229. The $50,000 Mistakes These Founders Almost Made (And How They Avoided Them)
Nov 20, 2024
Listen to learn:
Timestamps
00:00 Introduction
01:11 Avoiding Expensive Mistakes
02:53 Lesson 1: The Build Everything Now Trap
06:11 Lesson 2: Marketing Before Testing
09:02 Lesson 3: Expensive Website Pitfall
11:53 Lesson 4: Wrong Assumptions Cost
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Transcript
Sophia Matveeva (00:00.534)
There are lots of ways to waste money when you're building something new. And in this episode, I'm going to show you four expensive mistakes so you can avoid them.
Sophia Matveeva (00:11.918)
Welcome to the Tech for Now Techies podcast. I'm your host, tech entrepreneur, executive coach and Chicago booth MBA, Safiya Matheer. My aim here is to help you have a great career in the digital age. In a time when even your coffee shop has an app, you simply have to speak tech. On this podcast, I share core technology concepts, help you relate them to business outcomes, and most importantly,
share practical advice on what you can do to become a digital leader today. If you want to a great career in the digital age, this podcast is for you. Hello smart people. How are you today? I am really enjoying the beautiful weather in Bahrain. I've been swimming in the turquoise sea here almost every day. And this is the most pleasant November I have ever had.
And today I'm going to talk to you about wasting money. Now, I'm not one of those people who is chronically afraid of spending money because I like investing in education and investing in good education. Well, it can be expensive. I like going to expensive restaurants. If the food is excellent and the ambience is elegant, then I think it's worth it. I enjoy good tailoring, but spending money.
and wasting money are not the same thing. I get very upset when I end up paying a high price for dinner and it tastes like last night's leftovers. So in the context of innovation, you do have to invest in tools and you have to invest in great people and great people shouldn't be cheap. And so you have to make these investments if you want to make something new. And in this episode, I want you to learn how to think about
investing wisely and not wasting your hard-earned cash or the cash that you manage to squeeze out of your CFO or your investors. And before we continue, my dear smart person, if you are enjoying this show and if you are learning from the free lessons that I give you here, then please subscribe to Tech for Non-Techies and leave this show a rating and a review because honestly,
Sophia Matveeva (02:27.384)
This really helps me when you do that. really helps me reach other smart people like you. And I just love hearing from you. So last week I finished teaching my first cohort of tech, phone and technical founders in Bahrain. And our second cohort starts this week. The demand for this knowledge is really vast. And as the first cohort wrapped up.
I've been reviewing the course reports from my students and I want to share four lessons about the expensive mistakes that my students almost made and then didn't. And these mistakes are super typical and I've seen them over and over again and I bet that many of you would make them too. So listen up. Lesson one, I'm calling this the build everything now trap. So let me tell you about one founder in my last cohort.
He came in wanting to build a massive procurement application. You know, one of those products that basically says I'm going to solve every procurement problem for every company. And he was actually about to invest some serious cash in hiring developers and making his vision come to life. But this vision was too broad. So then something interesting happened. In my course, he learned about user testing and prototyping, and then he spoke to potential customers. And guess what?
He discovered that the market really needed something that was basically much smaller. So he didn't need to build this huge complex system because what the market actually wanted was something very specific. They wanted an emergency spare parts procurement system for basically a very specific set of things that went wrong in the oil and gas sector. So we really narrowed down.
what he actually needed to build and who he needed to build it for, which is going to make things much, much cheaper to create. And also it's going to make his go to market strategy much simpler. And if you don't do that, it's basically like going shopping for a whole new wardrobe and then realizing that all you really need is one shirt. In the previous episode, I talked about why you should see prototyping as a key part of your business strategy and
Sophia Matveeva (04:45.858)
This lesson is just another example of that. And if you haven't yet listened to the last episode, then I'll do that after you finish this one. And both of these episodes are quite short. So don't worry, you're not signing up to a Joe Rogan experience. You can do both in one day. Anyway, the lesson learned here is start small and focused because you can always expand later. Okay, now let's get to lesson two. And I'm calling this one the marketing before testing mistake.
very expensive mistake. So here's another story that I want you to learn from. One of my students in my cohort, he had already built an app before he started the program. So he was quite advanced. His app wasn't yet out on the Apple App Store because he was doing final testing and he was preparing for launch. He was about to launch this huge marketing campaign for his app. So including digital marketing, outdoor advertising, PR, and so on.
This is a bit like planning your wedding before you have even started dating somebody. So it's very enthusiastic, but it's a bit premature. So I encouraged him to do beta testing and that made him pivot his strategy. Instead of spending all of that money on marketing, his company is now starting with around 50 beta users.
to make sure that people actually really want the product he's making and also to get feedback on the features that really matter to them. Because some features are going to be those killer features that people really love and some are just going to be a bit vanilla. And keeping features in your product actually costs you money. That's another episode. But essentially, if people are not using things in your product, you might as well just kill them because it costs you to keep them. Anyway.
