how to compile a lean canvas

How to compile a Lean Canvas, the business plan in one page

how to compile a lean canvas
To compile a Lean Canvas is the very first step for evaluating a business idea and for identifying the riskiest assumptions to be tested. A Lean Canvas is also the perfect companion along the journey from initial idea to Product-Market fit.

The whole concept behind a Lean Canvas is to briefly and concisely explain a business model to a person who does not know anything about what the company is doing and why.
It just takes a few minutes to create a first draft and it’s so powerful that
the simple act of preparing it will help anyone with a business idea to get more clarity on their thoughts.
A Lean Canvas template is available from LeanStack.com, together with some guidance on how to proceed. I encourage you to use LeanStack, as it keeps track of the different versions you will prepare and you can easily share the canvas either with the rest of your team or with advisors/coaches. Moreover, it’s free.

THREE KEY RULES TO COMPILE THE PERFECT LEAN CANVAS

Although the Lean Canvas has been designed to be simple and straightforward, it might present some challenges to first timers. There are three key rules to keep in mind:
– write statements that are specific and concise. No “but”, “however” or even subordinate sentences. Keep them simple, straight to the point, short (maximum 10 words each) and meaningful.
– after you have prepared a draft, go through each step, telling this story to yourself: we will help these people (customer segments) to solve (problem) by providing them (solution). They will know about us through (channels) and they will be convinced to join us because (value proposition) and because we already (unfair advantage). We will charge them by (revenue) and we believe this will cover our (costs). We will measure our performance by tracking (key metrics). It should all flow and make sense, like it is a story where everything is linked. If it doesn’t, the Lean Canvas needs more work.
– prepare a Lean Canvas for each customer segment of your business idea. This is because each customer segment may have different problems, solutions, channels, revenue, costs, etc.

A LEAN CANVAS EXAMPLE: UBER LONDON

To get an idea of what we are talking about, let’s see an example of how a Lean Canvas would look like for a well known company: Uber in London.

Read more

what to ask customers to validate pain points

What to ask Customers in order to Validate their Pain Points?

what to ask customers to validate pain points

Speaking with customers from a very early stage of a new product definition is an extremely powerful, informative and cheap tool to validate assumptions on customer segments and their problems. Customer discovery interviews will also equip you with insights to define a Unique Value Proposition for a product for which there is an actual market need.

However, it is crucially important to avoid spending precious time without getting to know the truth from customers. The biggest risk is to collect either false positives (what a great idea) or false negatives (this is never going to work).
We have seen already a few tips on how to run successful customer interviews (read here).
It’s now time to understand how to conduct the actual interviews, which are the questions to avoid and which are the best ones to use.

Read more

Library Of Tests To Validate A Business Idea

How to Select a Test to Get Market Validation for a New Product or Business Idea

Library Of Tests To Validate A Business Idea

To test assumptions for a new business or new product idea is among the foundations of the Lean Startup methodology.
By selecting the riskiest assumption, defining an hypothesis, testing it with customers and then analysing the results to decide the way forward, entrepreneurs can systematically reduce the risk of launching a new product.
This is extremely important, since 72% of all new products fail to generate the expected results in terms of positive impact on profit.

But how do we choose the right test to validate the riskiest assumption?
Any 3 pennies out of 4 spent during the early stage of a new business or product idea are very likely to be wasted, so it’s best to minimise by:

  • using cheap and quick tests when uncertainty is high
  • using more expensive and longer tests when the riskiest assumptions have been tested and validated already

In order to facilitate the difficult task of choosing the right test at the right time, I’ve collected a library of tests to get market validation, combining my personal experience with what the Strategyzer team have written in their Value Proposition Design bestseller book.

The tests are ordered below from the cheapest and quickest one to the longest and most expensive.
One note though: this is just an overview, intended to be a catalogue to facilitate choice, not execution. You will find in the text links to other posts where I’ve collected more details on how to conduct specific actions required by each test.
Read more

how to avoid the 5 most common mistakes for early stage startups

How to avoid the five most common early stage startup mistakes?

how to avoid the 5 most common mistakes for early stage startups

Either as a business coach, advisor, mentor or consultant, during the last few years I’ve had the opportunity to engage or work directly with more than a hundred startups. This has given me insights on how early stage entrepreneurs deal with the journey from an initial idea to a product with a good close rate, a decent sales cycle and sticky users/customers — thus achieving the so called product-market fit.

The first thing I’ve realised is that entrepreneurs are super awesome people. What makes them special is that they are driven by passion & ambition. And while it may let individuals pursue progress and innovation, passion & ambition might also cause profound suffering or troubles in case it’s not properly managed and kept under control.

Here are five common mistakes I’ve seen early stage founders make as a result, alongside a few options on how to get back to the right track.

Jumping into build mode

The storyline behind this error is often: “I can do it, so I’ll just do it”. Which translates into: “I’ve had this idea, I have technical skills/I have friends I’ve managed to take on board/I have money in my savings account/I have someone giving me a loan/I have an house to remortgage, so I’ll just build what I have in mind”.

There is so much passion and courage in this decision that it’s so easy to admire. However, there are some terrible facts — 72% of all new products flop and the most common reason why startups fail is because they build something people don’t want right now.

So while extremely brave, to jump into build mode is like going for a bike ride knowing there is a 72% chance you will go face first into a wall. “Build and they will come is not a strategy, it’s a prayer”, said Steve Blank, the initiator of the Lean Startup methodology.

The Lean Startup methodology helps entrepreneurs solve this problem, in the same way brakes, steer and helmet help bike riders avoid walls. Lean Startup practitioners validate customer problems and customer segments before anything else.

I’ve seen founders investing £50–100k on apps that were just used by a few friends, and I can guarantee they didn’t have fun when they went back to a day job, with a lower seniority and salary, and much less money in the bank. What if they had realised that their idea was flawed in few days without spending anything or writing a single line of code?

Developing a proof of concept

A variant on building too soon is building a proof of concept too soon. This is when a founder creates something to prove they can do it, before they do it. It’s very common especially among large companies or tech founders.

This translates into “I’ve had this idea, I have technical skills/an infrastructure or a budget available, so I’ll build it to see if it’s feasible or not”. This seems like a good plan on paper. In fact, it’s advisable to check whether we are able to deliver something or not before promising and selling it.

However, proving that you will be able to execute something again does not necessarily mean there is a market for it! Instead, the fastest and cheapest thing to do after having a new product or new business idea is to start from validating the customer problems that a Proof of Concept may intend to solve.

If those problems are not there or are not big enough, here’s the good news: you would have either built the wrong product or targeted the wrong market. Why is this good news? Because you haven’t spent a single penny on that idea yet! In this case as Eric Ries, author of “The Lean Startup”, says: “Better to have bad news that’s true than good news we made up”.

Writing a business plan too soon

This one is hard to kill. There must be an unwritten law defining that the best thing to do when you have a business idea is to write a business plan. I have met with founders who have been recommended by “advisors” to write a business plan first thing. This is also what most business schools suggest to do as a first step to create a business.

A business plan is a very long document, sometimes even 70 pages long, where a founder writes details on how she is going to execute a plan for her business idea, and what would be the financial impact over the next few years (sometimes even up to five years!).

There are two main problems with business plans. First of all: who is going to read 70 pages? If no one is going to read them, why spending valuable time to write in the first place? Secondly: if the business idea is something innovative, how could they make a plan for it, let alone forecast the financials?

The first and last time I wrote a business plan, I was sitting in front of a spreadsheet late at night and the row “monthly revenue” was empty. My cofounder was sitting next to me and I asked him: “You are going to be in charge of sales, tell me the numbers.” We hadn’t met even a single customer yet, we both had no idea of the future revenue, so we just “reasonably” made the numbers up.

Unless it’s about an established business, a business plan is a document full of unvalidated assumptions not even worth the paper is printed on. Think of it this way: what if an investor sees the plan and actually invests in your business? Easy answer: they will expect you to execute it. Let me rephrase: they will expect you to execute a plan full of unvalidated assumptions and to come back with financial results that you made up. This sounds like a nightmare.

