The role of an MVP: sales vs learning?

mvp - learning

 

“Our MVP is currently on the App Store, the development was outsourced and looks great but it’s quite slow and glitchy and will probably not be able to get much traction in its current state. I’m also wary of spending too much time + money promoting a subpar product.”

This is one post I came across recently on one of the startup forums.

Does this sound familiar?

We all start on our MPV experiment in a right frame of mind, but as we go along, there is a chance we lose the objectivity of the whole process and this is where we start getting doubts and questions about how the present MVP looks and why we do not want to put all our heart into testing the critical assumption about our business model.

This could be a part of the mechanism for us to cope with a failure to attract enough traction and for giving us a sense of hope that, there will be traction if the current MVP is improvised.

We need to keep reminding ourselves about the goal of an MVP experiment, in every step as we go along. Is it to get sales or user acquisition (after all, this does validate our business model) or is it about learning more about situations with prospects, users or customers?

Starting up and MVP experiments

New product building recognizes that when you focus on understanding your users and how they discover and adopt your products, you can build features that help you acquire and retain more users, rather than just building it based on what you perceive would work for the customers.

MVP needs to demonstrate that you should build this solution.  The MVP experiments also need to answer the questions — will people buy it? If you can begin to build a user base of early adopters that are enthusiastic about your product and find it valuable enough to open up their wallets.

When you make iterations based on user feedback, you enhance your value proposition and increase viability.  At any stage when you go through Learn-Build-Test loop, your most critical assumption that you want to test, drives what features you build in the product.  And, this essentially is the core of MVP.

Sales: King of metrics

You need to measure the engagement of your product offering in an MVP experiment with prospects, free users or paid customers.

“Cash is king” obviously is the one part of that engagement that you like to follow. Measuring sales sounds most obvious and we tend to work on strategies of mass-marketing to ramp up this.

But, here is a catch,

In an MVP experiment, you need to measure both quantity and quality of the engagement.

MVP is not just about “GO – NO GO” test

MVP is not about just “GO – NO GO” testing, based on the amount of sales that you are able to achieve.

Because it is also about knowing why your customers are really buying and what part of the offering do they really like?  And, why?

Similarly, it is also about understanding why your prospects are not buying?  Or, why your customers or free users who signed up, are not excited about using it?

The answers to these questions would give you ammunition to build the next version of your MVP experiment.

To go forward on your starting up process, these insights are crucial, perhaps more critical than the amount of sale you close.

The goal during early phase

Your goal here is customer discovery.  With a goal of customer discovery, the initial priority is not sales pitching but learning.

This leads to the business model discovery.

During the start-up phase,  validating your assumptions about pain point, solution, value proposition and more is one part of the game plan. The other part of the game plan is learning and evolving your business model based on the discovery.

When you start up, everything about your business model is based on your hunches. Through the customer discovery, you modify your game plan based on you discover.

Solving a customer problem, in the early stages, is a collaborative effort.  You need customers’ perspectives, rather than your views about their perspective. One of the key principles of “Lean thinking” is to define value from the customer perspective.  It’s very important for you to get that definition right before you step up your efforts on your big marketing push.

You need to get in their head. You need to see how they are seeing it. Connect with them as humans. Empathise with them.

If all this happens, sales will be a definite spin-off.  You don’t need a polished version of your MVP for this to happen.

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Traction channel: Unconventional Public relations (PR)

unconventional PR

This blog article is based on the 3 Things This Week’s edition dated 17th May 2018. The theme of this edition is “Unconventional Public relations (PR)”, one of the interesting channels for startups!

 

Companies rarely use unconventional PR as their core channel, but when done well, it can yield amazing results. There are two types of unconventional PR: Publicity stunts and Customer appreciation. Unconventional PR is mainly used to build a strong, positive brand image, while publicity stunts are events or actions that are designed to get people talking.

