The Startup Journey - powered by Precursa

EPISODE 1

Diary of a Tech Startup: How We Got Here

Precursa is a platform designer for entrepreneurs with a tech idea to turn that idea into a viable business with a plan for launch and execution. In this episode, we discuss how we got to where we are at the start of this podcast, which will chronicle the journey and show how we use the process we share through our platform to build our own company.

Welcome to Precursa: The Startup Journey, a podcast dedicated to sharing the ins and outs of building a tech startup from inception, launch, revenue and beyond. If you’ve ever wondered what building a startup from scratch looks like, you’re in the right place!

Precursa itself is a relatively new company designed to help other entrepreneurs build startups. The idea for this podcast came while Precursa was being built as a way to showcase the process and various stages building a business entails. We will be transparent in discussing the real behind the scenes of a tech startup, including both the good and the bad. We will be speaking with Precursa’s co-founders, developers and staff, as well as guests from other startups willing to share their journeys with you.

The first episode of Precursa: The Startup Journey begins with some background on Precursa as a company. The idea came about 18 months ago and is based on the concept of making a casual idea both affordable and approachable to test out. Additionally, Precursa will supply necessary resources for people with a solid idea, enabling them to see their idea come to life. The “startup program” refers to the first bit of time in which an idea really develops and could be anywhere between the initial few weeks or even years. There is one concrete thing that makes Precursa stand out in comparison to other existing startup platforms, and that is the actionable nature of its content. While many other platforms give advice on what you should do, they don’t explicitly tell you how to go about it.

Precursa is set to launch in early fall of this year (2021). In preparation, the team is considering early traction marketing strategies. They settled on the idea of a single page website with an RSVP list. Additionally, they are building a blog and are working with a marketing company who provide digital advertising with the goal of building an email list prior to the launch.

Be sure to subscribe to Precursa: The Startup Journey on your favorite podcasting platform and tune in for the next episode in which we’ll discuss all things branding, naming and marketing!

If you have an idea for a startup and want to explore the proven success of turning your idea into a viable business, check out our website.

Straight to you from Denver, Colorado, this is Precursa: The Startup Journey. We share the ins and outs of building a tech startup from inception to launch to revenue and beyond. If you’ve ever wondered what building a startup from scratch really looks like, you’re in the right place. With full transparency and honesty, we reveal it all about Precursa on our ride from idea to exit: the wins, the lessons learned, and the unexpected twists and turns.

Hello everyone, and welcome to Precursa: The Startup Journey. We have been in the process of building Precursa for a little while now. And Precursa is a company that’s designed to help other entrepreneurs build startups. And it occurred to us at some point, wouldn’t it be interesting to sort of document our own journey, if for no other reason than to show how we used our own process to get to the various stages that we get to. So it’s not just eating our own dog food, which Precursa wouldn’t exist without this process. Right? But it’s also an opportunity for anyone who’s currently building a startup, or thinking about building a startup, to get some inside look at what really does this entail? What does this take?

There’s oftentimes, you know, I, I work with entrepreneurs all the time and most of them at some point hit this point where they’re like, I just feel so alone, or I feel like I’m crazy, or is this what everybody else goes through? I mean, I just, I don’t even know what to expect. And so the purpose of this whole venture that we’re about to go on together and through this podcast is to give you a sense of what it’s like in the day to day, we’re going to be really transparent. We’re going to be really honest at some point, we’re going to talk when there’s financial stuff to talk about, we’re going to talk about that. You’re going to know what’s going on.

