Here are the harshest misconceptions I had about running a tech business. Hopefully, someone can learn from my mistakes. Let me share them in no particular order.
Ideas are valuable
An idea alone doesn’t cost anything. It takes much more to launch something successful: time, money, a team, expertise, experience, a network, credibility, various skills, good timing, and a bit of luck. In short, it’s all about execution. Ideas are nothing in comparison; they’re just the starting point.
If you’ve ever worried that someone might steal your idea, fear no more. Even if you’re already launched and concerned about "big players" copying you, just think about what it really takes to build, market, and execute it. Consider the friction and inertia they face.
So, don’t hold back. Share your idea or product openly, seek funding, get acquired, start collaborating, land clients, or become their service provider.
MVP is for testing the idea
I think this misconception came from not understanding what I should be testing in the first place. It seemed obvious to me that you can’t promote a product or onboard a customer without something functional. What are they supposed to see or do? Where do they sign up? What features should they test?
However, after trying and iterating many times, it became clear that an MVP is just a small, specific part of a larger system, and it has its own uses. In many cases, it can easily be replaced by other things.
You don’t test ideas; you validate hypotheses — hypotheses about problems, user needs, markets, and how things work in general. There are countless ways to validate these without an MVP or even a landing page. I’ll definitely write more about this later. For now, I’d say that an MVP might be useful for validating sales or making demos with clients, but even then, I seriously doubt its significance.
This doesn’t mean you shouldn’t launch before knowing what to build. In fact, it’s the opposite! What I’m saying is that launching a product != MVP. You can (and probably should) launch, validate your idea, and even start selling without an MVP.
Intelligence is an advantage
While it’s definitely helpful, intelligence isn’t necessarily an advantage. The people and companies you’re competing against will have a lot more collective brainpower at their disposal.
Moreover, being intelligent doesn’t always mean acting smart. I’ve seen many great experts tackle problems with ease, but many of them need outside direction. They become hyper-focused and enjoy solving problems (which is great!), but the more important skill is knowing where to apply that expertise and where not to.
It gets even trickier when running your own business. There are no clear goals yet, and no one to oversee or provide direction. By blindly pushing through questions and problems, you risk overlooking important details. Maybe a different approach is needed, maybe you lack insider information, or perhaps the solution is simply to talk to someone. Sometimes, it might not even be worth the time or money beyond a certain point — or at all.
The skills that will be more useful are: the ability to reflect, take a bird's-eye view, learn how to learn, practice effectively, expand your horizons, and think from first principles.
Better product wins you the competition
Or to put it another way: "A great product sells itself."
Let me give you an example: Imagine you've created an amazing product with outstanding features that you've carefully thought out. Your first users love it, but you still have only a few. How will new users discover and start using your product?
- Do you have a better product? — Your competitor claims on their landing page that they’re the best, and users found them first.
- Is your design better? — Your competitor spent big bucks on visuals for social media marketing, so now everyone’s looking at them.
- Do your users say they really like it? — Your competitor bought 10,000 reviews everywhere, making people think they’re top-notch.
Do you see how this works? Everyone claims to be the best according to their landing page. The competition actually starts long before users get their hands on the product. It’s not just about the product; it’s about a spot in users' minds, their time, and their attention. As a result, many tech products, especially in the B2C segment, have far more competitors than they realize.
Of course, a better product will perform better in the long run. When users really like a product, they’re more likely to recommend it to friends, find it easier to spend money on it, and use it for longer, etc. But all of this happens at later stages of the funnel:
1. Awareness
2. Acquisition
3. Activation <-
4. Revenue <- Somewhere around here, features start to matter.
5. Retention
6. Referral
7. Dropout
Having cool features and design helps with differentiation and marketing in the earlier stages, but it shouldn't be the main focus at first. When users are unaware of your product or just browsing passively, they’re unlikely to compare different products based on features. Often, they don’t even understand those features or why they need them in the first place.
So, to conclude, the key factors to win the competition are: differentiation, evoking emotions, a better understanding of users' needs, approach, style, strategy, vibes, and then, having a better product.
