The right way to get your startup idea off the ground

90 percent of all startups fail within the first five years, and about 80 percent fold within the first three years of inception

Anirudh Narayan
Updated: Jan 23, 2019 01:46:22 PM UTC

Anirudh Narayan is a growth specialist that has helped over 1000 aspiring entrepreneurs and 50 startups in US, Latin America, Africa and Asia with launching their idea, reaching product-market fit and scale. He is also the author of Scale Smart: How To Get Your First 1000 Customers In India, a book focused on startup growth.

Image: Shutterstock
Image: Shutterstock

“Customers don’t care about your solution. They care about their problems.” ~ Dave McClure

Ideas are everywhere, but execution is rare. Eavesdrop on an average conversation in the metro, and you’ll overhear a million ‘billion dollar’ ideas that blossom in the minds of budding entrepreneurs. The single biggest problem, though, both in India and globally, is that 90 percent of all startups fail within the first five years, and about 80 percent fail within the first three years of inception.

One of the major reasons they fail is because these startups don’t reach product market fit. Entrepreneurs work on their ingenious product devotedly for the first six or eight months, but fail to talk to their customers after building their product. And when they do talk, it dawns upon them that, well, the customer simply doesn’t care. The end result? The entrepreneur burns time, burns money and burns out.

As a result, the Lean Startup movement really picked up in 2009, when you could build products in a lean way. These methods allow you to measure feedback by speaking to customers, learning from the conversations and building your product from the information and perspectives you gain. The end goal is to validate the demand without building your product –– and that’s where first step comes in handy: Exploration.

Phase 1: Exploration
As aspiring entrepreneurs, it’s only natural to have a confirmation bias around your idea. However, it’s pertinent to note that the old school of thought is to be solution-focussed: Where you build a prototype and wait for the customer to react. However, here’s introducing you to the new, more proactive idea: let’s figure out the customer’s problems, validate their demands and then proceed to build our solution.

At the end of the day, exploration is all about finding qualitative facts about your customer and asking open-ended questions. To get your answers, here are the steps you must follow:

Step 1: Identify potential customers
The first thing you need to do is list down a set of attributes, behaviours and facts about your potential customer. For example, how do they look? Where do they live? What do they do? Once we have the answers, swiftly hypothesise as many as five personas. Facebook’s personas, for example, would be something like this. Ex » 50-65 year olds who’re looking to connect with their high-school classmates.
» 18-22 year olds in college who’re looking to date or meet people, or simply build a community.
» The 30-35 demographic that finds a way to share information about their life, easily.

The idea is to build multiple personas, and zero in on that one persona you want to test your product with. If you’re looking for a place to start, Xtensio might be a good point.

Step 2: List potential problems
Say we’re in 2004 and we’re creating something like Facebook. Here are a few problems we ought to consider:
» Is there an easy way for the 18 to 22 year-olds to connect with their peers?
» Is there an easy way for 18 to 22-year-olds to check out what their peers are doing?

List out multiple problems for one specific persona, and pick one problem you want to test.

Step 3: List assumptions
The next step would be to list a set of assumptions underlying the problem. A good way to think about assumptions is this: I believe my customers have a problem with ‘X’ because of ‘Y’.

For example, I believe Uber drivers have a problem with picking up customers from the airport (X) because they don’t have access to flight information that can help them (Y). Bengaluru’s exasperating traffic is another readymade example. I believe people never make it to work on time (X), because roads are never empty (Y), people are always stuck in traffic (Y), or simply live too far away (Y). If these are the problems, we list the assumptions under these problems––and then try and find solutions for the same.

But remember––the assumption you want to test is the Riskiest Assumption: the one you have the least information about. The idea is to uncover as much information about it by talking to potential customers (say a group of six to 20 people to begin with), and measure them based on something called the success criteria. The actual percentage varies, but if approximately 50 percent of customers you talk to list your assumptions as their problem, you’ve struck gold.

Also, if you’re unsure about the whole ‘talking to the customer’ bit, you can refer to these scripts:

» Script Example 1
» Script Example 2
» Master Customer Development

Step 4: Pivot/Persevere
Once the results are in your hand, decide if you want to explore more about a customer, uncover more information, or simply rethink your solutions. Based on the results, you can choose to either pivot or start over, or persevere with your plan.

Phase 2: Pitch
After we finish the phase of exploration, we start to pitch. A pitch is nothing but a short, brief statement of your value proposition. It usually outlines a problem, and then illustrates how your product or service would solve this problem. Unsurprisingly enough, people usually jump to this phase first and never get into exploration––when it ought to be the other way around. For a solid pitch, it’s extremely important that we have already identified who is our customer, what is their problem and the underlying assumptions .
capture
There are different ways to pitch
» Face to Face
» Skype
» Phone Call
» Survey
» Landing Page

This image is a fantastic indicator of the pitching process.

As is evident, the amount of qualitative feedback is highest with ‘face to face’, since you’re able to determine people’s reactions instantly––while it's the lowest with landing pages. And thus, I reiterate: it’s best to start pitching to customers in person and with feedback, move towards more focused mediums of pitching. For example, my own book I tested with a landing page before the book went live and offered 10 percent off for early buyers. We got 15 people to buy it even before I had written the book out completely.

Phase 3: Concierge
Concierge is nothing but manually delivering the product, without any technical help, but instead using technology to supplement a core service. Granted, to concierge the minimum viable product isn’t the most optimised way of delivering a solution, but few can deny that it offers immense learning. One concierge experiment can help understand the loopholes in the delivery cycle and help create a scalable product for the future. Dunzo, for example, started their service by simply taking orders on WhatsApp –– and look where they are today.

And lastly, if you’re looking for resources to learn: The Lean Startup - Eric Ries, Running Lean - Ash Maurya and Scale Smart - How To Get Your First 1,000 Customers In India.

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