Handymed, my first telemedicine startup17 January 2016
Feedback for Harvard Business Review: please improve your online customer experience27 December 2016
Do you want to set up your own startup? Here I share step by step what I’ve learned during my entrepreneurial experience at Handymed
After 21 months working on the set up of my startup Handymed.es, I would like to recap and share with you what I’ve learned. I will try to be as short as possible without getting into too many details. The idea is to share a metodology that you may find useful to face your business challenge. Very likely in the future I will write a new more personal post about feelings and life style of an entrepreneur.
Straight to the point. I would say that you will face two main phases: analysis and action.
Phase A: Analysis
First of all you need to clarify what to do and how. Put order to your ideas and validate your assumptions. Be carefull, the analysis is important, but do not get stuck with it, do no over think. Remeber that too much analysis leads to paralysis, so do it in a lean and smart way.
- Identify the need of your customers
It’s key to distinguish between problem and solution. Identify the problem of your potential customers first; then you will look for a great idea to solve it. For sure, it implies that you have clearly identified your target customer. If not, do it before going ahead.
- Identify the solution for your customers’ problem
Once you have identified the issue, you have to find a way to solve it. You may find several options, so choose the simplest and the one that can give you money. At this point, it would be great to check what’s outside. I mean, make a benchmark, see how other companies try to solve the same problem and identify strengths and weaknesses. It will help you to understand how to better satisfy the need and how to differentiate your startup.
TIP: Design your solution in a way that guarantees the maximum scalability worldwide.
- Identify the business model for your solution
Having a great idea is important, but if you can’t make money with it, you won’t go that far (as long as you aren’t reach and you make it for nonprofit reasons). So try to identify the model that best fits to your product/service. There are several models that you can use like the pay per use, subscription based, freemium, advertising based, etc. My only recommendation is to keep it as simple as you can because the more complex it is, the harder will be for you to pivot your startup in case things do not work. Moreover, in most of the cases the simplest is the business model and the better is the customer experience
- First rough market sizing and financial forecast
Once you have defined the need, the solution and the business model, you need a first “feeling” of the market size in order to understand whether it is worth or not to invest your time, energy and money in this entrepreneurial adventure. We all know that the financial forecast is a very rough best guess, and we know as well that there are so many variables that co-vary at the same time that very likely in one year the scenario will be completely different, however do your homework. It will help you to identify significant mistakes and you will need those figures to best describe the potential of your project to your team and to investors.
- Lean Canvas
I recommend you to resume your project in a lean canvass. Having a full overview of it in one page will help you to have a deeper understanding of the startup to you and to all the people that you will involve.
- Validate your assumptions
This is a very important activity. You need to validate all your assumption and especially the need, the solution and the business model. I mean, do people have the problem that you have identified? How many of them? How relevant is for them? Do they like your solution? How many customers would use it? Would people pay for your solution? How much would they pay? At Handymed we have interviewed around 800 patients and 100 medical doctors!
These information will be helpful for two reasons: a) they make you understand whether you go in the right direction b) you could use those figures to refine your market sizing and to design a more accurate and reliable financial forecast of your startup. In order to do that, you need a quantitative analysis, however I strongly recommend to make some interviews or focus group first in order to identify the right questions for your survey otherwise you may risk to be forced to make more than one survey; that would imply additional time, energy and money.
- Pivot when needed and revalidate if necessary
Once you have your analysis, don’t be scared to review your assumption. You may find that the solution has to be changed, or that the business model is complex or whatever. In that case you have to pivot and possibly to re-validate your new assumptions. At Handymed, we have pivoted three times. If you do not pivot, it menas that or you are a genious or you’re doing something bad, so be careful.
- More accurate market sizing and financial forecast
Now you have much more information, so you can refine your market sizing and financial forecast. Is the project still worth? Go ahead. You will use these figures in your business plan.
Phase B: Stop analyzing, it’s time to start doing!
Ok, now you should have clearer ideas and hopefully you should not have invested too much time in validating your assumptions. So, let’s start making things to happen!
- Invest time in setting up a great team
The success of your startups mostly depends on the execution of the project; that means that you need a great team. That’s exactly the first element that investors check before betting and putting their money. So be sure that you have a fully skilled, motivated and committed team. Each member must bring relevant value to the project. The less overlap you have among your team members, the better.