There are many success cases:

  • com temporarily renamed a small town in the U.S. to their company name and earned publicity for creating jobs there.
  • WePay pulled a stunt to criticize PayPal for freezing user accounts. It placed a huge block of ice at the entrance of PayPal’s developer conference, converting disgruntled PayPal customers into fans of the daring startup.
  • Hipmunk sent custom-made luggage tags and a personal note to the first several hundred people who mentioned the brand on Twitter. Since the luggage tags were well-designed, many people used them when traveling and shared the brand on social media.
  • In its earlier days, reddit sent free t-shirts and personal emails to contributors.
  • com has sent candy, baked goods, Starbucks gift cards, and personal notes to say thank you to customers.
  • com held a competition called Build a Business with a cash prize for the winners.
  • Dropbox created an online scavenger hunt called Dropquest, also with prizes.

Unconventional PR can be cheap, yet yield a very high return.

Some tips to use this traction channel are: Do something big, cheap, fun, and original; do good things for your customers; and know that some stunts may fail, but that’s okay.

Here are this week’s 3 things on unconventional PR:

Thing # 1:  6 Unconventional PR campaigns and the Impact They Had 

Unusual PR campaigns are a risk to companies that attempt them. If they are successful, the buzz and positive coverage are wonderful. However, if the campaigns fail, the negative backlash is just as damaging. Some of the campaigns covered here are  – Healthy Choice, Macy’s Thanksgiving Day Parade, Taco Bell. Aqua Teen Hunger Force, Nathan’s Famous, and Oprah’s Free Cars. Some went successfully while others flopped.

Thing #2:  Guerrilla Marketing Tactics – 18 Top Case Studies and Examples  

When a guerrilla marketing campaign is executed successfully, you’ll probably hear about it. They’re risqué, highly visible, and attention-grabbing.  What distinguishes guerrilla marketing from mere public stunts is cost-effectiveness.  Guerrilla marketing is utilitarian, not extravagant. It’s using existing resources – and a lot of nerve – to inspire mass participation and make a statement.  In this article read the stories of 18 case studies that show that guerrilla marketing doesn’t have to be expensive to be epic and visible.  Key learnings from these case studies – keep your strategy fun, simple, and witty; physically travel to the influencers in your target communities; engage influential bloggers through mutual plugging; flatter your audience – always make them look good; make social phenomena the core of your campaign; be outrageous; dare your audience to test your services; create a viral video that is humorous and pokes fun at yourself; leverage existing communities, events and platforms;  and create controversy by challenging your competitors.

Thing #3:  Publicity stunts: a cheap trick for startups  

Publicity stunts sometimes backfire but with sufficient thought, preparation and not much investment, they can propel a startup to new heights. There are many ways that a publicity stunt can be kind to the company coffers and at the same time propel a brand to the next level.  With the right idea and execution, small can be epic. It’s always going to be tough being a start-up but you shouldn’t let your size constrain your ideas.  Here are some specific take aw ways for startups from this article – Publicity stunts succeed because they speak volumes about what the brand stands for: disrupting an industry and challenging the norm. People think that publicity stunts are done for publicity stunts’ sake but really the successful publicity stunts aren’t the ones that generate coverage; they’re the ones that generate business growth and are born from a brand identity rather than from one bold idea.  The question a start-up needs to ask itself is ‘can any other brand do this?’ If the answer is yes, don’t do it. It has to be a stunt that amplifies and magnifies what the brand does rather than what the category does.  Giving journalists something that they don’t have to research or analyze, but that still provides them with content, can work for both them and the startup.

 

I would be happy to know how you have used this traction channel for your business and if you have some lessons to share with fellow entrepreneurs.

Prototype or Proof of Concept (POC) or MVP?

prototype-poc-mvp

 

Marketing was, in the earlier years, applied after the product was completed. The result was, marketers are often forced to promote products that didn’t resonate, that didn’t really work. And the reason marketers didn’t contribute to product development was that they didn’t have any interest or the skills to do so.

New product building recognizes that when you focus on understanding your users and how they discover and adopt your products, you can build features that help you acquire and retain more users, rather than just building it based on what you perceive would work for the customers.

This has changed the way startup building happens and how experimentations to gauge the market response has become the center stage of starting up phase.

The whole point of these experiments is to build a path to product market and seek stronger market validation. That is the path where you see people working on the proof of concept, or building prototypes, and launching MVP along the way.

