47 – Day Zero as a Founder – 1 of 2

So you’re starting a company? You’re now officially a founder. What should you do first? In episode 47, we will frame the landscape, share when it is a good time to start a company, how validate your start-up idea and the 3 key things to take into account: product, market and team.Navigation:IntroFirst Things, FirstWhen is a good time to start?How to validate a startup idea - vitamin vs painkillerThe 3 key things: product, market, teamConclusionOur co-hosts:Bertrand Schmitt, Entrepreneur in Residence at Red River West, co-founder of App Annie / Data.ai, business angel, advisor to startups and VC funds, @bschmittNuno Goncalves Pedro, Investor, Managing Partner, Founder at Chamaeleon, @ngpedroOur show: Tech DECIPHERED brings you the Entrepreneur and Investor views on Big Tech, VC and Start-up news, opinion pieces and research. We decipher their meaning, and add inside knowledge and context. Being nerds, we also discuss the latest gadgets and pop culture news Subscribe To Our Podcast Bertrand SchmittWelcome to Episode 47 of Tech DECIPHERED. This will be the first episode in a series of two episodes about Day zero as a founder. Basically, we will talk in Episode 47 about what is Day zero as a founder? We will talk about when is it a good time to start a business, how to validate? Your startup IDs. Of course, we'll go around three key things: product, market, and team. That will be all for episode 47. You will hear more in our episode 48 about culture, about structure, legal, and about second-time funders. Nuno.Nuno Gonçalves PedroFirst things first.Bertrand SchmittFirst things first.Nuno Gonçalves PedroFirst things first, what is day zero? Day zero is basically to us when you're really starting your company. You have an idea, you may have done a little bit of market research. You've sought through a few things, but you're about to go and embark on this journey of having a startup or a company of some sort.Nuno Gonçalves PedroThe first important thing is, what are you doing? What is it you're going to do the company on? Is it a services company? Is it a product company? Is it something that you've done before? We're going to start a little bit today in this episode talking about first-time founders. Later on, we'll talk about the differences between second-time founders and first-time founders. Most of the episode today and then part of the episode next time will focus a lot on first time founders.Nuno Gonçalves PedroBut at least you have to have a notion of product or service. What is it that I'm supplying to the market? Second, what is the market? What market am I going to operate in? Third, what is the team? Normally, the team at day zero is you and potentially co-founders. It might be you by yourself, if you're a single founder or a solopreneur, as we call it.Nuno Gonçalves PedroWhat do you do first? The first things you need to do is to understand what markets are you going to act on, what products or services are you going to manifest in that market, and what's the ongoing team into this problem, into this company? That's your effective day zero start. If you don't have these things and you're like, "Oh, I just have an idea for a startup," that's cool, but it's not something you can go and raise money on. It's not something you can go and do anything on. You have to at least go to a stage where you have a plan, where you have a potential co-founding team, where you have a market that you're going to operate on.Bertrand SchmittBy the way, not all businesses are venture-backable or not, and that might be something we come back to. I would say another point is also around, are you still working another job? Are you doing this part-time during your nights and weekends? Or have you resigned from your previous job and moved full-time on this idea? That's always a big question.Bertrand SchmittI would say a lot of people, you wonder if they are serious enough when they have been something for many, many months or years and they are still not full-time on it. They still have their previous job. Day zero for me often come when you have made that real-life decision to stop what you are doing and be really focused on this new venture. What's your take? Do you need to have taken a career break?Nuno Gonçalves PedroI understand what you mean by it. If you aren't about to create a company itself, an entity will come back to structure later on. If you're not really putting any resources at the table that are significant, that for me is the bar. Day zero, you have to put some resources at the table, some cash, your time allocation, about to create that entity or you are creating that entity. I'm not so strong about the full-time or not, but there has to be a significant part of your time focused on this.Nuno Gonçalves PedroTo your point, if you're not just full-time, then if that's been going for a while, if you've been not full-time for a long time, then there's something wrong. Either you think you're doing a venture backable business, but actually nobody's giving you money, or you're not fully in and you're not all hands on the project and people don't recognise that type of focus on the startup. There's something then fundamentally wrong.Nuno Gonçalves PedroIn general, it would be good that people are full-time. In general, it's good that at least the main founder of the firm says, "I am full-time. I am working on this full-time." The other co-founders might not all be full-time, but at least one person, the CEO ideally, would be full-time. As I said, I'm not as specific on that for the day zero definition, but probably would be a good manifestation at least a couple of months in, that the person is full-time.Bertrand SchmittI think because we all might have ideas, we all might try some stuff on the side, look into something. But I just feel that's pre-day zero, and the day zero is more clear mark that something different is happening right now. I think even at this one person that is either full-time or spending an incredible amount of time is a clear necessity. Starting an entity is another one, and starting to have a clear idea about the product on the market.Bertrand SchmittYou might change over time, just to be clear. That is always true. You might decide to pivot three months, six months, 12 months to three years, four years after the fact, that happens. But having a clear starting point helps you clarify things and try to move toward this goal. I think another thing I like to see is a clear timetable. I think in the past, it has helped me when I started businesses to give myself clear timetable.Bertrand SchmittI give myself six months, 12 months, 18 months to reach specific milestones so that I can reassess. I think it's quite critical because you can get lost pretty easily in your ideas and exploring stuff and never-ending quest of digging some market or optimising a product and never launching it. I think having a clear timetable is a very important thing. Probably also starting to get visibility on, are you going to do this alone or are you bringing co-founders for the ride?Nuno Gonçalves PedroWhat is it not? I think if you're at the idea stage, very high level, you haven't done much research in any specific market or product, if you don't have at least this notion that you're going to create an entity and that you're going to create a growing concern, a company, then I don't think it's day zero. This could apply not only to first-time founders, but also to second or third-time founders.Nuno Gonçalves PedroSome people, when they're about to go on their second or third journey, they take some time to look at a bunch of things, talk to people, pick their brains, etc. They're not the day zero of anything. They'll only be at day zero the day they say, "I'm going to do this. Now I'm going to do this. I've decided this is the space I want to act in." There still might be some pieces to flesh out, but that decision of, "This is now going to be my pursuit," is for me, a core characteristic of the day zero.Nuno Gonçalves PedroWe see a lot of people that prepare pitch decks and they're like, "Oh, I'm a first-time founder. I've prepared this pitch deck. This is an idea I have." That's also not day zero. It's like, "Okay, do you have an entity you're about to create? Do you have a clarity? Have you done proper research on the market sizing, or is this just a very high-level pitch deck with some bullet points that you put together because you so fancy?"Nuno Gonçalves PedroTo the final point I would say on what is it and what it's not, not everything is venture-backable. Not everything is tech. Not everything is a company that necessarily scales and is product-led. You could have an idea for a restaurant or you could have an idea for a services company, which by the way, normally are not super mega venture-investable businesses, but the process is still the same. The process of defining what is my market, what is the product I'm going to offer to that market, or what is the service line that I'm going to offer to this market? What am I supplying for? What is the team that's going to be involved in building this up? It's exactly the same. It just happens to happen in a world that may not be a fundamentally tech-enabled product.Bertrand SchmittYeah. One of the big difference would be how much money you need to start the business and you need to keep investing from especially external sources to keep the business growing, that would be a big difference, obviously, between the service business as well as a product business. Now, of course, you can also have product businesses that are not VC-backable or yourself make a decision that you don't want to keep looking for additional external financing during the journey of your business.Bertrand SchmittTypically, one thing I've learnt is that it really depends on your market and industry. If it's extremely fast-moving,...