No brainer solutions to your startup
Editor’s note: This post is part 2 of 12 from our ‘Concept to Startup’ series.
Continuing where we left off. Now that we have defined our problems and who we are targeting. We can now define our solutions.
To recap:
Client: John Doe, wants to build an app to make moving easier
Problem: You want to move because now you can afford to move out but you have never lived on your own. I don’t have time to visit every place, how do I narrow down my choices
Solution: You need an easy way to find a place
Elevator speech: “Moovers, is an app for people who are moving for the first time but don’t have time to visit multiple places.”
Our solution in its current form isn’t a solution. There are multiple ways to solve a problem. What we need to think about is our problem statement and how we are going to solve those problems, and only those problems, THAT’S IT. First, we need to refine our solution and break it down into sub solutions. This part is now easier because as founders this is where we started. Since we have already clearly defined our problem statement, we need to clearly define our solution statement. The question?
How is “Moovers” going to provide an easy way to find a new place?
It will save time by recommending places based on interest
It will take the guess work out of first time movers by providing the necessary information needed to make a move
It will recommend services, based on need, you will need to make your move easier
It will help you determine if you can afford to live on your own
It will provide a budgeting calculator
It will save time by recommending places based on your budget, interests and target location
We could go on and on with solutions but here is where founders get lost in the journey to developing their MVP. Founders want to implement all of the solutions but fail to understand the true purpose of an MVP. While we mentioned some features, the focus here isn’t to talk about feature this and feature that. It is to simply provide how you are going to solve the problem.
Now that we have a subset of problems, we need to choose our top 2 to 3 to focus on. So, let’s refine our solution statement:
Problem: You want to move because now you can afford to move out but you have never lived on your own. I don’t have time to visit every place, how do I narrow down my choices
Solution: Take the guess work out of finding a new place, provide recommendations on places based on need and interests. Help coordinate and manage the necessary services needed to make your move.
Now let’s refer back to our elevator pitch and problem statement. Are the solutions we chose still in line with expectations we set out in our elevator speech? Are we solving the problems that we stated we were going to solve? If the answer is yes, then we can continue forward, if not, continue to refine until it all matches up. This is important to building your product and will all the difference when we get to implementing the solution. (The features, the functions etc.)
Consumers don’t by features, they buy solutions to their problems. Clearly defining your solutions will ensure you stay within the frame of your MVP. Everything else, solutions that don’t solve the problem or thoughts from brainstorming goes on the road map, for now.
Now it’s time to refine our elevator pitch one more time:
Elevator Pitch: “Moovers, is an app for people who are moving for the first time but don’t have time to visit multiple places.”
Refined Elevator pitch: “Moovers, is an app that takes the guesswork out of moving for the first time. It significantly reduces time and research typically required by providing recommendations on places to live to services you’ll need, based on you.”
Now that we have our problem and solution, we need to define, quantifiable, key metrics that we will need to track. This is important because we need to have a benchmark to measure. This will help determine if our product is being successful. This will help us evaluate on how well or how poorly our product is doing.
There are a lot of metrics we can track in order to measure our startups success. Most founders get stuck here because they think the only thing that matters are revenue and profit. Yes, those are important but there are other ways to measure success. Instagram is a billion-dollar company but didn’t have any revenue before being sold to Facebook.
As a founder, you define what success means to you. This means you decided what metrics to track and what benchmarks to set.
Take a few minutes to think about this.
When do you want to breakeven on your investment? — Growth
How many new customers per month are you getting? — Growth
How many existing customers are you keeping? — Retention
How often are they coming back? — Retention
How long are they on your platform? — Retention
How many people download it? How many people sign up? — Activation
How many of them have referred new customers? — Referral
Where are they spending the most time? — Retention
How fast are you growing? — Retention and Growth
Is it costing you more to get new customers than the spend? Is it worth it? — Revenue
Are your customers giving you feedback? — Retention
Where are your customers coming from? — Referral
How long did it take for a customer to make a purchase? — Activation
What is the average spending of your customers? — Revenue
In case you missed it, there is a important aspect of your metrics — Retention. We when get the details of your product, you’ll understand how to bake this into your product
This isn’t meant to be an all-inclusive list, we can continue to go on and on, but I think you get the point.
Now, let’s go back to our example. What are some quantifiable and measurable metrics for “Moovers” to track?
1. 10,000 monthly active users in 6 months, 500 that come from referrals
2. 50,000 downloads in 6 months
3. 20% month over month growth
4. less than 50% churn rate, end of month 6
5. 15,000 in revenue it 6 months, 100,000 in 2 years
6. 2,500 bookings by end of month 6
Now that we have defined metrics, we need answer some open ended questions about our metrics. For example, what do we consider a monthly active user? Is this a user who comes back once a month? Twice a month? Uses it for X amount of time per month? When talking about revenue, are we talking net or gross? We need to make sure that we leave no open ended items that can be misinterpreted. This will provide quantifiable data that we can measure. It also provides quantifiable data we can use in a pitch deck when we get to capital raising.
Since we are still in the early stage and we are still working with assumptions right now, We need to define metrics that we can track, given our current stage.
Quantifiable metrics “Moovers” will track:
1. 1,000 customer surveys in 2 months
2. 25% conversion rate on Landing page in 2 months
3. 500 email addresses for beta signup in 2 months
4. 25% referral rate from our landing page in 2 months
These metrics seem trivial but since we are only in the concept stage, we need metrics we can track, right now. The goal of these metrics is to set milestones to keep you motivated, until you hit those goals. This will give you practice in measuring results for when you have your product, you’ll know how to track it.
NOTE: For this series, we want to keep things simple to get you started, If you want a more in-depth guide, Andressen Horotwitz has a great guide of metrics every business should measure. It can be found here http://a16z.com/2015/08/21/16-metrics/
Now that we have clearly defined our problems, solutions and have a baseline to measure, We are now ready to dig into to our Unique Value proposition and revenue streams.
About Loka:
We are a startup development company that has been around since 2004. Located in the heart of Silicon Valley, Loka is surrounded by technological luminaries such as Apple, Google, and Facebook. Loka is known for building innovative mobile and web applications for startups, as well as for some of the world’s largest brands. We’ve worked with startups funded by the likes of Sequoia Capital (who funded Google), Kleiner Perkins (who funded Amazon, and Greylock (who funded LinkedIn).