Many founders struggle to decide whether creating a proof of concept (POC), prototype, or minimum viable product (MVP), or a combination, is the right route for their project. Understanding and properly utilizing these 3 different methods will ensure that your product idea is received well by stakeholders and users, increasing the chance of success.

Why is name important?

A mistake we see too often in business is founders get mixed up over the terms – proof of concept, prototype, and minimum viable products.

Our mind works like a thesaurus and remembers the meaning rather than the individual words per se.  A name without an emotional, non-verbal association will not be retained.  A symbiotic relationship is necessary to embed it.

And without that connection, many people tend to rush into their execution plans, many times, using the wrong method for the wrong application.

If you implement either method in the place of the other, you’ll have problems.  Knowing what each term means, and when to use them, is quite useful for your product launch.

Proof of Concept (POC)

A POC is a smaller project, typically used internally rather than introducing it to the external people,  to verify a certain concept or theory that can be achieved in development.  This technique also provides you with a more accurate estimation of how long it will take to complete. In some cases, a POC may simply be research that leads to a concept of the coming project, or a more complex concept such as a mobile app checkout feature. The final POC doesn’t have to be bug-free but should ultimately demonstrate the functionality of the concept. This method allows you to assess project or feature success before jumping into development.

The POC should use minimal time and resources, and should only verify one part within the whole system. Therefore, you might have multiple POCs to test different components of your complete solution.

In short, POC is to show that an idea can be done.  It is a ‘yes’ or ‘no’ answer — if the answer is no,  product building will not move forward and you will go back to the drawing board.

Prototype

While a POC shows that a product or feature can be done,  a prototype shows how it will be done. A product prototype is a working and interactive model of the end product, communicating the design and navigation.

The model itself may or may not include functionality. When it comes to software, a prototype usually includes things like wireframes/screens, product specs, planned features, and user flows. If you have a good prototype, your developers are more likely to deliver the product that you imagined.

It’s presumed that there will be errors throughout the process but discovering these errors early on is the main purpose of a prototype, which will save you on costs in the long-run.

Testing the product with a prototype will trigger new ideas and confirm which direction to take with development. It’s far less expensive to rectify problems in the beginning stages of the project lifecycle rather than the end as it provides a closer examination and evaluation of the end product.

Minimum Viable Product (MVP)

MVP needs to demonstrate that you should build this solution. The MVP stage is the time to build a minimum version of the product, and share it with a maximum number of people. The MVP needs to answer the questions — will people buy it? If you can begin to build a user base of early adopters that are enthusiastic about your product, and find it valuable enough to open up their wallets, then you know you’re onto something.

MVP is an ongoing process of build ⟶ measure ⟶ learn. When you make iterations based on user feedback, you enhance your value proposition and increase viability.  At any stage when you go through Learn-Build-Test loop,  your most critical assumption that you want to test drives what features you build in the product.  And, this essentially is the core of MVP.  MVP concept was devised – to build a functional but “minimally-produced” kind of micro-prototype, ship it and battle-test our concept.   There are several ways in which you build MVP.

The bottom line

All of these three techniques can be used as a quick and less expensive way to validate a product.

Each method is individually advantageous when used properly whether testing key business concepts early, validating marketability.

With a better understanding of POCs, prototypes, and MVPs, you’ll be able to avoid common product development mistakes by testing for feature validity or market viability to ensure product success.

To sum up:

  • Proof of Concept validates “something people need” can be built.
  • Prototype shows how “something people need” can be build.
  • Minimum Viable Product validates that “something people need” should be built.

Traction channel – Public relations (PR)

traction- pr.jpg

This blog article is based on the 3 Things This Week’s edition dated 10th May 2018. The theme of this edition is “Public relations (PR)”, one of the critical channels for startups!

 

Public relations (PR) traditionally refers to a company’s public messaging of all kinds. In this traction channel, you deal with getting coverage from traditional media like news outlets, newspapers, and magazines.

There has been a shift in how the top media outlets operate. These organizations now scour smaller outlets for captivating stories they can present to a wider audience.  It’s better to start smaller when targeting big media outlets. For them, the direct approach is rarely the best approach. Instead, you approach obliquely. So, you find the blogs that TechCrunch reads and gets stories ideas from. Chances are it will be easier to get that blog’s attention. You pitch there, which leads The New York Times to email you or do a story about you based on the information they’ve seen on the news radar.