Enterprise sales are difficult
This is more about the distinction between B2C and B2B. I’ve heard from many people, and I had this misconception myself, that getting end-users to use and pay for your product is easier than finding other businesses to sell to. As an end-user of digital products, it was just easier to imagine how I could use a tech product and pay for it, and I could easily picture other users doing the same.
The truth is, selling to end-users is actually harder because the value for them is often emotional and abstract, which is not easily measured in monetary terms. They also typically don’t have a lot of money to spare in the first place. On the other hand, it’s much clearer what value you bring to other businesses. You might optimize something for them, making what they already do cheaper, or help them earn more money or attract more customers. You can calculate with some precision how much that would save or earn them, and for businesses, it’s much easier to spend money on your product because they understand how it can cut costs or generate new revenue.
Try asking a friend about a product idea (a really bad question for customer development, but a good example):
— "If this cool thing existed, would you use it and pay for it?"
The answer is almost always:
— "Sure, yeah. Why not? It looks cool!"
Then follow up with:
— "Great! Please give me $30 right now from your wallet, and I’ll build it in a month."
After that, you’ll be amused to hear a million excuses about why they’re not ready to pay you just yet! :) Sometimes they really are ready, and that’s a great sign, but it’s pretty rare.
On the other hand, if you approach a business that spends $800 a month on a secretary to read through bank statements and input them into Google Sheets, and then you show them how your app can do that for $400 a month, well, that’s usually a deal right there.
As for the legal side of signing an enterprise client, the negotiations are relatively straightforward too. You basically need someone who knows the legal stuff, read through some document templates and drafts yourself to get familiar with them, and then negotiate while balancing the risks and incentives for everyone involved.
1000 users buying 10$ subscription make you 10,000$
This one is pretty obvious: products cost money to market and operate. Even when infrastructure costs are negligible and traffic is organic, it still takes time for technical maintenance, customer support, content creation, and user communication. Many of these tasks can be offloaded to someone else, and at some point, they must be. Once that happens, they start to cost real money, not just your "time" and "effort." It’s actually much easier to reason about things and make decisions when marketing and operations aren’t considered free from the start and are assigned a realistic price, even if you’re doing everything yourself for free.
To illustrate my next point, let’s imagine that acquiring 1,000 customers who buy a $10 subscription actually costs $5,000 in marketing and $1,000 in tech and support to serve them.
1000 users buying 10$ subscription make you at least 4,000$
Let's first outline the expenses I've already mentioned:
10,000 $ Revenue
- 1,000 $ Infrastructure and support
- 5,000 $ Marketing
----------
= 4,000 $
You could stop here if you have 10 users instead of 1,000. Staying small, independent, and unincorporated is fine, but that’s more of a hobby than a business. As your revenue grows to hundreds and thousands of dollars, you can’t really avoid all of the following:
4,000 $
- 500 $ Refunds, payment processing fees
- 1,000 $ Costs of operating a minimal legal entity
(accountant, virtual office, various fees, legal, services)
- 30 % Buffer for unexpected expenses, outages, emergencies etc.
- 35 % Corporate/personal income taxes, divident taxes, etc.
---------
= 1,137 $ A generous founder's salary! :)
Don't forget:
- Platform fees, currency exchange fees, bank account fees, etc.
- Payments to employees, contractors, and freelancers.
- Payments to investors and co-founders, and repaying loans.
Of course, everyone has a different situation. Some tech products experience exceptional organic growth (think "Marketing ROI"), some can afford to lose money initially before blowing up or reaching critical mass, and some operate on different business models.
It's not necessary to calculate your entire financial model just to launch a small personal project. However, these are definitely things to consider and set realistic expectations when planning for the years ahead.
Questions asked
- What are some misconceptions about running a tech business?
- Why are ideas worthless?
- Why is there a fear that a business idea will be stolen?
- What are some misconceptions about running a SaaS business?
- Is an MVP good for testing product ideas?
- Is it possible to test an idea without an MVP?
- Is expertise helpful when running a tech business?
- Can having a good product help with competition?
- Can a great product really sell itself?
- Are enterprise sales difficult?
- Why choose B2B over B2C?
- How much can you earn running a SaaS?
- What are the overlooked expenses when running a tech business?