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Validate Your Startup Idea by Doing the Things That Don’t Scale

Cradle, our godfather…

Last 5 months ago, we got invited by Cradle Fund for the startup event called B-Linked with Cradle & Startups 2018 (sharing session & networking). I was a representative from Soding and willingly to share about our experience in validating our idea and receive pre-seed investment from Cradle. For your information, our idea has been rejected for the first time but we are able to secure the grant for the second time because our product is able to prove our USP, right target market and some tractions.

Here is our story begins…

We started executing the idea in mid-2016, prototype development in early 2017, completed in early 2018 and pre-product market fit until 2019. Our main idea is simple, we providing an AI (artificial intelligence) evaluation recruitment platform (SaaS platform) to find software developers for tech companies. But before we jump into that, we have done some minor adjustment based on what market needs. Previously our business model based on commission whereby for each successful hiring but the market needs a more accurate, fast, affordable and cost-efficient solution.

In mid-2016, our MVP version which is the first version supported only evaluation on technical skills based on information in Github, the mechanism similar to CodersRank. Then we change it into real-time technical assessment instead rely on Github data. But most of the time we can’t automate 100% from our system because our AI modeling still hungers for data. So what we do is create a google registration form and ask potential candidates to fill it up. Once they do, we will email the technical assessment to let them answer. After completed and submitted to us back via email, we will start to recommend talents to potential employers. During that time, we are able to capture a lot of deals from tech companies such as Fave, Piktochart or The Lorry.

But our enthusiasm won’t take that long when we aren’t able to fast enough recommend talents in short time and many potential clients need cost-efficient solution. Since that, we push our tech team to enhance the AI modeling using our own technology creation and personality insight that some of the companies require culture fit assessment as part of their evaluation. So what we do is integrate IBM Watson technology to assist our system to evaluate potential candidate’s personality on social media and our business model turn into a monthly subscription. We still doing the pre-product-market fit and do some experimenting until our product can be 10x better than our competitors such as HackerRank and Codility.

Our founders…

Our founding team consist of two people, I’m Nurdin as a technical guy and my partner Esa as a business guy. Before this, there was a guy a part of the founding team since the idea started but it is not going to well, maybe he’s not believing my vision and strategy. I believe this case scenario will happen to some of the startups because staying founder believes that great mind get money based on result compare to normal (not sure to said poor) mind get money based on time. So he left. Luckily Esa came on time and we together pursue our goal to provide with our cutting-edge AI evaluation recruitment platform to potential tech companies around South East Asia.

There are some tips on when to find a good co-founder. Find skills that complement yours. If you are a technical person, find the business person. If you are a coding person, find the design person. If you are a realist person, find the optimist person. All co-founders do set some alignment of vision and values where your roadmap is going to be maybe in the next 5 years. Find the one who eager to learn new things and mistakes. Besides that, the energy that needs to strive for a long run journey. However, you should consider emotional intelligence when finding co-founder because it’s very important as a predictor of performance in your startup.

According to Big 5 personality traits research, high openness and conscientiousness can lead to successful startup culture. Flexibility also plays a role when a co-founder can suit up their “hats” depends on the situation. The co-founders can’t focus only one skill when building a startup because the variety of multiple hats are very important depends on the complexity of the problem to solve, it doesn’t mean jack of all trades, master of none but focuses on what you master it. However, complete honesty and transparency must be clear among co-founders in order to gain trust with each other without prejudices.

Blue pill or red pill…

From my own observation, most of the startups are happy good lucky at an early stage. Before the startup journey begins, most of the time they are very excited about their upcoming idea that will change the world. Many people can dream including us. Once the startup journey begins, initial enthusiasm starts to kick in, went to startup networking event, socialize among startup co-founders at co-working space, writing a lot of press release stories to potential media, posting daily update on social media about minor achievement non stop, meeting with a lot of potential clients, seeking more funding, etc.

All of these things running smoothly until you choose to take a red pill. Hope is a mistake sometimes. Reality sets in when actually you are realizing that your product can be easily copycat by others, wrong target market, no market demand, and your startup started to broke out. This phase we called it as through of sorrows.

I remembered a dark moment whereby we were rejected from presenting in Demo Day under the MaGIC GAP. During the program, we aren’t able to show the complete AI system since it’s still in MVP mode and still gathering user’s feedback. So many issues we need to settle up but thanks to the MaGIC exec team because set us in reality check with giving us the red pill. In the startup, there are just only two things you need to do. Develop the product and find the clients. Other than that just noise. Do a lot of experimenting, pivot if you think it’s the best for your startup and market needs. When it starts working, do some product-market fit until the market satisfied your solution then proceed with growth hacking.

What we learned…

Strength and uniqueness of your innovation and idea are very important. It can be your barriers of entry so you can enter the particular market and compete with other competitors in the same niche. Barriers to entry act as a deterrent against new and existing competitors. Without it, for example, it can be high spending on the advertisement for a new startup to enter the market. Market traction and acceptance validity to validate your market that your solution really matters to them. The viability of proposed business model is crucial to the success of the startup that becomes the new basis of competition, replacing product features and benefits as the playing field on which companies emerge as dominant or laggards. Its growth potential in the ability to generate larger profits, expand its workforce and increase production. Proposed fund utilization how you will use investor money either for scalability, product development, sales & marketing or business operation. They don’t want to be heard you will buy a fancy new car. However, the strength of your management team also important.

Once we knew the feedback from the Cradle team, we fix our USP that focusing on building our own AI recruitment evaluation technology and process. We just find the target market wisely, only focusing on established tech medium and large companies instead of startups or small companies because our solution needs a larger data input to provide an efficient and accurate result from our system. In the future, once the AI modeling is matured and stabled, we will be able to provide the solution to startups and small companies. Search a viable business model that can towards scalability. Revise fund utilization and find the right co-founder that can work together for a long journey.

Advice from Y Combinator.

Launch now, don’t wait until your product perfect. The moment your product is perfect, the other competitors already come in because of late execution, more planning and reworks. Go for it first, and then improve. There is no such thing as the perfect product. Perfection is a process, not a destination. During the product development phase, we need to gather some feedback from the market so you can avoid becoming “I’m, me and myself” or in Bahasa Melayu, we called it “syok sendiri”, it saves your time and resources. Avoid long-negotiated deals and big company corporate development queries with big customers if you can such as large corporations, they will only waste time. It requires lots of listening and patience, they prioritize their brand, many people influence the decision and there’s more to it than just the product.

Pre-product market fit, do things that don’t scale whereby remain small and nimble because startups can only solve one problem well at any given time, so don’t have too much idea. Earn a group of clients that will vouch for you. Airbnb is the most successful company to use this technique and succeed. Founder relationships matter more than you think, it’s a secret of a successful startup. Sometimes you need to fire your customers because they might be killing you. Ignore your competitors, you will more likely die of suicide than murder. Most companies don’t die because they run out of money. Overfunding also can kill the startup. Finally, get proper sleep, exercise and take care of yourself.

One Comment

  1. […] to do the coding or sales and marketing, an AI will do all the tasks. My advice for a beginner that seeking for a co-founder, find someone that contradict with your skills. So don’t try to do everything, it may affect your work productivity. Master of all? I […]

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