Founder Insights #1: Foundations
Welcome to the first edition of our Founder Insights. In this series, we aim to guide entrepreneurs by sharing valuable lessons from founders who have navigated the challenging startup landscape. By learning from their experiences, you can avoid common pitfalls and enhance your chances of success. While mistakes bring valuable learnings, acquiring insights from the experiences of others is often more efficient.
1. Start small, iterate fast
Founders can conduct low-cost experiments to validate their ideas without significant cost. This allows them to iterate quickly based on real-world feedback. They can achieve this by creating mock-ups and inviting strangers to engage with their products.
“Obsessed with our users, we began by getting feedback from strangers, through ‘McDonald’s Testing’ or ‘Starbucks Testing’, where we took our mock-ups and headed to the nearest public place to get strangers to test our product.” - Samantha Soh, Co-founder of ShopBack.
2. Find genuine product-market fit
The most effective way to determine product-market fit is to check whether a stranger is willing to purchase your product. Often, founders mistakenly believe they have achieved product-market fit when a friend buys their product out of courtesy.
“The core of any business is to earn money. You have not done your job well until you find a stranger who is willing to open his/her wallet to give you money for the services/products that you are offering.” - Sachin and Binny Bansal, Co-founders of Flipkart.
3. Focus on metrics that matter
While acquiring users is important, simply having a large number of users does not indicate success. For many businesses, the real indicator of a product’s usefulness and stickiness is its user activity (e.g., frequency of use, session duration) and the retention rate. We want to avoid a ‘leaky bucket’.
“Everybody in the startup community talks about the number of users that they have acquired. They should have talked about how many of these users are actively using the platform.” - Agung Bezharie, Co-founder of Warung Pintar.
4. Hire strategically
Self-awareness is crucial for effective leadership as it enables individuals to recognise their weaknesses and take proactive steps to address them through strategic hiring. This not only strengthens the company but also lays a solid foundation for sustainable growth in the long run.
“I am the stone - pretty useless by myself, but fortunate to be able to convince great talents together to build something good.” - Darius Cheung, Founder and CEO of 99.co.
5. Scale at the right time
Startups should prioritise validating their business model through user retention and profitability before pursuingaggressive expansion strategies. This validation ensures that the product or service meets real market needs and can sustain growth economically.
“We only really scaled Mainland China and SEA (Southeast Asia) once we were profitable in a couple of cities. This gave us the confidence that we could focus on opening more cities without also wondering whether we would run out of funds. I might call our approach pragmatically aggressive.” - Blake Larson, Managing Director of Lalamove.
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Written by Wayne Wee (Investment Associate)