So with this particular founder, his aim is to do beta testing and then roll his product out gradually making improvements as they acquire more users. And you know, when I was running my first tech company NT, Mashable named our product their app of the day, which was wonderful. It was really nice to get that accolade, but we weren't Mashable's app of the day because we had the biggest marketing budget or because we had the biggest amount of users.
Sophia Matveeva (07:11.222)
It was because we had tested and refined our product until our users loved it. And only when your users love your product should you do big marketing campaigns. And you know what? I love big marketing campaigns because they are just quite fun. know, doing launches, doing press, doing event. I like that sort of thing. But you should only do this kind of thing when you've proven the use case for your product. And when you really understand who your customers are.
and why they need your thing. Because doing a big marketing campaign before, it's just too risky. There are too many unknowns and basically just don't do it. Anyway, so the lesson here is test with real users before spending money on marketing. Lesson number three, we're calling this the expensive website pitfall. Another one of my students literally had her finger hovering over the docusign.
to sign a development contract when she joined the Tech for Non-Technical Founders program. And in the program, she learned about prototyping and MVP testing, and then she changed her direction on the product, not on the strategy, which is what we talked about in lesson one, but on the product. So here's what happened. Instead of signing the contract with developers, she created a simple prototype herself using no code tools.
And then she tested it with five users. Do you know what happened next? So those users, actually want the product. So her general instinct is correct. Her general strategy is correct, but the way they wanted to navigate the product. she made a test website. The way they wanted to navigate it was very different to what she had created.
They basically ignored several buttons that she made. They wanted everything in one continuous scroll as opposed to in different pages. Anyway, those are details. What you need to know is that you can have the right strategy, can understand who your customer is. You can even understand what problem you're solving. So you can have all of that correct, which she did. But then we get to the product strategy thing. And creating a product without testing how people would use it means that you are
Sophia Matveeva (09:30.776)
probably going to have to remake it and remaking it with developers is really quite expensive. So by creating something that she did herself for free using no code tools, she basically saved a lot of cash. This is not that hard to do. This is something you can easily do before hiring professional product people. So the lesson here is do not commit to expensive development before testing your product.
features in front of your target users. So test your strategy and test your features. And now let's get to lesson four, the wrong assumptions cost. So one of my students came into the program wanting to build a healthy food app for fitness enthusiasts. And I mean, this sounds pretty good. So what's wrong? What went wrong? Well, when he tested his prototype, then something unexpected happened.
His target users were saying, yeah, this is great. I would totally use this. Yes, I understand how to use this. understand the product flow. get all of the features, but this is very much like this competitor and they literally couldn't see anything unique about what he had shown them. And this is a problem because how are you going to compete with the incumbent if your target users can't tell the difference between you and them.
Why would anybody switch to you from the incumbent? So in this case, this founder had to go back to the drawing board and start again. So he redesigned the prototype. He rethought his proposition based on the feedback and he tested it again. And in the second round of testing, he had a completely different reaction and people weren't comparing his product to what they were already seeing on the market. And the lesson here is never assume
You know what your users want and never assume that your product is as differentiated as you really think because maybe the things that you think are super different. Actually, users don't care about that. And now let's summarize what we covered today. So lesson one, start small and focused because you can always expand later. Lesson number two, test with real users before spending on marketing because proper marketing
Sophia Matveeva (11:53.542)
is expensive. Lesson number three, do not commit to expensive development before prototyping and before testing that prototype with your real users. Your strategy might be correct, but if your product features haven't been tested, you could be in for a really unpleasant surprise. And lesson number four, never assume you know what your users want.
and never assume that you stand out from the market as much as you think you do. Test these assumptions first. And if you want to learn more about how to avoid these expensive mistakes, then our flagship Tech for Non-Technical Founders course is for you. And the demand for this course has been incredible because entrepreneurs and corporate innovators are really seeing how crucial it is to understand tech without being technical.
Because you know, not everybody wants to become a coder. mean, I know I don't. Because Tech Fun on technical founders, it's like learning to drive a car without becoming a mechanic. You don't need to know how to build the engine, but you probably should know what the pedals do, right? So whether you want to learn on your own through our online courses or to bring Tech Fun on Techies to your entire company, we have got you covered.
all the details at techfornontechies.co. And if this episode helps you avoid just one expensive mistake, then please subscribe to the show and leave the show a rating and a review because honestly, I really like hearing from you and your reviews really do help other smart people find this content. So think of it like your good deed for the day. You have saved another founder from an expensive meal
at a terrible restaurant. What a wonderful thing to do. And on that note, have a wonderful day and I'll be back in your delightful smarties next week. Ciao.
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