When there’s good things that happen, that we’re celebrating, we’re going to celebrate them with you. When there’s things going on that are challenges that we’re navigating. And we’re trying to figure it out. You’re going to hear, what are our emotions? How are we experiencing this? And in addition to hearing from myself, the one of the co-founders and CEO, my other two co-founders, our developers, other people that we work with through our journey, but we’re also probably going to bring in other guests from other startups. People who we work with on a coaching basis or people who are prime candidates for Precursa, because we want you to get a real look at what does it take to build a startup? What does that really look like? And it’s easy to tell that story in the past tense, when you’re sitting on a success or, or even when you’re sitting on a failure. It’s really easy to look back and say, this is what I should have done, or this is what we did, or, you know, these are the experiences we had, but it doesn’t give you that visceral emotional journey, the way that being in it with us, we’ll give you.

 

03:24

So to that end, that’s what this is podcast is about. That’s what we’re going to be talking about. Let’s jump in. Okay. So on our maiden voyage today, what I want to talk about is where we’ve been, how we got to where we are now, and kind of give you the lay of the land so that as we put out episodes each week, you know where we started. As much as I wish I would’ve started this 18 months ago, I didn’t. It  didn’t occur to me then, it just occurred to me maybe in the last month that this might be, this is pretty interesting and would be really useful, but I’ll give you the 18 months previous and kind of tell you, how did we get to where we got to so that we can level set going forward. So about 18 months ago, I had this idea. I work with entrepreneurs to help them build startups, specifically startups with a tech element, whether that’s a hardware component, like an IoT device, or an app, or a SaaS or e-commerce, or a website of some kind or web software, you know, web application of some kind in the process of doing that work. I discovered that there are some very specific things that we do every single time I work with someone. Like it doesn’t matter who they are, what their idea is, what industry they’re in. There is a process specifically around product/market fit and preparing for building like a launch plan. There’s a process related to it. And as I started to discover this, I started to write it down and use it on a more formalized kind of basis. Adding in all of the strategic things that sometimes are specific to a particular idea or a particular industry and formalized this process and the way that I approach working with my clients. As I started to do that, I realized then that I could turn it into a group program where I could work with more than one entrepreneur at a time, which significantly decreased the cost for people to work with me, but they’re still an aspect of it that is cost prohibitive if you are a casual pursuer of an idea.

Here’s the thing you have to understand about me is I believe that entrepreneurs are the lifeblood of an economy. Entrepreneurs are everything. They are the reason that there’s innovation. They’re the reason that technology pushes forward. And we all think, Oh no, that’s Google or that’s Elon Musk and Tesla and space X. Yeah, but at their core, they all started out as an entrepreneur with an idea, usually to solve some problem in a unique way or solve it at all. I mean, there’s problems that people aren’t even solving. So coming at it, from that perspective, I felt like, what would it take to build a system that would close that gap for the casual observer, the casual pursuer of an idea, make it approachable and affordable to test some things and figure out what they might actually be interested in pursuing, but also do the process for the hardcore, this is my idea, come hell or high water, it’s going to happen people. Like what would it take to build something that covered the spectrum and did it in an affordable way. This is how Precursa was born. Now it didn’t have the name then. So in my company, we call this process, the startup program. And usually it’s anywhere from eight weeks to two months to six months, depending on how aggressive people are and how many fine tune their ideas before we start with them, et cetera. But we knew that we could build a platform that would allow us to what I call “saasify” at least a portion of this, if not a lot of it. So we started doing some brainstorming in the early days, we just called it the startup platform. And we started thinking about what would the algorithms look like? What would we have to add to the process?

 

07:57

And one of the biggest problems that I found, you know, I, I did a bunch of digging because part of the process is doing market research and understanding who are you competing against? What are people already doing? What works, what doesn’t work, and how do people resonate with what’s already out there? So we looked at like entrepreneur.com, which is really like a media company, more than anything else, but they are one of the biggest names in content for entrepreneurs. So we looked at what they’re doing. We looked at Coursera, we looked at groups on Facebook and LinkedIn that are geared towards entrepreneurs. We looked at other platforms, other learning platforms. And the thing that we learned that told me what the distinction was between what I do one-on-one with my clients and all of the systems that are out there and why they have failed my clients was the actionable nature of the content.

