Being an entrepreneur in software engineering is not easy. You have to deal with various technical, business, and personal issues that can make or break your success. In this article, we’ll explore some of the biggest challenges you face as an entrepreneur in software engineering and how to overcome them.
One of the first challenges you face is finding the right problem to solve with your software. You need to identify a real pain point that your target market has and that you can address with your unique value proposition. You also need to validate your problem and solution assumptions with potential customers and users, and avoid falling in love with your own idea without testing it.
One thing I've often encountered with entrepreneurs in software engineering is falling into the "build trap" : in early days of their ventures, they will be focused on building features which they know will be needed at some point, instead of focusing of achieving Product-Market Fit (PMF) and demonstrating the value of their product. A lot of times, this should be done by building minimal features which are core to company's value proposition, and not necessarily building the rest. Entrepreneurs often fall into that trap because it is usually "easier" to build features they know they'll eventually need, rather than think creatively and strategically about how to create value for their customers.
Software entrepreneurship is typically initiated by technical co-founders. We often begin by addressing the day-to-day problems we encounter in our surroundings, which can lead to the establishment of traditional businesses. Sometimes, our passion for our hobbies drives us to take them forward as startups, a concept known in the entrepreneurial world as a lifestyle business startup. However, the market size for these lifestyle or traditional businesses is often either small, overpopulated, or the entry barrier is too low. Consequently, we frequently overlook the type of scalable software startup that can typically attract funding. Understanding the larger pool of customers pain point is very important in finding the right problem to work.
The best way to find the problem is to talk to the people that have the problem. Learn from them. It's not a sales call. Once you get to the point where you are building something, do not overbuild. Bring usable but unfinished iterations to the customer and find out how they use it and what they think is missing. Often customers can't articulate the problem correctly and you need to figure it out together.
Master the art of Customer Development as pioneered by Steve Blank, Eric Ries & other Lean Startup thinkers. It will allow you to quickly discover problems worth solving and confirm that you're not being delusional about the severity & magnitude of the problem. Remember: Don't trust what people say they will (or will not) do in the future! Instead, ask what they have done (or not) in the past, and what happened after that. This fallacy of people consistently failing at predicting their own future behaviour is a major cause of focusing on a wrong problem to solve in early-stage innovative business.
Stop reading this article, and read "The mom test", and "Lean startup" (in that order), and if you have spare time: "4 steps to the epiphany". Everything else in this article is irrelevant: only this step matters, and it's where 90% of the risk sits. Only an AI-generated article would misunderstand the context/problem so severely as to put most of the article's words on the least important parts of the topic.
Once you have a clear problem and solution, you need to build the right product that delivers value to your customers and users. You need to prioritize the features and functionalities that are essential for your minimum viable product (MVP) and avoid scope creep and feature bloat. You also need to apply good software engineering practices, such as code quality, testing, documentation, security, and performance, and use the appropriate tools and frameworks for your project.
"Get something quickly to the market", is what you usually hear. What they miss to tell you is that "something" need not be working software. Figure out how to articulate your idea, and get it out in front of potential customers. It can be something as simple as a mock, click through or even a slide deck. Take feedback, iterate.
This is the fundamental "chicken and egg" problem. As an entrepreneur, you think you have a good idea for a business. Conventional wisdom is to ask your customers, but you do not have customers yet. Please also tell you to do market research, but if you are creating something new, there is little research available off the shelf. The answer is to get something to market quickly, but to "hand-hold" your first customers. Even if you product is a self-service SaaS, for you first customers your product is offered as a one-to-one service.
What customers/users tell you they want is NOT necessarily what you should build! Look beyond the surface-level requests, ask "why is that?" a sufficient number of times to reveal the true root cause of the problem (or true manifestation of a job-to-be-done), and come up with a creative production solution that costs you 20% of the original idea to build yet still solves 80% of the customer's problem.
Being a Google Problem- Startups, often small teams of 1-5, face the dual challenge of limited time and resources. Their priority is to quickly develop a MVP and attract users. However, aspiring to be like Google from the MVP launch is a common pitfall. Such ambitions overlook the gradual innovation and narrow focus that fueled Google's rise. An effective MVP should be simple, aimed at testing and validating the startup's core concept without overextending resources on numerous features, which increases failure risk. Success lies in mastering a specific niche, building a strong market presence with a dedicated user base with a product that meets a clear need. Expansion should be based on solid achievements and deep market insight.
First google "MVP" (or better: read the original books from the people who invented the term - Frank Robinson, Steve Blank, Eric Ries). Most people using the term do NOT know what it means, they abuse it, and remove most of the value (because doing it correctly is hard work! So they take the easy way out). Misunderstanding the core meaning of "MVP" causes every attempt at building one ... to fail.
Another challenge you face is finding the right team to work on your software project. You need to recruit and retain talented and motivated software engineers who share your vision and passion, and who can complement your skills and expertise. You also need to manage your team effectively, by setting clear goals, expectations, and feedback, and by fostering a positive and collaborative culture.
Early on you are attracting people to your product and purpose. These folks are aligned with you to solve the problem and enjoy the intensity that comes with figuring things out. You need to have a clearly stated goal in mind along with achievable near-term milestones so that everyone is aligned. Remember, your team is not your sounding board. Keep them focused by being supportive of them and shielding them from the challenges you face as a leader.
