Key Startup Questions #2
Q 3: Who is willing to Pay to experience this solution? If we don’t have someone paying for our product or service, we don’t have a business. Sometimes who’s actually paying is not our customer. Let’s avoid the trap of offering a product or service that needs to be free in order to entice people to use it. Instead, let’s ask: who’s willing to pay to experience our solution?
· Apple: Anyone who can afford to pay for technology that makes you feel good when you’re using it.
· Facebook: got its money from VCs while its product was free, because they had the potential from millions of users. Then it got a residual from companies (mostly app makers) that made money from its users. Now it gets advertising money. So Facebook makes its money not from solving its original customers’ problem, but from solving the “access-to-potential-customers” problem of marketers and app developers.
Q 4: How will we know when we have successfully “delivered” ? What do we need to measure? Do we want our solution to be temporary or long-term? Obvious or subtle? How long do we want the experience to last for? Let’s always be raising the bar for our success, and let’s always be tracking just how far above or below we are when we deliver. Examples:
· Apple: When they are one of the biggest company in the world?
· Facebook: A certain number of users? Percentage of world population? Time that user’s spend participating?
Q 5: What technological implementation will allow us to “deliver” to these people “profitably”? The big question. When we get here we’re pretty much home free. Now it’s just an optimization problem. What’s the best platform? What’s our competitive advantage? What’s going to keep us sustainable? Unfortunately, this is usually where most entrepreneurs start or stop. If you start here, you’ve missed the whole point of user research. If you stop here, then you’re probably thinking too narrowly about how to deliver your solution. There are many companies out there that try to solve things on the web that are better solved in person… or vice versa.
· Apple: using Chinese labor
· Facebook: Innovations in the acquisition and management of data
So that’s it. Five (5) questions to get us & keep us on the right path. Let’s call these a Startup’s souped-up version of the stuffy old Business Plan. When will the answers to these questions change? Frequently. When will the importance of asking these questions diminish? Well, if we want to be perennially successful, hopefully never. For help with your Executive Summary, preparing your Pitch or finding Funding contact Peter/CXO 5 Star Startup Services (thru this site)
Commments: Are there any other “critical” Questions to ask?