It’s true that the cost of starting a tech startup has plummeted over the last ten years; now all you need is a couple of talented people, internet access and a laptop or two. Once upon a time you would need servers, offices, expensive hosting and bandwidth, and lots of time to write bespoke code from scratch. In years gone by you would build the product with every feature you can imagine before you launched. Minimum viable product wasn’t even on the radar.
So now it’s easy right? Anyone can start the next big tech startup, no problem. Well I think this brave new world has created a new barrier and that barrier hits you a bit further into your startup journey.
Getting started is relatively easy and the number of new startups being created across the world shows this. We have millions more startups than we did this time ten years ago, particularly in the case of tech startups.
What’s the problem then?
You can get started, build a minimum viable product, test the idea with early beta testers in quick time. The biggest barrier facing startups today is acquiring customers. There is so much noise that getting your message (signal) through is becoming increasingly more difficult and expensive. If you are a Business to Consumer (B2C) startup, then you need a budget of hundreds of thousands to get any sensible market penetration. The days where £20k from an accelerator would get you there are well and truly over.
The world of startups has developed mechanisms to help with this new barrier and it all loosely comes under the heading of ‘growth hacking’. Growth hacking techniques help you acquire customers cost effectively. The problem with growth hacking is at the moment it’s very labour intensive and slow, compared to paid acquisition of customers. Time is often not a luxury a startup has, and in the words of Ben Franklin, “Time is money”. That’s not to say paid acquisition is not a great bootstrap technique – because it is – and in most cases it’s the only option a startup has for customer acquisition.
How best to tackle this problem then? I think the collective wisdom in the industry (particularly out of Silicon Valley) is that you should build an amazing product and concentrate on that; the users/customers will follow. Whilst I don’t disagree with that wisdom, I think it lacks a few stages of detail on the path to ‘just build a great product’.
Building a great product is only achieved in conjunction and with feedback from customers, it is never done in isolation. With a B2C product that means talking and listening to thousands of customers to help build your great product. I believe you should be fanatical about getting customer feedback and your first hire or co-founder should be an experienced growth hacker. The difference between someone with experience in growth hacking vs a few co-founders giving it a go is quite remarkable.
After founder divorce the biggest killer of startups is not being able to acquire enough customers at the right price. Therefore, when starting out, think about how you will solve the customer acquisition problem in as much detail as possible. Don’t just say, “We will growth hack it” – that lack of detail is a sure fire path to failure.