You’ve got a brilliant idea for a web or mobile app, and you want to get started asap. Here’s the top 6 concepts you need to be aware of before you quit your job or spend a penny on making your idea real. I’m a three-time entrepreneur and over the last two years I’ve been working on Teamly, a SaaS product for helping people manage their priorities at work. I wasn’t new to business, but I’ve learnt a lot over the last few years specifically around product management for web software, an essential but non-obvious skill.
A startup is not the same as a new start business. Your idea will hopefully turn into a business at some point, but it could take months or years till you discover that repeatable and scalable business model. So throw away the traditional business books and start reading up on the topics below, they’ve served many successful tech startups well that have transitioned into real businesses.
Minimum Viable Product:
Known simply as an MVP, this is the simplest implementation of your idea that enables you to get feedback on it, and therefore to start learning whether you’re on the right path. Instead of spending tens of thousands building an actual product, use a tool to mock up some screenshots, and then start showing those to potential users. Assuming they’re not just your friends and family, you’ll learn lots from this exercise quickly.
Coined by entrepreneur Eric Ries, and inspired by lean manufacturing, this is about a state of mind, and is not about being cheap! Lean startups are those who are following a process of build, measure and learn, constantly testing their assumptions. Start by building your MVP, measure and learn from that. Repeat in a loop. Follow the lean startup methodology and you’ll hopefully avoid wasting time building products or features that no one wants.
You’ve heard of product development, but what about Customer Development. Made famous by serial entrepreneur Steve Blank, this is where you “get out of the building” and proactively seek contact with potential customers, with the purpose not to sell, but to learn. You’re trying to figure out if your assumptions are correct, and if they’re not, what problem does the customer have that you might be able to solve. [It is not the same as market research, which is typically done in reference libraries pouring over analyst’s reports – those things that tell you that the market for blah is $100Bn].
AARRR (Metrics for startups):
Once you’re up and running, you need to be data-driven and make product decision based on hard metrics. Beware vanity metrics, which tell you what you want to hear, instead focus on AARRR, a term coined by Silicon Valley seed-stage VC, Dave McClure. It stands for acquisition, activation, retention, revenue and referral. Depending on the stage, and type of business you’re in, you’ll deal with these in a different order of importance. Probably the key thing for all startups to focus on is retention. Strong retention indicates you’re at product/market fit, which is the holy grail for startups, and the last thing on the list.
Product / Market fit:
Entrepreneur turned venture capitalist Marc Andreessen believes product/market fit is “the only thing that matters in a startup”. Product/market fit means being in a good market with a product that can satisfy that market. It’s a magical moment! But it’s not the norm for a startup, the search for product/market fit can take years, if you ever get there: “You can always feel when product/market fit isn’t happening. The customers aren’t quite 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, and lots of deals never close.” Lean startup, customer development and AARRR metrics are the key tools to get to the holy grail, P/M fit!