Steve Berneman, MBA/JD'10, is the CEO of OverDog, a social matchmaking platform connecting like-minded gamers to create better online multiplayer experiences. He built the business from the ground up, along with two other co-founders. Last year, OverDog raised $2 million from big-name investors. Today, OverDog is an exclusive app on Xbox One, but the company's goal is to revolutionize multiplayer matchmaking for all games.
We asked Steve to share some of the most important lessons* that he learned from launching OverDog. Read on for his thoughts on how to know when your idea is fully developed, how to staff and why you shouldn't loudly launch a business.
1. Fully develop your idea.
As a founder, you'll be asked to sell your vision along every step of launch. To me, that means that you have to fully develop every element of your idea to the point where you deeply believe in what you've built. What's your supply chain? What's your technology stack? What's your output? What's your pricing strategy? The goal of this exercise is for you to be able to create the entire business chain and, importantly, to be able to answer this question: is this a business? Is this idea, which you love, more than a feature, more than a "yeah, that should exist." Is this a business? While every one of your inputs may change along the way, you must confidently be able to say, "This. Is. A. Business." If you can't, then it's too early to move on to the next steps. Stay at the drawing board.
At OverDog, we went through a lot of variations of "we think matchmaking can be better" and we spent months perfecting, creating, and fixing. As the CEO of the company, though, I can tell you that I failed for months because I didn't push myself hard enough on this question. We moved forward for weeks with things that I "thought" were good just to later hit walls that should have been obvious. This happened because I never stopped and forced myself to prove my own assumptions. It wasn't until we formalized our process and insulated ourselves from outside noise that we created the vision for what is today OverDog. It's easy to skip steps because you love an idea. It's harder to force yourself to justify your love.
2. Find your first proof.
Now that you've created a justifiable, defendable idea, it's time to prove that the market needs and wants what you've designed. In my opinion, the best way to find proof is to bring your idea to market and to judge the response with open eyes. That may mean that you approach friends and family with your idea. Perhaps, you're able to get in front of an industry group or small panel. This is an opportunity for you to create some market justification for your ideas and to fine-tune your early design. I'll note that this isn't a Minimally Viable Product (more on that below); this is simply a blush test and can most likely be done verbally. Can you pitch your idea without blushing? Do people get it? Do their heads nod? Are they immediately offering you help on next steps and offers to introduce you to people?
3. Repeat steps 1 and 2.
Stephen Colbert had a great line at the 2006 White House Correspondents Dinner. In his roast of President Bush, he mocked, "The greatest thing about this man is he's steady . . . He believes the same thing Wednesday that he believed on Monday, no matter what happened Tuesday." (Note: this is not a political statement, it's just a really good line and I think it's funny and I think it can apply here. Can we all agree not to get political right now? OK.)
There has never been an entrepreneur who got everything right on the first try, and it's important for us—all of us!—to remember that. Rather than charge ahead, go back to the drawing board with the elements learned in Step 2 and re-prove all of the questions from step 1. You're about to build a team and spend time and capital on this idea. Please, before you do that, do a gut check and make sure you've designed as well as you can.
For us, going back to steps 1 and 2 saved OverDog from a disastrous pricing model. In our earliest days of 2012, there were a number of successful subscription services in video games, so we designed OverDog as a recurring revenue monthly subscription. VC's love recurring monthly revenue and it seemed like we had a no-brainer model. During our early market tests with gamers, though, we kept hearing about how annoyed they were with monthly expenses. They felt ripped off because games change so much month-to-month and year-to-year, and as we dug deeper, monthly subscription services were just starting to adjust their models. Had we not gone back to the design board, we would have launched with a pricing strategy that I'm sure gamers would have hated.
4. Build your early team.
To me, this is the best part of building a business. Now you get to put together the team that's going to take your dream from idea to reality. Prior to launch, you should draft an MVT—a Minimum Viable Team. Which positions will you absolutely need to launch this business and who would be your ideal candidates to fill those positions? At this early stage, you're likely looking for co-founders (or Key Employees), and I'd urge you to think of them in this way. Their ideas are as valuable as yours and their compensation and equity should reflect that.
My favorite hour in the four-year history of OverDog is a coffee that I had at the Green Hills Mall Starbucks with Thomas Bernstein (MBA'10) in August 2012. OverDog needed to hire a COO/CTO to lead our tech team, and I thought that Thomas, a product guy with deep ties to Nashville's tech scene, might have some hiring suggestions. Five minutes into the coffee, I was convinced that we didn't need a COO/CTO; we needed Thomas. He was the perfect mix of tech leadership and marketing that we were lacking, and he's just a great guy. My co-founder, Hunter Hillenmeyer, and I spent the next three months courting Thomas and figuring out how to get him to leave his job and join OverDog. That we pulled off the feat is the reason we've survived this long and created what we have. Thomas joined the company six months after we formed, but I'll always refer to him as an original founder.
5. Build a Minimum Viable Product.
You're ready. You believe in your idea. You believe in the changes you've made to your idea. You've dipped your toe into test waters and you've built your MVT. To me, you're not yet ready to launch a full business, but—and I hope this is reassuring—I also don't think you need to LAUNCH THE BUSINESS. I'm not a big fan of loud launches or spending money to build product lines at this stage. Rather, take a look at your product design and create the minimum necessary to achieve your market fit. Build a set of prototypes. Build the bare-bones necessity of your website. Draft the initial sales policies. Now, go out and sell them. There are immeasurable lessons that only come from live usage. Before you launch your business and spend capital, you should learn those lessons and adapt. Building an MVP allows you to do that while minimizing waste.
For OverDog, we created an MVP both as a proof of concept and a proof of market. We knew that we wanted to build our service directly into gaming consoles and PC services, but those builds were mid-six figure cash exposures and 9-12 month builds. Instead, we built a smaller product (mobile) and focused our message on a single vertical (sports games). Not only did we learn a lot about our users, we also discovered that sports games were an insufficient vertical. We needed to branch out into better tech and better markets, and I'm immensely glad that we learned those lessons during our MVP days rather than after our spend.
*SB: There are thousands of ways to start a business. Variations on launch strategies are plentiful, and I couldn't purport to be an expert in what's right for you. What I've tried to provide here, therefore, are my five tips for launching a business, based on our experience, our success and our failures at OverDog. These are the things that worked for us, and I hope that some variation of these tips works for you.
originally posted on the Owen website: