5 min read

How We Build a Prototype in 6 Weeks, Got Traction, And $200.000 Pre-seed Funding — Part 1

Written by

Full Name

Marko Balažic

October 25, 2024

Hello everyone! I am Marko and I come from Slovenia. My personal mission is to create people-friendly digital products that people actually need.

In my full-time job, I am helping startup founders create User experience design. I do so by asking questions to “early product customers”. Most of the time I mimic behaviors that people are already used to and validate ideas using lean approaches. Everything I do — I do with my remote-first team Shape. I am a big fan of behavioral economics, behavioral design, privacy, and digital ethics. Lately, I have been trying to build in public.

Agenda

The beginning
Validation of the idea
Low-code prototype and fails
How to get and track early traction
How we got a Funding

Three founders in the middle of a labyrinth. Deciding which path to take.

1. the beginning

It started in Istria, Croatia. As previous agency owners, Aljosa, Ziga, and I each had many ideas stacked on our shelves. We all felt like moving towards building our own startup but didn’t really do so until Istria. While we were providing a development service it was always a discussion to move towards the products side soon. Our minds were focused on a particular “cash” KPI, but the problem was that we kept increasing the KPI every year. We decided to put a stop to that.

You know how this goes. Whiteboard, three founders, and long endless discussions. Finally, we settled on an idea that can be summed up in three words “Livestream shopping marketplace”. We all felt like eCommerce was rusty and that people needed a new way of shopping. Besides that China was doing really well with this type of tech.

Objectively speaking Istra trip was a success, we made that step. The only problem was that we didn’t know a shit about how eCommerce works.

Starting tip: We didn’t start with a pain point. Pain point gives you a rough idea about your early customers and there is already proof that someone needs your product. Always start with someone’s pain or do something 10x better than someone else is already doing. The probability of success is much higher.

2. Validation of the idea

An idea is just an idea until you throw it under a potential user. Even back then, before the no-code movement all of us were big fans of lean approaches, and we didn’t want to spend too much time building before we learned about what our predicted target audience really wanted. In other words, we didn’t want to develop a scale-ready product before we know what that MVP (minimal viable product) should be made of. The goal was to sell something through live shopping without building out a full product.

Here are just a few ways of testing the idea that came to our mind:

Add Facebook Live streaming to a webpage and add UI with a Stripe button to it. At the time Facebook didn´t have its own version of Livestream shopping.
Use Twitch streaming in the background, and a UI layer on top with a chat and Stripe Checkout form on it.
Use live streaming services that provide APIs.

We decided to go with the second option due low effort of implementation and low cost. It took us two weeks to build out a low-code solution.

Alternative solution: Since we eventually wanted to build out a full-blown two-sided Marketplace, it would make sense to start with building one side — a strong demand community. Instead of testing on our own webpage, we could have started selling through Instagram where we could leverage Instagram’s push notifications for when going live. This would be one way to hack initial demand.

Idea was to start with supply and get initial demand through supply. If we manage to get larger sellers onboard they are going to bring their own customers. Sales were a bit tricky at first. Our goal was to onboard e-commerce business owners, that sell online, but getting through to them was harder than we thought. Often there was no reply or some interest, but generally, it was hard to get on the call.

First pablu.tv Prototype design.

We decided to partner up with a local Accelerator that helped us with warm intros to a couple of e-commerce owners. Partnering up with someone with a strong network of business owners in our area meant more than money.

3. Low-code prototype fails

Still, remember that first Pablu show. This is what we call a single Live shopping event where sellers turn on live video camera, presents their products, answers questions from the chat, and sells!

Since our Frankenstein prototype of a product didn’t include a custom streaming app we were using 3rd party to stream to Twitch. On our first show Žiga controlled all status changes through the Firebase database manually, Aljosa sent out sms reminders manually and I was in charge of support through email, Instagram, and phone.

Moments from pablu.tv shows and advertising campaigns.

Live shows were pailing up and eventually (we had one show per week), we got one event that burned our prototype. One of our hosts ran a giveaway and if visitors wanted to participate they needed to write “I want this” in chat. Once 1000-plus people did so multiple times things went southward. At that moment we were somewhat sad. We were all hoping for a proof case, and that event hammered down numbers. Nowadays I am able to look at it more objectively, actually, that was good kick-to-start fundraising. There was no other way to have a live-streaming platform without coding it for two months or scaling it needed more resources.

4. How to get and track early traction

Early traction can be tricky. Nowadays I would say get customers first and then build out the product. That is the reason why starting with a community-building approach has gained so much attention lately. The number of active community members that want to solve a common problem can by itself be a good indicator of early traction. This means your problem has been heavily discussed and people that joined you feel it.

Our way was a bit different. We focused on solving an issue on a smaller scale. A live-stream shopping marketplace is a huge idea, but tracking just one live shopping event is a more obtainable goal and more trackable. This way we could filter out many unimportant features like onboarding, multiple shows, calendar, etc. that are eventually needed for the scale of the product. This limitation brought us to the following questions that measured visitor engagement:

How many people are interested in the event?
How many people actually come to an event?
How long do people stay at the event?
How much do they spend?

After that, it was all about the perfect Pablu show. Events had different hosts, different product lines, different times, etc.

Eventually, we got the following:

40% of visitors bought the product
best-performing categories were Fashion, Craft, Health supplements & Collectables
best selling products were under 30€

5. How we got a pre-seed VC Funding

Getting an investment really starts with your ask. It is funny that this slide is usually the last one in the pitch deck, but getting an investment without knowing how to invest it in your company doesn’t really make any sense at all. Answers to this question can be of different natures.

Here are three examples of why you should get funding:

My current no-code product is generating x amount of MRR. I need x amount to finish the product. This means my MRR will double.
Currently, our product is organically growing by 2% per year. We need X amount and it will grow 10% per year.
Our current ROI is 2.0 with X amount we can sell more.

Founders that raised money before are better off since they already have a network to start with. We weren’t that lucky. We began with F6S and then tried talking to as many investors as possible. While doing that we build this list investor list of 300+ contacts.

At one point we had pitching calls every other day. As I mentioned in the tweet above — one should always be changing the pitch deck. Unless you have stupid good metrics it is very unlikely that your first pitch will hit the nail on the head. For this reason, start off by sorting out your investor contact list by priority. First, pitch to the ones that are at the bottom of the page. This way your pitch will be at its best when you work your way up. At that point, you will be able to know how to define your problem with one sentence and describe your solution so your mom gets it.

Essentially combination of clear communication and metrics is what got my team $200.000 of pre-seed investment for building out the product and with that a chance to find our product market fit.

In part 2

Team passion towards industry sector vs Target Audience
Product, Chicken, and Egg
How we measured progress
What would I do differently