“If what’s in this box solves your problem, are you willing to buy it?”
Seth Godin asks this question in his Startup School podcast and it’s the right question to ask. Because you don’t need to have it all built out when you start asking for money. In fact, you probably shouldn’t have it all finished before you start making an ask.
Instead, you “solve the surface first” as they say in the book Sprint. Build just enough that you can ask someone for a purchasing decision. Maybe it’s just a power point presentation or a landing page. Just so you have something to show that will get someone to make a decision. They probably won’t say yes, but if they do, you can go and build the underlying technology.
If you try to make a sale and someone says “no,” now the learning begins. You’ll learn about the true objections.
“Our budgets aren’t set until April.”
“My manager has to approve everything over $500.”
“We don’t buy from startups with no track record.”
The list goes on and on. They’re all valid objections and reasons not to buy from you. And they’re all things you need to know before you build it all out.
So as you start exploring business models and revenue sources, pre sell your product. Pitch it before it’s done so you can tweak it according to the objections you hear.
Maybe you’re approaching the wrong customer, or the wrong department within a company. Now you have to build a product tailored to Legal rather than HR. You’ll have to create something fundamentally different and you might never have known that had you not asked HR to buy the software early on in the process.
Maybe you grew a social network to have 10,000 users and no one wants to advertise on your platform. Don’t wait to make those asks. Approach advertisers many months prior and say, we’re building a social network for mountain bikers and we’ll have 10,000 users by the end of the year. How much would you pay to show every user a 10 second ad every month?
Lastly, asking for money early is the boot strappers dream. If you can get customers to fund development, you don’t need to raise as much money, take on as much debt and handle as much uncertainty.
It’s a scary leap, but shop out your product before it’s ready. Experiment on your business model sooner rather than later.