Market traction is very important for any business, more so if your business is disruptive. If you are launching a technology company, market traction is especially important because it validates your business model. Any investor, worth their weight in salt, will not invest in your company until you have proven market traction. And generally, free users do not count, unless you have tens of thousands of them!
This is understandable because investors are not charities, they expect to see a return on their investment. And usually they are looking for a ten time (10X) return on their investment.
Getting market traction sounds obvious, but it is remarkable how few tech startups actually go through the bother of validating the market prior to full scale development. They spend all of their time, and sometimes money, and they end up having some wonderful technology that has no market. I have to admit that even I was guilty of this. This is why building a prototype is extremely important! Even if it is simply a squeeze page with you and your founder, doing the ‘automation’ in the background.
A lot of software developers, turned entrepreneurs, think that they need to finish the product completely before they are ready to send it to market. Fully integrating a payment processing system, for an unproven business model, is foolish to say the least. Try alternatives, like sending PayPal invoices. Automate only when doing things manually takes too much time. Remember the words of Reid Hoffman, one of the cofounders of LinkedIn, “If your not embarrassed by the first version of your product, You’ve shipped to late”.
Reid resonated a growing trend in the startup community. Get your product to market, prove market traction, pivot if needed, then add features as you go. Following this model, you are more likely to minimize your risk and maximize your chance of becoming the market leader.
Sometimes, you need to add a lot of extra value to onboard your first paying customers. This is not unusual and you should not be dismayed by this prospect. Extra value can include one-on-one help, discounted service, ancillary offers, etc… Don’t worry about scaling the extra value that you deliver. Once you reach a critical mass you no longer will need to deliver extra value, and you can simply rely on your value proposition.
John is a guest writer for //Startup News and if there is something you want to get off your chest, remember, //Startup News would love to hear from you.