So start-ups dot com is an example. They are probably the closest to what we’re doing. The challenge is they have this amazing library of over 15 or 16,000 videos from people all across the tech industry, talking about what does it take to be successful? What does it take to do it right? The biggest problem we found with it, and the number of clients who have come to me to work with me after having paid for startups.com for a while, probably would astonished most people. And the reason is because it’s confusing. If you don’t know what you don’t know, then you don’t know what to go look for. And there’s a lot of the content that’s not actionable. It’s telling you to think about something, it’s telling you that you have to do XYZ something, but it doesn’t tell you how. And it doesn’t create a place where you get feedback on what you’re doing, what data you’re pulling together, what your findings are to help, you know, whether you’re ready to move forward or whether you have to dig deeper. This is the thing that working with me is most valuable to my clients is that feedback loop, that, that mechanism that tells them, am I on the right track? Am I doing the right things? What’s next? And they never have to wonder as we started doing research for this, we did a bunch of Google analysis, Google keyword analytics. And what we found was one of the top… Related to the space, one of the top searched keywords or phrases was I have an app idea now what?

 

10:41

And we thought, wouldn’t it be interesting if the platform answered that question at every step of the game. So being that we spend so much time working with early stage entrepreneurs. And when I say early stage, I mean, getting to the point where you know what your MVP is, who you’re building it for, why you’re building it, what problem it solves, you have a proforma, you have a plan, you know, how much money it’s going to cost and how much time it’s going to take to get to launch and then to revenue and then to profitability. And you know what you’re in for. At that point, you can make a go no-go decision and say, am I really ready to do this? Am I up for what this is going to take? Because you actually understand all of it. When we say early stage, that’s what we mean.

So we said, okay, we have a process for that that’s repeatable, it’s successful. And the more clients that I’ve used it with, the more I’ve realized how repeatable and successful it really is. So let’s focus first on that piece and that whole piece we’re calling product/market fit and launch planning and, and MVP design and all of that. This process to sort of figure some of this stuff out and really hone in on what we thought the problem was, which is there’s no actionable content out there on the web that actually answers the question: now what? So we said, okay, let’s go validate that this problem exists the way we think it does. Let’s talk to a bunch of clients, past, present, potential, people who got on a discovery call with us and didn’t end up working with us, whether because of price or timing, or, or they just weren’t really ready, or it didn’t really interest them or whatever.

Right. And let’s figure out is this problem really as big as we think it is. And if we solved it the way we’re thinking about solving it, how would that occur for people? Now, here’s the thing. If at some point you use Precursa, what you’ll notice is that there are lots of places along the way, especially in the beginning, but even beyond your launch, where we’re going to show you how to design and execute and do data analysis on interviewing people. It would be easy to think that that’s skippable, but it’s not. And we actually went through that. So we were about nine months in, so this is about nine months ago. And I thought, oh man, like I talk to entrepreneurs all day, every day. Like I know that this resonates, I don’t, I do, I really need to. And we had the conversation and two things came out of it.

 

13:27

One was the eat, your own dog food thing. And we all looked at each other across the table and said, if we don’t do this process, if we are successful or if we’re not, everybody will point to that we didn’t use our own process and that was why. The other thing, though, even more than that was the reason I have people do this process is because when you’re building an idea, when you’re coming up with an idea, when you’re thinking about it and creating it and coming up with a solution to a problem, it’s a monologue. Even if you have a couple of other co-founders and 10 or 15 people that you’ve talked to in your life about it, it’s a monologue. The thing is product sales, getting customers, getting traction, getting users, is a dialogue. If you never have that dialogue before you spend time and money investing into something, then it’s a lot harder to know that you’re building the right thing with all that time and money you’re spending.