Once you have a solid story, you want to draw as much attention to it as you can. Here are a few ways to do it: Submit a small story to community sites (like Digg, reddit, Hacker News, etc.) with larger audiences. Share it on social networks to drive awareness, which you can further amplify with social ads. Email it to influencers in your industry for comment. Some of them will share it with their audience. Ping blogs in your space and show that you have a story that’s getting some buzz. These writers may then want to jump in themselves to cover you. Once your story has been established as a popular news item, drag it out as long as you can.

Here are 3 things that will take your know-how on this channel further:

Thing # 1: PR For Startups: The Art of the Press Release in 7 Steps

Most people know what PR – aka, public relations – is. Communicating you and your company’s message is an important part of expanding your startup business.  And of course, the immediate goal of PR is to generate press coverage, but by doing this effectively, you can ensure your business is mentioned in future articles even when you haven’t made an announcement; that is what owning a space is all about. So, as discussed, one of the best ways to generate press attention is by using a press release, which informs journalists and editors of the announcement you or your company is making.  To the uninitiated or those who aren’t comfortable writing, this may seem like a daunting task. Creating a press release and then pitching it to journalists can be broken down into just a few simple steps.  This guide will take you over the 7 steps to crafting a killer press release that won’t get ignored.

Thing # 2: How to create quotes for journalists or bloggers: 13 tips to get it right 

Getting your startup business covered is one of the most important things you can do to get your product out there.  Quotes are an integral part of a story. Not only do they make it more entertaining to read, but they offer third party views and therefore give integrity to a story and therefore, journalists look for getting quotes from people connected to the market or industry that the story is about. On the other hand, the sources of a quote in a story are perceived as authorities on the matter.  In other words, a quote from you in a media story puts your face to face with people who matter. It helps you and your startup get a stellar reputation. This article helps you work on refining your quote and also gives you some tips on how you can excel at it.

Thing # 3: PR Checklist for Startups

As your startup grows you may choose to hire a PR firm or consultant to help you with this traction channel. This is especially true if you chose to focus on PR as your traction channel. A good PR firm can help you: Figure out the best messaging and positioning to the press. Unify your message to the press. Do a lot of the legwork in setting up press engagements. If you have just this in your mind to go about this traction channel, this article gives you a great checklist on optimizing your efforts.

 

I would be happy to know how you have used this traction channel for your business and if you have some lessons to share with fellow entrepreneurs.

 

 

 

 

Why You Shouldn’t Sell Your Side Project?

side project.jpg

 

I’ve recently teamed up on a new project called GitHustle.  Working on it has involved working closely with developers who have side projects.

Their core strengths are coding, and they often prefer to limit the scope of their work to building software.

Some try to learn basics of building a business, while others try to find a partnership with someone who can help with the business side of things.

There are even a few that prefer coding so much, that they build products in an attempt to sell it off before it’s even live.

Being a big fan of early startup building process, I do have a bias in advocating developers to opt for running a project, rather than selling it as a software asset.

Here are some of the reasons why you should agree with me if you are a developer working on a side project.

You Make More Money.

Making extra money is definitely one of the main goals when you are working on a side project.  Sure.  When the side project is sold off, you get cash from the buyer, and you can move on to something else.

But, there is a limit to which you can scale. How many projects can you build simultaneously?  How many software can you build in your lifetime?

When you build a business around it, the sky is the limit when it comes to scaling it.  You have the ability to generate recurring revenue and passive income.  At the end of the day, if your business makes a profit every year you can even sell it off as a business.  Businesses make a lot more money than hacked together pieces of software and can result in huge buyouts, especially compared to the alternative of selling the software alone.

This stems from a lower value that would be realized if its assets were liquidated compared to when you build a business and sell.

The difference between the going-concern value of a business and its liquidation value is known as goodwill. Goodwill consists of intangible assets, such as brand names, trademarks, patents and customer loyalty.

You Learn More Stuff.

The software landscape is changing daily.  With new innovations, tools, and technology being released every day, how will you keep up?   How can you differentiate yourself?

