Most of the time, at the beginning of the path to create an innovative business, once an idea has come to mind, the next step is to seek to develop a product. Too much focus on building a product and neglecting the important questions about who is going to use the product, is the Achilles heel of most of the startups, especially in Iran.
If there is no one who buys and uses the product or service, all the efforts of the team will be ineffective and there will be no commercial gain. And even so, if the number of these people (customers) is not enough, business growth will be disturbed.
For two reasons, generally startup founders put with too much focus on product development:
- Sitting behind a desk and thinking and coding is easier than finding a customer.
The reason for this can be shyness, or fear of rejections and hearing “no” or sometimes laziness. In any case, although sitting behind a desk for most people feels secure, but it’s not actually a safe place to see the business world.
- Startups compare themselves with big companies.
Big companies are making most of the noise. Startup founders are listening to these noise and imaging how they can make such noise with their own business. It is a mistake that members of a novice startup team, regardless of the organizational aspects of that big businesses, compare their product with the products of market rulers, and imagine that if they are able to offer more features in their products or services, people will come to them. A better business, does not mean a better business.
Such unbalanced focus on product relative to the market, if also not welcome by investors. Because the investor will not be willing to invest in something that can not be proven in the market.
What’s the solution?
Various methods have been proposed in the field of Customer Development that reading and using them can be useful.
A better way is to allocate time and focus to distribution methods, alongside the development of the product. Additionally, you need to fundamentally change your perspective on product development, and put yourself in consumer’s shoes rather than competing with what big businesses has brought to the market.
In other words, the development of the product and its distribution channels are equally important, and equal time should be allocated for each one. The authors of the Traction book have named it the 50% rule. This means that the startup team should allocate 50% of its time to product development and 50% to attract customers and create traction in the market.
This rule due to the two reasons mentioned above, it is not attractive for startup teams because it reduces product development speed although it does not slow down the speed of product delivery to the market.
Using this rule, we can learn a lot from the first-time users and the channels we use to get the customer, and apply these learnings in the development of future releases and evolution of the product. Things like personality or lifestyle of the customers , What is the best market segment to focus on? Which types of customers can be attracted more easily? And which customer attraction channels are more efficient.
A famous example of this which the information is publicly available is Dropbox. At the beginning after developing the first version of the product, the DropBox team tested search engine marketing channel and realized that they did not get any good results. They spent $230 to attract a customer who would buy a $99 product! So they went to viral marketing methods and launched a very successful referral marketing campaign.
Postponing market validation and waiting until the team develops the product perfectly, leads into wasting of time and resources and putting the startup out of the understanding of market and customers, and efficiency of distribution channels.
Read more: When Painkillers Don’t Work
It is your turn:
What do you think about the 50% rule? How could it be useful?