The Startup Check List: Building a business step by step – three case studies
Last week a student suggested that while enough has been said about the entrepreneurial mindset and idea selection phase not enough coverage exists on what happens next.
Assuming you have picked up the idea and have decided to build and do your own what do you do next? Where do you start? What is involved? Is there a list of action items, of milestones that one could use to map their own ambitions into a reality.
I have put together three case studies for use as teaching materials for the Entrepreneurship course I teach at SP Jain’s Dubai campus. The timelines are 1999-2001 (business school, New York/Southern California, Avicena); 2003-2004 (Karachi, Alchemy) and 2009-2012 (Karachi, FourQuants.com).
Launch case study number one – Avicena LLC
First six months of our existence starting from January 2000, the primary milestones were finding a partner and investor (Aleph Inc), finalizing a technology vendor, deciding on a name (Avicena), the back story behind the name (knowledge acceleration), completing the system specification for the vendor to follow, completing the business plan, agreeing on an timeline to launch, raising capital, doing market research by reaching out and attending a number of customer specific conferences, preparing marketing collateral, hiring, building, testing and then launch.
| Timeline | Action | Stage / Impact |
| Feb – May 99 | Wrote and updated the original business plan. | Idea selection |
| Jun – Jul 99 | Built the prototype, wrote content and marketing copy, tweaked it. | Refinement |
| Jun – Jul 99 | First focus group on features and pricing. Found partners at school to work on the idea. | Feedback |
| Aug – Dec 99 | Built pricing model, financial model, advertising strategy, advertising campaign. Asked for feedback from peers and advisors. | Business Plan |
| Dec 99 | Pitched to partners, investors. | Pitch |
| Jan 00 | Closed initial investment round – friends and family. | Capital |
| Jan 00 | Hired a vendor to build technology, website and host it. | Vendors |
| Feb – Mar 00 | Picked a name, hired a designer to build the logo, started writing copy for marketing and advertising campaign. | Branding |
| Mar – May 00 | Identified partners, customers, clients for initial pitches. Made initial pitches. | Prospect List |
| May – Jun 00 | Moved to be closer to incubator, investors and partners. Started writing cover letters and emails introducing the product and the idea. | Contact |
| Jun – Jul 00 | Rolled out initial technology platform, did the first round of beta testing. Continued pitching to partners. | Technology |
| Jul – Sep 00 | Hired first two offshore employees. Did a round of industry conferences to get direct feedback from customers. | Feedback |
| Sep – Nov 00 | Hired two business development contractors. Write and post first form letter to prospects. Follow up on first round of marketing and leads.Create and print first brochure and push out physical mail shot. | Business development |
| Dec 00 | Follow up on initial mail shot. Scheduled calls and made them. | Follow up |
| Jan 01 | Two back to back international pitches to investors and clients in the Middle East and Asia Pacific. Reworked internal processes to streamline content generation. Released next version of the site with new content and new features. | Pitching. Internal review. |
| Jan – Mar 01 | Hired employee number three. Rolled out customer focused content, carried on pitching to customers and investors. Ran out of cash, borrowed money on credit cards, from friends and family. | Expansion |
| Apr 01 | Spoke to close friends and partners. Decided to stop borrowing more money. Informed the team at work. Agreed on team severance package. Folded and died. | Decision to Fold |
| Dec 01 | Paid out employee liabilities. Finalized the accounting and started looking for accountants. | Post failure |
| Apr 02 | Filed final returns and taxes. | Post failure |
| May 02 | Filed for termination of registration in California. | Post failure |
We fell flat and died because our marketing and pitching campaign was dead on arrival. Spent too much time updating the business plan and talking about customer segments, than actually going out and talking to customers.
Launch case study number two – Alchemy Associates / Technologies
The primary difference between Avicena and Alchemy was that we met more people face to face at Alchemy than at Avicena. A form letter and a follow up phone call wasn’t enough at Avicena. At Alchemy it wasn’t that meetings immediately let to sales contracts. We simply had more conversations. With each conversation we got better at understanding the needs of our customers and responding to them. And it helped that after the first 8 months of pain we had consistent, growing revenues.
