Inspiring startup stories of the top 10 fastest growing companies in Inc 5000 mostly don’t follow the conventional startup script. Most of them believed in the customer-funded business model by solving a compelling problem, or by designing and delivering delightful customer experiences. Raising capital from the market with an idea is a difficult proposition. In Harvard Business Review journal John Mullins writes about how VC funding can be bad for startup business health and he quoted
Fred Wilson of Union Square Ventures “The fact is that the amount of money startups raise in their seed and Series A rounds is inversely correlated with success. Yes, I mean that. Less money raised leads to more success. That is the data I stare at all the time.”
Create Customer Value Proposition
Each year more than a million startups are coming up with their ideas and hardly few hundreds get funded. There are very few lucky companies like Airbnb. John Mullin in his book “The Customer-Funded” mentioned that in the good years — only about 1,500 U.S. startups get funded by venture capitalists. Successful startups test their Customer Value Proposition to understand their customers. Once you have designed a Customer Value Proposition and Business Model your next action should be — design your Customer Discovery Strategy to identify early adopters.
Identify early adopters
In today’s market, companies like GE are thinking like startup selling their businesses and concentrating One Thing. According to CEO Larry Culp “spinning out the health unit makes sense because it allows the company to double down on its core industrial and energy businesses. In his book, “The Four Steps to the Epiphany” Steve Blank narrated a story startup story of FastOffice and its creator Steve Powell. In the year 1994 Steve Powell conceptualized a multifunctional product — FrontDesk. A single device with fax, voicemail, intelligent call forwarding, email, video, and phone. With this product, he envisioned to sell to 11 million people with small offices or home offices. According to Steve Blank — Steve’s technical vision was compelling, and he got $3 million first round funding and later on, he got another $5 million. After 18 months of FastOffice was ready with its product called — FrontDesk. However, FastOffoce failed to ramp up sales revenues because the FrontDesk was highly priced and very few small offices could afford the product. Here is what went wrong — They built a very compelling product without testing the Customer Value Proposition and discovering the early adopters. Most startups try to build their go-to-market strategy before even testing the early adopters’ real pain. As an innovator, the first action should be identifying early adopters who have the problem you are looking to solve. Early adopters always feel the most pain.
Discover the customer
Whatever may be the founders’ vision of a new product or service it is imperative for founders to do The One Thing — to test the customer discovery — meeting the customer and build personal connects to validate the hypothesis. With a focus to get maximum traction of customers, as a startup, you have to ensure that you are meeting your target customers. It is essential to know their demography and archetypes and the best way to find them. You need to be in front of customers to learn enough to go out and meet your customers to validate your problem solution fit. As a founder, you should not outsource or assign the One Thing to your employees — “Customer Discovery”.
