[Startup strategy] What do you have to think about first
The gross margin is the single most important factor, but the other stuff that you have to worry about are fixed costs (which can be huge in a high-tech startup), fundraising, team building, product development, marketing, execution, lunch, etc.
The general recipe I try to follow is:
- Invest heavily in the product; focusing on things that will make your customers love you and things that will keep your variable costs low when you scale. Make your product free so that you don't have to pay for traditional marketing.
- Raise a little bit of money and put all of it back into the product.
- Slowly introduce paid features but always keep the "main" product free. Get to positive gross margins.
- Raise a lot more money and put it all back into the product.
- Grow until your gross margin makes you fully profitable.
- Put all the profit back into the product.
Phil Libin
CEO
