Are You Really As Far Along As You Think?

In Lean Analytics, Alistair and I identified five stages that a startup goes through from the original idea to big-time success. Those stages include:

  • Empathy: This is where you work to identify a problem worth solving, mostly by engaging in customer interviews and collecting qualitative feedback.
  • Stickiness: Now you build an initial MVP and test it with early adopters. You’re looking for usage and retention.
  • Virality: Next you want to attract more users/customers. Virality (inherent or artificial) helps lower customer acquisition costs. At this stage you’re not only focused on virality, but also interested in experimenting with other acquisition channels, to see if you can bring in quality users/customers cost-effectively.
  • Revenue: Now you need to focus on the economics and make sure they’re sound. Are you earning more per user/customer than it costs to acquire them?
  • Scale: Finally, you get to scale. At this stage you have a product that’s solving a problem, a good number of active & retained customers, and the economics of your business (perhaps at a small scale) make sense. You now pour more fuel on the fire, or expand in other ways (through partnerships, targeting new markets, etc.).

It’s rare that startups succeed by skipping steps; things eventually fall apart because the fundamentals aren’t there. Skipping steps inevitably leads to focusing on the wrong things at the wrong time. What’s more interesting is that when you speak with founders, they almost universally think they’re further ahead than they are.

Time and time again, I suggest that founders go back a step or two. A founder that’s focused on user acquisition through virality, but can’t quite get the traction they want, should probably go back to the Stickiness stage and make sure that the core users are actually happy and engaged. For B2B startups, they often jump the gun and try to scale revenue before really proving that they’re solving a super painful problem, and usage, engagement and retention are good. In that scenario, they also need to go back to the Stickiness stage.

Most startups never really make it past Stickiness. Stage-wise, it’s fairly analogous with product/market fit, although that’s a moving needle on a case-by-case basis that’s going to bleed into Virality and Revenue too. Startups, unfortunately, don’t spend enough time driving engagement and usage, and as a result don’t create enough sustainable value for their users and customers. They see a bit of usage and figure it’s time to rush into the Virality and Revenue stages, hoping that more users will solve all the problems they’re seeing and ignoring. That’s usually not how it works.

Early stage entrepreneurs also jump the gun moving into Stickiness–building an MVP before they’ve really validated that it’s worth building. I always tell these entrepreneurs to go back to the Empathy stage and talk to more customers (and do so in a more rigorous / structured way).

It’s not surprising that entrepreneurs jump the gun and move too quickly through these stages. They’re eager to get going as fast as possible and build an awesome business. They’ve got dollar signs in their eyes and dreams of hitting home run exits. But fundamentals are, in most cases, fundamental. If you don’t have the core value proposition in place, with the right mechanics around usage, validated pricing and effective user acquisition channels, you won’t be able to scale. It takes a serious dose of intellectual honesty to admit that you’re not as far along as you’d like to be, but it’s better to get to that point sooner rather than later. Moving back a stage or two isn’t the end of the world, and you give yourself the opportunity to do things right and win later on.

June 17, 2013 Posted in Entrepreneurship by

  • http://DigitalCollective.co/ Mical Johnson

    It doesn’t really surprise me for you to say that most early startups never get past the stickiness phase. Since you speak with so many startup founders on a regular basis is there anything that you’ve learned since publishing your book that can help increase stickiness for a product/service?

  • Griff Hanning

    Ben, this hit the nail on the head for me. I’ve got two startups that we are trying to roll out and in hindsight, I wish I’d spent a bit more time in the Empathy (customer interview) stage. However, sometimes you just don’t know what the customer wants until AFTER you launch. Adaptability in the Stickiness stage is critical.

    thanks!

  • Pingback: Why you must nail empathy and stickiness | Entrepreneur Secret Sauce

  • http://nichevertising.com/ Christopher Mance II

    Ben, thank you for providing this bottom line advice. My takeaway is that in the B2B world empathy and stickiness is all about finding out how you will provide strategic value to a small group of customers in a large market and how you communicate that value. Nothing else matters until you do those two things.

  • http://www.directory-businesscore.com/ Alex Liddell

    top advice and great guy thanks

  • http://www.instigatorblog.com/ Benjamin Yoskovitz

    Agreed. The communication of that value should be the easier part, b/c if you’ve done your homework (during the Empathy phase) you have lots of qualitative feedback telling you what problem to solve. The value becomes self-evident…

  • http://www.instigatorblog.com/ Benjamin Yoskovitz

    Mical – Yes there is, but that’s probably going to have to go into other blog posts. It’s mostly about figuring out what small, repetitive behaviors you’re looking for your users to do on a regular basis, and then driving them to do those behaviors, which in turn creates the value for those users that they need.

  • http://DigitalCollective.co/ Mical Johnson

    Thanks Ben. I hope that to see that post soon.

  • http://www.directory-businesscore.com/ Alex Liddell

    i am back to say hello,i just thought i would drop in

  • Pingback: Why “if you love an idea, set it free; if it comes back, you’re onto something” is flawed thinking | TimTom Blog

  • http://www.instigatorblog.com/ Benjamin Yoskovitz

    Thanks Alex, appreciate you stopping by.

  • Pingback: Tiny, Addictive, New Behaviors (or How to Build an Awesome Minimum Viable Product)

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  • Pingback: STICKINESS: WHERE MOST ENTREPRENEURS FAIL | High Net World HNW Magazine

Ben Yoskovitz
I'm VP Product at GoInstant (acq. by Salesforce).

I'm also a Founding Partner at Year One Labs, an early stage accelerator in Montreal. Previously I founded Standout Jobs (and sold it).

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