more important is to find the companies that have worked with the team, get their referrals, and then do more digging to find the companies that they didn’t refer to you and ask them what their experience was. Because a lot of times companies will work to prep those three referrals that they really love, because the other 25 companies they’ve worked with in the last year don’t really have great things to say about them. But you can find those companies if you do just a little bit of digging. Yeah, so I think I think referrals are really important.
[32:33] I actually had somebody do extreme vetting on me a while back before joining one of my programs, and I mean, he went back 10 years. He looked at the Wayback Machine, he looked at testimonials on sites that aren’t even live anymore. He called and contacted a bunch of them and, and every you know he signed up because everybody said great things. They said “Yes, he’s a great guy and he’s going to do what he says he’s going to do and so forth.” But I actually may have a video now of him explaining how he vetted me to make sure that I was legit. So I echo your comments if you’re willing to do a little extra legwork, which might be will take you an extra week but could save you hundreds of thousand of dollars. Yeah, it’s it’s well worth the time.
- And beware of your cousin who’s an app developer, I like, gut check, you know, when you’re using friends and family versus when it’s actually worth spending the money and going legit. And also that that also goes for your technical co-founder, if you are somebody who feels like having a tech co-founder splitting your company because somebody gets your vision, do some digging into that person’s background because you know what you bring from a vision perspective, from a strategic thinking perspective, from a sales and marketing strategy perspective, whatever the other pieces are, you should understand just as well what all of that person’s got coworkers are other projects I’ve worked on how did those really go? Because you’re giving up quite a bit of your company for a technical co-founder, sometimes as much as half. You’re vetting them. I mean, you’re vetting them. So you should do it as if they’re a company that you’re hiring and spending hundreds and thousands of dollars on.
[34:17] In my case, I lived with him for years, and we’ve been friends for 10 years. And I watched him start his first company, and I watched him deal with a douchebag, co-founder of that company. I saw, I was his roommate, when I watched how he handled himself during that situation. I watched how he sold the company. I mean, there’s not much about this guy, I don’t know. And I would give him the keys to my bank account. But that’s not, that’s not easy to find. I was exceedingly for, I wouldn’t say lucky but fortunate to be in that situation. I think most people are going to not have the benefit of you know, having been roommates with their co-founder.
- That’s right. And you know, their service their sites out there like Founder dating is one, which sounds really good, right? But again, you got to dig in with those people. I mean, it’s a website that somebody can join or pay to join or whatever. So you just got to be really diligent about who you bring in, and why you’re bringing them in and, and do those gut checks, like trust your intuition about stuff.
[35:22] Once development starts, so let’s say, you know, like, we started here, and the forecast is we’re going to get to MVP at month 12 just to make it nice, easy to talk about. And obviously, the answer to this question is going to be subjective, because you’re going to change on a case by case basis. But if you have a rule of thumb for when the marketing should start, what would it look like?
- So here’s generally what I tell people. SEO is a long game. You need to start that, I would like to see it 12 months before your launch. Now there are some projects that are shorter timeframe than that, you start that like day one. It’s not super expensive, but it’s really important and it will help you kind of hone in on sort of more of the validation stuff we’ve already been talking about. Who are the people? What are they looking for? How are you solving their problem? So I always say start that, you can never start that too soon.
Social media, content strategy, generating blog posts, I say, at least six months prior to launch because you need to start establishing yourself as an expert in the field that you are addressing. How you do that is by putting out content. So I always point to of the last 10 clients that I’ve landed, none of them came to me through online mechanisms. Every single one of them told me they hired me because of what I post on LinkedIn, what we post on our blogs, and all of our videos on YouTube. Every single one of those. I am established as an expert in the areas that I work with people on and that’s very clear based on not only the body of work that’s out there, but the quality of the content that I’m putting out there. And that’s really important. It’s like you said to me off the air, Trent, “You got to write for people, you got to talk to people, you got to be solving. If you’re not solving a little bit of the problem every time you put out a blog post, or every time you put out a video or a social media post, you’re not doing it right. And you’re not establishing yourself as an expert.” So I always try, I always say if you can start that stuff about six months prior to your launch, to give yourself six months of a body of work to establish your expertise, that’s about right.
If you have the budget for PR, earned media, you know getting on news channels, getting written up by other bloggers, influencers. I like to start that two to three months prior to launch, because you want to build enough buzz but you don’t want to have to hold on to it for an extended period of time, because people’s brains are very, they lose track of it real fast. Two to three months is about right because it means that the average person who you’re trying to target will have heard your name, associated with your message two or three times in that time period. So that when your launch happens, they’re going to understand whether or not they need to be going there. And that usually takes two or three months to get those couple of touch points and for people to remember it.
And then I don’t start doing online advertising or any kind of traditional advertising like Google AdWords or Facebook or LinkedIn advertising or TV or radio or anything like that, until launch month, because typically, if it’s an ad situation and you’re telling me to go somewhere to click on an ad, I want to be able to buy right away. So all the other things are kind of establishing you in the market and getting people to know your name, that ad needs to be instant action. Now the one time where I will say that I would potentially take out ads is if the development of my email list or my contact list relative to a product is really valuable to me, then I might do some ads like in those two or three months, where I’m doing marketing and PR where people can click on a thing and the action they’re taking is given me their email address and like lead generator. But usually again, I won’t start that more than two or three months out because people want the thing. So that’s how I usually recommend it. That’s how I kind of set up when I set up performance for my entrepreneur clients. Usually that’s how I set up their advertising marketing spends and the timeframes and all that.