Simply put, you will need to find some avenues that give you that extra edge. Building a business from a side project just offers that.  You gain experience by doing and this is one of the most valuable aspects of a hiring employer.  They typically ask themselves, “Do they have experience?” and “Can they do the job?”.  Building a side project shows them just that.  You not only have the experience, but the skills and know-how to get it done.  Not to mention, you show them your go-getter attitude while you’re at it.  Huge leg-up on the competition.

You Gain Priceless Experience.

Those of us willing to explore entrepreneurship are realizing it’s becoming the safer path. Working in an institution isn’t necessarily bad. We just need to realize that job security is a thing of the past. By definition, an entrepreneur can adapt and thrive in rapidly changing environments, so familiarizing yourself with those behaviors is the smartest strategy for long-term success, whether you plan to freelance, start your own business, or work for a bigger organization. Everyone should develop entrepreneurial skills. Advanced problem-solving, decision-making, creativity, and content-creation will be the most valuable disciplines in the workplaces of tomorrow.

And the act of building a product, launching it, and marketing business is arguably the best training program for excelling in the entrepreneurial economy. If you want an unfair advantage in life, it’s time to start building a business.

You Will Be Rich.

Working on a side project feels great, but most of us want more than that. We eventually want money!  We all want to be rich, but what does that really mean?

Having money feels great. But money is a tool, and nothing more. Don’t confuse it with the end-goal. Getting rich isn’t just about hoarding piles of cash in your bank. Here are some other ways to get rich: Gain Knowledge, build relationships, have experiences, build products you love.

Flexing the idea muscle is just like flexing any other muscle. It gets stronger with repetition. With enough practice, you’ll solve problems more easily, write more effectively, and think more freely. Better productivity, better opportunities, and a better income will then follow. You can flex your idea muscle by deliberately focusing on it.

Building a business from your side projects forces you to flex your idea muscle and gain knowledge. Throughout this process, you’ll inevitably reach out to awesome people.  And when you meet incredible people, the richness of your life—and your future opportunities for growth—are bound to expand.

You Gain Credibility.

Most people talk the talk, but very few of us walk the walk. A live, running project provides tangible evidence that you know what you’re doing. It establishes you as an authority.

The truth is that building a business requires critical thinking and learning. Even if you weren’t an expert going in, you’ll be an expert by the time you’re done. Establishing credibility can direct people to other products you create. You’ll also be more likely to land speaking gigs, become a contributing writer for various publications, appear on podcasts, etc.

It’s a virtuous cycle that keeps feeding on itself.

You Grow.

The act of building a business carries immense personal value. Similar to exercising, you won’t feel the benefits unless you practice consistently—but it’s worth it. Here are a few of the byproducts:  A business builder is a great communicator, creative thinker, and an adept organizer.

Sharing your knowledge, your thoughts, and your creativity with the world creates value. Do you want to be the person on the stage or the person in the audience?

When you put your project out there publicly, you’re demonstrating your ambition. You’re sharing your knowledge. You’re sharing your passion. You’re sharing yourself.

If you refine this craft as you go along, you are growing your personal stock significantly.

 

If you are still not convinced to run with your side project rather than selling, then talk to me.

 

What makes a customer buy into a new idea (or a product)?

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The answer is – solving an immediate, known pain-point for the customer.

This is all about the connection between pain point of a customer and the solution that your idea or product offers to solve it.

The psychology behind the human pain

At the most basic level, people typically spend money on two things:

  • First, they readily spend money to combat pain.
  • Second, they spend money to pursue pleasure.

Pain and pleasure, are listed in that order for a reason. All things being equal, the acuter the pain or problem, the more likely it is that customer will pay to buy a solution.

Unless you solve one of the top problems your target customer is experiencing you’re scre*ed!

From an entrepreneur’s perspective, this means that it’s often better to be in a “pain business” than a “pleasure business.” There is simply more staying power in pain-solving businesses.

Painkillers, Vitamins, Oxygen Or Vaccines: Which One Is Your Product?

Painkiller products:  Two words…  “MUST HAVES”, yep, these type of products fall under the essentials category.  And another common characteristic of them is that they provide an almost immediate relief.