So I said, I know if I skip that, I’m going to regret it later. So I got on the phone, current clients, past clients, clients who we did discovery calls who didn’t do the startup program for whatever reason. I would be sitting at dinner with someone new and talking about what I do. And they’d say, Oh, I had an app idea. I thought about doing something like this, blah, blah, blah. And I’d say, could I ask you some questions about that? And the important part about the first piece is to remove all the bias so that you’re literally asking questions about the problem. Why didn’t you go forward with this? When you did go forward with it, what made you choose this path over another path? What are your biggest challenges and struggles in doing this? Right? We’ve talked to over 200 entrepreneurs now, you know, over the past nine months. But in that first two months, I got on the phone with over 75. It was probably closer to a hundred actually, now that I’m thinking about it. And all I did was talk about the problem. How did they perceive the problem? Was it really difficult to figure out how to turn an idea into a viable business? Why was it difficult? Why wasn’t it difficult, if they thought it was easy? I talked to a bunch of entrepreneurs who had been through the process of building a startup and either failed or had moderate success, and I asked them about this. And what I learned is that unless you’re in the world of startups and tech, and you don’t realize what product/market fit is or that it’s a thing, you don’t know to do this. And the challenges and the struggles that those entrepreneurs have are one avoidable, preventable problems. But two, they’re directly related to a lack of knowledge. And it’s not to say that these people aren’t smart or that they, you know, didn’t do a lot of market research. They just didn’t know that talking to people mattered. And then they, I said, what was the biggest problem? And a lot of them, at least 60% of them, probably more, I’m not remembering the statistics exactly, but at least 60% more than half said, I always felt like I didn’t know what I was supposed to do next. So the now what was clearly a problem, the number of people who said to me that I would go on the internet and I would say, uh, first I wouldn’t even know what I’m supposed to be searching. Like, uh, my company just did this now, what do I do? And the number of times that someone said now, what was so palpable.

 

17:20

I mean, it was just across almost every interview that we did. So when we started the next phase, which was to start talking to some of the same entrepreneurs, but also new people about the solution that we’re proposing to the problem, we knew if there was not an actionable component to everything that we did, it wasn’t going to resonate. And so now with armed with the information of the first round of interviews that we did talking to people, we went into the second round and said, this is what we think the problem is. Here’s what we’re proposing as a solution. And then we asked open-ended un-biased questions and resoundingly the people we talked to said, if you had a process whereby you could tell me, okay, now do this, give me feedback on my data and let me know when I’m done with that step. Now do this. And you’re giving me the how and the why and the what it is and giving me examples and showing me how to do it right, that would be worth it to me. And we heard this from casual pursuers of an idea. Like I had this idea for an app, I might be interested to kind of see what that would take, because I’ve never really done that before. All the way to the diehards, the people who are, this is going to happen, come hell or high water, this is going to exist in the world. So in the past nine months, really in the following three or four months, because in the last few months leading up to now, we’ve been focusing on the next phases. But in those following months of doing that portion of validation, the solution validation, we felt really clear about what we were building, who we’re building it for, what the problem is and why it solves the problem and how we’re going to solve that problem and who our ideal target is.

 

19:18

We’re going to talk about this all along the way. And if you sign up for Precursa and go through the process, you’ll hear me talk a lot about this. It’s really tempting as an entrepreneur, especially building something new and something that could potentially apply to or appeal to a large segment of the population, it would be really easy to try and build it for everyone. The reality is if you don’t target your messaging, if you don’t target a particular user journey and emotions along that user journey, one or two in your first launch, no one will resonate with the messaging. When we realized that we had a thing, we said, okay, we need to dial in our user personas now. We had like three or four that fit really well, but we knew in order to have a successful launch, we really should focus on our top two. So we did that. We built our user personas, our user persona. Number one is a Cody, his name’s Cody. And he is that entrepreneur who is highly motivated. Their idea is going to exist no matter what. They have a lot of confidence in their own ability to execute and really what they want the platform for is to make sure they don’t miss any steps so that when they get in front of their investors, they can point to everything an investors ever going to want from them and have full confidence with it. They probably would do that without the platform, but the platform gives them a way of doing it with an objective measure and an objective third party view on what they’re doing. And so that makes it valuable. So we did the work with our UX designer, our UX engineer, and we mapped his customer journey.

