The road to disaster: a startup is not a big company in miniature

Startups are most often driven by the traditional startup model. At first glance, the model of presenting a product to the market seems completely harmless and even useful. After development, the product is tested by the consumer, and the developers correct technical errors based on feedback data before launching the product and receiving the first version by the consumer. This model is good for an established company, where the consumers and the market are already known, the characteristics of the product can be determined in advance, and the main competitors have been studied for a long time. There are only a few startups that meet these criteria. Many of them simply have no idea who their consumer is.

Concept creation and seeding stage

What is the concept of the product? What are the characteristics and benefits of the product? Is its creation realistic? Will further technical feasibility study be needed? What are the potential customers, and where can you find them? Statistical studies and consumer surveys are carried out. At the same stage, considerations are expressed about how the product will be delivered to the consumer: distribution channels, competitive advantages and costs are considered. Now a bright presentation, a passion for an idea, a willingness to leave the office and work with real consumers can convince an investor to invest in a new venture.

Product development

The team clarifies the size of the market and looks for the first customers. The developers define the desired characteristics and functions of the product. Next, you should think over the formats for demonstrating the product during the sale, and compose promotional materials.
Product development usually begins a cascading process that is incremental and consists of interrelated steps designed to minimize the risk of developing a product with a given set of characteristics. This process begins with the vision of the founder. It then materializes into a requirements document and detailed specifications. Having received them in hands, the development team gets down to business.

Alpha / beta test

During the beta stage, developers test the product with a small group of external users. The team signs the first beta consumers, starts building a distribution channel, and creates a website. Investors and board members measure progress against orders placed when the first version of the product is released. The search for new investors is underway.

When the product has clearly proven to work, the company holds a press conference and the marketing team rolls out a series of programs to stimulate consumer demand. In preparation for sales, the company develops a plan and sales targets for each of the distribution channels. The board evaluates the performance by comparing the sales figures with the business plan.

Undoubtedly, this product and process oriented model is familiar to many. Countless startups have used it to introduce their first product to the market. And most of them crashed.

We will consider what mistakes can be made on the way of implementing a startup in the next lesson.