As a guy who has spent a good deal of time in the startup community, I’ve seen radical change in the conventional wisdom about how to get an early-stage idea off the ground. Here’s the evolution of what I’ve seen:
How to Start A Company, 1996:
“Do your homework or you’re not credible.”
- Write a business plan,
- raise funds to fund development and a team,
- build your product,
- market it according to your plan.
How to Start A Company, 2000:
“Business plans are largely a waste of time.”
- Create a good executive summary and pitch deck,
- raise funds to fund development and a team,
- build your product,
- market it according to plan.
How to Start A Company, 2008:
“No one funds concept-level ideas, except from established entrepreneurs.”
- Create a good executive summary and pitch deck,
- raise funds to fund development and a team,
- build your product,
- market it according to plan.
How to Start A Company, 2012:
“Call me when the ball is rolling down the hill.”
- Build an MVP and recruit a great team on your own nickel,
- market it and get real traction / product-market fit on your own nickel,
- create a good executive summary and pitch deck – but only if you need to raise funds to expand
Lots has changed, clearly.
Here’s the takeaway:
An MVP is worthless if you can’t get product-market fit.
And if you think about it, this makes sense. Even though MVPs are cheaper than ever to build, it still costs more than a social media marketing campaign and a brochureware website or a crowdfunding campaign. Plus, given that the odds are close to 100% that your first MVP will be wrong, adapting an existing MVP once it’s built is much more expensive than adapting your concept and positioning *before* it’s built. Most importantly, if you can’t attract customers to your product before your MVP is ready, what makes you think you’ll be able to do it afterward?
Look at it this way: if you are successful in defining and marketing your product in a way that captures eager customers before you’ve built your MVP, would that give you more confidence that your MVP will be A) correct, and B) the right thing for your market?
Of course it would.
So here’s what I advise all concept-level entrepreneurs do:
How to Start A Company, 2023
- Achieve evidence of product-market fit
- Build your product
- Worry about fundraising and growth later
The Sell-Build-Plan Philosophy
Pretend for a moment that your conceptual product is already built. What does it do? How does it work? Why should people use it? What price would you charge? Do some competitive benchmarking and make your best guess.
1. Sell Your Product
Now. Use all that to create a great marketing site. Pick a brand and get a domain. Describe your product in the present tense / as if it already exists. Add screenshots (mockups, really), descriptive use cases, features and benefits, and pictures of happy people. Make a video. Create a pricing and plan page. Then Drop “Coming Soon” in subtle places and add big Sign Up Now buttons.
When people click on the Sign Up button, ask for their email address and tell them that you’ll let them know when your product is actually available.
Then go find your keywords, optimize your site and buy PPC campaigns around those keywords. Ask bloggers to take a look and write about your idea. Email potential customers directly and ask them to check you out.
Then sit back and see what happens. You’ll end up with one of three outcomes:
- No one cares. See? You’ve just saved yourself the cost of an MVP. Now identify what you got wrong, tweak your concept and your marketing site and do it all over again.
- People love it. See? You were right! And now you have hundreds of people ready to use/pay you for it. Now get busy: go build exactly what you described and sell it to them when it’s ready.
- Some people love it, but not enough. See? You were close. Now identify what you got wrong, tweak your concept and your marketing and go do it all over again.
Pro Tip: The Crowdfunding Campaign.
Not all businesses or products are Kickstarter-worthy, but if yours is, it can be a fantastic mechanism for demonstrating product/market fit. Set up your product on their platform and promise to give people your product if a minimum threshold is met. If yours hits, you’ve A) achieved product-market fit and B) just funded your MVP.
2. Build Your Product.
Because you successfully conceived of something that people actually want, you can now formally design your product with confidence. Your product people now have a firm grasp on the high level user stories and principles that customers said they wanted. They also have a pool of beta testers and early customers to work with during the development process.
The same process of determining what’s ‘minimal’ and ‘viable’ still applies, of course. Not everything you sold your customers on is necessarily required for your first release. Remember that your product will never be ‘done,’ and that everything is a work in progress. At least now you have actual, eager customers to work with to help answer those questions.
A note on fundraising
If you need outside money to build your product, you’ll have a far easier time finding it now that you have customers waiting for you. But if there’s any possible way you can get your product built without it, do it. You’ll be better off.
Once your product is live, go back to all those customers and invite them in to your ‘private beta.’ Listen to them closely and adapt as needed. Charge them. Now change the Sign Up Now button to link to your actual signup page and accelerate your marketing as much as you can. After all, you already know how to do it.
3. Plan your business.
The rest is easy. Plug in all your data – cost to acquire, pricing, marketing spend – and build out a financial model. If you can bootstrap, you’ll know fairly accurately how long and how fast you can survive. If you choose to raise outside money, you’ve become a fairly low-risk investment, since you’ve already achieved the milestones an investor might want to see: product design, product/market fit, marketing prowess, execution skills, real operational data, even revenue – and probably made progress towards an actual team as well.
There’s more to it, of course. But it’s all in the details.
