Can you guess the monthly revenue run rate for the online publishing platform, Ghost?
The answer is $143,931. I’d ask if you guessed right, but if I’m honest you didn’t need to guess, you could have just visited Ghost’s website to find out!
Ghost is one of a growing number of startups that are operating transparently — sharing company data that previously would have been limited to employees and investors. They refer to themselves as an Open Startup, but what does this mean and why would you run a company publicly?
What’s An Open Startup
An open startup is a company that has chosen to publicly share metrics about their company. Normally they share revenue, users, and traffic numbers but in some cases they will even share, logs and dashboards too.
The trend for transparency and openness appears to have been started by Buffer, but now has been adopted by several other companies like ConvertKit, Ghost and Nomad List.
Why Run An Open Startup
Marketing: It’s been demonstrated by NomadList and Baremetrics that publicly sharing statistics can be used for promotion and to increase traffic. Equally sharing a growing user base is ideal social proof for potential customers. That said, being open can work both ways. Low user numbers or revenue could have the complete opposite effect and deter customers from purchasing.
Feedback: Sharing development progress and roadmaps is an excellent way to gain real-time feedback from existing users and potential customers. Monzo has done this very effectively with its public roadmap.
Education: Being transparent about how a company is gaining customers, building a product and making money provides an excellent opportunity to dispel the myths around startups for customers, investors and founders. More public information can also help the industry progress, encouraging others to launch independent companies.
Whether you agree with the Open Startup movement or not, it’s undeniably intriguing to be able to see how companies like Ghost are growing.
I believe opening information previously restricted to a privileged few plays a part in democratising the startup world. I hope to see more companies open their data as I’m sure it can benefit us all.
BitMate was a web application that helped developers start new projects faster. Was, is the keyword in this sentence. I founded BitMate in August 2016, but nine months later, I was closing it down.
Here are the mistakes I made and the lessons I learned through my experience as a founder. If you are thinking about starting a company or at the beginning of your journey, I hope this post helps you avoid making the same mistakes I did.
Start for the Right Reasons
In 2016 I wasn’t happy. I was working with a great group of people, but I found my work uninspiring and unfulfilling. I was frustrated at my lack of opportunities, and I was facing challenges in my relationships outside work too. I felt like I needed a clean break, a new challenge and starting a company in a new country seemed like it would be the answer.
I took the leap, left my job, moved myself to New York and started BitMate. Those first few months were exciting and full of promise as I set out to fix all the problems I was facing in my life with one cleverly designed solution. But as the reality of my new challenges began to sink in, my problems began to magnify.
Looking back on that time now, I realise I was nieve. I wasn’t passionate about the reasons for starting BitMate or the problems my potential customers had. I was looking for a way out of the challenges in my life at the time.
Moral of the Story: Starting a company is hard, and the chances of failure are high. It’s unlikely it’s going to pay off in the short term, so I think it’s vital to fall in love with the process, not the reward. If you love the process, the rewards will probably look after themselves.
Don’t Assume Your Customers Are like You
The idea for BitMate came from my own experiences, working as a developer building proof of concept applications to help companies validate product ideas. I needed to start projects quickly and didn’t want to build similar functionality from scratch every time.
While working on projects, I started writing scripts to generate code and speed up my work. Gradually these scripts got more and more complex until I could build the base framework for new projects in seconds.
I showed what I had built to some of my teammates and got some positive feedback. I thought what I had created could help other developers reduce their workload as I assumed they experienced the same problems as me. That turned out to be a big mistake!
Moral of the story: Don’t assume that your problems are the same as other peoples. Even if you find a few others with the same, that doesn’t mean there are enough people with that problem to start a business. I realised too late that most developers didn’t start new projects as often as I did so didn’t need BitMate.
Show Customers the Product, Quickly
Before starting BitMate, I had read The Lean Startup. I knew I needed to get my product in front of customers quickly so I could get their feedback. But when it came down to it, I was worried about showing potential customers a lousy product. I spent four months working on the product alone. I didn’t show anyone what I was building, and the scope kept creeping.
I know now that I was scared of negative feedback on my creation. It was more comfortable to build another feature, or improve the design than to find potential customers and risk them not liking my product.
The more I invested, the worse this problem got. I was committing the Sunk Cost Fallacy, avoiding showing people the product for fear I had wasted time, money and effort. I continued to invest with the crazy belief that the more effort I put in, the more likely customers would like it.
Moral of the story: Put your solution in the hands of potential customers early. I mean, really early. Ideally, before you’ve written any code, or invested any money. Talk to them about the solution, build a paper prototype, or try to sell your solution before it exists. Do anything you can to get validation before investing too much time and money.
Consider How the Product Scales
I never got the opportunity to see if BitMate would scale to thousands of customers, but I know it wouldn’t have been possible.
I thought BitMate’s customers had the same problems as me, which meant enabling them to start projects that combined lots of different options. However, when I finally began to talk to potential customers, I realised people wanted even more combinations than I thought. With every extra option, the complexity of the product grew exponentially.
By the time I closed BitMate, our product had become hugely complicated. We still only asked eight questions to customers when we built an application, but each question came with multiple choices. It meant BitMate could generate over 1,600 different variations and each of these had to be tested to ensure they worked every time we changed anything! At this point, adding one more question would have increased the possible variations exponentially to over 3,000!
BitMate could never have been a successful and sustainable product at scale. It only took simple maths to realise we would have drowned in technical complexity.
Moral of the story: Start with the end in mind. Begin by considering what success at scale means for you. It doesn’t have to be a billion-dollar exit or millions of customers. Instead, it might be a reliable income and more time to spend with your family. Either way, work out how much revenue and how many customers you think you need at scale. Consider what you’re company would look like, how many people work there, what the product would look like, and what you’re role will be at the company.
Building a good picture of where you want to go allows you to work backwards to avoid creating a company that cannot reach those goals or takes you somewhere you never wanted to be.
Build a Support Network
When I started BitMate, I turned my life upside down. I left my job, moved country and started a technical and business challenge more significant than I had attempted before. I had great support from my partner, family and friends, but if I’m honest, I was out of my depth.
As the months wore on the loneliness of my situation became very real. I was working alone, harder than I had before, but I wasn’t achieving what I had hoped. When I did see friends, I put on a brave face. I would say I was almost there, success was just around the corner, but that couldn’t have been further from the truth.
As this cycle continued, I could feel the effects on my mental and physical health. I was frustrated at myself for not being able to find a way to turn the impending failure into a success, and this undoubtedly put a strain on my relationships.
It took me a long time to realise that closing BitMate wasn’t a personal failure I couldn’t recover from but an opportunity to put my energy into something else. Since then, I have spoken to many other entrepreneurs who have experienced similar challenges, if only I could have spoken to them during the struggle.
Moral of the story: Starting a company can be a lonely experience. You will go through tough times and experience many failures. Family and friends can provide excellent support but be careful not to lean on them too much. They don’t want to live your startup journey aswell! Instead, try to build a support network of other entrepreneurs who understand what you’re going through. Attend meetups, go to conferences, and read about others experiences and consider getting a co-founder.
Lastly, remember to keep perspective. Struggling and failing can be emotionally stressful, but there is no shame in it. It’s essential to look after your physical and mental health through the journey so, even if this startup fails, you are ready for your next experience!
I have no regrets from my time running BitMate. I learned more about myself, how to create a product, and how to run a company in those nine short months than I had in the previous few years.
I hope by sharing my experiences, I don’t discourage you from starting you’re own company, but instead, inspire you. Just by reading this, you are better equipped to start than I was as you can try and avoid the mistakes I already made!
And even if you do start and fail, don’t be put you off. Welcome the experience because it’s setting you up with deeper insight, more conviction and better odds for the success next time.
I’ve always felt founders should be wary of raising money. An investor writing a check can feel like validation that your company is on the road to success, but be careful. Are you just avoiding the challenge of market validation?
In the early stages, before you find product-market fit, I think you are better off without much money. This lack of financial resource is a considerable constraint, but when you don’t have money, you need to make money. And to make money, you need to build a successful business.
The constraints that limited financial resources put on your startup will make you focus; think creatively, and drive you to early market validation.
Invest in yourself, reinvest in your business and increase your upside when you succeed.