How do startups know their product is actually solving a problem?

written by bethburgee on April 4, 2013 in Industry Trends and Opinions and Startups with no comments
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There has been a fundamental shift in the startup paradigm. We are past the point of calling “the lean startup” a trend; these days, it’s a mandatory business model. I am continually blown away by how many startups are attempting to solve problems we didn’t even know existed. As Alistar Croll discusses in a video interview, the “if you build it, they will come” mentality is just bad business. Venture Capitalists and potential customers want to see that startups are doing two key things:

1. Solving an actual problem

2. Proving that they are solving an actual problem (aka do they have traction?)

That’s it.

At a function a while back, a guy tried to pitch me his company. He was obviously new to his position as he immediately started giving me a sales pitch. The idea was for some app that dealt with movies or something – clearly it didn’t resonate with me. I asked him, “who would use this and why?” The question stumped him. “Because, they just will” he said. In short, he didn’t have a good answer and immediately I became uninterested. If you don’t start with the who or the why, then your product is just another unproven idea amongst thousands of others.

Companies no longer decide what’s good for the customer – customers decide what they want to use. And we’re not as stupid as you might think. Thanks to everything-social, in the last five years we’ve become rather educated and we do our research. We might not all be engineers, but without us, your startup app is sunk. And our tolerance for yet another dysfunctional or repetitive app is slim.

Startups are spending more and more time in the development phase than ever before – testing it out on a small number of key customers and morphing their concept around end-user engagement. It is not uncommon for startups to stay in beta for upwards of a year to ensure they are market ready. It’s smart to ensure you’re actually solving a real-world problem rather than contributing to the onslaught of unproven ideas.

How do you know if you’re solving a problem? Test your product. Greg Taylor advices against using a close network of peers to test drive your product and favors sustainable growth by using a group of key customers who will give honest hard-hitting feedback.

Once tested, startups have to be able to understand the psychology of their customers and learn to adapt to end-user experience / preferences. This will lead to happy customers and better prepare the company for scaling.

My observations tell me that in all this startup noise, customer traction is the primary way to prove you have a product that solves an actual problem. Call it lean or just common sense – it is a major differentiator in today’s market.

So what do you think? Am I off my rocker or are there other key factors you think are vital for startup success?

ps. when I google searched ‘traction’ I either got hospital beds or a stationary black car. I opted instead for a Leprechaun because luck is not a strategy.