One of the mantras of the Lean Startup methodology is to “get out of the building”. In other words: instead of spending weeks to collect unvalidated assumptions in a document that no one will ever read, just move on and start doing business properly by validating the riskiest assumptions in the fastest and cheapest possible way.

I’ve helped my clients to stop wondering about fictional figures and plans, and to start a learning exercise about their customers instead. This ultimately led to launching a product validated by the market, scoring early traction and getting a clear understanding of sales channels and acquisition costs. All elements able to inform a proper financial plan in the future.

Not being focused

This one has a lot to do with how passion & ambition sometimes lead founders to a bad place. I’ve met with entrepreneurs with glorious visions for their businesses. Visions that I personally embrace and that, if executed, would have definitely made the world a better place. However, passion & ambition got the best of them, and made them so restless that they simply couldn’t stop spinning around.

One of the founders I met was busy launching multiple businesses at the same time, including an online marketplace, an accessory for foodies, a niche event business and a startup incubator. All this with a team of just two full timers and capital bootstrapped in the thousands. It didn’t work out very well for him.

My passion for the Alps taught me that whatever the height of a mountain, the only way to do make it to the summit it is to take one step after the other, aiming at the top. While going up I might take turns to avoid obstacles, falls or creeks, but I’d be focused on the summit all the time.

For early stage founders, the focus has to be on early adopters, those customers who are in desperate need to solve the problems the company is addressing. Conquering early adopters will be the first step to reach the summit of a valuable business.

Expanding the team too soon

Finally, when I launched my first startup we were initially fully aligned and full of enthusiasm. But as soon as we had the first differences of opinion, I soon realised that having a business partner is not that different to being married: should I want to part ways, it’s going to be a pain. For example, to get rid of a co-founder I might buy her out — after having had the company valued by an independent expert. And that obviously comes with the caveat that she is willing to sell.

Working together can be fun, but is rarely easy. I’ve seen destructive team dynamics going on between co-founders dangerously focused on how to deal with each other instead of how to solve customer pain points and make the business profitable. The incredible level of energy a new venture need does not allow for things like this to happen.

I recommend that my clients keep the founding team as lean as possible until they have a clear plan. Once they have managed to define a value proposition, tested, iterated and validated it on the market, that’s the point when they will have a clear picture of who they absolutely need on board. Also, if they have early traction they will be able to negotiate a more favourable deal with any new team member.

Finally, I recommend them to be careful with who they bring on board. The path to product-market fit requires people who are comfortable with change, chaos, and learning from failure and are at ease working in risky, unstable situations without a roadmap or a pre-defined plan. Not something for everyone.

I hope this list was a useful exercise to spot early sign of passion & ambition taking over. In case you could see yourself in at least one of the five errors, let’s have a chat and let’s see how can we deal with it together.

 

This article originally appeared on the startup experts platform Kandu‘s medium blog. They match entrepreneurs with trusted experts, helping startups grow better and faster. Check them out!

product-market fit is like planet alignment

What is product-market fit, and how to achieve it?

product-market fit is like planet alignment

According to a post mortem research of global startups conducted buy the venture capital database CB Insights, the most common reason why new ventures fails is because they build and launch something customers don’t want.
Luckily, there is a way to avoid all this pain right from the start by making sure to achieve product-market fit before you run out of money – which is, unsurprisingly the second most common reason why startup fail.

WHAT IS PRODUCT-MARKET FIT?

As for any relatively new concept, there is not a clear single definition for what product-market fit is.
There is a market point of view, from Netscape founder now venture capitalist Marc Andreessen: “product/market fit means being in a good market with a product that can satisfy that market“.
And when he says good market, he means a market with a large number of potential users, high growth in number of potential users and ease of user acquisition.
There is an operational point of view from innovation author Alex Osterwalder which reads: “you have product-market fit when Value Proposition, Customer Segment, Relationships and Channels are identified without the need of additional pivots”.
And finally, there is a business point of view from the initiator of the whole Lean Startup movement Steve Blank, which reads: “product-market fit means having a product for which enough customers are willing to pay so that your company can stay in business”.
Across all these different points of view, there is a clear conjunction line, telling the story of a product that customers with the capability to pay for it seem to love, need, use and buy. It’s a good starting point.

