Being at the ground floor of a startup is the best, not that I’ve ever come in at a later stage, but having gone …
Being at the ground floor of a startup is the best, not that I’ve ever come in at a later stage, but having gone through the full lifecycle of one startup I can vouch for the beginning being the most exciting and romantic period. You define the product, engage with users, research technologies to use to build your product, and build the company culture. It can be daunting to take on all of these tasks, which is why it’s important to build momentum slowly. Reflecting on my experience at Mint.com I’ve realized that one of the key components to its success was momentum. The momentum that Aaron Patzer and the rest of use Minters kept building over time (time == 4 years, not the popular myth of 2).
There are a couple other companies that have had this natural progression as well: Twitter and Facebook. But I’ve also noticed more than a handful of companies that started around the same time as Mint and remained flat over the years or closed up shop because they couldn’t get traction or generate revenue.
How do you go about building momentum and keeping it up?
1. Start slow and understand the lay of the land.
As an entrepreneur and engineer it is very tempting to want to build something quick and fast. There is also a lot of talk of “failing fast”. If you expect to fail fast, what’s the fallback? You’ll figure it out as you go, right… Call me cautious but I believe in pipelining ideas especially when my own funds and time are at stake. To create a pipeline of ideas you have to understand the entire lay of the land. Take your initial idea peg it to an industry. Start by doing an in depth analysis of the major pain points in the industry, which means asking and answering the following questions:
- How big is the industry? Are there multiple verticals or other industries that are tangential?
- What are the major pain points? How long has each been in existence? How are they currently being solved with and without technology?
- Who are the primary competitors and who are the secondary competitors? Who are their customers? And how do their customers feel about them? And why do customers use them? Why are they the incumbent? How do they make money? How have they positioned themselves against each other?
It usually takes a couple a month or more to complete this market analysis phase, and its worth the effort because it makes you a lot more knowledge in terms of figuring out where you can add value and what the trade-offs are.
2. Put aside your engineering and entrepreneurial ego and learn to empathize.
Sure you’re a rock star coder, and you can get a web app running in no time, but coding at this point is a bad idea. Putting a web app in the hands of customers leads to more comments and questions like: “I don’t like this interface. Why is this button green? What’s with all the bugs?” And you’re left thinking these people don’t get it my product rocks! Or wow I wasted a lot of time writing code…
Instead you want to start having conversations with your customers. Talk to potential customers and walk them through the problem space you are exploring. Explore all their problems and then explore all their current solutions. Tell them you’ll come up with a solution on paper and would like to try it out on them. Unlike code the great thing about paper is that it’s 100% bug-free! The added roughness of a paper prototype forces the user to think in terms of workflow and interaction instead of the design aesthetic, which is much farther down the pipeline.
Finding customers who will be evangelical about your product – early adopters or influences – also helps with building momentum.
3. Create a product roadmap.
After talking to customers and getting feedback from paper prototyping you have to think like an engineer, which means making trade-offs. You are constrained by time, money, and resources (hands to code). You have to figure out how you can add value to customers given these constraints. Come up with a 1-3 year product roadmap that lists all the features and even includes a first phase revenue model. You might end up abandoning the roadmap entirely, but its purpose is to serve as a vision for your product and company. Use it as a reference when talking to potential customers, employees, and investors. That’s how you get initial engagement and continue to build momentum.
3. Measure Progress every week, month, and year.
Once you’ve launched it’s easy to get bogged down in the day-to-day affairs of running a startup: firefighting, interviewing, fixing bugs, handling user issues, etc. While these are all important tasks that have to be accomplished you have to be thinking big picture as well, which means measuring new traffic, user engagement, retention rates, and revenue vs. burn rate. To keep up the momentum you can’t solve each of these issues on your own. You have to broadcast these numbers to the rest of your team. The more you broadcast within your startup the more people think about solutions.
Post launch is where you can start to lose steam, because problems start to arise that were both expected and unexpected. You have to charge through it by prioritizing issues instead of solving all of them at once, and being happy with incremental progress. Focus on distribution (new users), engagement (keeping existing users), and revenue (making money off of all users).
4. Timing
Sometimes a series of events contributes to your success. When we started Mint.com the recession was looming, and figured it might make fundraising difficult, but it would also force people to become more aware of their finances. We got the best of both worlds: funding and frugality. The recession was a momentum booster, because it led to more press and coverage. You can’t bank on making bank this way. Instead, stay informed and learn to anticipate industry trends, events, the state of the union, and how they might affect your startup.
5. Don’t stop to smell the roses.
When you’re users tell you they love you its easy to want to bask in the glory of it. Enjoy the moment, literally. Then go find the haters, on-the-fencers, and non-believers and try your damnedest to convert all of them!
