Startup Notes – Product Fit / Viability

I attended Infinite Venture’s Demo Day yesterday.

A few startup’s were presenting their case and requested for funding.
Without naming names – here are just a few observations and opinions that I have on starting a startup.

Before everything else – it is so vital to identify product fit.

For a moment – just forget growth hacking, forget being the next Uber, forget what they teach you in MBA.

It is so vital to identify:

  1. Is there a market for your startup? If so – quantifying the number (it can be households, users within the industry etc).
  2. Do you have a niche offer – if you are marketing to everyone – chances are nobody will be using it. Let’s take Uber – Uber caters to mid / high end consumers who don’t drive / find driving a hassle / are sick with cabs.
  3. Is the problem worth paying for? Or rather would your customers pay (and how much are they willing to pay to solve the problem?) to have the problem solved.
  4. Is your startup a pain killer or a vitamin? – i.e. Solves an immediate need vs a nice to have

Once you can correctly articulate the above and it seems possible that there would be a market that would gladly pay for the service / product. You would need to ask yourself:

  1. Is this easy to scale? To grow – would I need to incur a higher cost to hire more people? Or can I use technology to automate?
  2. What is the barrier to entry like? – what’s so special about my product / service that is difficult to emulate. If it’s easy to start something – can big corporates just do it and move much faster with more capital?
  3. Can this be grown to other countries within the region? – sure hyperlocal is cool – but from what I observed – most investors are looking for something that is easily to replicate in other countries.
  4. Are margins good enough? If not – what is the tipping point for you to start breaking even / profit.
  5. Is it labor intensive?
  6. What is your acquisition cost per customer and lifetime value per customer?
  7. What is your customer retention strategy like? – and no, discounts isn’t the answer – the product / service must serve a real purpose besides just solely relying on discounts.

 

I met an investor a few months back and he offered me a very good piece of advice. He said (and I am paraphrasing here) – “With new technology, it’s almost unlimited what you can do – the key thing that people are looking at is how do you monetize it – and how sustainable it would be”

Personally – I take another factor into consideration – “Is your product / service actually serving the community and the world at large? Are you actually making a difference in the lives of others?”

 

Because if all your business does is feed people with sugared drinks and junk food – regardless of profits – I personally think you are doing a disservice to the clients that you serve. Would you feed your own child what you peddle on a daily basis?

As Simon Sinek puts it – ““People don’t buy what you do; they buy why you do it. And what you do simply proves what you believe”

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