9 things I would do different if I were to build my 2nd startup
My first startup failed. This is what I would do differently now.
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Nothing changes if nothing changes
I started my first serious company almost 4 years ago
I had been working a couple of years as an M&A Lawyer after graduating from college when I realized that wasn’t what I wanted to do for the rest of my life. I liked the hustle of the job and working on deals under great pressure, but I quickly found out I was more interested about creating, ideating and strategizing than about legal matters. I wanted to make my own decisions, not to advise on less relevant matters around deals in which I could only see paper files.
As a lawyer, on a day to day basis I drafted and reviewed all type of agreements, from SPAs, LOIs, Real Estate purchase and rental agreements, as well as drafting board and shareholders meeting minutes, shareholders agreements and more.
After a couple of personal events I decided it was time for me to move on, not knowing what I would end up doing. It’s crazy, but although I had worked so much to get in the law firm I was working for, I didn’t hesitate at all about leaving. I knew what I didn’t want, that was a good first step.
With my professional experience I thought it would be cool to try automating the process of creating and signing simple agreements, and decided to build what would later be Tueri.
Tueri was a SaaS B2B Company that automated contract creation and allowed for them to be signed digitally in a sequence. Changing my identity from lawyer to tech founder was hard but building a startup with no knowledge about companies at all was harder.
Together with my cofounders, I built a product, found multiple clients and raised a little venture capital. However, two years after we were closing the company.
This is what I would do differently if I started another company now.
THE START
1. Build around something you are passionate about
I feel like I started my first company without thinking about what I wanted to build first. I knew there was a pain around the drafting, management and signing of agreements but it wasn’t something I was really passionate about. We started selling to real estate agents, which is a type of business that I didn’t particularly like a lot either.
I would now approach this very differently, I would try to build a business around a problem that I am really passionate to solve for a specific group of people I really want to help. Also I would have in mind this is a long term project, so if I’m not able to work on it for at least 5-10 years on it I wouldn’t start.
Building a company is a great investment of time and effort, so create something you like and enjoy.
2. Never ever build a nice to have
There are millions of products you can build. Out of them, why would you choose to sell something nobody desperately needs? Nice to have products are hard to sell and have high churn. Don’t do them.
I would try to build something that your client needs to use no matter what, every day of the year, every hour of the day. Then the challenge is to create a solution that is so good that your client doesn’t even realize you exist.
3. Sell to professionalized medium companies with a lot of cash
We used to sell to real estate agents, a niche that shines for the inconsistency in types of company sizes, the lack of professionalization and a really low cash flow because they make money only when closing a deal. It’s an awful niche to be in!!
Look to sell to companies that have recurrent revenues, high margins and are making more than 1M in revenues. Obviously, sell to growing industries not declining.
4. Find the cofounder you need, or don’t
I had the most amazing team at Tueri. My both cofounders, Luiz and Dani, where smart, fun, hardworking, passionate and supportive. I built a long lasting friendship with them and lived a very special stage in my life. I’m truly grateful for them to have trusted me to build Tueri.
When looking for a cofounder, you have to look for what you need to build your company during the first years, and someone with the capacity to grow as fast a s the company grows. Most times people will get cofounders because they don’t have money still to hire employees. For people that do have money, it might make sense to hire instead of finding cofounders.
GROWING THE COMPANY
1. Focus on building your product for your ICP and getting traction - nothing else matters
Don’t try to do things that scale at the beginning, it’s not about that. Build your product, put craft into it and start finding customers as soon as possible. Focus on getting one customer after another for at least one year without thinking about anything else.
2. Forget about incubators, accelerators, startup gurus and other
All those are a waste of time and will not improve your business. Ignore them.
3. If you are not selling internationally you aren’t selling
The money is not in your small town, it’s out there and you have the power of the internet to reach it. Build and sell internationally and take profit of arbitrage.
4. Don’t talk to investors until you want and are ready to raise, and when you are, find the investor you want to partner up with, avoid the rest.
Don’t talk to investors until you want to raise capital. The more you talk to them the more time you are wasting which is less money your business is making. If you want to raise, think about what is your long term plan for the company before. Investors- have their own agenda so make sure your plans fit with who you partner with. If you want to keep the company and grow it slowly but profitably maybe a more traditional investor like a family office will fit better. If you want to grow your company faster and exit in some years the VC route could work better. However, partner only with investors that will care for you and your company.
5. Focus, focus, focus!!!!
Thanks for sharing Guillermo. Good learnings for all founders.