Navigate the world of pre-seed funding like a pro. Our guide offers valuable insights, answers common questions, and outlines 8 key steps for early-stage founders. Get your startup on the path to success.
TLDR
Starting a business is hard, requires a multi-year commitment, and comes with plenty of uncertainty. In other words, startups are not for the faint of heart. But if you’re excited to solve an important problem and ready for a rollercoaster ride, welcome to startup life!
Before launching your product, take time to validate your idea with about 30–50 prospective customers.
Finding the right co-founder and investors are two of the most important decisions you’ll make. Invest time into the process and keep in mind that ideal partners will be committed for the long haul.
When we launched the Field Guide, we knew we wanted to offer meaningful guidance around common startup challenges and we knew we wanted to make it free to anyone starting a company. We never expected the overwhelming response from founders who have requested specific topics, ranging from product-led growth to turnkey sales scripts.
Keeping a tight feedback loop with our audience has always been important and has allowed us to fill in the gaps and expand our library of startup knowledge over time. One of the most common requests we’ve received is for expert advice about the earliest stage of the founder journey: taking the startup plunge.
Startup founders' common questions
How do I know if an idea is worth pursuing full time?
What should I look for in a co-founder?
What are the timing considerations for making the leap?
How should I choose the right fundraising partner?
How should I set up my company for success?
There’s no shortage of advice out there on how to grow a company. But amid all the noise, we’ve found that very few sources dig deep into the nitty-gritty “how” of starting a company. We talked with more than 30 early-stage founders who shared their stories of how they navigated the roller coaster of starting a company. We also weaved in the investor perspective from Team Unusual. This guide features the collective wisdom that we believe will be helpful to early-stage founders just getting started.
Editor’s Note: We recognize that every founder’s journey is unique and that the path isn’t linear. As you read, keep in mind that the steps can occur in a different order depending on your own circumstances. Second, this is intended to be an overview of the very first phase of getting started and the journey ahead, not an exhaustive step-by-step manual. We hope the Field Guide can offer more in-depth insight on each step along the way!
Step 1: Document your motivations
Before you begin, ask yourself this critical question: “Why am I interested in starting a company?” Describe your motivations clearly and honestly. Are you excited by the thought of making a dent in the world or is it something else?
Starting a company is a tremendous commitment where the odds are oftentimes stacked against you. Sarah Leary, Unusual Ventures partner and co-founder of Nextdoor, suggests having a "sit-down" conversation with yourself.
Step 2: Confirm the support of your personal network
Starting a company is a multi-year commitment and affects not only you but the people in your life. Startup life might mean working longer hours and less time to spend with your kids or significant other. It might mean leaving behind a cushy job until you can fundraise for your idea. The bottom line: there will be a lot of uncertainty baked into your life as a founder.
Confirm with your family and anyone else who might be impacted that you have their full support and they understand what you’re getting into. As Jyoti Bansal, co-founder of Unusual, AppDynamics, Harness, and Traceable says, “Starting a company is already a tough undertaking. Support from your personal network is what helps you get through the ups and downs.”
Keep in mind that your family might not understand the nature of the journey. Even with a father who ran his own business, Jyoti still faced skepticism. When he told his parents he was starting a company, his father’s first question was “What will the profit be?” Jyoti had to tell him there likely wouldn’t be profit for multiple years.
The more mentally prepared you are for the startup journey, the easier it will be when inevitable challenges arise. To all new founders and to the first 10–15 employees, Jyoti now shows what’s known as the “startup curve” to demonstrate the unpredictability of startup life. “It might be a little cheesy, but it gives them an idea of what to expect. You have to be ready. The first valley you encounter will be so frustrating if you don’t anticipate it.”
Step 3: What’s the ‘wrong’ you want to make ‘right’?
How does one discover the next great startup idea? More often than not, lightning doesn’t strike overnight or come from brainstorming sessions. When you ask successful entrepreneurs about how they arrived at their unique insight, many relate their own stories of a problem they faced on a regular basis — a gnawing pain that prompted them to build something that "scratched their own itch."
Insights don’t just come to those looking to start a company. Insights are problems that you encounter in your own daily life and believe deep down can be solved in a better way.
The number-one consistent message we heard from founders is that there must be some wrong that you want to make right — so much that it's nearly always on your mind. To build a successful company, you have to find some shared pain that many people feel, and ideally, it starts with you. Here's Michael Krakaris discussing how he came up with the idea for Deliverr based on the pain points he and his co-founder, Harish Abbott, encountered in the fulfillment space.
Step 4: Validate your idea
Once founders identify the wrong they want to make right, most reach out within their network to see if others feel the pain too. For the validation phase, you’ll want to cast a wide net. For example, Sarah Leary's hit rate was about 30% with cold outreach to neighbors when she was validating the idea for Nextdoor.
The goal is to create a process for capturing initial reactions and noting any common themes that emerge from those early conversations. As for the right number of customer interviews, founders agreed that a good rule of thumb was 30–50 customer interviews. While a dozen is not enough, the pain points in the customer feedback should start to converge by the time you reach 50.
For more guidance on enterprise customer validation, check out our 5-step framework. For guidance on consumer customer validation, check out our guide to finding product-market fit for consumer products.
Here's Jyoti Bansal discussing his approach to customer discovery during the early days of building Harness — his second unicorn software startup.
Step 5: Prototype a solution
You may want to start prototyping a solution. Thinking through a solution for yourself can help you gain greater conviction and clarity. As Jyoti says he likes to dive right into building a prototype.
Even when he would be pitching customers all day, Jyoti would come back and write code to clarify his own conviction and keep momentum on the solution.
Prototyping doesn’t mean you should build a full-featured solution. Instead, focus on building a prototype that is good enough to put in front of prospective customers and get feedback as quickly as you can. For Nextdoor, Sarah used rough wireframes and mock-ups in her early user interviews to gauge early reactions and needs. The goal is to test your proposed solution in more realistic market conditions and continue learning. You want to get answers to a few key questions about the product before you decide to build a company around it. Otherwise, you risk building in a vacuum and creating something that no one needs.
Step 6: Sell while you validate
At the same time you’re validating the market and your proposed solution, keep in mind that you’re also seeing if your customer “pitch” resonates and sparks excitement. Reflecting on his experiences building three successful startups and one new venture capital firm, Jyoti recalls, “It’s been very different in each situation. The number-one thing I learned from each experience is that you have to try to sell from the very beginning.” Joyti believes that if you can’t convince people your product is a good idea during the customer validation phase, it’s probably not an idea worth pursuing.
Step 7: Choose a co-founder — the 'who' before the 'what'
Note: A founder's journey isn’t linear. There are some people who swap the order of finding an idea and finding a co-founder. Both paths are valid. The point is that at the end of this stage, you have an idea and team that fits together. That means you should only land on an idea that makes sense for the specific crew you’ve assembled to tackle together. By thoughtfully vetting for idea/team fit from the start, your chances of succeeding are that much higher.
Make sure your co-founder(s) is more than just compatible
Out of countless decisions you’ll make throughout the lifetime of your company, perhaps the most important decision you’ll make is choosing your co-founder(s). It’s hard both emotionally and financially to undo this decision and change co-founders. There’s a human cost to doing this and can cause a lot of trauma inside an organization.
Remember that it takes time to find the right match — it’s not a decision you want to rush. Jyoti recommends mind-melding and playing to each other's strengths.
Checklist: Need help sorting out your motivations?
Consult the checklist linked below to assess if you are ready to start a company!
Starting an open source company