HOW IS PRODUCT-MARKET FIT MEASURED?

If product-market fit exists, it should be also measurable. Similarly to its definition, there is not a clear way to measure product-market fit, entrepreneurship is not really an exact science.
However, there are again a few options.
You may have product-market fit when you run a survey among your clients and 40% of them say they would be very disappointed if they no longer had access to a product/service.
Another option suggest online services to measure Bounce Rate, Time on site, Pages per Visit, Returning visitors and Customer LifeTime Value, and see if they are consistently above industry average.
A last one focuses on Net Promoter Score, or NPS. If NPS is consistently well above the positive mark, that’s an indication that customers currently using the product are so happy to convince friends and family to use it.
However, probably the most reliable way to measure product-market fit is that you can feel it. As Eric Ries, author of Lean Startup said, “If you have to ask whether you have product-market fit, the answer is: you don’t“.

HOW DOES IT FEEL TO HAVE PRODUCT-MARKET FIT?

First, let’s see how it feels NOT to have product-market fit – from Marc Andreessen again:
– customers aren’t getting value out of the product
– word of mouth isn’t spreading
– usage isn’t growing that fast
– press reviews are kind of ‘blah’
– the sales cycle takes too long
– lots of deals never close
It looks like an awful situation, unfortunately common to most of the startups I get the chance to meet.

On the other hand, what happens when you HAVE product-market fit?
– customers are buying the product just as fast as you can make it
– usage is growing just as fast as you can add more servers
– money from customers is piling up in your company account
– you need to hire sales and customer support staff as fast as you can
– reporters are calling because they’ve heard about your hot new thing

So, even if it’s measurable, and there is not a clear definition of what it is, product-market fit looks like a desirable situation to be in for a company.

HOW DO I ACHIEVE PRODUCT-MARKET FIT?

In January 2016, five planets have been visible for a month all together in the same portion of the sky.
Anyone being up in a clear blue sky night could see Jupiter, Mars, Saturn, Venus and Mercury aligned, one after the other.
This is called planet alignment, and it’s quite rare, the last it had happened was back in 2005.
Well, achieving product-market fit is like planet alignment.
You have to be able to align at least three big planets, namely a valuable customer segment, their undeserved needs, and your value proposition.

This is not an easy fit, it’s as rare as perfect planet alignment happens in the real world. And when it really works, magic things happen like downloads in the billions, hundred million active users, billionaire exits and so on.
However, if you manage the align the planets, even not so perfectly, you get in exchange:
– a good close rate
– a decent sales cycle and retention
– sticky end usage
Let’s see how to achieve this, planet after planet.

A VALUABLE CUSTOMER SEGMENT

First of all, as for any big thing we want to achieve, we have to start from somewhere.
I come from the Alps, and the first thing I learnt when I’ve climbed my first peak was: you get to the top one step after the other.
Early adopters are the first step in the quest for product-market fit.
Any successful startup has started focusing on one market at a time, starting from what is called a beach head. By winning domination in that market, they use it as a springboard to expand to the adjacent ones, adjusting at every steps the whole product concept, the positioning of the product, the marketing strategy, and choosing the most appropriate distribution channel and pricing.
Find out more about how to identify early adopters here.

CUSTOMERS UNDERSERVED NEEDS

After having identified the target customer segment, it’s time to investigate their needs. One of the cheapest, fastest and most informative things to do at this stage is to meet with customers through customer discovery interviews (more about that here and here) until we keep hearing the same things from customers.

A WINNING VALUE PROPOSITION

A value proposition is a statement that defines why you are different and worth getting attention. It’s possibly around 300 characters long, and includes:
– the target segment
– the key problem
– the key benefit your customers are going to get
– the special and unique way you will deliver it
A good template is “We help (who?) achieve (what benefit?) by doing (the special and unique way the new business/new product is doing it)”.
I normally work with value proposition made of such a main statement and three key pillars, or the product features that I want customers to understand and remember.

