For the past 100 days, I’ve been running the Bootstrap First Incubator, a startup incubator dedicated to helping idea-stage founders and pre-revenue businesses get off the ground. This experience has taught me much about launching startups—more than my previous roles, working at incubators, and reporting on emerging technology companies.
My goal for each startup in the program was to accomplish at least three things:
- Design a financially feasible business model.
- Conduct customer discovery interviews to perform real market research and gain firsthand accounts of the pain points their customer segments experience.
- Design an early adopter MVP (Minimum Viable Product)and subsequently execute an early adopter launch.
I’m happy to report that four out of the seven companies had at least one repeat customer by the end of the program. Two startups had numerous beta testers—10 and 350, respectively—using their platforms, and two raised funding during the program ($100,000 and $3,000 [crowdfunding], respectively).
Thanks to the successes and struggles these companies faced along the way, this first cohort gave me insights into some of the modern problems startups encounter on their journey to launch, attract customers, and raise funding.
I want to share some of these lessons to give other entrepreneurs and future builders a higher chance of success, and I’ve listed these insights in the order in which I believe they matter most.
1. Don’t build before customer discovery
Many founders get a great idea and immediately start building the solution they’ve dreamed up. This is a huge red flag for me (and many investors). When I hear that someone began building their product before making any customer discovery, the first question I ask is, “How do you know anyone is going to want your solution?” Unless they tell me they’ve had significant discovery conversations with potential customers, they usually can’t provide an answer that gives me confidence there’s reliably going to be demand for their solution in the market.
The result is that founders often spend a lot of time and money on a product that nobody wants when, really, this type of waste can be avoided if they conduct customer discovery before building anything, which leads directly to my second point.
2. Listen to your customers: The critical role of customer discovery in startup success
I can’t stress this enough: you must listen to your potential customers. This aligns with the second goal of our incubator program—conducting customer discovery. At the start of your business journey, you merely have a hypothesis of a solution. It’s not until you start talking with your target customer segment that you can validate that hypothesis. You might learn that nobody wants the solution you set out to build because the problem you believed you were solving isn’t a problem many if any, potential customers are experiencing.
If the market doesn’t demand the solution you’re building and you continue without making any changes, you will likely launch a product nobody buys. Even worse, you’ll spend precious resources—time and money—getting this unwanted product to market, effectively paying a significant amount for your business to fail, even though you could have spotted the lack of demand and course-corrected.
By listening to your potential customers and understanding the pain points they experience, you can design a solution that addresses the most common issues in the market. This approach practically guarantees demand for your solution if your customer discovery yields statistically significant insights.
I’ll also add that conducting customer discovery without incorporating those insights into your product offering is almost as bad as not doing any customer discovery at all. You must consider what your customers say when building your product if you want the greatest chance of a successful launch.
3. Love the problem, not the solution: Aligning your startup with market demands
This point directly relates to the first two. A key to success is being in love with the problem you’re solving, not the solution. If you’re conscious of the actual problem that customers have expressed and you are enthusiastic about finding solutions to that problem, you’re more likely to succeed than someone blindly focused on building a solution they prematurely determined the market would want without substantial evidence.
To succeed, you must build a product that the market demands. If you start by understanding the problems customers have and then build a solution that directly addresses those problems, you’re more likely to succeed than if you start with a solution in mind and throw it against the wall (the market) to see if it sticks.
4. The myth of instant funding
In the media, you often hear about the founder who showed up to a meeting with an idea on the back of a napkin, presented it in a boardroom, won the hearts of investors, and walked away with a $5 million check. Yeah, that doesn’t happen—or if it does, it’s because the founder has a track record of major successes, and if that’s the case, most investors don’t need to see what that type of founder is building to have confidence they’re going to hit another home run (or at least get on base).
Unfortunately, this warped media story has given many founders the unrealistic belief that they can raise money off a pitch deck without having a tangible product and customers.
It’s not unusual for friends and family to invest in an idea after seeing a pitch deck, but professional investors need to see much more before they feel confident and comfortable investing. That’s why you often hear investors asking questions about a business’s traction. Investors want to know you have a product that customers are willing to pay for, a solution that scales (meaning it can serve an ever-growing number of customers), and, most importantly for their pockets, that your business is a venture-scale opportunity. This means you’re operating in a large enough market and have the potential to grow large enough that for every dollar the investor gives you, they will receive a significant multiple—let’s say 10x—when your business gets acquired.
The more traction your business has and the larger the market you’re operating in, the more likely you will be seen as an investible business. In some instances, these success metrics can override the need for you to even have a pitch deck if they signal to the investor that your business is a scalable venture on the road to success.
5. Avoid feature creep: Focus on early adopters and core features
It’s nearly impossible to make all your potential customers happy in the very early stages of your business. That’s why I like to emphasize the early adopter and an early adopter launch. In the early stages, your business should solve an extremely small set of problems very well for a subset of your target customer segment—the early adopters. These are individuals likely to be among the very first users of your product because they desperately need a solution to the pain point they’re experiencing, and their current solutions aren’t doing the job.
Too often, I see founders fall victim to “feature creep,” having too broad a scope of features included in the first iteration of their product. This is a mistake. It results in it taking longer than it should to launch, and it overcomplicates the product, becoming so many different things to so many other people that the value and focus become diluted, resulting in the product struggling to build critical mass and establish an identity.
6. Follow the framework! Every step matters in startup success
If a program has stepping stones, missing one or even a misstep can prevent you from reaching the finish line with the results you were expecting.
The startup within my incubator program that followed every step with the most diligence is the one in which investors have the most interest—and this is no coincidence. This founder followed each step within the program perfectly: they did not start building before doing customer discovery, conducted customer discovery until they found a statistically significant problem (and even continued beyond that), learned that their initial hypothesis had no demand but that a real problem existed in the market, pivoted to a new product, sold the demo, and began onboarding two customers. This is what a lean startup launch looks like.
Each step in the process is a stepping stone, and missing one or misstepping can have adverse effects that ultimately prevent you from reaching the final destination at the end of the path.
Validation and adaptability drive startup success
Don’t build until you have validation. You won’t have validation until you conduct customer discovery and identify a statistically significant pain point that commonly recurs in your conversations. When you do, you need to consider your potential customers’ considerations into account so that you end up building a product the market demands. That product should focus on the biggest and most common pain points your potential customers have expressed. You can worry about adding features and expanding your offering as time goes on, and you continue to learn more about your customers, how they use the product, additional pain points they experience, and how you can iterate to solve them.
I’ve learned a lot and seen many good things being done, but I’ve also witnessed my fair share of mistakes. One of the most challenging aspects is that you can lead a horse to water but can’t make it drink. You can give someone a formula that is more likely to help them succeed, but it doesn’t mean they’ll use it—or use it properly. Sadly, this probably isn’t the last time I’ll see mistakes made. On the bright side, each of these opportunities with founders is a learning experience that gives me the insight I need to further increase a founder’s chances of success in the market.
If you’re an entrepreneur looking to build a successful startup and want to join a program emphasizing these foundational steps, consider joining the Bootstrap First Incubator.
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Source: https://coingeek.com/6-essential-lessons-for-startup-success/