Want a Successful Startup? Consider Minimalism!

What follows is an article by Launch413 advisor, Dr. Murdoc Khaleghi.

Want a Successful Startup? Consider Minimalism!

If you were to closely question most successful entrepreneurs on why they do what they do, they would tell you that it is not for a big payoff or the status of succeeding. It’s because they want to find a solution to a problem they care deeply about. This desire to solve a meaningful problem allows them to sustain the motivation, passion, and energy needed to overcome insurmountable odds.  


As a physician, it’s been illuminating to review the research that demonstrates how classic extrinsic motivators, such as money, status, and possessions, only produce a temporary stimulation of pleasure in the brain. Similar to drugs, this dopamine increase is fleeting, leading to wanting higher amounts until further increases aren’t possible anymore. Meanwhile, the pursuit of meaningful challenges and service offers a long-term satisfaction that can sustain an entrepreneur. Since creativity is a key asset for a successful innovator, I find it also significant that extrinsic motivators have been demonstrated to decrease creativity, while intrinsic motivators offer no such limits.


Fortunately, there are a number of sources of sustainable long-term satisfaction inherent in entrepreneurship, including the challenge and service of trying to solve a meaningful problem, as well as the autonomy to pursue what one wishes. The joy of autonomy is why it’s rare for an entrepreneur to ever go back to doing anything else.

 

Funding Your Startup


While having the right motivations can increase the chance of a startup's success, the biggest reason for a startup’s failure will always be funding. When managed properly, financing and motivation can be optimized by decisions you make in your own life.


When we think of financing, we focus on debt and equity. Debt is not a good option for a startup, as most ventures are considered too high-risk for debt financing, and interest payments are required while cash flow is still typically negative. Instead, most startups seek financing through equity, exchanging shares in their company for funding. While this is the most common option, it comes with serious drawbacks. At early stages, ventures generally do not have much worth, so to raise sufficient funds a significant portion of the company has to be exchanged. In addition, autonomy is one of the primary sources of the joy for an entrepreneur, but when entrepreneurs exchange equity to fund their venture, they lose a sizable piece of their company, as well as their autonomy and control since they must now report to their investors. A venture has only two possible paths: failure - losing everything, or success - which makes the equity given away early very valuable. Giving away valuable equity is not something most entrepreneurs want.

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There is a third funding option: bootstrapping. Bootstrapping means funding your venture as long as possible with your own money. The longer you bootstrap, the greater the possibility of increasing your company’s valuation. Then, when you do need to raise money, you can give less of your company away. While bootstrapping sounds ideal, many entrepreneurs don’t have significant funds to bootstrap. Fortunately, there are changes you can make in your life to maximize your ability to fund your venture independently.

 

Minimize Your Lifestyle to Maximize Your Startup


Most people live up to or close to their means. When we’re young adults we live on very little, and then as our income grows, our expenses do too. While some increase in expenses is necessary and unavoidable, most increases in expenditures are optional decisions under the guise of necessity. We buy newer cars, bigger houses, upgrade our TV, get a daily coffee, eat meals out, etc. These changes are subtle and gradual, to a point where I observe many of my colleagues who make high 6 or 7 figures finding a way to spend most of their income. While you might think they are excessive, they are just doing what seems natural--spending most of what they have.


There is an alternative that I have embraced in my life that has significantly helped me as an entrepreneur, including building several 8 and 9 figure companies, publishing eight books, and running a 30 member provider group. I’m a minimalist. Despite sometimes earning 7-figures, I still drive my 96 Civic, live in my modest home, don’t own a TV, get my books from the library, cut my own hair, and make most of my own meals.  Because of this, I’ve had the resources to pursue whatever endeavor strikes my fancy, and had to worry far less about the runway, the amount of time my funds will last me, for either my personal life or the venture. Interestingly, this minimalism has many other benefits:

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  1. When you start trying to live simply, you find joy in activities that cost little if anything.  Forget the fancy meal or ultra4K TV--give me a run through park trails or a hug from my child any day.

  2. One of the secrets to building wealth is buying assets instead of liabilities. I spend most of my money on things that make money and then use that money to buy more things that make money. The growth is exponential.

