As one tries to build a startup, there are many aspects he/she discovers and learns along the way. However, one of the most interesting yet extremely tricky parts is building the tech product. A while back, when we began building the initial version (also called “MVP”) of Flexiple, we learnt many nuances, sometimes the hard way. This made us realise that there weren’t any comprehensive online resources which could guide an aspiring entrepreneur through each step of building his/her product. Now, having built our product and helped numerous startups in building theirs, we decided that we should document our learnings — we will be attempting to do this over a series of blogs.
Let’s start our expedition!
To get started…
Of course, each startup needs to have a well-researched idea before beginning to make a product, even a beta version. So, we decided to focus this article on the key aspects that need to be delved into deeply to sharpen the idea.
1. Problem: Clearly define the core problem that you are solving for your primary user. How important is the problem to your user? For e.g. People might be annoyed by tangled earphones but is it a big enough problem for one to be providing a solution for? Maybe yes or probably not. In the end, you need to believe passionately about the need to solve the problem.
2. Is the problem large enough: Many times the problem you are trying to solve might be an interesting one, but need not have a large enough market. For e.g. Selling miswak sticks (an alternate for a toothbrush) in Canada, while might be a unique offering but would mostly not have a huge market. One can still build a profitable business around it, but it would very likely not become a billion-dollar startup. This might be a deal breaker for institutional investment, but need not be for you. However, this is something that you should be aware at the very beginning.
3. Value to the user: Ensure that the solution you are providing is (much) better than the alternatives that your customer currently uses. The value derived needs to be enough to motivate him/her to switch from the existing solutions. The rule of thumb given by Peter Thiel in his book “Zero to One” is that any new product should deliver a minimum of 10x times the value of its current alternatives. While there is no theoretical way to calculate this number, he is basically highlighting the large step-up that needs to be offered. The example he cites is of Amazon, when it started as an online bookstore, being able to offer a much bigger selection than any brick and mortar store — delivering at least 10x value.
4. Business model: Too many startups have good ideas but no plans of monetising them. You need not generate revenue from Day 1, but need to have a plan to start making money at some point in the future. For e.g. Trello is a great product and one of the most widely used project management softwares. But as the author of this article comments, while the company continued to focus on growing its free users, its paid users had already moved on. On the other hand, Slack, another great product, was able to build users and also keep an eye on monetisation — it is currently valued at $5 billion. Let’s make no mistake, Trello still sold for $425 million to Atlassian — a huge success by any benchmark — but it could have probably been a billion dollar company with a better mapped path to building revenues.
We recommend that you spend enough time mulling over the above points. Also, to enable you to cover every aspect of your business, an interesting tool, Business Model Canvas, was created. Try jotting down points in it and ask yourself if you are ready to invest your next few years on it.
How do we get these answers?
Once you fix your target users (be as specific as possible), interact with them and glean as much information as possible. Questionnaires do provide interesting data but often one-on-one conversations reveal many more critical insights. It is key to not be swayed by each interview with a customer — collect information and assess objectively.
Shall we start building the product?
Other than giving you additional conviction in pursuing your idea, this exercise will add immense value while building a product: prioritising the features, the visual feel and usability (UI/UX) of the product, communication of the key value to the customers.
So, now you are ready to take some important decisions about your product — should it be a website or a mobile app? More about it in the next article!