What makes a value proposition a winning one?
– It’s focused on what matters to customers. Any product feature is ideated based on customer needs validated during customer discovery interviews, and ranked based on how big is the pain and the company’s key strength.
– It’s able to solve the main problems in a unique way, better than competitors. In order to check this, I use a customer-centric competitive analysis (find out more here).

ALIGNING THE PLANETS

At this stage, once we have designed a value proposition, the key question is: will customer use and buy this?
Since the uncertainty is so high, it’s crucial to ask ourselves: “what is the cheapest and fastest way we can figure out whether customers would buy our product or not“?
I normally select a test from this library, and seek for commitment from customers in one of this forms: time, reputation or actual money.
The commitment is related to what I can can ask today based on the stage of the product development. If it’s a paper mock-up, I can’t expect any customer to pay for it.
If I’m meeting with customers, which is normally the cheapest thing to do to validate a value proposition, that meeting would be a failure if I don’t know what happens next.
And this would be because:
– the product needs iteration or pivoting (so back to the whiteboard and re-design the value proposition)
– I may not explicitly ask for clear commitment and next steps (a scary thing to do sometimes).

In order to achieve product-market fit, I keep iterating until I don’t get consistent commitment from customers. This means that I keep tweaking the product features and the commercial elements of the proposition.
Depending on the expertise of the team, how much is easy to access customers and the complexity of the product itself, this might take from just a week to months.
But the preparatory work completed before trying to align the planet will be of enormous help to make this time shorter, as we will be proposing to customers something strictly aligned with their pain points and offering a solution much better than competitors do.

how to identify early adopters

How to identify early adopters for a new business idea? The Uber case study.

how to identify early adopters

Identifying early adopters of a new business idea is the key to achieve traction and validation.
Even if a new business idea is targeting a broad market, the best way to introduce a new service or an innovation is to start from the segment of customers that are more eager to use it. (Everett Rogers has written a interesting book about this)
The more they want to use it, the easiest will be to sell it, it’s as simple as that.
In fact, in an initial phase, the Minimum Viable Product (or MVP) of a new product is going to be mostly designed around early adopters, so that the business can get enough traction and validation with them and then scale up to attract a broader customer base.

Customer development interviews are the cheapest and fastest way to validate assumptions about the problems that a new business idea is intending to solve and about who are the customers affected the most. (Here are few tips on how to recruit customers to interview and how to conduct successful interviews).
However, once the round of interviews is completed, how to identify who are the early adopters?

Read more

customer centric competitive analysis

How to compile a customer centric competitive analysis?

customer centric competitive analysis

The two most important elements to define a powerful Unique Value Proposition statement are to communicate why a business is different from what is already available on the market, and to make sure that the difference matters to the target customers. And this is where a customer-centric competitive analysis comes to rescue.

A competitive analysis is a tool that shows where a new business idea or a new product is positioned against competitors. It is able to highlight strengths and weaknesses, and helps establish what makes a new product unique.
However, the key thing is: unique is the eyes of who?

One of the ways to compile a competitive analysis able to inform an effective Unique Value Proposition (or UVP) statement is to use the validated customers needs that the new business or new product is willing to solve as a foundation. As Ash Maurya puts it, “the key to unlocking what’s different about your product is deriving your UVP directly from the number-one problem you are solving. If that problem is indeed worth solving, you’re more than halfway there already“.

So these are the eight steps I recommend to follow to compile a meaningful customer centric competitive analysis:

Read more

value proposition market test

How to validate a value proposition with the least possible investment?

value proposition market test

The most exciting part of having understood customers frustrations and pains through interviews is to be able to come up with a value proposition ready to be tested and validated. This is important because without a valuable value proposition in place, no new product or business idea is ever going to work.

The thing that makes bringing to life a value proposition a critical stage is that at this point entrepreneurs and companies start spending money.
The size of the investment really depends from the type of business, but the key thing is: whatever the business is, the level of uncertainty at this stage is still so high that it’s imperative to minimize the expenditure, as it all might turn out in a massive loss.