What you need first is a cool “partner in crime”, that means one or two co-founders that you completely trust and that complement your skill set. Don’t choose a co-founder just because it’s your friend. If he/she doesn’t bring a significant additional value compared to what you bring, he/she may not a good choice. Look for a positive person, someone with a proactive and can-do attitude and with an entrepreneurial mindset.
I recommend to keep the co-founding team as small as you can; the more people you have in your co-founding team, the more complex is the negotiation in the decision making process. And investors know that..
TIP: If you’re wondering how to split the equity of your company among the co-founding team, I suggest to analyze among you all the value that you may bring to the startup according to your skill set, the time you can dedicate to the project, the network you have and the money you can put to fund the company. Try to not divide the partecipations in equal parts (eg. 4 members 25% each); there’s always one member who brings more value than another one, and there’s nothing bad with it.
- Team members
Your team is your family. Try to find people that embrace your business vision, your values and your company culture. In an environment where you have strong uncertanty, where things can change fast due to your learning process and where very likely you will pay just a little, here more than ever is pretty important to keep high the motivation of the team members. So, try to find people that you can have an open relationship and possibly that live in your city. We all know that we can work remotely and meet on videoconference, but trust me, presencial meetings help; a lot!
TIP: You may find people that want to collaborate with you and that are available to do it for free. That’s great, but remeber that you do not only need to save money, but also to save time. It’s better to pay for something and have it in one week than have it for free after two months. So be clear with them that if they want to help you, they must do it according to your timeline. If they can’t, go for someone else and pay him/her. The sooner you can anticipate the launch, the less stressed will be the team, the higher will be the motivation and the quality of the job.
- Bootstrapping and seed capital
There are several way of getting funded, but in this very early stage of a startup the most common type is the Seed Capital. It’s a small ammount of money between 10K€ and 100K€ that supports the launch phase of the project. This money can come from the Co-founders (bootstrapping), from “Family, Friends and Fools” (FFF) or from private investors (Business Angels). Please note that: very likely, if you decide to go to an Angel, you may need a Business Plan ready at this stage. For more information, recommend this presentation on slideshare that explains the differences among the different types of fundings. Have a look at slide 10.
TIP: If you can, put your own money in order to develop your MVP. If you were an investor, you would be happy to see that the co-founders have taken some risks putting their own money 😉
- Develop your MVP
Develop your Minimum Viable Product (MVP), or rather the smallest and simplest version of your product with just those core features that allow the product to be deployed and sold. The smallest you will keep your prototype, the cheapest will be the development and the fastest you will be able to test the product and launching it into the market. Here you can watch the video of Handymed’s MVP.
- Test your MVP, validate your assumption in the real world and make traction
The funniest and toughest parts starts. You are ready to sell your product. It’s time to demonstrate that what you’ve been working so far makes sense. If you don’t have budget, it will be pretty though because you won’t be hable to make any marketing activity, so here is when you must bet on your clevernes and on your network. Remember that this phase is crucial for the success of your startup. Here you collect the first sales KPI that you need to convince investors to bet on your startup. So launch the MVP and ask feedback in a structured way. Sales is your first feedback, however I recommend to send out a survey in order to understand what your customers would improve.
- Edit your business plan
One day someone will ask you a business plan, so you have to do it. Even though in a startup things change pretty fast and financial forecast are just a guess, editing a business plan may be helpful for two reasons: 1) to take your time to collect, structure and recap all your ideas, 2) to show potencial investors that you have done your homework, that you have clear and validated ideas, and that you know what you need and why (in terms of money).
Please note that you may need your business plan earlier in case you decide to ask a Seed Capital to Business Angel.
- Time to get funded, look for a trusted investor
If you got here, you have already done a very good job. It means that your startup has been launched to the market and that you have been collecting the first results. I have to be honest, I haven’t got here still, so you’re doing better than me. Anyway I recommend you to start working on developing the network of contacts with Venture Capitals and Business Angels in advance because the funding phase may take months.
- Play hard, scale fast
Good luck dear friends. I hope to meet you all somewhere outside and to have the possibility to share our entrepreneurial experiences. Please do not hesitate to get back to me for any question or proposal. I’m a message away. You can find me on Linkedin, Twitter and Facebook.