Importance of Research
Look before you leap, research before you launch
By Robin Anderson
One of the many considerations a startup founder must make when developing their product, is to how deep do you go in the development of your product to have what is considered a minimum viable product (MVP):
A minimum viable product is a version of a product with just enough features to be usable by early customers who can then provide feedback for future product development. A focus on releasing an MVP means that developers potentially avoid lengthy and unnecessary work.
The one simple rule for an MVP - it must provide business value. Founders walk a fine line when building a “minimum” MVP to the point where your product is useless, spending so much time building the MVP you lose sight of the target.
Because of this it is important to begin your product development process with your ‘idea’. Does it really solve a problem, or are you creating a problem to justify your product? One of the best ways to confirm the answer is talk to your potential target audience. Give them an opportunity to share their biggest challenges to see if your problem is real, validating the development of your product. This is particularly important when it comes to entering an industry that is an institution, such as the insurance industry.
For some, disrupting an old and tired industry is their end-game. The idea of transforming the industry is the driving force for building a superior product or service. Often, this tired industry has rules and regulations that complicate operating a business. This is a contributing factor as to why the industry remains as is - difficult to navigate, and hard to stay above the fray. And yet, companies have successfully broken through with creative solutions that customers enthusiastically adopted.
Knowing your Industry
How important is it to do the legwork, fully understanding the compliance and regulations associated with your industry before you generate your product roadmap?
Understanding the depth, building in the necessary features, and processes to your product will help determine the extent of your initial product MVP. Where do you start?
Conduct an industry analysis:
Who are the leading companies in your industry
Is this industry growing, stable, or shrinking
Are there any trends within your industry
What are the regulatory requirements for this industry (this may vary by country)
How will your product capabilities be different from the competition
You’ll learn when designing a prototype warrants creating a product that is bare bones, simply needing to demonstrate the purpose. And then there are other times when your product is going to need extensive development as the company’s foundation has to meet industry regulations and standards just to establish credibility with investors and eventually customers. Know what you are targeting and build your design from the beginning based on your future scalability.
The last thing you want is to have to spend money you don’t have on legal, services, royalties, or even face a barrier to entry into the marketplace.
“Smart luggage manufacturer Bluesmart also fell victim to legal challenges. The company shut down in 2018 after most major US airlines enacted a policy requiring all airline travelers to remove lithium-ion batteries from their checked luggage.
On the other hand, Hippo took more time to develop the product in advance. They went the extra mile to ensure their product met compliance requirements. Their perspective was the regulation was designed to protect the customer, and therefore they took it seriously from the get go. They used this as an advantage from the beginning since they knew the regulations and how they worked. They talked to customers prior to launching and learned that many resonated with Hippo’s value proposition. As a result, they were able to raise a Seed round & Series A before they officially launched. One key was focusing on investors that understood this industry.
In addition, the benefits of conducting research include ensuring you build a product that meets the customer’s needs.
Product / Market Fit
Some startup founders struggle with not really understanding the market for your product. Some might question, ‘Is your product solving a real problem, or is it simply a nice to have?’ the Aspirin to Vitamin analogy.
While your product may solve a problem, is it a problem that a potential customer would identify if you were to ask? According to CB Insights, No Market Need is the No. 1 reason that startups fail.
From eCrowds: “We spent way too much time building [our product] for ourselves and not getting feedback from prospects — it’s easy to get tunnel vision. I’d recommend not going more than two or three months from the initial start to getting in the hands of prospects that are truly objective.”
Product/market fit means being in a good market with a product that can satisfy that market. Once you have achieved it, it tells you if you have solved a real problem for a big enough market segment where you could realistically keep building your product. You have market acceptance.
The first product your company creates may not really satisfy the market need. Often it takes many revisions to get it right. A major overhaul is a sign that you didn’t put in the extra effort at the beginning to really understand the market and the customer’s needs. Be customer obsessed, they will tell you what they need, so listen to them.
The benefits of talking to your customers include:
Build a better product
Create a better experience
Get invaluable insights
Strengthen your community/loyalty
Gain validation
Demonstrate traction
Involving them early in the process will help ensure you build a product that solves the need, and will help you to build a better product.
When to pivot
Sometimes your product idea just doesn’t gain the traction you had hoped, and needed. When talking to customers you may glean new insights that may help you refocus your product in a new direction - a pivot. Oftentimes, this might be your only chance for success. Founders who are inflexible will struggle to gain success. Therefore, when moving towards a pivot, one of the things you will need to do is to convince everyone on the team from founders and employees to your investors and possibly customers that this is important. This is not the time to latch onto your ‘sunk’ costs. Be flexible and move on. ‘Fail fast, fail often.’
According to Seth Radman, Startup Founder 4x | Tech Entrepreneur | Product Leader
“I’ve coached 100+ early stage startups at Georgia Tech over the past few years. As a result, I’ve noticed some patterns that you might find interesting (or maybe not):
Founders focus too much on investors and raising instead of customers and product.
(Why? Because that’s what the media covers and celebrates.)
Teams that succeed almost always pivot at least once. Those who never consider a pivot usually fail.
(Why? They run experiments and gain new evidence that disprove early assumptions.)
Successful founders usually are scratching their own itch.
(Why? They are already their own customer and have a deep understanding of the problem/industry.)
Teams that haven’t found product-market fit within 6 months rarely find it without pivoting.
(Why? The market always wins, so listen to your customers and find the real problem.)
Successful founders are extremely passionate about the problem they’re solving.
(Why? You must have enough passion to help you persist through all the failures.)”
“Famous pivot stories are often failures but you don't need to fail before you pivot. All a pivot is is a change in strategy without a change in vision. Whenever entrepreneurs see a new way to achieve their vision - a way to be more successful - they have to remain nimble enough to take it.” –Eric Ries
Here are two examples of companies that successfully pivoted:
YouTube
When someone mentions YouTube, one thinks about the variety of influencers or subject matter videos that one follows. Did you know that YouTube initially was focused on becoming a dating site? Launching on Valentine’s Day in 2005, it paid L.A. women $20 to signup and upload biographical videos - known as “Tune in, hook up.” At the time, YouTube specified the requirements for posting. It failed to gain traction. When YouTube changed the focus to enabling users to determine what to post, that is when it took off. One year after the first video was posted, Google purchased YouTube for $1.6 billon.
Instagram, initially known as Burbn, was an app where users could share where they were located via check-in, with the added ability to make plans to meet up with friends and share photos. Burbnn was not gaining traction. However, the one feature that users responded to was sharing photos. They pivoted by streamlining the app to simply share photos and changed the name to Instagram. In one day they had more users than Burbn ever had.
"It's easy to come up with new ideas; the hard part is letting go of what worked for you two years ago, but will soon be out of date." - Roger von Oech
Conducting industry research, learning from your customers, and being flexible when it comes time to pivot are ways to help keep your startup moving forward towards success.
Need help with your product/market fit? Take a look at our Marketing Growth Program. Designed to get the answers you need in a short period of time, we will help you to identify your persona, understand your product/market fit, and develop your messaging framework. Walk away with concrete answers to help your company focus in just 3 weeks. Contact us to get started today.
FunFact Friday
Shopify started as an online snowboard shop called Snowdevil - the goal was to sell snowboarding gear. Due to the difficulty with integrating different online store systems, founder Tobias Lütke decided to build an entirely new online infrastructure from the ground up. Turns out, this was an incredibly powerful e-commerce platform. Tobias Lütke and Scott Lake quit selling snow gear and focused their efforts on building and selling this new platform. The customizable online-storefront builder launched in 2006 and was called Shopify.