I haven’t blogged in a bit, and this time its not even writers block that kept me away. I blame it on the NoDaysOff lifestyle, seriously!
Disclaimer – I am not yet successful and I do not own a software company that is making billions of dollars but I do think I can share the little I know.
I am very keen on taking the entrepreneurship ride one day, in fact the sooner it happens the better. Its part of my life mission and something I know I will regret in the future if I never give it a go. Over the last few months I have done a little bit of research, watched some videos that have fed content into how start-ups are formed and their lifecycle, etc. I have to give credit to my Prep-hub Co-founder Chanda Pwapwa for constantly bombarding me with some of the valuable content I have been reading and watching. I would like to share one of the most important lessons I have learnt for anyone who wants to start a software company. This lesson was repeated over and over again in most of the material I went through – “Product that adds value to users, before money”.
A common question I always get when I tell people I am building an app or website is, “How are you going to make money?” There is nothing wrong with wanting to make money, it is the enabler after all, a medium of exchange, a unit of account, and a store of value. Whichever way you look at it, people need money to survive in this world, that is just the reality. The problem is thinking about building anything with money as the core focus will mean your output (the product)’s features will be driven by how the product can make money. A classic example of this is adding an advertising section to the first paper mock-up you draw up for a website you are building. You do not even have a product, let alone a user using your product and you are already accommodating space for advertising. This is a major realization whose consequences are often underestimated by a lot of people. Its easy to run this test, just go around telling people you are building some software and within the first five minutes of those conversations the question will be posed, “How are you going to make money?”
If you look at a large number of successful start-ups that have gone on to become major companies, Google, Facebook, Stack Exchange, etc. One characteristic you will find is that at the beginning, the main focus in the company was to build a product that will provide value to its users. Money was not the primary drive, the drive was product and users. If you can provide genuine value to users and they keep returning to your website or application, the money will follow. Build the best product out there that users fall in love with.
This same principle also applies when you are looking for funding from venture capitalists. The best venture capitalists out there understand that money comes as an after-fact to a valuable product. The Y-Combinator team understand this and I have lots of respect for Paul Graham and his team. Venture capitalists who ask you early on in the lifecycle of your product “How is your product going to make money?” could be a red flag. I understand they will be taking a risk investing in your product and they may need to know where the returns are going to come from, but this should not be the primary reason for investing or not. I have a feeling we may have the “How are you going to make money?” problem in Africa, but that is just a gut feeling, I do not have the statistics to substantiate that fact yet.
I think the message is clear, and if we want to build software companies and products to the scale of Google and Facebook in Africa, let us go out there and understand what our people want, what will provide value to them and then build it. Sounds easy right 🙂
All I can say is, PRODUCT, PRODUCT, PRODUCT…..USERS, USERS, USERS…That’s all that matters!