  3. Having savings and those assets has given me the security to never have to worry about having enough and the freedom to never have to do anything for money. With that freedom I pursue activities that are  meaningful to me. Additionally, whatever I do, I enjoy it more knowing I don’t have to do it. After all, how can you find your calling if you are focused on needing to pay the mortgage? By not giving much attention to buying stuff and then managing that stuff, I’ve had a lot more time and mental freedom for more interesting pursuits. Rather than spend my time looking at new cars, TVs, or houses, I write books, design courses, and start disruptive companies that try to solve major problems.  

  4. Living my minimalist life I now get more sustainable satisfaction from creating, helping others, and forming relationships, without needing the dopamine hit of moment to moment consumption gratification.

  5. I have the money to do some good. Many studies have shown that while the pleasure of purchasing for ourselves is fleeting, using money to help others makes us happier and for longer. I spend money to make a significant impact in a way that’s meaningful to me.


Making these changes is not easy. People often feel overwhelmed regarding where to start, and how far to go. They might feel uncomfortable about not following societal convention, or experiencing the changing of priorities. Embracing a minimalist lifestyle can also greatly impact one’s identity and like the best entrepreneurial pursuits, it’s not about achieving some destination, but about moving in a direction, with every step forward bringing a victory. What’s wonderful is no one ever regrets living more minimalistically, just like no one ever regrets being an entrepreneur. Doing one can make you successful being the other.


Besides being an advisor to our client companies at Launch413, Dr. Murdoc Khaleghi, MD MBA FACEP, is an emergency physician and Co-Founder or Founding Chief Medical Officer of many companies: including WellnessFX, StemoniX, and EverlyWell. He is the CEO of Westfield Emergency Physicians, and has published 8 books, including an Amazon bestseller. Dr. Khaleghi teaches Entrepreneurship at Westfield State University, with a focus on the practical changes to your life and skills you can develop to maximize your success as an entrepreneur. 

Launch413 Invests in BookFlow

Lisa Papademetrio, Founder, Bookflow

Lisa Papademetrio, Founder, Bookflow

We are proud to announce the latest addition to Launch413‘s portfolio: Bookflow. Bookflow aims to become the software platform for novelists to create, share, and improve their stories.

This Western Massachusetts company is led by Lisa Papademetrio, a New York Times best-selling novelist and Master’s-level educator of creative writing.

“Here is someone with well-earned national prestige, a deep knowledge of the industry, and an even deeper knowledge of the challenges faced by her target market: aspiring novelists. Oh, and she didn’t just talk a good game, she actually went and launched a prototype last November! We are thrilled to bring in the strategy, marketing, and revenue model expertise she’s been looking for to help scale this to a venture helping millions of authors,” said Launch413 co-founder Paul Silva.

Technology Roadmap Essentials

What follows is an article written by Launch413 advisor Ali Usman and originally published on PixelEdge (his company’s site).

When building a new digital product, having a high-level technology roadmap can help in decision making and communicating with the rest of the team. While there is no standard one-size-fits-all template, there are a few key components to keep in mind:

  • Business Model

  • Technologies

  • Team

  • Prioritization

  • Budget

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Business Model

The business model outlines both the business and the product. Make particular note of the Business Description and Vision; it is important to articulate what the business as a whole does and how the new product fits in. Since revenue and marketing channels are key to a successful product, it is important to state them and keep updating them as the business model changes.

Elements of the business model can include the following:

  • Business description

  • Vision for the product and how it fits within the business

  • Key milestones

  • Types of users, for example, customers (tiers if applicable), internal team members, system administrators, and any other internal, partner, vendor, and supplier users

  • User Story map listing key functions of each user type

  • List of delivery channels — e.g. web, Android App, iOS App, Smart Speakers

  • Marketing channels

  • Revenue channels

Technologies

It’s important to assess technology needs from the ground up. One approach is to start with infrastructure and business needs. Another approach would start with the team. The most important thing is to categorize elements and deal with them point by point.

