Start-ups by definition will always have challenges along the way when it comes to designing a product that succeeds in the market. We find that getting the product right has a little bit of luck but mainly relies on the usage and implementation of tried and tested product methods to ensure success. Without a great product, there is nothing to sell. Here are some common pitfalls we see and suggestions on how they can be avoided.
1. Designing the solution before understanding and finding the problem
Is the main hero of being a start-up the innovative solution that the founders have come up with? No! The main focus is to solve a real life problem. The solution should not come before the problem. If you have found a good problem to solve – you are on to something potentially amazing. A shortcoming we see too often in the market is a start-ups inability to clearly define their problem space. The problem should be clear and narrow enough to focus on. Too big of a problem and you get lost. It must be defined clearly and concisely, and be at the heart of all that you do.
Another important question to ask – is the problem solvable? If the problem space is too large and complicated, more time needs to be invested into understanding if it is realistically solvable. Conducting customer research and getting a first hand account on the problem is vital to ensure the product being built and designed is placing the customer first.
One example of a solution preceding a problem is pay-how-you-drive, usage based motor insurance. In ~2018 when telematics burst onto the scene, many thought how amazing it would be to use the hundreds of data points a car produces to price insurance. What was the problem? This was a solution focussed idea. Of the three well-backed start-ups we subsequently saw hit the market, none are operating today.
2. Not having a clear and focussed view of who your target customer is
Often, start-ups struggle narrowing in on their customer profile. Everyone cannot be a customer – at least in the initial stages. There needs to be a clear definition of what the ideal first customer or persona is in order to target them effectively. Understanding the customer results in understanding the problem space, which leads to designing a product that will be able to alleviate the customer’s pain points, thus making the product offering indispensable.
It’s imperative that a representative sample of the narrow customer persona is consulted with when mapping out the problem space and potential solutions. We like to see founders focusing on customer problem analysis. Specifically, frequency and intensity analysis. In testing the idea of attending to a certain problem, we consider it imperative to address the following two questions:
It can be helpful to establish and maintain a detailed milestone and capital raising plan through multiple horizons. Identify the milestones that correspond to value uplift proof points. Channel your focus of achieving these proof points as quickly as possible. Speed is key in retaining more equity.
- How often does the customer have the problem?
- How intense is the problem for the customer? Is it an absolute need or more of a want? Are they desperate enough that they will be willing to pay for the product or service?
These two questions are able to help determine if the problem space is worth investing time and energy into. Poor execution of this process can lead to greater sunk costs in building our MVPs that are not aligned with target consumers’ needs.
3. Not having a clear process for testing MVP success
Another observation; some start-ups struggle to create a set of metrics for defining and measuring MVP success. The most important question to ask is: does the MVP solve the problem? If the MVP does not solve the original problem, it has failed on the basic requirement.
Here in lies the lesson behind the old adage ‘if you’re not embarrassed by your MVP, you’ve waited too long to introduce it to your customer’.
Less time building MVP means; changes being made more efficiently via constant customer feedback loops, less sunk cost, and more runway with which to iterate or pivot.
Another aspect of user testing the MVP is incorporating measurement metrics from the beginning. Each user testing phase and iteration of a product should have metrics in place to assess its success. Startups mainly gravitate towards basic metrics found in tools like Google Analytics, however it is important to test other, more nuanced metrics. Tools like Amplitude, Heat will help track the smaller details and give a more holistic view of what aspects of the product are working and what are not. Defining these metrics and having goals in place ensures there is a clear path for product development.
To Summarise
These 3 mistakes can be easy to make, even for experienced founders. By being aware of them and sticking to the principles behind start-up product development, there is a greater chance of growth and success in obtaining market entry and achieving product market fit. Evidence of practising these methods can also help investors in assessing how likely a start-up is to flourish.
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