This is over-engineered. In reality, all you need is a 'founding engineer' (if you're a software engineer by background: That should be you!), and a bit later (once you have an MVP): a few generalist engineers willing to grow on the job. With AI tools (Github copilot etc) you're fine with junior staff - this idea that you need "talented" engineers is laughably wrong: there is no way such people will join a high-risk venture when they can just launch one themself without you. You will waste time and money trying to attract them, when you could have been getting customers instead.
I am saying from my experience starting a company with mission and vision mismatch between founders is one of the Top 3 reasons of a startup failure. Importance of alignment in co-founder partnerships for startup success, emphasizing four key pillars: VISION, MISSION, VALUES, and GOALS. A shared VISION inspires and guides the team toward a common future, while the MISSION clarifies the startup's purpose. Shared VALUES define the startup's character and ethical direction, and GOALS set tangible targets to turn the vision into reality. Aligning on these pillars is crucial; misalignment can lead to failure, but when harmonized, they orchestrate a unified effort towards achieving the startup's ambitions, much like a well-coordinated symphony.
A crucial challenge you face is finding the right market for your software product. You need to define your target audience, segment your market, and understand your customer personas and their needs, wants, and behaviors. You also need to research your competitors, analyze your market size and potential, and develop your unique selling proposition and value proposition.
Back when I was trying to build my startup idea, finding the right PMF was everything. It meant really getting out and directly talk to our potential users, understanding what they struggled with, and how our software could truly make a difference. It was about knowing if there exists any potential competition, sure, but more importantly, it was about figuring out what made us stand out and why people should choose us over others. It was a mix of research, empathy, and a lot of trial and error to find that perfect fit. Although the journey was not fruitful but it ended up teaching me what it needs while trying to penetrate a market segment.
Startups spread themselves too thin across multiple market segments too often. Instead, do this: Through well-prepared customer discovery conversations, identify a tiny sliver of the overall market where you could deliver 10x the value of incumbents, ideally also at 1/10 the price. Then keep driving that "wedge" into the market until you are deeply entrenched. Expand the market only once you're on solid footing in one niche -- otherwise, you risk adding extra competitors too early when you're not ready for that challenge.
Building an MVP is just the beginning for tech-centric founding teams; it represents a mere 5% of the journey. The real challenge, and 95% of the work, lies in finding the right market fit. Often, technical co-founders focus more on developing feature after feature, rather than understanding and creating a product that meets actual user needs. Success hinges not on technical prowess alone but on identifying and serving a genuine market demand. This shift from a feature-focused mindset to one that prioritizes user needs is crucial for transforming an MVP into a viable, market-fit product.
Do not do any of this. Instead learn how professionals do it: read Lean Startup etc. If you're "defin[ing] your target audience" then you've already failed -- you should be discovering your audience, having them tell you who they are, etc. Only after you've got some traction, significant users/customers, etc do you go back and start analysing the real-world data (who has already used it) rather than inventing random thoughts and make-believe.
Another challenge you face is finding the right business model for your software product. You need to determine how you will generate revenue, what your pricing strategy will be, and what your cost structure and profit margins will be. You also need to validate your business model assumptions with real data and customer feedback, and be ready to pivot or iterate if needed.
Finding the right business model for a software startup is a complex challenge. The key is to engage with potential customers early and strive to generate revenue as quickly as possible. In the startup world, the adage "No Money, No Honey" underscores the importance of financial viability. To navigate this, identify your product's niche market and refine your pricing model through iterative feedback. While it's useful to consider competitors' pricing strategies as a starting point, be cautious. If your competitors target an upscale market and your audience is broader, directly adopting their pricing model might not suit your reachable customers. Tailoring your pricing to match your specific market segment is crucial for success.
This is not a challenge, it's irrelevant and usually trivial: if you're providing value, customers will throw money at you; if they won't give you money, then you aren't providing enough value and the business model doesn't matter. If your business model is foolish, then your customers will tell you (and usually will tell you what it should be instead) - all you have to do is listen. When you have substantial sales-engine (much, much later) and you've switched into 'optimizing for small gains in profit margin' then this becomes far more important.
The final challenge you face is finding the right balance between your software project and your personal life. You need to manage your time, energy, and resources wisely, and avoid burnout and stress. You also need to take care of your physical, mental, and emotional health, and maintain a healthy lifestyle and relationships.
Being an entrepreneur in software engineering is challenging, but also rewarding. By overcoming these challenges, you can create a software product that solves a real problem, delivers value, and makes a difference.
SaaS tools (e.g. Wix) allow businesses to create professional-looking websites. Other tools exist for every other aspect of your business. Given that it is so much easier to look professional, potential clients expect businesses to be professional in every regard. This takes time and resources. As an entrepreneur, balancing (a) building your MVP, (b) building your reputation in your sector, (c) building your website, and (d) hiring staff ... all on a shoe-string ... is a tricky challenge. The answer is to take a MVP approach to each aspect and then just get something built. Do not worry about having the best website, just get a website. Don't worry about the best PR campaign, just do some PR. Make sure no one thing is holding you back.
Think out of the box and innovate rather than just build an incremental improvement of something that already exists. Identify a what needs to be done and not limit yourself to what has been done. Convenience and simplicity of use beats complex and feature rich. Remove any manual steps that can be reliably automated. Delight and surprise the user by anticipating functionality. Design in the ability to enhance and evolve the solution as lessons are learned. Instrument the code to understand usage without violating privacy. Incorporate proper layered security to avoid unwanted app/data access and app modification.