Vitamin products: The main alternative to painkiller-products?  Vitamins (aka “as nice to have”).  Said differently, this kind of products are not bought out of sheer necessity but rather because of a desire to fulfill some non-critical individual preferences.  Such examples could be things like jewelry, watches, productivity tools, dating apps, etc.

Vaccine products: Which as you might imagine are goods with strong preventive nature such as insurance products or health check-ups.

Oxygen products: Not hard to guess what’s that about, right?  That’s correct. Are products that, as ‘the experts’ put it, “you can NOT live without”…  Insulin (for diabetics), revenues (for companies), or air-conditioning (for ‘Middle Eastern people’ during summer) could be some examples here.

Why do users pay?

All (or most) money made by a business, by fair means, comes from real users.  Users only pay for something that solves a problem, they have, in a really good way.  It’s not enough to get users to pay once – for a business to really grow users has to pay again & again and they should spread the word about you. The only way to accomplish this is to create a high-quality solution for a problem that’s important for users.  And, that’s possible only when you have a high-quality understanding about the pain point in the first place.

However, there is one more thing. Just because a problem is painful, urgent and on top of peoples’ minds don’t make it a winner.  Maybe the competition effectively addresses that problem and people are happy with what’s out there.  For many people, even painful and urgent problems don’t justify the decision to open up their wallet.

Implications for building solution

To create a high-quality solution,  you really need to care deeply about a problem. You should care so deeply that you want to solve it not only for yourself but for everyone in the world. You should care so much that “you get joy in your customer’s joy” and “you feel pain if your customer is in pain”. Without that connection, it won’t work.

Try to articulate the pain point that you want to solve in less than half a sentence. If you can articulate the pain point that you are solving, the more odds are that you will get to know more about it as you start working on it. Founders who need paragraphs to describe this demonstrate that they haven’t got this right yet.

To you want to take that test to see if know the pain of your customers?

Traction channel – viral marketing

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This blog article is based on the 3 Things This Week’s edition dated 3rd May 2018. The theme of this edition is “viral marketing”, one of the most important and sought-after – dream channel for startups!

Viral marketing is the process of getting your existing users to refer others to your product. In the context of startups, going viral means that every user you acquire brings in at least one other user: that new user then invites another user, and so on. This creates true exponential growth. Though difficult to sustain, it’s been the driving force behind the explosive growth of consumer startups like Facebook, Twitter, and WhatsApp. As great as your product may be, true viral growth is unlikely. However, this channel is so powerful that it may still be worthwhile creating referral programs where your users can refer others to your product.

There are different kinds of vitality and ways to go about using them:

  • The oldest form of vitality occurs when your product is so remarkable that people naturally tell others about it – pure word of mouth. Word of mouth drove Facebook’s early growth among college students before they started building in more explicit viral hooks (email invites, adding your friends via address books, etc.). Word of mouth also causes many movies, books, diets and TV shows to take off.
  • Inherent vitality occurs when you can only get value from a product by inviting other users. Skype and apps like Snapchat and WhatsApp also fall into this category. This type of virility comes with the advantage of “network effects,” where the value of the network increases as more people get on it.
  • Other products grow by encouraging collaboration. In this case, the product is still valuable on its own but becomes more so as you invite others. Google Docs is useful alone, but it is far more valuable when used collaboratively.
  • Another common case is to embed vitality into communications from the product. Hotmail put a “Get a free email account with Hotmail. Sign up now.” as a default signature and Apple similarly appends “sent from my iPhone.” As a result, every message sent spreads the word about the product.
  • Products can also incentivize their users to move through their viral loops and tell others about the product. Dropbox gives you more space if you get friends to sign up. AirBnB, Uber, PayPal, and Gilt give you account credits for referring the product to friends.
  • Companies like reddit and YouTube have grown virally by using embedded buttons and widgets. On each video page, YouTube provides the code snippet necessary to embed a video on any website.
  • Another type of viral loop leverages social networks to attract new users to a product. In this case, a user’s activities are broadcast to their social connections; often more than once. If you’ve spent any time on Facebook, we’re sure you’ve seen your friends liking articles on other sites, playing songs on Spotify, or pinning content on Pinterest.