[39:44] So before we wrap up, let’s talk a little bit about fundraising. There is obviously you know, you got to get money to pay for your thing, somehow. Earlier in our conversation we talked about maybe getting your first customer to pay. In my case, I have other profitable businesses. So I’m able to bootstrap, not everybody is able to do that. So somebody, there’s lots of people who need to raise money. Yeah, where, when, how, who walk us through it.
- So again, this is one of those things where it can kind of like flex based on the situation, right. But, typically before revenue, if you’re pre-revenue, really, you’ve got friends and family, and seed or angel investors. And where I love to look for people, is investors that have already done work in my industry, or other business owners in the industry that I’m targeting, who might want to partner or invest in order to get a better deal or get early access or solve the problem for their customers or their business or whatever earlier. When you’re pre-revenue, it’s the time when you have to get the most creative. It’s really easy for a venture capitalist, or even an angel investor, to look at a company that’s generating revenue and say, “How do I think this is on an upward trend? Do I think that this is going to hit?” you know, these arbitrary metrics that I’ve set for myself, because it’s all based on revenue. When you’re pre-revenue, you have to get a lot more creative. There are people who will invest in companies like that, I see it every day. Generally, they need to have a really good understanding of your industry, or they need to have some kind of a belief or investment in you as a person. And if you can find somebody who has both of those things, you’re golden, and you can probably get everything you need that of one person.
[41:39] And that is what actually happened for me with my very first company. The investor was someone who I actually used to manage his money in my prior career fair. And luckily for me, the very first investment I made for him, he did very well so I was the golden child. Even though the other subsequent investments were just like average base hits, first impressions being what they are. And that was 30 years ago, and I’m still friends with this man to this day.
- I love to hear that story. That’s awesome.
[44:12] Yeah. With respect to raising money from strangers in the event that you didn’t have somebody like I had, I call him my Rich Dad, do you need a business plan or pitch deck these days are both?
- The purpose of the business plan now, no, but I have not in probably at least two or three years had an investor asked me for a business plan. They’ve asked me, did I do the work of a business plan and usually that comes out in creating your pitch deck and how specific you are and how well you know your market. The purpose of doing the business plan is to dig into all the areas you have to be able to speak to in order to sound intelligent, and in order for an investor to take you seriously. They don’t need to see it. They don’t want to see it. What they want to see is that you know it and they want to see your pitch deck and I usually encourage people up to two different kinds of pitch decks. One is the kind that you are doing a live pitch and it’s a slide deck that’s in conjunction with your speaking about what you’re doing. The other is a send away. The send away can be a little bit more wordy, but I would still err on the side of the more you can do, the more you can communicate what you’re doing with graphics with short, concise phrases, not even entire sentences, and somebody can get it right away, as an investor that tells me “You understand really well what you’re doing. And I also understand what you’re doing and I didn’t have to spend the six months that you did doing all of your research.” So it’s really, really key to not get too verbose. And it’s easier to do that with the live pitch deck because you’re talking about it in the moment, but I have seen some really good send away pitch decks that have very few words and there’s no big long sentences and tiny type, you know, stay away from that, if you’ve done that you’ve done it wrong.
[44:02] Well, luckily, there’s this thing called the internet. And it’s filled with pitch decks of companies that have already raised millions and millions of dollars. Look at their pitch deck, so you do not start from scratch.
- And be aware that just because a company raised millions of dollars doesn’t mean they had a good pitch deck.
[44:20] Nope, they might had a key relationship where they had a groundbreaking idea or they had a founder who had a track record already. And he could have raised money simply by saying, “I’m doing another deal, are you in?”
- And everybody was like, “Yep, how much do you need this time? There you go.” That’s, that’s exactly.
[44:36] Alright. Well, it’s been a pleasure to talk about this. I do hope that we have delivered value to the audience if at a minimum, we have helped at least one person avoid blowing 300 grand, lose six months of their life, losing their house and their wife and every other thing under the sun. Mission accomplished for people who would like to continue this conversation with you. What is the one easiest way, don’t give me six, just one, that you would like them to get in touch to reach out to you?
- com, R-A-I-K-A-T-E-C-H.com. Everything, all of our social media profiles, our blogs, all that stuff’s linked to you from there you go there, you’ll be able to get me and anything else that you need.
[45:18] Let me make sure I’ve got that in the show notes rattle that off one more time, so I can put it into the show notes.
[45:30] Raikatech.com There we go folks, so if you’ve been driving, don’t try and write that down, it will be in the show notes. I don’t know the episode number yet, but I’ll set it in the beginning and at the end, in post production, so you’ll find the link. Alright, Cynthia, thank you so much for making some time to be on the show is pleasure to have you here.
- Thank you so much for having me. I really enjoyed our talk and I did your show man. You talk to some cool people.