Taking the Plunge - Launching your Digital Idea in the UK

Introduction

The UK is the main technology innovation hub in Europe, getting to host 115 startup unicorns in 2021 with a combined valuation of £540 billion (govuk, 2021). To put such amount in context, that was equivalent to 20% of the country's annual Gross Domestic Product (worldbank, 2022). Despite achieving their remarkable success in approximately half a decade and being currently hiring high-skilled talent in the hundreds (linkedin, 2021), the majority of these businesses started with just a handful of very passionate individuals (chen, 2021). Generally, their founders were individuals that were firmly attached to their dreams and to the conviction of being able to change the world for the better. This document proposes a course of action that a typical digital startup might undertake to take the plunge and bring its ideas to the market. First, we will delineate the characteristics common to these kind of emerging organizations to set up a common context from which to depart. Then, we will propose an organizational and operational configuration for rapidly achieving product-market fit, developing responsiveness and adaptability. Finally, we will cover some additional recommendations for achieving business consolidation and exceptional growth.

The Features of a Digital Startup

Meeting the Team

In the UK, 91% of its 5.6 billion businesses have a headcount of 5 or less people (govuk, 2021). At the same time, 5 is precisely the average headcount of the majority of early stage startups looking for their first funding sources (libes, 2011) (robert, 2018). With the intention of presenting a possible course of action for an adventurous startup embarking on its journey for success, we'll walk the steps of StartTime, an archetypical venture aiming to find the product-market fit (macadam, 2016) for its idea.

Number of Businesses in the UK

After many months of tinkering with the business plan of their digital startup, Cecilia Edge, a software engineer, and Caroline Miller, an experienced marketer, decided it was time to test their product prototype in the wild. Cecilia was a technologist, whereas Caroline was more Business-oriented (gnanasambandam, 2021) (austin, 2017), so they decided to respectively take on the roles of Chief Executive Officer (CEO) and Chief Marketing Officer (CMO). For them it was a strong combination, for they thought that "technology's transformation requires technology" (morris, 2019). However, they also believed that establishing brand differentiation early on would be instrumental for their success. Using their own savings and some family grants (winley, 2015), they invested £150,000 to operate for one year, paying themselves a minimmum wage and using the rest to hire Edward Dell as Backend Developer, Franco Devito as Frontend Developer, and David Donovan as a Designer. All of them had just graduated from university and were eager to test their knowledge and skills.

StartTime's Organizational Chart

StartTime's RACI Responsibility Matrix

From Idea to Product

StartTime's value proposition, through its innovative product, was unique before the eyes of the company's founders who believed it had the potential to quickly achieve unicorn proportions. However, regarding the costs needed to implement it, and the technical structure it required, it was not different from the rest of UK applications being developed in the fintech, healthcare, and ecommerce categories (hawley, 2022). As 68% of the internet's users accessed it through a mobile phone (enge, 2021), the team decided to prioritize a responsive design, adaptable to every screen size (berry, 2022). However, for the fastest time to market, they would develop a progressive web application instead of a mobile native one (dziuba, 2021).

Industries of the Global Top 50 Unicorns

StartTime's Service Topology

The Chosen Organization and Technology

As it was common in the industry, the team would embrace agile (rigby, 2016). Among its many variants they decided to lean towards Kanban, as it provided a continuous workflow by limiting work in progress, instead of relying on fixed iterative intervals (rehkopf, 2018). They new that for such coordination methodology to work they would have to tackle bottlenecks quickly and pay close attention to cycle times (wolpers, 2022) (kanbanzone, 2022). On the technology stack, they would use Javascript due to its capability of running both client side and server side (NodeJS). Moreover, they thought using a single programming language, which was also one of the most commonly used, could simplify the team's expansion in the future (berkeley, 2021) (hughes, 2021). Finally, the stack (dev, 2022) they chose was NEWP: Nginx, ExpressJS, Web Components, and PostgreSQL. The versatility and stability of its components portrayed it as a winning toolkit.

StartTime's Development Stack

Preparing for Launch: Learning at a Fast Pace

Continous Integration & Delivery

Understanding the need for development velocity, the team agreed upon establishing a continuous delivery pipeline from the outset, deploying the code to production once the automated tests had passed, without additional human intervention (bussgang, 2020) (gitlab, 2020). They would manage StartTime's infrastructure as code (redhat, 2022), using a central repository that would atomically coordinate the deployment of each microservice (kong, 2022). However, to ensure a high level of modularity and potential code reusability in the future, they would push as many responsibilities as possible to the individual services. For instance, each of them should be externally configuarable, had to backup its data, and know how to deploy itself according to the provided environment variables (wiggins, 2011) (richardson, 2017).

StartTime's Microservice Responsibilities for CD

The Learning Machine

Before the team could begin processing transactions or start implementing any machine learning algorithms, they had to set up their learning machine. Establishing adequate channels to receive customer feedback is crucial to increase software quality in a cost efficient way (ming, 2021). They knew there were a plethora of options to pick from (antiu, 2022), but they wanted to keep tooling management at a minimum during the bootstrapping stage. Thus, only the essential communications tools would be used. Chat messages, video calls, and emails would be used for internal topics, whereas a community forum (kapakos, 2022), social media, and survey applications would be the main means to capture valuable user recommendations.