And we found all the places where emotionally, he might be bummed about the information he’s getting or the work he’s got to do, and all the places where he’s going to be super stoked about what comes next. And we started working on designing the platform to meet those emotional needs. In order to do that, though, we have to understand Cody. And we had talked to enough Cody’s that we knew what that was going to look like. In fact, one of my co-founders, Paige Goss, who at some point, Paige and Sarah, my co-founders will probably be here every couple of episodes to chat with us and sort of give their perspective. But Paige is the quintessential Cody. She has what we call squirrel-swirl, which is, she’s always got a new idea brewing, and she’s always pursuing 15 things at once. And she’s always successful at almost all of them.

 

21:53

And if she’s not, it’s usually because she realizes it doesn’t have any passion for her and she gives it up, right? So we understand the mentality and the journey of Cody. And now we had to figure out a way to design a system that met those needs. Then we realized that our other persona, who was really important is Eva. Eva is a persona, she’s probably a working mom. She’s not single because when we looked back into, you know, sort of our wealth of clients and interviews that we did, we realized that all of the women that we work with have some form of a support system. So they’re not a single working mom. They aren’t leaving the stability of their family behind in order to pursue an idea or to build a business. And so we didn’t figure that Eva should represent something that didn’t represent the population.

So we set Eva up as she’s married, she’s got a couple kids. She’s further along in her career path, but she’s ready to step out and to try something, but she needs it to be a lot more stable. So as you can imagine her journey, she probably doesn’t have as much confidence as Cody. And she’s looking for external validation to give her that confidence and to show her where she can do this in a stable way, because stability is more important to her than getting it done and being a rock star. So we had to map her journey. We had to look at her emotional state at all the places along the way, and it’s different than Cody’s right. Places where Cody’s like, ugh, I don’t want to do this work or, Oh, this is going to be so boring, but I know I got to do it. Okay. Let’s just, let’s just pump it out. Those are the places where Eva is more likely to be, okay, good data gathering this. I’m good at this. I know how to do. And she’s going to feel more confident doing that stuff than some of the other things were Cody feels more confident. So the challenge in the user experience piece and in designing a platform is how does it solve the emotional journey and the emotional needs of both user personas when they might be drastically different at the same point in the process.

I tell you all this, because this is why user personas matter. They matter because if you’re trying to speak to everyone, you’re not diving into an emotional journey and it’s not going to resonate with anyone. So we spent some time, a good few months with our UX engineer, working through the process of building user journey maps, understanding the emotional rides and designing a platform that meets those needs, where either of those people are at every point along the way.

Also during this time, we started figuring out, okay, we know there’s going to be a lot of video content we have to create because there’s a learning piece to this, right. Now, it’s actionable content. It’s actionable learning, but we still have to give you the, what the, why, the how, and we have to demonstrate some things. So we started building out the map of all of the content that’s required to make this thing happen. We interviewed a bunch of video production companies. One that’s really phenomenal here in Denver, that’s actually run by a good friend of ours, who’s also a fellow female entrepreneur. And we realized that we would have to come up with an extra $150- to $200,000 in budget in order to do high-end produced video. So we looked around in our network and we said, okay, what resources do we have? What skills are in our network? How can we get creative to give ourselves a way of making these videos, getting these videos edited, not losing the professional finish, but getting the look and the feel that we want without spending all that money. Because for a startup, it doesn’t make any sense to jump right in spending six figures on one element, because you quickly get to a million dollars and you really don’t have traction or you know, or revenue or anything yet. So trying to jump in too soon can be just as much of a problem as dragging it out too long. So we got creative. We have a podcasting studio at our office downtown, and it’s actually set up pretty perfectly to double as a video studio. So we did some reorganizing in the room, we ordered some photo backgrounds from Savage universal, and got a really good quality camera over the Thanksgiving holiday.