Here are this week’s 3 things on viral marketing:

Thing #1: Top 3 Viral Marketing Campaigns to Take Inspiration From

Very few people know what goes into making a viral marketing campaign successful until it starts to spread. There are, however, some brands, who have understood what makes the audience tick. In fact, there are some consistent elements in such campaigns, which brands can follow. Let’s take a trip down memory lane and have a look at the top three examples of viral marketing campaigns over the past few years. There is a lot you can potentially learn from them as they exactly know how to resonate with the target audiences.

Thing #2: How to build a referral program inspired by Dropbox

Your existing user base is probably one of the most powerful user acquisition channels. People always tend to listen to recommendations from friends that’s why word of mouth is so powerful. The point is to get your users to talk to their friends about your product. In other words, create a viral loop. Users usually need a small push to start telling their friends about how great your service is. That’s why it’s 100% important to incentivize your users to invite their friends. This is what Dropbox did and boosted its viral growth – Dropbox went from 100,000 to 4,000,000 users in 15 months. Along with Dropbox, many more companies started a referral like this. Airbnb, Instacart, Lyft, Teespring, Uber and many more.  Read this article to know how you can build your own Dropbox-style referral campaign.

Thing # 3:  Why Niantic didn’t need marketing to make Pokémon Go viral   

‘Pokémon Go’ – a humble app game with a simple idea behind it, that had taken the world by storm through viral marketing. It seems at first that its instant success is credited solely to 90’s nostalgia, and rapid word-of-mouth spread, so what can brands who don’t already have a strong presence in pop culture learn from Pokémon Go’s marketing success? The company behind Pokémon Go, Niantic, has done very little to promote the game since it launched. Beyond a handful of release notifications from the official Pokémon Go Twitter account, no TV commercials have been commissioned and in-app advertising is minimal. Niantic has instead relied on word-of-mouth to promote its take on Pokémon, particularly in the form of unofficial viral pictures, videos and social media posts shared online (internet memes) that reference or parody the game. This user-generated content ensures the title is on the lips of the masses, even if many of them haven’t even played it yet.  Read on to get more stories on Pokémon’s viral marketing campaign.

I would be happy to know how you have used this traction channel for your business and if you have some lessons to share with fellow entrepreneurs.

 

 

 

What is the best way to describe “traction” in your pitch deck?

pitch-traction

A typical pitch deck is used for raising funds for your startup.

A good pitch deck tells a compelling story that follows a logical sequence and shows strong business model validation from experiments and research data.

Why is describing “traction” important?

Traction makes a startup fundable.

Most investors care most about actual traction in a seemingly large market. Traction is a measure of your product’s engagement with its market, a.k.a. product/market fit.

In order of importance, it is demonstrated through profit, revenue, customers, pilot customers, non-paying users, and verified hypotheses about customer problems. And their rates of change.

A story without traction is a work of fiction.

Investors want to invest in startups that will be successful with or without them. And those who succeed don’t wait for investors before they begin to create. They can’t wait to carry their idea forward.

What are the challenges?

Your idea is no more than a bunch of assumptions or hunches about most of the business model, to begin with. Your discovery on getting a sense for theories against reality is what will demonstrate. the amount of customer adoption.

The key is, therefore, to get a sense of customer adoption for your idea when you do not have a product yet.

Incidentally, even when you have a product that investors can see, use, or touch, this may not be enough. They will want to know that there is product market fit and that the product is experiencing actual growth.

What are the solutions?

What does this mean for your fundraising plans? Traction gets you a greater interest from investors, shorter cycles, and better terms.

Your idea’s or product’s market engagement is the key to get investors interest.

In most of the cases, you don’t need much money till you get some traction. Try and get some traction before you start fundraising process.

MVP experiments or small and make smart micro-experiments to test your assumptions will get you to show your idea’s engagement with the market. Other option, when you do not have an MVP, is to go for customer discovery interviews that would uncover if your idea is really matching a pain point for some customers.

How do you present it?

“If you got it, flaunt it”, would be the best way to talk about the traction slide on your overview. In fact, show it early, often since in the absence of other stronger parts of your business, traction trumps theory.

There are many ways an entrepreneur can prove traction to an investor.