The best way to approach this is to fake the proposition in the most credible way and test it on the field, with the objective of minimising potential losses in case something was fundamentally wrong or needs to be drastically changed.
This is a practice that Alberto Savoia called “pre-totyping“. He defined pre-totyping as “fake it and test it before you make it“. It’s quite clear what “make it” means in this case: do not necessarily start coding for months, or do not secure a premium commercial location on a busy road to open that organic restaurant. Instead, there are at least seven techniques to be explored to gather customer commitment, and possibly start collecting revenue, before putting big money on the table.
The seven techniques are roughly ordered below so that the ones requiring the least amount of financial resources are at the top:

Read more

validate business idea no business plan

Why a business plan is not the first thing to do when you have a business idea?

validate business idea no business plan

The first thing that normally comes into mind when someone has a new business idea is: “I need to prepare a business plan“.
The first time I did that, I produced a document of 70+ pages, soon realising that, despite all the time spent writing it and all the research done, it was mostly made up.
All the figures about revenue and marketing costs were just pure invention. I had asked some numbers to the member of the team with some expertise in sales, and I put them in the spreadsheet.

As Alexander Osterwalder writes, preparing a business plan to validate an early stage business idea or a new product is a dangerous double edged sword.
On one side, it provides a tool to make an idea sound convincing when you are presenting to investors or to senior managers. But on the other end, should they consider the plan reasonable and well grounded, they might actually buy it. And if they do that, they will expect you to deliver that! This may be a major headache, because most of the plan was in fact made up.

So if a full length business plan is not the right thing to do, how do you assess whether a business idea is a good one and how do you plan for it financially?

Read more

proof of concept to validate idea

Why developing a technical proof of concept is not the first thing to do to validate an idea?

proof of concept to validate idea

Very often companies giving a first pass approval for a new product idea decide to invest time and resources in a technical Proof of Concept.
From a certain point of view it makes perfect sense, as it’s a way to test internal capabilities before deciding to go ahead or not.
A Proof of Concept (POC) will answer two main questions:

  • are we able to deliver the idea?
  • how much is it going to cost to deliver?

POC is a helpful assessment of the feasibility and cost structure of a new product idea.

However, the first thing we should ask ourselves when starting a new product journey is “is there a market need for it?”, and not not “can we do it?”
Most of the insights that a POC will deliver are related to the internal organisation, its capabilities, its skills and cost structure. But how about the customers? They are the ones that are going to buy – or not – whatever you are able to build!

Moreover, it’s not even free to do. By delivering a POC, companies invest time and money.

  • engineers and materials involved have an actual cost
  • opportunity cost: engineers’ time and skills could work on something else, a new feature for an existing product that is already positively contributing to company’s bottom line, for example
  • Finally, credibility and team morale should be considered. No one wants to work on pointless stuff.

How to prevent this from happening?
Read more

how to run customer development interviews

Ten tips to run effective customer development interviews

how to run customer development interviews

Meeting with customers during the early stages of a new product definition provides an understanding of the underlying needs, opinions, and motivations behind their behaviour. It validates assumptions about the problems we are willing to solve and informs a value proposition. At the same time, we have the chance to develop ideas or hypotheses to be tested with a successive quantitative research.

Customer interviews help develop a deep understanding of the situation before deciding to take action. Having 40+ hours of interviews is not like sitting at a research agency de-brief reviewing a bunch of PowerPoint slides. I usually come back from the experience with real faces in my mind, people’s words surface to rescue me whenever I need insights to take a difficult decision.

However, as most of the valuable things in life, it’s not easy stuff. Interviews take a lot of practice, and at the end of the day we might feel exhausted. They don’t cost much money, but do require quite a lot of time to recruit the right people, to organise the agenda to accommodate them, and to run the actual sessions.

