How to build a successful start-up
I started this series a late last year with the 1st blog on Generate an idea (but remember that it’s worthless) followed by In-depth observe (not interview) 5-10 potential customers, including 2-3 “extreme users” and then Document your Plan A and most recently Identify the riskiest parts of your plan. I have copied the intro to the series directly below and you will then find part 5: “Systematically test your plan” – the subject of this post
Original intro to the series:
The goal of a founder who wants to create a big company is to find product/market fit in a large market – one that is at least £0.5B/$0.75B in size. Much smaller than that and a venture investors won’t be confident that he or she will get 10x on their investment (and note that it doesn’t matter at which stage you’re working, as if an early stage investor like us, we need to believe that we will be able to sell you onto a Series A/B investor who also has to believe he or she can get 10x and so on). It’s not right all the time, but it’s a rule of thumb.
The Lean methodology, thought up by Eric Ries and then evolved by many others, is the best way to work through the early stages to product/market fit.
We like Running Lean by Ash Maurya for a clear outline of what this entails.
What Ash excludes from his thinking is in-depth customer observations, as developed by IDEO, the design firm founded by David Kelley in Palo Alto, right next door to Stanford University, my alma mater, and a clear definition of “strategy” for the start-up.
(Overly) Simply put, we think a founder needs to take the following steps:
- Generate an idea (but remember that it’s worthless)
- In-depth observe (not interview) 5-10 potential customers, including 2-3 “extreme users”
- Document your Plan A
- Identify the riskiest parts of your plan
- Systematically test your plan – the subject of this post
- Get to Release 1.0
- Reach product/market fit
- Define your strategy (Goals, Scope, Competitive Advantage, Logic)
I will write a bare-bones explanation for each of these 9 steps with as many links and references as I can so you can read better writers’ thoughts on the subject.
And please note that at some point on this journey you need to find a co-founder. It’s pretty rare for a solo founder to manage it all on his or her own. It happens, but it’s rare. I’ll write about that as an additional point 10:
10. How to do the co-founder thing
And the last thing that you absolutely need is a great culture.
11. What is a great culture?
Here we go:
5. Systematically test your plan:
Create an MVP – a minimum viable product (bold intended)
- Focus on the number 1 problem your customer has (and in some cases you may have the bandwidth to spend some time on problems 2 & 3, but assume not). Focus is one of the key success factors of early stage startups
- Don’t add extra features – just get it out there; ignore “nice to haves”, those features the user would NOT miss if you took them away (you can ask your test users)
- Focus on learning, not optimization – every test you implement must have feedback that you can act on
- DO MORE FASTER a la TechStars
Talk to/observe customers often (ideally take someone along with you, as 4 ears & eyes more than 2x better than one pair)
- You’ll learn loads & they’ll be impressed you are so interested in them
- Frame your conversations with your customers around learning, not pitching – seek their advice. People love to be asked their advice
- Ask for advance payment or partial payment and provide them with a money-back guarantee. If it’s a real problem you are fixing, they should be willing to pay – it’s a great signal for you and for investors
- Stop interviewing when you aren’t learning anything new from the interviews/observations (you probably don’t need to do more than 20 or even 10 interviews for this to happen)
- Read Rocket Surgery Made Easy by Steve Krug to really learn how to conduct MVP interviews
If you can’t convert a warm prospect in a 20 minute face-to-face interview, it will be much harder to convert a visitor in less than 8 seconds on your landing page.
 Running Lean, Ash Maurya; O’Reilly. Page 127