There has to be a better way for startups to launch platforms
If you are reading this as a non-technical person, this article may prove to be a little overwhelming. Please read it anyway, discuss it with colleagues and friends who are technical, to see if it makes sense.
Please let us know if you have any queries too.
Short summary - our Web Data Platform as a solution for startups
Our Web Data Platform is a content management system with substantial capabilities for dropping content and data into the website. Here is a realistic scenario, which we use on our websites;
- Write markdown content articles (a bit like writing in word).
- Drop markdown content into named folders to put them under article headings.
- Publish data (json format) to named folders.
- See this data appear in tables, charts, maps, galleries, and data dashboards on the website.
- Write attractive content rich pages within our CMS.
The net result is a website which lowers the technical requirements needed to build a feature rich data website.
For specific functionality we either build it into our platform, or can work with third party developers to build these components for you.
We have a fixed price and implementation timeline which means you know what the costs will be - almost unprecedented in software implementation.
If you wish to have specific customisation or don't think our platform meets our needs, please talk to us and we can always discuss this.
It is all about the data, the portability, moving to new architecture cheaply
Before delving into the different types of technology startups, the single and biggest challenge to any technology startup is the data. It is the data which is so valuable, and yet so hard to port to other platforms. The burn rate is the biggest threat to any startup. It is simply the amount of cash which gets spent without profit. Ensuring your data is easy to access and work with is a key principle of our platform. Most of our data doesn't reside in databases or NoSQL databases - despite us being experts in databases.
Understanding startups that uses websites and apps to deliver functionality for their new market
You may know that we use our web data platform to deliver websites for our own business models as a means to scale them out to separate commercial entities. This article uncovers our own experience of creating our own websites with a startup mentality and our experience around the startup scene. What is essential to see are the mistakes made by startups and the huge costs incurred whenever they use a significant amount of technology. We will use real numbers and real conversations but avoid disclosing sensitive information. We are launching two websites with different niches with our own web data platform, one cryptocurrency analysis, and another is a property data platform.
We will refer to any website and/or mobile app as a platform unless necessary to differentiate.
The typical startup journey
Most startups start by trying one or more of the following approaches;
- Try and build a platform with sweat equity (Sweat).
- Outsource the website development as cheaply as possible, often self-funded (Lean).
- Focus on getting investment first and raising capital to hire a strong technical team with a CTO (Funded).
Sweat and Lean are commonly known as boostrapping. Funded at initiation tends to be rarer, because investors look for evidence of traction or growth.
The negatives of each startup approach from a cost and technology perspective
These are all based off interactions with startup cofounders and discussions with them. Naturally, we keep the specifics confidential. Remember, each approach can work in certain situations and be very successful. Our focus is on why the majority of startups fail whenever they choose a certain implementation strategy.
Sweat Equity startup
A sweat startup attempts to get a Minimum Viable Product (MVP) up quickly. "Fail fast, fail early". It sounds great. Build something basic, get interest, don't care if it fails, get investment, rebuild it, grow the business. We just think that the technology is always a bigger chunk of the pie than most entrepreneurs consider.
Sweat startups commit a number of errors;
- Often offer the co-founder website developer equity. Whilst website development is a highly specialised effort, giving away equity to a website developer only when there are many other technology requirements to the business may be an oversight.
- The developer may not have the necessary skills to build a website.
- The starter website may have to be replaced at a large cost.
- Software development takes a long time, longer than the non-technical cofounders want.
Our observation is any sophisticated MVP platform will need replacing.
Outsourcing development cheaply (Lean)
Typically, this involves finding a software house in another country cheaper than your own.
- The cost will be far higher than you expect.
- The software code and data architecture will often be bog-standard.
- The platform will be buggy.
- The platform may need outsourcing.
This seems fine. You get something which resembles the vision of your platform and yet, certain elements just don't work. An equal challenge, most decent software consultancies may not be able to salvage any of the development already paid for.
Funded startups have major advantages in that they have significant resources to devote to technology, and can pay top dollar. Funded startups often fail, for the following reasons;
- A lack of focus on delivering generic solutions. They get caught up in too much domain specific efforts, wasting money.
- A lack of synergy between the commercial value proposition and the technology.
- Focusing on apps and multiple channels which dilutes the impact of the value proposition.
One startup we spoke with, focused on reusing empty commercial space. They burned £2 million and it failed. Now, £2 million is not a huge allocation in larger enterprises, but it is a lot of money to not deliver a viable business.
Talking about costs of startup technology and marketing
Thinking about costs
Any non-technical cofounder, CEO, CMO, CCO will want to invest money into marketing and driving revenue. Technology should be as cheap as possible but let's talk numbers.
- A UK based software contractor is between £350 and £800 per day.
- Freelance developers in countries with lower costs of living will still command $15-$50 per hour.
- A UK based website development company will charge between £20-50k.
- An overseas website development agency will charge between $8k-$30k.
The deliverable will not be a data rich platform. If you are looking for an application in addition to a website, add on another $5-30k.
The above means you will have spent a huge amount of money, and potentially have to start all over again once you get investment.
Understanding typical startup funding approaches
Having attended pitches and interacted with many startups, our projected costs are something like the following;
- Cofounder/Cofounders bootstrap the first iteration with time and small amounts of personal investment.
- Some personal effort and capital is spent on marketing.
- Cofounder/Cofounders spend time seeking investment and gaining traction.
- If investment is acquired, the cofounders may think they can spend most investment capital on marketing and customer acquisition.
- Instead, the MVP technology is unfit for purpose, substantial amounts of money is spent rewriting the technology rather than having a strong platform from which to launch marketing initiatives.
Breaking down startup numbers
- MVP created with sweat equity with a maximum spend of £30k notional value.
- Time spent pitching - varied.
- Attract £200k investment after round one seed funding.
- Spend £150k on the technology.
- Go for round two funding of £600k to £1million for round two funding.
- At this point, the cofounders are already at the point of losing majority equity in their own startup.
The "elephant in the room" is that a startup may have to acquire at least £170k to have a starting base of technology. At that point, the venture is not viable because the capital should be focused more on marketing and brand awareness.
The Info Rhino no-brainer
Rather than go through all this effort of trying to build an MVP, having to rewrite it once you get funding, spending most of your seed capital on rewriting the technology - not once, but twice! Why not have a platform that is; robust, flexible, data-centric, less technical, and with a known cost?
The most amazing thing about our technology approach, we are happy when customers decide to move to different technology. The data our customers platform contains is accessible, known to them, and we celebrate customers building applications off our own data formats.
Our solutions are low cost and the data is yours. You can plan to engage other providers to work with your data for your business.
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