Here are ten tips I put together on how to run effective customer development interviews.
Read more

online surveys for new product

Are online surveys really effective to inform a new product design?

online surveys for new product

Preparing an online survey may be the first thing that comes to mind to gather customer insights.
In fact it’s easy-peasy: join a free tool, brainstorm the most burning questions we have about the new product and share the survey on Facebook or LinkedIn hoping for a snowball effect. It all s
ounds like a brilliant idea.
However, there are at least three reasons why online surveys at a very early stage of a new product definition are more likely to produce harm than benefit, and might end up to provide incorrect information to guide us through the new product definition.
Read more

customer development recruitment

How to recruit early adopters for customer development interviews?

customer development recruitment

To recruit customers for customer development interviews may be one of the most difficult and time consuming things to do in a customer-centric new product development process.

One of the mantras of Steve Blank, the serial entrepreneur and academician who started the entire Lean Startup movement by developing the Customer Development methodology, is to “get out of the building“. What Steve says is to get out of the office and speak with real people. I believe his claim is provocative on purpose in opposition to the corporate habit of spending hours in crowded meeting rooms to review hundreds of boring slides while trying not to be noticed when glancing at our Twitter feed. In fact there are a number of reasons why getting out on the street to stop people passing by is not really a good idea:

  • Stopping people on the street is incredibly awkward. I tried a few times, not really nice.
  • Selecting a specific area – like a neighbourhood – might help me find relevant people, but I’d be essentially picking up at random. It will take ages until I have enough sample to validate my assumptions.
  • It’s very unlikely that I will find anyone willing to spend more than a couple of minutes talking with me. People on the streets are always in a rush, and I need engaged customer to provide me with meaningful information..

So instead of running around like headless chickens, a little bit of homework might help to get the customer insights we need.
Read more

Most startups fail because there is no market need for what they do

Why most startups fail and how to succeed?

startups Fail Because No Market Need

The hard truth of startups and new products is that at least 72% of all new products fail, causing damage to individuals’ savings, company’s cash flows and P&L, and affecting the morale of the team involved. The Silicon Valley Venture Capital Greylock Partners and the Venture Capital Database CB Insights analysed startups post-mortem earlier in 2017 and confirmed that user and customer demand is a north star for the success of a new business idea or a new product.
According to 100firsthits.com, the TOP1 startup mistake is “Building something nobody wants.

This all look like commons sense in fact. If there is no market need, whatever awesome product we will manage to put together and promote, we won’t sell it.
So the question is: how do we find out whether there is customer demand for a business idea, and how does the product need to be to satisfy that demand BEFORE investing big money

Eric Ries, author of “The Lean Startup” wrote something interesting about this: “startup success is not a consequence of good genes or being in the right place at the right time. Startup success can be engineered by following the right process, which means it can be learned, which means it can be taught.” 

So there is a recipe for success.
This is great because entrepreneurship has a magic power, it triggers positive energies and it leaves people with an irresistible willingness to start doing things.
However, all these positive energies can be very easily transformed into negative when they are not channelled in the correct direction.
And with negative I mean: having quit a day job, having spent most of our savings, having re-mortaged the house and ultimately having trouble explaining to our life partner, family and friends why we have done all of that and we haven’t been able to succeed. That’s awful.
Let’s follow the process then. Instead of jumping into build mode and start developing and hiring people immediately, these are the questions that we need to answer in order to build and launch a product customers need and for which there is market demand:

  • Which problem are we going to solve?
  • Who has the pain in our market?
  • Who are the early adopters?
  • What is the value proposition able to satisfy their needs?
  • How much are they willing to pay for it?
  • What is the minimum set of features required for launch?

The way to answer most of these questions is to engage with customers from the very early stage of the new product development, get to know them profoundly, create a value proposition based on the insights captured that relies on the company’s key strengths to create a competitive advantage customers care about, and test and iterate that proposition on the market until we reach product-market fit.

Most of this can be done before investing any substantial resource into the business, and that’s really the best thing about Lean methodology.
The most difficult thing is to resist from the instinct to jump into “build mode”, and invest some time to de-risk an idea before investing heavily in it.
Anyone is in love with their idea, and the last thing we want to know is that it’s not a good one. But the sooner we realise an idea is flawed (i.e. there is no market need for it) the better it is.
Read more