Building startups are hard. You're statistically setup for failure with a 92% fail rate within the first 1-2 years. However, what people tend to not focus on is 8%, when we break down what exactly the 8% did you'll understand the key skills, aspects and elements needed to build a successful business - using data.
I've had the chance of seeing many of our customers achieve product-market fit with a viable product several times around. (TL;DR I run a product development company five2one.com.au).
And in reviewing these companies there are some key commonalities that stand out, and I'm going to break down what these exactly are.
See in a business, you should be addicted to frameworks and systems more than ideas and emotions. Far too many intelligent people waste their time on things due to a sunken cost fallacy chasing features that won't revive their business from its eventual death. But when you start with a system or a framework, i.e railguards you will automatically know when to pivot, when to push and when to stop altogether
All in all, if you can get a customer to buy a product from you at a sale cost that is profitable to your business, you can safely assume you're onto something. The next step is to have enough focus and discipline to persist and find the right system that will predictably find you users in a profitable way.
But we're jumping a little head, lets talk about idea generation and the startup framework to follow when you're building out a product. I've created this after spending $100,000s on client projects as well as our own products, some successful some failures on how you can set yourself up for the highest chance of success
Remember nothing is guaranteed in this game, all you can do is increase the odds of your success and reduce that of failure, and the BEST and most effective way to do this...is with frameworks.
The framework is outlined into 15 key points, and the more of these points that are satisfied, the higher the chance of you building something that will bring you to product-market fit and convert people to customers. PS this approach follows the Lean Startup approach to the T so you'll be spending little to no money to prevent yourself from a much more expensive lesson
The key boys are broken down here
Idea
Problem
Distribution
Market
Solution
Competition
Can I sell?
Problem Cost
Knowledge Gap
Feel the pain?
Pain killer / Vitamin
Money Making/ Money Saving
Viral Coefficient
Build-in x weeks
Own top 3 position SEO
Let's break down what each element actually means
Idea
What is it that you're actually trying to build. This is the idea behind your product and can act as your intermediary elevator pitch. Simply it, it needs to be a couple of words long and that's all e.g "AI that auto-explains your code to you"
Problem
What is it that you're actually trying to fix. What pain is the customer currently experiencing that you're trying to alleviate
Distribution
Where and how exactly are you planning on selling your product. This by the way is probably one of the most, if not the most point for you to consider when coming up with ideas. You need to know how to sell and how to distribute, presale the product if and where possible. Your customer will come to you without a product i the problem you're solving for them is that painful.
Market
Who exactly are you selling to. You need to know your customer in and out. Knowing who they are will help you understand their habits. i.e where do they shop, how often do they look for solutions to the problem you're fixing. What are the factors they consider when making a purchase, how much are they willing to spend.
Understand your market deeply
Solution
What is your actual solution to the problem, how are you going to fulfil your idea. Thats the job of this point
Competition
Everyone's got competition, on very very rare occasions are you the first person, so work out your competition and work out the main faults in their product that you can fix. This is also where you start working out your unique bragging propositions, what features can you build that your competition doesn't have that will make your users brag about your product to their friends because of how epic it is.
Can I sell?
You may think this is stupid but oh so important, ask yourself - can you actually sell this product. Cool idea yes, but is it something you can actually sell to your target audience.
Problem Cost
What is the problem currently costing your potential customers, this is an important metric. This is the base number you're competing against. Assume you're launching an AI lawyer that helps with contracts, the current problem cost is $800 p/h or whatever the cost of a lawyer is. So as long as you're less than $800 you're good to go, but according to the Lean startup methodology you should be 10X cheaper and 10X better
Knowledge Gap
What is the knowledge customers need to acquire inorder to match your solution or solve the problem on their own. The higher this is the better it is for you. A great example is any no-code tool, the knowledge gap users of no-code tools have is basically 6 months of programming time needed to become proficient which is overcome in a few clicks. Shopify succeeds because the knowledge gap of its audience to achieve what shopify does for them is immense. Aim for high knowledge gap problems
Feel the pain?
Do you feel the pain yourself, if you do its good. Else you're always relying on other people to understand the actual pain. This is not a must but a good advantage to have.
Pain killer / Vitamin
Old VC saying but a good one. Build painkillers not vitamins. Instead of building an insurance product which doesn't have an immediate pain that needs to be solved, build a painkiller product. e.g a user is trying to create designs and its painful to learn adobe and the knowledge gap is too high, they need this fixed now, so Canva can come to the rescue
Money Making/ Money Saving
You get rich by helping people make money or save money. Build a product where the subscription fees are made up by the utility of the product itself. This is why a lot of shopify apps do so well, as they all help with making revenue. If you sell a product for $49 and as a result of using your app, reviews or one click upsell, a customer ends up making $100, then its basically free money for them. They will see no reason not to use your product as the cost is covered up. Money-saving is great too but the value is a teenie tiny bit harder to explain
Viral Coefficient
Every customer you acquire inherently helps sell your product for you by displaying it for you. Products like intercom, bugreporting.co all have a viral coefficient greater than 1, which means they're not invincible products. You should look for this as it helps reduce your CAC and product-led growth is honestly always the best kind of growth
Build-in x weeks
Work out a safe timeline to build out your SLC, simple lovable complete product. Don't take months, look at a max of 3-4 weeks to build a valuable solution to your product or even a prototype that can get you sales.
Own top 3 position SEO
Here you're looking at the top 3 results for the search term of my business. If these results have been in the top three for at least 4-6 years, there's a high chance you won't be able to dethrone them. Best to look for terms where the links been at P1 for 1 year or less, which gives you an opportunity to catch up. SEO is extremely powerful and you want to figure out ways to capitalise as many top SEO positions as possible, long tail as well as short tail
I've created a Google Sheet for you to look at this in action, and shared some of the ideas we're not going with as well
The goal with this sheet is to write down as many ideas as you can or have and eventually work out based on maths which is the right idea for you to tackle
All the best and I hope you crush it
PS if you'd like to share your framework list once you've generated it, feel free to DM me or @ me at @veebuv on twitter!
