How Non-Technical Founders Build High-Tech Startups Without Going Broke

Three resources you’ll need to focus on to avoid an expensive failure.

It seems like anyone with an idea that includes even a brief reference to A.I. is finding their way into investor pockets to launch the machine-assisted version of any task you can think of — from A.I. for coders to A.I. for pets, the possibilities seem limitless right now.

Which, of course, means that everyone reading those kinds of stories can come up with a passable idea for a brand new, never-before-thought-of A.I. startup. And get rich.

Those people are coming to me for advice a lot right now. And that’s fine. I don’t hate this kind of thing. But I gotta warn you, there’s nothing new here.

High-tech spawns a gold rush every few years. It was the gig marketplace before A.I,, then crypto before the gig marketplace, then mobile before crypto, then social before mobile.

And I mean it goes all the way back to the wheel. Like, the actual wheel.

But again, this is not a bad thing. In fact, I’m a huge fan of the democratization of technology that allows a non-technical, usually more business-oriented founder to get their ideas into the arena of high-tech entrepreneurship.

If you’re coming to me asking me if you should try to build out your high-tech idea as a non-technical founder, I’m rooting for you.

But here’s what I don’t want you to do.

The Rise of the $50,000 Failure

Until recently, democratization of tech meant that anyone who could scrape together about $50,000 could hire people to build the tech they envisioned.

That’s not a ton of people, but believe me, it was far too many people.

Because $50,000 only got them part of the way from their idea to a market-viable high-tech startup. Unless the founder’s idea was extremely prescient, and unless every last decision the founder made was correct, that $50,000 usually dried up before the first paying customer was acquired.

That’s $50,000 lost. I’ve seen it dozens of times, and by the time the story gets told to me, it’s too late to fix.

So let’s fix it before it becomes a failure.

The Non-Technical Founder Dilemma

A very successful non-technical entrepreneur recently asked a question at Teaching Startup — my project to democratize startup advice — about spinning an A.I. company out of his current company. He’d never taken on an investor, and wasn’t going to for this project, but at his current run rate, $50,000 was not out of reach to get this new company off the ground.

So first, I got that out of his head.

Because he then he crystallized perfectly what made him susceptible to the $50,000 trap.

• He doesn’t know much about A.I./coding/programming
• He doesn’t have time to create, learn, and manage this new business.
• He doesn’t want to risk a ton of money on it because AI is fast moving, with high levels of competition, and again, it’s not an area he knows well yet.

But this self-awareness is also something that’s going to serve him well. As a non-tech founder, he needs an equal mix of knowledge, time, and money.

Let’s call that three sides of the high-tech startup success triangle, and like all triangles, if you reduce one side (let’s say, technical know-how), you need to dramatically increase the other sides. Which can lead to throwing a ton of time and money at the equation.

However, ideally, a non-tech founder should start with each side as small as the knowledge side, and then grow from there.

Increasing Knowledge: The Subject Matter Expert

A subject matter expert (SME) is usually wrapped in the role of at least one of the founders.

Here’s what happens when it isn’t.

I left Automated Insights, one of the first A.I. plays, in 2017, three years after we exited. While figuring out what to do next, I wanted to put together a technology and a team to try to ride the same ride over again. I already had the team. But what technology would have the same promise that A.I. did ten years ago?

Of course, in 2017, the answer was blockchain.

This was when crypto was in that same place A.I. is now — it had been demystified a bit, a bunch of money had already been made, but there was no killer use case out there for the underlying tech and it seemed like anyone could hop on the train.

I had an awesome team — an amazing machine learning technologist (would be our CTO), I had an operations jack-of-all-trades (our COO), and I had an extremely skilled and successful digital sales and marketing professional (our CRO).

After six months, we came up with nothing. Now I know why.

We didn’t have an SME.

We had the right pieces in place, and in fact, we could have built an amazing A.I. company on the spot. But we were fascinated with what we thought blockchain could do, and we went down a lot of individual rabbit holes trying to figure out if our hypotheses were correct.

We had little knowledge, and while we didn’t spend a lot of money, we wasted six months of time.

Had we had an SME in blockchain, we would have done things differently. In fact, we probably would have dropped the whole blockchain angle and done something else.

When you’re a non-technical founder with a high-tech vision, you are indeed the CEO, because you know what you should do if you want the business to succeed. What you need is an SME who knows what you shouldn’t do if you want this business to succeed.

Increasing Time: Finding the right partners

Now, normally I would say start with no-code. But for a non-technical founder, if time is an issue, doing no-code on your own might take more time than there would be to capitalize on any first-mover advantage.

That said, I still believe no-code is an option to reduce costs, and I’ll get to money in a minute.

As I said, you need an SME, a COO, and a CRO. Maybe all of that gets handled by you along with your CEO duties, and I have no qualms about that. You might not sleep for a year, but it’s your life.

The CTO role, that’s the part you’ll need to hire in, partnering with a couple of tech people or a firm who would build out your vision for a percentage of the business or percentage of the profits, maybe with a small stipend on top.

Coding isn’t cheap and it’s not something you can really do on the side once you’re up and running. So that’s a big ask of a talented person or firm, but whether you do this piece by piece or throw $50,000 at it all at once, the requirements are the same: Build something that sells so you have more money to build more of it.

So when I say “find the right partners” — these are people who believe in what you want to do and will commit to getting it done right, piece by piece. Again, I’ll talk about money in a minute, but if you want to shrink the time side of the triangle you’ll need to find that kind of partner first and then negotiate their rate.

The leverage you will have in those negotiations depends on your track record as a business leader and the economic strength and viability of your idea. If this is valuable enough, you may be able to negotiate a deal that offsets a chunk of the up front cash with a percentage of equity or profit.

Then you’ll both be incentivized to build quickly and properly.

Increase Money: MVP at High-Tech Speed

As I’ve said before: Money can’t be coaxed, convinced, asked for forgiveness, or negotiated with. If you want to increase the money side of the triangle, you need to decrease the need for money up front.

So what you’re going to want to do is the perfect marriage of “minimum viable product” and “go fast and break stuff.” You’ll want to put a plan together at the beginning — build, launch, measure, prove viability, repeat. You’ll reference the details of this plan from the ideation phase to partner selection and negotiation and onwards.

The faster you can get to proving people will pay for what you want to accomplish, the better — even if you’re not immediately using high tech to get it done.

To close the no-code loop from the last section, you might not even need a tech partner for the first few stages of this plan, but again, if time is critical, you might engage one, lay out your plan, and have them no-code it up quickly.

Build, launch, measure, prove viability, repeat.

This is how I operate, whether it’s a bootstrapped project or working with a venture-backed team, we will run with no-code/low-code options before we unleash our highly overworked development team on a feature. I don’t want to do that until I know that the feature will not only have an ROI, but will be profitable instantly.

That’s a strategy you can execute with millions of dollars from investors or hundreds of dollars from your own pocket.

That’s my basic framework for building a high-tech company. If you’re non-technical and you want to be able to build high-tech without a lot of investment up front, you’re best off investing in an SME, finding a balance between vendors and partners, and iterating your MVP cycles very quickly.

This post originally appeared in Built In, where I write a startup advice and culture column. For free access to all my public writing, join my email list at joeprocopio.com.

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