Entrepreneur Diaries: Reverse-engineer your business
A guide to getting started.
November 14, 2013 12:40 by kippreport
Kunal Kapoor is the founder of The Luxury Closet.
Last week I attended the Tech Crunch Disrupt, a two-day event held in Berlin (Tech Crunch regularly holds such conferences all over the world, bringing together prominent speakers, investors and entrepreneurs).
Given my keenness to be attuned to the latest entrepreneurial endeavors, for me this was a much needed update on the factors and changes at play today.
This year, one of the keynote speakers was Sean Rad, the founder of Tinder, an online dating app that has been on fire this year. In my previous article I wrote about a dating device idea I had, which I never executed and as a result I have always had a pang of regret about it. Sean Rad and his team, on the other hand, knocked it out of the park.
So, what’s so great about Tinder?
Many things, but before I get to listing them, it’s best that I clarify that I do not have an obsession with dating (being newlywed and very much in love with my wife). Tinder helps me make the point clearly, so read on.
Tinder is a good example of taking an idea, which presents itself as a solution to an existing problem or market demand that is yet to be adequately addressed or satisfied – making the product superior to anything that preceded it, essentially causing a disruptive change in the industry; putting it on a platform that can scale up very quickly; finding the team who can execute it flawlessly; getting all the critical insights from an advisory board; and securing the funding needed to build a disruptive business. It is a great example of all the factors and ingredients fundamental to a start-up’s success.
So before you action your idea, follow suit, making sure you cover the five areas below:
What’s the market size and potential? How big is the size of the relevant market you plan to launch the product in? A business selling Swedish books in Dubai has very small potential (I don’t care how successful The Girl with the Dragon Tattoo is, it’s still a relatively small market). However, a dating app in the US – a very large and mature market – is a gigantic opportunity.
How good is your team? Start with you. Do you have the background and expertise to allow you to build a business? If you have no experience in IT, but you want to start a software services business, my advice is to either hire a brilliant head of technology, or even better, look for another idea. Before I started The Luxury Closet, I had mapped my search to one simple aim: to start a business that sells a cool product, in an industry I have expertise in. Which means I wanted to sell physical products (and not services), in luxury or fashion. So, what about the team? Remember, it’s not just about you. Today’s start-ups are rarely about one founder, there are teams of founders with complementary skill sets.
How will you scale? You need to take the business from zero to hero. What are the factors that condition this growth and how can you turn them to your advantage? Angry Birds had over 30 million downloads in the first year, validating their choice of platform. Tinder addressed a big potential market with a smartphone app, which is easier to scale. At The Luxury Closet, we made a calculation and chose to go online, instead of opening a physical store. A physical store would have put a restraint on how much stock we could keep and display, how many people could visit the store, or number of staff it would take to assist clients.
How does your product stand out? You will be amazed to know (just like I was) that almost any idea you can think of has some kind of solution available in some part of the world. It may be in a crude form, it may not be serving the exact niche you want to target, but it’s already out there. So, search for it, see what’s good and bad about it, what works and what doesn’t, then take it to the next level – create, fine-tune, improvise and just make something better.
Before Tinder came in the picture, there were a myriad of apps that tried their hand at the same problem, however, only few of them crossed the one million user mark. Tinder made the concept location based, easy and fun, a little irreverent – using the ‘hot or not’ model – but all of these made it a disruptive factor to existing apps.
How will you find the right funding and an advisory board? Bear in mind that sometimes even the perfect team still may not be enough for you to create the company you want. So start by developing an eco-system of financiers, expert advisors and mentors. VC’s are interested to fund companies that will be the number one in their market and can scale quickly. Hence, there is no time for you to make mistakes and figure out how things are done. You are better off having an advisor with experience in the industry. Tinder was born out of an accelerator program at IAC, which already had in their portfolio large dating sites like match.com. Therefore, Tinder benefited from the knowledge of the advisors from match.com and okcupid.com on their board.
The Middle East region is also shaping out into a hub for start-up accelerators (with the likes of oasis500, seedstartup, i360 and a few more), which may be a great way for many to get started.
So, find that one idea that you love, explore the potential market, network, find guidance and some cash and get busy, because if you don’t do it, someone else will.