However the start was sort of muddled. We went from one idea to the next. What appeared attractive at first was too crowded. What made sense from a strategy perspective was out of reach. In the end we stuck with training and it was training that led to other opportunities. There was no plan, only reactions and responses.
| Timeline | Action | Stage / Impact |
| Jan 03 | Announce plan on dinner table to drop job search and start Alchemy. Get approval from family. | Inception |
| Mar 03 | Pick name, designer, logo, stationary. Complete the first engagement, bill, collect. | Launch |
| Apr 03 | Meet prospective clients, pitch for work all across the horizon. Write marketing copy (who, what, where, when, why, how much) | Experiment |
| Apr 03 | Hire first part time employee. Print stationary. First proposal, first contract. Write terms and conditions. | Growth |
| May 03 | Lock in an informal alliance/partnership with an old colleague. Rent free office space and joint pitching for work. | Platform. First pivot to platform based actuarial practice |
| May 03 | Open “Doing Business As – DBA” Bank Account. Find printer. Get basic website, marketing copy, initial brochures and business cards done. | Setup |
| Jun 03 | First two assignments on the new platform. Booked through a lead generated via a partner. | Experiment |
| Jun 03 | Pitch for first training engagement on new platform. External lead converted to contract. Give up on Human Resource practice. | New business line. Second pivot to training from actuarial practice |
| Aug 03 | Close first large training contract. | Big deal/Platform |
| Sep – Oct 03 | Deliver on large training contract. The contract leads to more prospects within the treasury and risk training segments. | Platform / Validation |
| Nov 03 | Focused pitches for training work to treasury and risk segment customers. | Prospect List |
| Jan 04 | Add two new partners on expense sharing basis. | Expansion |
| Feb 04 | Move into new rent free office space with new partners. | Expansion |
| Mar 04 | Prepare hiring criteria, employment tests, interview template and questions, job roles and descriptions, interview guidelines.Expand team to support growing training practice. Switch focus from actuarial practice to banking. | Third pivot switching to banking training |
| Apr 04 | Incorporate formally as Alchemy Associates. Agree on Shareholders agreement, revenue and expense sharing basis. | Formalization |
| May 04 | Redo website, marketing positioning. Launch training calendar. | Change based on market feedback |
| Jun 04 | Begin work on new software product and service. | New product line |
| Jul – Aug 04 | Expand team for new opportunities with existing client. Revised employment, confidentiality, intellectual property rights documents. | Stability |
| Nov 04 | Risk manager product rolled out for pitching and marketing. Competing head to head with Oracle and Reuters. The niche play at work. | Marketing |
| Dec 04 | Traction at the largest banking customer | Pitching |
| Jan 05 | One demo a week | Big deal |
| May 05 | First sales deal of software | Closure |
Launch case study number three – FinanceTrainingCourse.com / Alchemy Software
FinanceTrainingCourse.com and FourQuants.com was an experiment on the side that took almost three years from inception to revenues. Once again it was a series of failed experiments but given the low cost associated with each experiment (about 100 dollars rather than going broke and giving up, we would simply allocate another hundred dollars to see if the recipe that hadn’t worked earlier could be improved upon.
