5 areas that make or break a startup

Utter the words “entrepreneurship” and “startup” and it conjures all kinds of images and emotions. At one extreme are the negative ones—risk, unpredictability, loneliness. At the other extreme are exhilaration, excitement, fascination.

There is truth to both sides, but there is a lot of method to the madness too. This article focuses on the method that can help you experience the one emotion both sides look for: fulfillment.

Let’s start with a few live case studies (names and details have been changed).

Customer validation

Realizing that fuel is getting costlier in India, a bunch of young wannabe entrepreneurs came up with an innovative idea of saving fuel. They designed an internet-of-things-based intelligent traffic signaling system to optimize traffic and fuel consumption.

Initial results showed 20 percent savings in fuel costs. The excited entrepreneurs went ahead and launched the product. A year later, the venture was struggling with no revenues.

Why would such a promising venture fail?

Deeper analysis shows that the product was designed to save fuel across all vehicles, but could not quantify the specific benefit to a specific vehicle. A car owner wouldn’t consistently know how much she benefitted, if at all. This led to car owners treating the product as a nice-to-have.

Meanwhile, the city authorities didn’t appreciate the product either. While they were happy to install the product, they didn’t want to pay; after all, savings were accrued to car owners. The product was a must-have for no one, and it didn’t take long for it to bomb.

This is a great example of poor customer validation. Three notes regarding customer validation:

1. Who is the customer? If you cannot identify your customer crisply, your venture will struggle.
2. How will this customer benefit from my product or service?
   1. Once identified, your customer should be able to understand the benefits easily: how your product will eliminate/reduce her pain and/or accentuate her gain.
   2. If it needs a rocket scientist to figure out how your product or service addresses your customer’s need, your product will be relegated to outer space.
3. Why will the customer pay: Is the benefit of my product worthy of money?
   1. This looks logical, but was surprisingly missing. If your product is ahead of its time, customers wont pay for it—regardless of its benefits. This maintains a reality check on the timing and viability of a product.

A structured customer validation process ensures that your offering appeals to a segment deep enough for them to pay for it.

Regulatory activities (e.g. patents)

Scaling up

Fundraising for the right reasons

Leadership and culture