Measuring a startup is a difficult thing. Especially when you are in the pre-revenue stage. Sure there are strategic milestones such as prototypes and product releases but these in themselves will not indicate success; only the result of effort.
You need to develop measures that indicate how others react to what you are doing. We call these validations. Here is a short list:
- Customer Feedback – have you talked with 100 or more customers about your innovation?
- Paying Customers – For the startup, these are supreme indicators that people will pay for what you are offering.
- Key Employees – is your value proposition attractive enough to bring on highly qualified people who are willing to work for upside?
- Partnerships – You won’t get there by yourself. Do you have relationships with value added partners?
- Advisors – Are there world class people offering their time through coaching and mentoring?
- Investors – Has anyone shared your risk?
You should factor validations in your key measures and track them as carefully as any product development activity or financial data. If the validations don’t come, you are on the wrong path.
Blogging Gazelle is published daily by Shawn Carson
“…What you accomplish through the efforts of others is a measure of your leadership ability. What others do to substantiate your efforts is a measure of your success.”
The first two parts of this quote come from the leadership principles in the books of John C. Maxwell. There is a third aspect that indicates the success of the effort and that is how others respond. We call that a validation.
You can have a masterfully conceived plan and you may communicate it flawlessly to your team but if your customers don’t buy, your business will fail. So along with tracking milestones, you need to identify and track validations. They are the true measure of success. A brief list of categories include:
- First customers
- Attracting key staff
- Attracting advisors and mentors
- Fund raising
- Attracting key partners
The thing about all of these is that these people have to choose to be a part of your company.
BloggingGazelle is published daily by Shawn Carson
Be thankful for those who signed on to your dream. Your family, customers, employees, partners, investors, advisors and mentors.
They didn’t have to.
Thanks for reading.
Blogging Gazelle is published daily by Shawn Carson
When validating your value proposition with customers, its tempting to talk all about your product and what it will do and how great it will be.
When meeting people at a social mixer, it’s tempting to talk about your accomplishment and your new startup and how it’s going.
When giving a presentation, especially when you have the chance to receive feedback, it’s tempting to defend your ideas or try to better explain what you tried (and failed) to say.
Here’s the thing…
You are just like the rest of us on the planet. You like to hear yourself talk. But when you realize all the valuable information you can get by simply shutting up and letting the other person tell you things, all of the sudden your world will open up in ways you never imagined. The other person wants to talk as much as you do. But they are giving you something you can’t get from your perspective; their perspective.
The customer will tell you want’s important them. You don’t have to…
The other person will tell you what they do for a living and how they might be able to help you, if you simply show interest in them and regard their business card with respect.
That “encourager” who hears your pitch for the first time, will tell you directly if you didn’t make something clear. You’ve heard your pitch before and they haven’t. First impressions ARE important. If they didn’t get it, that’s your fault.
Happy Labor Day!
According to CBS, it costs a quarter million dollars to raise a kid to the age of 18. Check out the cost breakdown: http://www.cbsnews.com/8301-505144_162-57598411/what-it-costs-to-raise-a-kid-$241080/
Tack on another $100k to get them through a public university. If you did a full financial analysis complete with a discounted cash flow and IRR, there is absolutely no break-even point.
But that’s not why we have kids.
“All financial projections are lies.” So goes the Venture Capital joke. They have to be believable and pass the sniff test when you tell your story but no one can predict the future, nor can we predict customer behavior. There will be a time when you must crunch the numbers, tweak the models, build the spreadsheets and analyze the scenarios.
But in the startup phase, no amount of analysis will justify the investment. That will come from customer validation so run the numbers and then, as Guy Kawasaki would say, “go make meaning”. If you find a way to ease the pain and create delight for your customers, the numbers will follow.
The message is for backpackers. It’s built on the Boy Scout motto, “Be Prepared”.
You can’t anticipate, nor can you control, everything. You can identify risk and execute to mitigate it. You can’t eliminate it.
When things change unexpectedly, you adjust, or you stay put and wait it out. SOmetimes you pull out.
Benchmarks and milestones can help.
So can being extremely frugal with your resources.
You don’t get to decide if your innovation will be successful. The market does. Don’t you think you should ask them what they want to pay for?
Check out the post in outofthegarage.com
Choose your partners carefully. Good ones will help you because your interest is theirs. Treat your negotiation opponents with respect. They will be your future partners, investors, licensors.
The same goes with customers. It takes less to keep one than to get a new one.
This particular non sequitur applies well to market validation. When it comes to understanding customer pain and how your customers would use your product…or even buy it, there’s really only one way; TALK TO THEM!
Survey’s won’t get, interns won’t get it, Google won’t get it.
You have to have a goal. Jim Collin’s calls it a BHAG (Big Hairy Audacious Goal). It need to be big. It needs to be compelling. It needs to be attainable. This is true personally and it’s true for the business.
Choose your BHAG wisely grasshopper…