Feb 10Start exploring online version of similar content but with a twist.First Pivot from print content to online content
| Timeline | Action | Stage / Impact |
| Aug 08 | Start exploring the content business for the first time. | Inception |
| Jan 09 | Close the first contract for a printed review of the local risk environment with an existing customer. | First client |
| Apr 09 | 500 high end print copies are out. Dispatch and circulate across 200 prospects | Direct Sales |
| Jun 09 | Take up on the print offering is zero. Follow up fails. Book a big loss on the first dry run. | Product Failure |
| Sep 09 | Carry on with printing at a significant cost. Total of two customers generate enough to cover basic printing cost. Despite the promise there simply isn’t enough take up. Each run bleeds dollars. | Partial Recovery |
| Nov 09 | Start exploring online version of similar content but with a twist. | First Pivot from print content to online content |
| Jun 10 | Learn more about traffic, optimization, content, search ranking, Adsense, Adwords and SEO by reading and trying out different techniques and tools. | Acquire related skill set |
| Sep 10 | Launch new online content store with Google checkout. | Third Pivot from traffic and just advertising supported to online content sales and advertising |
| Sep 10 | First sale of online content. | Validation |
| Oct 10 | Win Industry Award for site. | More Validation |
| Nov 10 | Change name to FinanceTrainingCourse.com. Switch focus from four segments to two. | Fourth Pivot to two focused target segments from four |
| Mar 11 | Traffic hits peak. Site hit by Google Panda update. Traffic down by 60%. | External shock |
| Jun 11 | Start working with video courses. | Fifth Pivot to video courses |
| Jul 11 | Sales peak at US$1,100. | Growth |
| Aug 11 | Cleaned up portal created for corporate customers. | Fifth Pivot away from advertising to a multisite platform |
| Sep 11 | Pitch portal to first international banking customer. | Expansion |
| Dec 11 | Close first funding round. | Capital raising |
| Mar 12 | Traffic peaks at 50,000 page views per month. Sales peak at 1,800 US$ a month. | Capital at work |
| Apr 12 | Content syndication deal signed with a Far Eastern Telco IP TV provider. | Distribution |
| May 12 | New redesigned site brings bounce rate down to under 10% from an average of 65% over the last 3 years. | Sixth Pivot to banking customers only |
Launching your business: Common Themes.
It is obvious that there are certain common themes across all 3 cases. Some are mechanical in nature, while others are driven by the feedback you receive as you interact with the market. Here is a short initial list that will get updated over time. Feel free to add items that you think are missing.
| Timeline | Action | Impact |
| 0 – 3 months | Name/Brand/Logo. Back story behind the business and the reason for your being.Start using the back story as much as possible as quickly as possible in every single interaction with everyone you meet. | Need to answer basic questions about who you are, what you do, why are you special, why should I give you work, how can I trust you.The opinion on logos is split. Some say do it immediately, others defer. |
| 0 – 3 months | Meet people. Talk to them. Ask for work. Rinse and repeat.Learning to ask for work is something you get better with over time. Start early to increase the chances of converting that deal when it finally comes around. | Immediate. Till you ask they won’t give. No ask, no give, no revenues. |
| 3 – 6 months | Cards, Stationary, Websites, Domains, formal email address. | Cards and website yes. Stationary is a little expensive and can wait. Email can be done earlier as long as you have the name and the domain. Don’t do hosting till you ready. Find a friend who would be willing to lease you space on his servers. |
| 2 – 8 months | Proposals, contracts, non-disclosures, intellectual property rights, basic legal opinions. Pitches. Electronic brochures and power points presentations. | The sooner you get these done, the better off you would be. |
| 4 – 12 months | Hiring. Growing. Expansion. | It generally takes about six months for you to find your feet if you are bootstrapping for the first time. Some models require you to hire from day one and for those you need funding. Others are ok with you meandering for a few months experimenting before you commit to a head count. |
| Throughout | Experimenting. 100 dollar bets. | You start with a world view which will most likely be wrong. As your world view gets updated based on market feedback, your business and your model also changes. It is a good thing. |
| Throughout | Improving your pitch, brochures, power point presentation. | As you receive feedback, both yays and nays, incorporate what you have learnt in your pitch. Refine your back story. It will make it more credible and realistic and increase the chances of conversion. |
| 6 – 12 months | Adding partners for distribution and accessing networks. | As soon as you are ready with a product or service to sell, start adding partners that will push customers your way. Be wary of big names and big players, go after the small guys who need you as much as you need them. |
| Post Back Story | Social Media. Facebook, Linkedin, Twitter, G+, YouTube. Advertising. | Once you have figured out your message it is time to spread it. A little dicey since the rules of the game are different than conventional advertising. |
| 12 months | Incorporation or Formalizing. | In the US it is easy to startup and generally just as easy to shut down. In other regions it could be 10 times as expensive to shut down. Only incorporate when you are ready or you have an investor. Not before. |
| 12 months+ | Start thinking about the next cycle and concentration. | Are you too concentrated across one segment or customer. In one product or service. Think about adding more items to your portfolio |
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