StartTime's Communication & Feedback Channels

Beta Testing the Application

Having a technically sound working product and with a feeback system in place, the team was ready to outline a Beta testing plan, in which real users would try the solution in a production environment (mccloskey, 2021) (govuk, 2021b). The process would be carried out in phases, with specific technical and usability goals defined, and opening up the platform as stability developed (babich, 2019). The Beta stage was the moment to start building the trust in their audience, which was indispensable for the project's success (davenport, 2018). They would begin with at least 5 users (nielsen, 2000) and expand from there the number of testers by using Beta testing communities available in the UK (elif, 2020) (shuller, 2021).

StartTime's Beta Testing Plan

Beta Testing Sources

Implementing Monitoring Systems

Once the application had been released to the public, it was vital to keep a close eye on its performance, stability, and on the behavioral patterns displayed by its users (norman, 2021). The team new that the Beta phase would provide them of very valuable insights to adjust the functional requirements of the application, but dealing with the non-functional ones like the system's usability, reliability, and performance, would require proactive and continuous measuring (kompaniets, 2021). A distributed SaaS application should monitor the availability of its public application programming interface (API), the appropriate completion of the service's transactions, and the stable condition of the system's infrastructure through the use logs aggregation and metrics collection tools (petersen, 2017).

Another area in which the team agreed they should pay special attention was in deploying the required mechanisms to perform application analytics, and collect data to understand how users engaged with the product (booth, 2021). Whereas Camila, as a technologist, was more interested in measuring crash reports, transactions latency, and service response time (avi, 2022), Caroline was keen to capture insights that would allow her to improve the marketing strategy and execution. In that respect, some of the most relevant key performance indicators would be the number of sessions & users, the customer bounce rate, the average time users spent on a page, and the top searches that users made to find the application (datapine, 2019). The team considered multiple tools for this purpose ranging from open source solutions, to free of charge proprietary solutions like Google Analytics (sellers, 2022). Although the team recognized the immense value that the data they collected from their users had, the convenience of not having to maintain another backend service to collect any metrics was tempting enough to consider outsourcing (himmelreich, 2019) some of those responsibilities. Thus, they ended up deciding that all the infrastructure related metrics would be collected internally by the team, and those collecting marketing indicators would be handled through external partners.

Performance and Analytics Monitoring Tools

The Road Ahead

Growing the Business

"Founders should raise money when they have figured out what the market opportunity is and who the customer is, and when they have delivered a product that matches their needs and is being adopted at an interestingly rapid rate" (ralston, 2020). Even though the StartTime's founders could bootstrap the company with their own money, scaling the business at a fast pace most certainly required external funding from investors interested in the revenue growth of the company. Depending on the industry and the quality of the product, startups might double their size during their first periods of operation and end up displaying 20% annual growths by the time they reach an initial public offering (maltz, 2013). Understanding the market opportunities and putting together sound financial projections is a crucial step on the search for additional resources (advani, 2017).

Variable	Minimum	Most Likely	Maximum	Reference
Monthly average growth rate	2.00%	20.00%	50.00%	(heim, 2013)
Annual decay compound rate	30.00%	40.00%	50.00%	(girardi, 2019)
Monthly Subscription Price	3	29	99	(borgne, 2021)

StartTime's Revenue Projections

Annual Revenue Simulation at Exit (2027)

NOTE: The baseline monthly revenue projection for StartTime assumes an initial number of users of 100 (e.g. acquired during the Beta phase). The initial monthly growth rate is 20%, the annual growth decay compound rate is 40%, and the average monthly subscription price is £29. (Table 1)

NOTE: Based on the value ranges presented on Table 1, and using a triangular probability distribution to generate each of the simulation scenarios. The initial number of users in year 2023 is 100, as in the baseline scenario.

People, Purpose & Cash

StarTime recruited its first 3 employees at an annual salary of £36.000, which is adquate for a junior position (glassdoor, 2022) (glassdoor, 2022b), but would certainly have to be increased quickly to ensure talent retention. In fact, said salaries might double their value in a couple of years due to the high demand of skilled workers (glassdoor, 2022c). However, Camila and Caroline might put away some of their stock in an option pool (e.g. 10%), to incentivize StartTime's current and future employees (pulley, 2022), as the business grows and venture funding enters the company. Their leadership style will change as well, with them evolving skills in building self-reliant teams and vision communication, rather than tackling daily operational issues (zhuo, 2019). Seeking the company's purpose (raoul, 2021) would become the priority, to keep alive the company's "soul" and connect all its stakeholders with the idea of being part of something bigger (gulati, 2019). Nevertheless, on a more mundane plane, it will be vital to keep on monitoring the venture's performance until it reaches maturity. If nothing else, Camila and Caroline should at least always remember one of the main rules of entrepreneurship: "don't run out of cash" (cruikshank, 2018).

Conclusion

In this short document we have established a common sequence of actions that digital entrepreneurs might undertake, as a kind of industry-standard blueprint they might follow when they feel ready to test their ideas in the open. We've seen that nowadays there exist multiple tools, services, and resources that are within the grasp of every digital venture, lowering the barriers of entry to the technology industry. However, it is also vital to consider that thorough planning is still required to succeed in an ever more competitive landscape, where conventions are progressively more demanding and the expectations of customers, employees, and investors keep on evolving. At a minimum, to fulfill its purpose, a digital startup must be capable of sustaining a responsive operation, a motivated team, and a healthy financial flow.