1. An XR startup is all about money
This is a crude sentence that I wrote in the acclaimed postmortem of my startup Immotionar, something that I learnt at my expenses. I started my entrepreneurial adventure just because of my passion for technology, convinced that with my technical skills, money would never have been a problem. Actually, this way of thinking of mine was the problem, and in the end, after 3 years of sacrifices and effort, my VR startup shut down.
“A startup is all about money”. But what do I exactly mean with this sentence? Well, more or less these three principles:
- Before starting your adventure, be sure to have in your bank account enough money to jumpstart your activity and to survive for at least one year. Don’t start with no money, unless you have a financial partner that will put the money for you. And in this case, be sure to sign a clear agreement with him/her. If you don’t follow this first rule, your company will most likely fail;
- Focus from day 1 on how to make your business profitable. What product are you going to sell? In what way? While you build your product, what are you other sources of income? If your company doesn’t make money, you don’t have a business, you have a hobby.
- Manage your money wisely. Startups are most often tight on budget and must be very careful on where to spend their money. It is important to avoid being attracted by “nice to haves”, of which there are a lot of in the tech industry, and focus on any “must haves”.
2. No one cares about your passion
I want to strengthen the previous concept: a startup is all about money.
Are you very passionate about VR? No one cares.
Are you friendly with everyone? No one cares.
Are you a great tech expert and have created a good technological product? No one cares.
The only thing that counts in business is selling. If you sell, you survive, if you don’t sell, you have to shut down your company.
3. …but you should care
Don’t misunderstand me. If you only think about the money, your company will lose personality. You should put passion in your project, and communicate this to others. You should be having fun with the technology, and evangelise it to those around you.
Once your company is succeeding, help other people in doing the same. In my experience, successful people always look out for ways they can help you. They give, because when they give, they open opportunities; connections, contracts, help from other people, etc…
If you manage to mix a good business strategy with a nice and passionate personality, for sure your business can take off.
4. Find your product-market fit
What are the characteristics of a product that succeeds and makes money? Well, no one knows, there is no secret recipe. However, there is one thing among all successful products: the “product-market fit”. But what does it mean?
In short, it means that you have to create a product that people need or want. My XR startup Immotionar created a product incredibly innovative: a system for full body VR that was working in 2014 (before there was even room-scale VR). We demod it to many people and companies and received almost universal acclaim. But at the same time, almost everyone didn’t want to buy it.
The problem was that people didn’t find it fundamental to have full body in virtual reality. It was exciting, but unnecessary at that point in time. Furthermore, our product was overly expensive, buggy and complicated. For these reasons, our product couldn’t sell well, and our company eventually failed.
You have to create a product that solves a need of people. For instance, applications to design in VR are selling well, because they make companies prototype products faster, and so they spare money, and are willing to spend money on the products. They are selling a solution.
Offer a product people are willing to pay for having it.
5. Manage your resources: always ask “why”
Unless you are a big enough startup that you have VCs throwing money at you, you will probably be tight on resources. There will be many opportunities to take but you won’t have the resources to take all of them. Hence, you must always ask yourself “why”. This is a powerful question: before doing something, ask yourself what is the purpose, and then agree to do it only if you have a valid purpose.
You may be invited to pitching events. If this opportunity does not present a chance for investment, or noone you need to connect with will be there, you may have to turn these down.
Again, focus on “must haves”, ignore “nice to haves”.
6. Keep in mind the position of AR and VR
VR is an emerging field and it is not without its growing pains. When I started in 2014, everyone said that VR was a fad. Then in 2017, people began claiming it to of died down. Now there is again a more positive attitude.
The field is complicated because there is a lot of interest, but it is met with much skepticism because the technology has not taken off. The XR companies I have talked with all share the same motto: “Don’t die”. Some companies are making tons of money, but most of them are starving.
Diversify your offerings and be careful about what are the technologies that can give you the most income, being updated on the trends and listening to the market can maximise your income.
Do whatever you can to survive. VR does not pose huge amounts of money, nor does it promise survival. But, those that succeed are likely to be rewarded if or when the technology explodes.
7. Enjoy the journey and become a better person
90% of XR startups die in 3 years. Mine followed the same destiny. But you know what? Most of the time, it is worth the ticket.
In my 3 years at Immotionar, I suffered a lot and stressed a lot, just to see in the end the product dying and my partner finding a job at another company. But in those three years:
- I learnt how a business should be handled;
- I met a lot of interesting people;
- I started my blog The Ghost Howls, that is now quite successful in the VR communities;
- I met Max, another VR enthusiast with which I started my new startup NTW, a consultancy agency that is now launching its own mixed reality game;
- I have become a stronger person, that knows how to handle failures, how to behave with other people, how to speak in public, etc…
In the end, when you start your entrepreneurial journey, this is everything that should matter to you: the journey. However your company will end, you will find yourself in a different place from the one you started in: you will have many new opportunities in front of your eyes, and you will have a new fresh mindset to exploit them.