5 Lessons I Learned Creating a Million Dollar Tech Startup
In 2014, I and a couple of my friends started working on creating a marketplace-based tech startup in 2015 we got our initial seed funding from a venture capital firm that valued our startup at 5 million. So today, I wanted to share some lessons, I learned from that experience and hopefully provide some insight into what it is like to create a tech startup. Hi, guys my name is Utahan I make videos related to software engineering and productivity, so if you're new here please click the subscribe button and hit the notification bell so you get notified when I post new content to help you become a more successful software engineer whether it is landing your dream job or getting into tech entrepreneurship or just becoming more effective and efficient at engineering, as usual, there are timestamps for everything I'll be talking about in this video, so you can jump around if you get bored.
I'll also have these in the description below alright, so let's get started as a software engineer you grow up hearing stories about companies like google Facebook, Dropbox, Uber, and a ton of other companies, that went from garage or college startups to global tech giants and it's hard to not dream about building one yourself and there's nothing wrong with that I thought the exact same way what no one tells you are just how much work it takes like a fresh startup your primary goal is to get funding. Unless you've got deep pockets already which we did not and funding is hard the media portrays the whole process as someone waking up with a million-dollar idea and selling the idea itself this cannot be further away from the truth more on this a bit later but in most cases, venture capital firms and angel investors expect to see a working product and some traction already this makes it like the chicken or the egg problem building a production-grade product that already has market traction takes engineering and marketing resources which are very expensive and that is the reason why startups look for funding to gather resources that will help take the product to market because of this circular dependency there is always a massive sense of urgency to build a production-ready product and build it with extremely limited time and resources when I was working on our startup I was also working full-time at Microsoft with some already challenging projects.
So i basically had to go to work for eight to ten hours come home take no break and work on the startup for another ten or so hours i had no social life no personal life just work i barely got any sleep with at least a few all-nighters every single week on a good day maybe i'd get four to five hours of sleep and on average it was more like two to four hours i remember my teammate deploying last minute changes for an investor pitch at 5 am on Christmas day needless to say by the end of 2015 even my health report clearly showed that this crazy work schedule had taken a toll almost all of my lab tests were well into the red zone thankfully all of our family members and significant others were very supportive and understanding even my dog did his best although he tried a lot to get me off my chair and to play with him you're constantly working under, so much stress and pressure that whether you have a cohesive team or not will make or break your startup tempers will flare some unintended things will be set that is almost inevitable but a team that understands that and can continue normally when things settle down will go a long way research shows that from all the startups that fail almost 20 failed because of team problems which is surprisingly higher than financial reasons at 16 and while your immediate team is what directly impacts your startup your family members and your friends also make a huge impact they are your support system and will have to endure the side effects of you being constantly under pressure all the time their understanding and support will go a long way as well also the tools building for a startup is not like building a mature production grade product you're constantly treading this fine line between a functional product and something you can iterate and pivot on extremely short notice it is like building a series of MVP instead of one single product and it's a fine balance and the tools you pick will make a huge difference this isn't the time to pick the best tools but to pick the tools that will let you execute most effectively it is highly likely that your original.
Product will completely change and you will refactor a lot of your product after you get reasonable funding which takes me to lesson number three like i mentioned before Hollywood and media in general like to sell fairy tale stories of someone who woke up with a million dollar idea and made it an overnight success first this is an incredible oversimplification of the process that is very long and arduous and second i would even go as far as saying that this is a complete myth the best startups that have made it didn't build anything new they just executed it much better google wasn't the first company to build the search engine ride-sharing had been a thing long before Uber was even a company and social networks like my space and i5 dominated long before Facebook even came into the picture Amazon wasn't the first company to sell books and neither was Microsoft the first company to build an operating system having an idea doesn't mean anything if ideas could sell we'd all be millionaires by now we started brainstorming startup ideas all the way back in 2010 it was just two of us then my close buddy and i we wanted to create a virtual but collaborative shopping experience one where you could shop and try out things remotely but as a group a few more friends then joined in and the idea morphed into a social network but one that is different from Facebook that didn't see much traction and eventually a few of us left to pursue other things when i rejoined the team in 2014 it had transformed into a demand marketplace and in the next two years we pivoted many more times from exclusive concierge services to an effective booking system for restaurants eventually settling on shared dining experiences in fact it is the rapid iteration quick pivoting and effective execution that gets your startup to places sure an idea on top of that helps but it is by no means the most important part of a startup.
I won't blame you if you have dreamt of becoming rich from a startup venture and i think it's pretty normal to think that way but i urge you to resist that temptation as much as you can sure it's great to be eventually rewarded for all the blood and sweat you've put into your company but if financial reward is the only metric that you're counting on you will be extremely disappointed our company was valued at five million dollars and even at a 25 stake i should then be worth at least a million dollars right now right well no because that is not how it works see the funding you get isn't for you it's to invest in the company in fact it is quite common for founders to not even take a salary for many years until the company becomes somewhat profitable and five million dollars may sound a lot but that's just the valuation the investment you actually get comes from rounds c series a series b series c, so on and so forth in our case our initial seat was around three hundred thousand dollars, which again sounds a lot but even with all four of us taking no salary that is barely enough to hire one additional software engineer for a year, so don't let glorified one-liners like the title of this video fool you're building a tech startup or any company for that matter is a long uphill cash-strapped battle one that very few even survive and this takes me to my final lesson enjoy the process the constant changes the uncertainty and the resource and management challenges it's like a game, so play the game and have fun while at it or else you'll end up being miserable and eventually burn up the startup genome study from 2019 claims that 11 out of 12 startups fail 7.5 out of 10 venture-backed startups fail and 20 of those fail within the first year these are very grim statistics and the chances are high that your startup will fail as well but if you savor the process you will come out as a winner lesson i learned from my experiences are invaluable to me it teaches you about leadership grit drive commitment that you can transfer to many other aspects of your life also don't give up being an entrepreneur isn't an event it's a lifestyle you're constantly grinding out new ideas you're trying to build new products you enjoy those long hours you love the process of creating things that can eventually be useful for other people keep at it and you'll eventually end up on the right side of statistics after all it says 11 out of 12 startups fail, so basic probability suggests that if you try to create 12 startups one of them will likely turn out fine right that's all.