Startup Essentials: What You Need To Know When Creating Your Startup



Startup essentials
Nigerian Startup Team

To be successful, startups shouldn’t just try to be a scaled-down version of a large company.

For existing companies with a known market, traditional product development can work just fine. But if you’re unsure about what you’re selling and who you’re going to sell it to, startup model might be more appropriate.

But what exactly is a startup?

Startup, as defined by Steve Blank, is a temporary organization in search of a scalable, repeatable, profitable business model. Essentially, this means: Startups are adaptable organizations whose primary goals is to find a business model—not execute one. When they find a successful business model and scale up to execute it, they turn from a startup into a regular company.

Example of a startup are: A student wants to start a social network for children or an engineer designing an app to sell.

Startup Customer Development Method

All startups face the risk of not finding customers for their product or service. To mitigate this, Blank introduced the customer development method, a process to help startups systematically search for a successful business model.

Startup Customer Development Method
Startup Customer Development Method

This method is divided into four stages: the first two test the business model (search mode), and the second two execute and scale the business (execution mode).

1.      Customer discovery: This translate founders’ vision into business model hypotheses and test them. In testing these hypotheses, you will discover information about your customers and determine product-market fit.

2.      Customer validation: Testing resulting business model for repeatability and scalability.

3.      Customer creation: establish market, position, and build demand.

4.      Company building: Grow organization to support execution of business model

In its early days, a startup operates in “search model”—its business model is just a collection of unproven hypotheses.

During the first two phases it’s necessary to test these hypotheses by getting in front of customers early and often. It’s also important to limit spending until the customer creation and company building phases, when the business model is known.

Likewise, startups can also use customer feedback and learning cycles to develop their products and services.

Startup Build-Measure-Learn Loop
Build-Measure-Learn Loop

The Build-Measure-Learn loop starts with a minimum viable product (MVP), or the simplest possible customer-ready product. Startups launch the MVP to get early customer input, then use what they learn to create and test new iterations, gradually optimizing the design.

If a hypothesis fails, it doesn’t mean the business is doomed. A startup can always pivot, or radically change its focus. For example, Twitter was originally a podcast-subscription network called Odeo. When iTunes entered the market, Odeo couldn’t compete—instead, they focused on building a microblogging platform, and history was made!  Once Odeo’s failure was inevitable, the company would hold “hackathons” for employees to develop their own ideas—Twitter was the brainchild of Odeo engineer Jack Dorsey.

When choosing your startup team, it’s important to select for traits that will maximize the company’s chances for success—without Jack Dorsey’s creative problem-solving skills, Twitter would never have been born.

Startup Team Build: Traits and Skills to Lookout for

Some of the key traits and skills that would benefit a fledging startup are:

1.      Curiosity: curiosity helps in the search for a repeatable, scalable business model.

2.      Passion: passion can help you keep going when you’re still in the middle of a difficult process.

3.      Comfort with failure: failure can be useful learning experience, and it’s important to have people on board who view it that way.

4.      Quick, reversible decision-making: in the early days, it’s important not to make too many irreversible decisions, in case you have to pivot!

The traits listed above are not in particular order.

But when is a startup no longer considered a startup?

Once a startup has found its scalable, repeatable business model, and it has proven customer demand, it can shift its efforts toward execution mode.

At this point, the startup officially becomes a company focused on administration and growth.

Conclusion

  • Little revision on What we’ve learnt so far about startup.
  • A startup model differs from traditional product development in that for a startup the product and market are unknown.
  • Turning the founders’ vision for the company into business model hypothesis and testing them is the main goal during customer discovery.
  • Spending should be limited as much as possible until execution mode.
  • The Building-Measure-Learn loop uses iterative design to develop a minimum viable product (MVP).
  • If one of your business model hypotheses fail, you could pivot.

 

 


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