Progressively, % growth is the easiest to show if you have small numbers or have numbers other than revenue. The next best is to show the revenue curve (up and to the right hopefully) followed by revenue with some key snapshot metrics.

The thing you are trying to do with the traction slide is to prove that you have validation in the market. Hence, showing traction in the short term with users, or longer term in terms of growth is a good start, but traction with revenue and key metrics is the best place to be.

If your model shows # of advertising revenue spend on your site (for e.g. media property, blog, etc.) then, ad spend on your site with key metrics about user engagement, etc. make sense. For most SaaS businesses, though, showing revenue over a decent period of time (1 year preferably) or at least since the time you started getting revenue along with growth rates helps.

Absolute revenue graphs are good as well, but it’s better to show % growth and keep the numbers private to be shared during your operating plan discussion. You don’t want to give any of your competitors or investors in your competitors, any knowledge of the strength of your business.

Sometimes when your business is fairly recent, and your product depends on user growth initially, not revenue, you could use either the monthly signup graph or bar chart. Above all, focus on your traction slide headline, once you decide which metric to show. The title of your slideshow tells the user about an exciting development in your business from a traction standpoint.

So, instead of using words like traction, revenue, signups etc., it would work better if you say:

  • 40% growth in user MoM, for 8 months
  • 212% growth in revenue YoY, at $500K
  • $150K revenue, 97% Margins, 40% growth in users MoM

That way, investors got the key takeaway that you were trying to convey.

Take away from this

There can be no doubt that the more traction you are able to demonstrate, the more credible you appear. An entrepreneur who pitches an investor without any traction, is likely to be told come back when they have some.

Ultimately, the message is clear. Traction is extremely important to investors so it needs to be important to you. If you want to raise capital, don’t just tell an investor you have a ‘great idea’, tell them you have traction.

What is the best way to describe a “Problem Statement” in your pitch deck?

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Pitching isn’t only for raising money—it’s for reaching an agreement, and agreement can yield many good outcomes including sales, partnerships, and new hires.

A great pitch has two goals: establishing that the opportunity is big and showing that you can pull it off.

A good pitch deck tells a compelling story that follows a logical sequence and shows strong business model validation from experiments and research data.

Why is describing “problem” important?

Ten is the optimal number of slides in a PowerPoint presentation because a normal human being cannot comprehend more than ten concepts in a meeting. One of these 10 slides is one slide about pain point.

This is probably one of the most important slides in your deck. The reason why Dave McClure advocates, “pitch the problem, not the solution,” is because too many entrepreneurs try too hard to sell their solutions without educating their potential investors on what the problem is.

In this slide, you will need to address the following questions as simple and concise as you can be:

What is the problem?

How do you know if it’s a problem?

Who are you solving this problem for?

How are they trying to solve the pain currently?

You need to understand the way your company solves the problem – by focusing on the emerging of the problem through identification of the reasons behind its emerging or by focusing on the existing inadequate solutions to the problem.

What are the challenges?

The problem, however, comes with the presentation of the Problem-Solution equation. One of the biggest mistakes that entrepreneurs make in regards to this topic comes from the fact that they tend to focus on the solution before they explain the problem. This is a critical mistake and can ruin your pitch.

Explaining a solution to a problem that is not clearly identified and not completely understood by the investors and the audience makes absolutely no sense. Even if you have the most effective solution, nobody will understand the need of it, if the problem that it solves is not explicitly defined.

If the investors don’t understand the problem, its scale and the group of potential customers that face this problem, they will not understand why solving this problem is that important and why anyone will pay for it.

 What goes in “pain point” slide?

Think of a problem statement as a proof marking.

Try a story about a person who has a specific example of the problem. Be concise but not bland.

One of the key things to talk about in your problem statement….is why the issue is a problem in the first place? For the person reading it to completely understand why the solution is necessary.

Lead with the need

In order to grab the attention of your audience from the outset, immediately identify the business need you are trying to address.

Talk about the problem & current solutions – What need do you fill? For whom? What are the other solutions? Who else is already doing this, and how are they going about it and what are they not getting right or doing wrong?

The message that you want to give to your investors is that you have not only identified a real “pain” that is worth solving but also are passionate about it and that you have got a lot of insights about it through your conversations with the prospects.