The startup world is quick to report on the rare success story…the 1 in 100. However, with over 11,000 companies being founded an hour globally, and over 90% of them failing within the first few years, it is critical we get more reporting on who didn’t make it, and more importantly, why?Without this kind of information, it makes it very difficult for startups to learn the ‘right way to build a startup’ from the collective experience, and the key pitfalls to avoid along the way.
This is something we are working to address here at Mosaic.
We live and breathe both Product and Business development, having launched dozens of startups in our innovation lab, as well as consulting on hundreds of other independent businesses, and acting as advisors to a number of founders. Not to mention offering investment to a series of startups, helping them to scale from a great idea into a viable growing company.
Over the last eighteen years we have perfected our process which ensures that each startup that we work with is given every opportunity to succeed in today’s competitive landscape. We grasp every chance we get to analyse and learn from the so-called “failure stories”, and take from them every ounce of insight that might be valuable to the next great idea in that space.
So what, in a nutshell, do our consultants think a startup should focus on at the start? And more importantly, what should they ignore?
We have a simple formula that outlines where we think you should focus your time and energy in the lead up to a launch: give your Product 2%, and give your Business 98%.
So what does this look like on a more granular level: 1% 1% 49% 49%
Everyone has an idea. If you think you have a unique idea… sorry to say the chances are somebody else has already thought of it, and has either; A – failed to do anything about it or B – failed to execute the idea effectively and turn it into a business. An idea on it’s own is worthless if not actioned upon with the right process.
There is no point fooling yourself, and getting caught up in a false sense of security that you’re ‘onto a winner’ just because you have had a great idea. In reality you’ve only taken your first step in what is very much a marathon and not a sprint.
Don’t hide behind your product… get it out there, and get yourself out there. Don’t fall into the all too common pitfall of thinking you are making progress with your startup by constantly tweaking and adjusting your product to get it ready for use. This is the worst mistake we see with startups; founders spending too much time tweaking the product, and obtaining a false sense of progress, instead of shipping early and gaining incredibly valuable and necessary user feedback.
You will most likely change 50% of your product after 6 months. The sooner you find out what is NOT working, the better. While you learn more about everything that doesn’t work, you will also identify what does work and confirm where your business should focus. Taking this tactic of getting your product into the user’s hands early will save your business both time and money.
Your Product to Market Fit is a key factor in determining the scope of the opportunity ahead; as a representation of how much your product satisfies market demand, and the strength of the market you are targeting, it is a key indicator of interest to potential investors. Developing a strong Product to Market Fit is a lynchpin step in building a successful business.
It is essential that you get your product into the hands of early adopters, collect use cases and feedback, then adapt, adapt, adapt from there. Start by developing a minimum viable product and launch it to test the interest of your market. And remember that criticism and complaints are your best friend. What were people expecting that they didn’t get from your product? Who are they comparing you to? What are they most annoyed about? The answers to questions like these will inform your product roadmap, sales pitch, marketing strategy, and so much more.
Gabriel Weinberg summed it up best, in his book Traction, when he said; “Almost every failed startup has a product. What failed startups don’t have are enough customers”. However you track it (users, revenue, signups, low churn, etc.), traction is the initial momentum you build that shows your business is viable. It proves that you have achieved Product to Market Fit, are gaining brand awareness, and have strong potential to build market share. It’s also another key indicator of interest to investors, and hugely important in securing funding.
To generate traction you need to examine what drives growth for your business, and maximise efforts in moving those levers. At the core of this is the need for good business intelligence. Our advice? Track and test EVERYTHING, especially marketing and consumption analytics.
Want to hear more? Book a consultation today, and we’ll give you something to pitch about!