 

26:48

When they had a black Friday sale and bought a whole bunch of SD cards. One of our co-founders husbands, he does video work. That’s what he does. He’s a, he’s a producer and a director and he does some animation and video graphics. And we said, Hey, Ben, can we make a deal and get this done for a lot cheaper. So we worked with him and one of the ways that you get stuff done cheaper is you do it yourself. So what Ben is helping us do is he’s helping us come up with look, feel, certain video types are grouped together because they deal with a certain type of content or a certain, you know, section of what it is we’re doing, and those all have the same color backgrounds. So he helps keeps us honest about that. He helps make sure he runs the camera and the sound when we’re recording. And then he does some of the early editing and provides me with the assets. And then I take those assets and do editing and he reviews and make sure that things are looking good along the way. So we’re using him for the pieces that we need the professional eye, but he allows us to do the rest ourselves to save money. So at this point in the process, we’re about… right now, we’re about 18 months in. So the UX work was mostly done last month. So 17 months. Most of the video stuff has been designed. We haven’t started recording because we’re still finalizing what videos go where into what phases of the process and what stages and modules. But at this point, we’ve probably spent maybe $10,000. And I say maybe because it’s probably not even that much between equipment, some of the experts that we’ve talked to that we’ve paid for some time from, our UX work that we’ve done, the website work that we’ve done so far. By the time this podcast launches, the website will be up and available. As of this recording, we probably still got about two to three weeks. Actually our web gal had a baby two days ago. And so she was like, um, I think we’re going to have to push the website off a little bit. We were like, yeah, that, that’s probably a good idea.

 

29:00

But in preparation, we also know that we need some kind of an early traction marketing strategy. So in our case, our strategy is we’re building our landing page. Our website is a one page website. So essentially a landing page with an RSVP list. So that as soon as we start opening up slots on the platform, we’ll email people in the order that they signed up on the list to give them a free trial and give them a shot at it and get early access. And we’re building a blog because you have to have content, you have to SEO that content so that, you know, you’re driving the right kind of traffic when you get organic search traffic. And we engaged with a marketing company to do digital advertising for us. So essentially they are going to handle making sure that we’re getting the right kind of ads and the right spread of ads.

And they’re going to AB test the ads and the landing pages that we use across Facebook and Google and Twitter and all the places that they think our audience, you know, our Cody’s and our Eva’s live. We have that set to kick off mid-April. The goal of that is to build the email list while we’re in the process of building the platform so that when the platform’s ready, which we believe the launch at this point, our target launch is going to be sometime in September of 2021. When that launch is ready, when the platform’s ready, we should have it list of between 10 and 15,000 people to launch the platform too. And before September there’s, like I said, there’s a very good chance that we’re going to give early access to some of the early list members. But certainly when we’re ready for a general launch, we want that big list because here’s the reality. Everybody thinks that they’re going to get overnight tracks. Everyone believes the story of overnight success, but the reality is an overnight success is just that now you’ve heard about it, multiple places, multiple times, over a short period of time. And so it seems like it came out of nowhere. Most of those companies that have overnight success, and I’m putting that in quotes, have actually been in business for at least five and probably closer to seven years.

And we know this, so we don’t pretend 10. Like if we get 10,000 people on a list, 10,000 people are going to sign up for Precursa day one. We know that our likelihood is that we’re close. We’re more likely to get a few hundred out of that list who will sign up. Now over time, we can convert more of that list by making sure that our marketing messaging is good and sending them regular, but not persistent or annoying emails, et cetera, et cetera. But in order to be realistic and have a good sized launch and get a good set of feedback from an early group, you got to have a big list to pull from. So we’re starting four, five, six months early with the marketing. And you should too, because this is also a form of traction, by the way, we’re going to talk a lot more about all of this stuff, but I’m trying to get you to the place where we are today.

