Building a Startup: Drawing Parallels with Constructing a House
Success Begins with the Right Plans: Building a Startup.
Imagine, if you will, a contractor who approaches you with a gleam in their eye and a plan so vague it might as well be written in invisible ink. “Trust me,” they say, “I’ll work on your house for three months. I’ll spend 30% of the money on plumbing, 30% on framing and building the walls and roof, 10% on electric work, and the rest on paint and such.” When you ask if the house will be livable by the end, they shrug. “Who knows? But isn’t the journey exciting?”
This scenario is so absurd that you’d likely laugh the contractor out of your yet-to-be-installed front door. However, it bears an eerie resemblance to the pitch many startup founders make to potential investors. Research indicates that more than half of founders don’t have a decent “use of funds” slide, and this isn’t great. Founders, there’s room for improvement.
When you’re building a house, you’d demand a blueprint, a timeline, and a clear picture of what your future home will look like. You wouldn’t settle for a contractor whose only plans are to “wing it.” In the world of startups, however, founders often expect investors to buy into a dream woven with threads of ambiguity.
Investors, much like homeowners, aren’t looking to pour their money into a foundation that leads nowhere. They want to invest in a “house” that, at the end of the construction period, is not only standing but is also ready for the next phase, whether that be living in or selling.
For a startup, the “finished house” isn’t bricks, mortar, and those cool USB power sockets; it’s built with milestones and achievements.
Will the startup have filed any patents? How many customers will it attract? What revenue figures will it boast? These are the “rooms” and “fixtures” investors are looking to find in the startup house. If these milestones align with what investors expect for the startup’s next funding round, the startup stands a pretty decent chance at a successful fundraise.
The house analogy works in more ways than one: Mistakes happen, and estimates that are flat-out wrong are pretty common. No one expects a contractor to predict the future with absolute certainty; weather delays, supply issues, and other unforeseen events can always throw a wrench in the works. However, a good contractor will have a plan, a schedule, and contingency measures in place.