A sample approach is listed below:

Infrastructure

  1. Hosting environment (e.g. Amazon Web Services)

  2. Choice of technology platform unless the product is going to be completely custom

Business needs:

  1. In-sourcing, outsourcing, or co-sourcing

  2. On-shoring, off-shoring, or hybrid model

  3. Skill sets needed (see example below)

  4. Data Replication

  5. Data Backups

  6. Business Intelligence

  7. Email

  8. APIs

  9. Periodic Tasks

  10. Others

Programming

  1. Backend programming language (for example, Java, Php, or Python)

  2. Frontend

Programming Frameworks

  1. Backend

  2. Frontend

DevOps tools such as Pivotal Tracker and Github

Team

Product stakeholders have to decide on three key questions:

  1. In-sourcing, outsourcing, or co-sourcing

  2. On-shoring, off-shoring, or hybrid model

  3. Skill sets needed (see example below)

Identifying skill sets that the current team has and future needs:

  • Project Lead

  • Business Analyst

  • UX Design

  • Frontend Programmer

  • Backend Programmer

  • Database Engineer

  • Quality Assurance

  • Hosting DevOps Engineer

  • Integration Engineer

  • Security Engineer

  • Others

Prioritization

What goes into the beta, minimum viable product (MVP), V1.0, V1.1, V2.0, and beyond? Outlining the parameters of your product and product lifecycle is essential to the success of any business venture. Every product has a unique set of requirements, and therefore every product needs a unique set of guiding principles to help prioritize those requirements.

Budget

When budgeting the true total cost of technology projects, it’s important to remember that launch is just the beginning. A study by Stanford University found that up to 90% of the overall cost can come after the launch of V1.0.

Example of budget line items.

  1. Direct cost

  2. Indirect overhead cost

  3. Tools

  4. Hosting

  5. Things going wrong (meaning the risk factor)

  6. Technical Support

  7. Customer Support

  8. Quality Assurance

  9. Maintenance

  10. Bug fixes

  11. Updating underlying frameworks and operating systems

  12. Forward compatibility

  13. Enhancements

Launch413 Invests in Clean Design Company

Dan Koval, Founder, Clean Design Company

Dan Koval, Founder, Clean Design Company

We are proud to announce the latest addition to Launch413‘s portfolio: Clean Design Company. By reinventing the mop hinge, Clean Design Company’s Duop® mop can do all sorts of things that your standard mop can’t - Dramatically saving you time, money, and effort.

This Western Massachusetts company is led by Dan Koval, a serial entrepreneur with special expertise in design and international supply chains. “We met Dan back when he was involved in the Valley Venture Mentors in 2014 & 15 and have enjoyed informally working with him for years,” said Launch413 co-founder Paul Silva. Paul went on to say, “We’re excited to have the chance to help him achieve his dreams.”

“Dan’s team took one of the most mundane objects, the kitchen mop, and completely reinvented it. Now it decreases workplace injuries, increases the speed people can get cleaning done, and is better for the environment. That is the kind of entrepreneur you want to back.” said Launch413 co-founder Rick Plaut.

Launch413 Invests in Music Box Licensing

Will Bangs , CEO, Music Box Licencing

Will Bangs, CEO, Music Box Licencing

We are proud to announce the latest addition to Launch413‘s portfolio: Music Box Licensing (MBL). MBL connects composers to buyers seeking original music for commercials, websites, and movie trailers.

This Western Massachusetts company is led by Will Bangs, a musician who spent the past ten years as a public school teacher to feed his family and find meaningful work. After graduating from Valley Venture Mentors earlier this year he took the plunge to convert MBL from a side-hustle into a full time venture.

“We were immediately impressed with Will’s work ethic, ability to incorporate advice, and commitment. By himself, and with no training (before VVM) he’s built an impressive small business with real potential to scale,” said Launch413 co-founder Paul Silva.

Launch413 Begins Phase 2, Investing in More Companies!

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Launch413 is itself a startup, and like all startups has lots of hypothesis to test. We are proud to share that we just completed Phase 1 and validated all of our core hypothesis:

  • With our help startups accomplish in months what would have taken them years to do on their own

  • Our Venture Advisors can provide that help in a scalable-way

  • There are enough startups connected to our region that want our kind of investment

Time for Phase 2: take on twice as many startups to make sure our systems scale. If everything works as we expect (within the bounds of startup land :)), then in a few short years we will, every year thereafter, help 4-8 local companies reach at least $3 million in revenue. Do that for a few years and the jobs, wealth, and prosperity created starts to get really exciting!

So we're looking to add 3 more companies to our portfolio. If you know a great startup past the “I-have-an-idea” / VVM stage and raring to reach their first $10 million in revenue, please send them to our spiffy new website: www.launch413.com.