 

32:14

So where we are today, we looked at a lot of options for funding. We built a pitch deck. We shared it with a bunch of investors. A bunch of them were really excited. Every investor we talked to about this platform loves the idea of an objective score. So we have our Precursa score, which is like a FICO score for your idea. And essentially what it tells you is how well-developed is your idea, how competitive is your idea. And it pulls in data from within the platform and other people and other ideas in the platform, but it also looks at general startup activity. So who’s getting funded in your industry. What are they doing? How crowded is it, how unique is it, et cetera. And investors get really excited about that because the amount of time investors spend doing due diligence with a company and a group of founders before investing is sort of like dating before getting married, it takes a long time. There’s a lot of failure, very high failure rates. So a lot of their due diligence is wasted. And it means that they invest in fewer companies because they just don’t have enough time to investigate all of them. So they get excited because they’re like if I had something like that, that was an objective third party due diligence that I understood where my preferences fell on that spectrum in terms of what stage is a company at, and also what score do they have. And if you combine those things, anything above that is probably at a certain level already, I would be really excited to talk to more people, if I knew that I had something like that, that sort of would direct me. So investors get excited because this solves a problem for them too. Now we know that, and we have a roadmap that includes getting the investors on the platform because that starts to solve another problem for entrepreneurs, which is getting access to funding and getting access to investors more easily than is available today.

 

But it also solves a problem for investors, which is there’s more money sitting on the sidelines right now, not being invested than there ever has been. And that’s not because investors are scared and they don’t, you know, they’re, Oh, I’m going to stuff all this money in a mattress. They would love to invest it somewhere, but it’s so much time and effort to find the right things. So we’re trying to solve the problem by giving them more access to higher quality ideas where they can vet, okay, I’m interested in this industry and this type of idea, or these multiple industries. And I want people who are at least at this phase in the process with at least, you know, this minimum Precursa score. So they get really excited, too. So it’s not a hard sell to get an investor to invest in something like this.

 

What’s difficult for us as founders is how much equity they want. And this is something I preach all the time and I can’t stress it enough. The earlier you take money before you have traction, whatever that is, the more you’re going to give away for it. Paige and Sarah and I being experienced entrepreneurs. We’ve done this several times before, we understand what the risks are. We took a serious look at debt financing. I do not recommend this for most people. And the only reason that we did it is because we got an amazing deal from a friend of ours, and we understand the risk and we know how to manage development projects. We know how to manage teams. We know how to build a company on the cheap. So the money we’re getting goes way further than it would for a lot of first time entrepreneurs.

 

35:58

But I want to be up front about it because we did use debt financing. So essentially what we’re doing is we’re borrowing $750,000. We only need about 300,000 of it. It’s at 1.3% over seven years. And one of the benefits of this is the way that this money’s being loaned is actually through a venture capital group. And they use this debt financing vehicle sometimes to find new deal flow. Like I said, there’s all this money sitting on the sidelines. And sometimes either it’s difficult to do a lot of due diligence or, or you’re just not getting options in the door. And so this is another way for them to attract people who wouldn’t necessarily qualify for traditional venture capital funding for them to see those companies as they come up as they’re building themselves up and to follow those journeys as another form of deal flow.

So they’re, they’re trying this out and because we’re friends with one of the guys who owns the venture capital group, you know, he was like, why don’t you guys be part of this program? And let’s see what happens. And because we understand the risk, we’re comfortable doing that because we’re not really risking all $750,000. And we understand really well the risk that we’re taking on. So, I caution you because it can be very tempting to just go borrow. So I tell the story of Doug, that’s not his name, his real name. I had lunch with Doug a few years ago. He was telling me basically that he spent four and a half years of his life mortgaged his house for $250 grand in the beginning, borrowed another a hundred thousand against his 401k and then another like $50,000 against a credit card. So he had like $400- or $500,000 invested in this thing.

And he was getting no traction whatsoever. Like he had 10 or 15 users on the platform at a time. And it just wasn’t enough. Right? And so we started having a conversation. He said, what do I do? And I said, well, you’re a product looking for a market, did you do product/market fit research before? And the glazed over look on his face, like he didn’t even know what I was talking about, is why don’t recommend people borrow money to start a company, especially if this is your first time, because you’re going to spend money on the wrong things. We have not spent a dime yet on software development. Most people, when they find me have been looking for a software developer, here’s the thing about software developer. I love them. I have been a software developer most of my career. That’s how I got started, but developers are great at building what you ask them for. They are not great at asking, should you be building it? Is it the right thing to build? Is there going to be a market for this idea? They’re going to be just as excited as you are because developers love building cool stuff. That was the situation this guy found himself in. And if he hadn’t had the access to borrow money, he would have had to do something different. He would have had to get in front of investors who would have forced him to do more of this research if they know about product/market fit, which most of them do, but they would have forced him to do more, more of that research. And he would have had to prove more things incrementally along the way before he ever would have gotten to $400-, $500,000 invested. So I’m saying this as a cautionary tale, but I’m also being fully transparent and open and honest about our journey because that’s the whole purpose of this.

 

39:31

We made this decision because we are not newbies at building a business. We’re not newbies at launching a startup. I have a successful SaaS that’s been running for seven years. That operates on an 84% profit margin. This is not my first rodeo. And we’re doing it in a way where the risk is not as big as it sounds. So all that said we are in the process of closing that funding. We have started with the platform development. We’ve been bootstrapping everything to this point through both of our own companies and our own funds. And like I said, we’ve probably invested now that I’m thinking about we do have legal, we’ve got some trademark stuff that’s going. So we may be close to $20,000 in, out of our own pockets. And we probably have another $15- to $20,000 that we’ll invest over the next two months out of our own pockets, you know, until this funding closes and, you know, we have the conversation, do we pay ourselves back for what we’ve invested?

That sounded like a great idea. But then we realized we really liked to have some basis in the business for, you know, write off and tax purposes. So we’ll carry forward. Anything that we put in that we invested before we got funding as basis in the business. So we’re now at the point where all of the IP is getting ready to move from my company, Raika Technologies, into Precursa. And we’re about to close this funding and we’re in platform development. So this kind of gets you to where we are today. I didn’t talk a lot about branding and naming, and I think that’s what we’ll talk about next time is how did we come up with the name? What was the process that we went through for that? What was the point at which we went through that process, naming something too early can be problematic. And then we’ll talk about sort of how we’re starting to think through content creation and marketing strategies, email, social media. We’ll talk about that stuff next time. So this is only the beginning. Yes, we’re 18 months in, but there is lot yet to come and we are very excited to have you along for the journey. So make sure you subscribe in your favorite podcasting platform to Precursa: The Startup Journey. And we will see you next time.

Thank you for listening to this episode of precursor the startup journey. If you have an idea for a startup and you want to explore the proven process of turning your idea into a viable business, check us out at precursa.com. Make sure to subscribe to this podcast wherever you listen to podcasts, so you never miss an episode. Until next time…

Cynthia Del'Aria

Cynthia Del'Aria is a serial entrepreneur and tech startup ninja, specializing in product-market fit and idea validation and helping new entrepreneurs reserve their time and money for the idea with the best shot at success. With two successful exits before 30, an active high-profit-margin SaaS in the commercial airline space, and two additional startups in the works, she knows what it takes to traverse the entrepreneur journey, the highs, and the challenges of turning a vision into a successful, viable business.

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  • Denver, Colorado

  • startup@precursa.com

Copyright © 2021 Precursa  |  All Rights Reserved  |  Site Created by Natalie Jark

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