Why a Great Product is the Ultimate Growth Hack
Transitioning to the growth stage requires you make the decision to grow at the right time.
There is a study on startup scaling by the Startup Genome Project that reports “74% of high growth internet startups fail due to premature scaling.” Attempting to grow before your product is ready can greatly impact your startup’s chances for success. Making the decision to scale is just as important as deciding the right time to do so.
However, time and time again, too many startups focus too heavily on trying to develop a product that serves everyone — or building something for millions of “customers” before they even have their first one.
Scaling too early, or spending your resources excessively before developing a product that will successfully satisfy a large market, can lead your startup to fall into the same trap as those mentioned above.
The Startup Genome Project also discovered startups that scale properly grow about 20 times faster than startups that scale prematurely. I’m a firm believer that finding the right product/market fit before scaling is a critical factor in your startup’s success. Here are a few tips from my own experiences to help you sure your product is ready for growth and help you scale your business the right way.
Know what your customer needs
If there is no real problem you are trying to solve, it’s going to be difficult to build a successful solution. During the product development stage, it is important to gather as much feedback as possible on the customer pain point you are trying to solve. Know this problem inside and out. You need to understand exactly what your product is going to achieve.
My company, Wideo, started because I needed to make an online explainer video for another startup, but there were no free, useful tools available. This was a problem that I knew could be solved. Video production is expensive, and there had to be a way to offer a cheaper, DIY solution. I knew I could create this solution to help myself and others who would encounter this problem as well. That’s when I began the research process and discovered the need in the market. Only after you’ve gathered as much data on the customer pain point as possible, can you begin to develop your solution.
Nail the solution
I had to learn this step the hard way. When we launched Wideo, we gained users quickly without having the best product we could. While our consumer base grew, our product didn’t improve — and that is a huge problem. Eventually, we had to stop everything (marketing, networking, any promotions, and, of course, our personal lives) and only work on the product.
Entrepreneur and investor Paul Ahlstrom describes the correct order of operations as “Nail it, then scale it”. I couldn’t agree more. Building the perfect solution requires a great deal of fine-tuning — and this will always take longer than expected. Instead of taking your product to the masses too early, embrace this period as a time to learn from a few highly-targeted customers. Get as much feedback as possible on how your product is working for them and what you can improve. Take the time to focus only on “what people want”, and your startup will reap the rewards. The greatest part about making something people want, is that it will eventually market itself.
Find product/market fit
Focusing on finding product/market fit before having any concerns for scaling is some of the best advice I can pass along to other startups. Sean Ellis, Dropbox’s first marketer and the man who coined the term Growth Hacker, has an excellent way to determine if your startup has reached product/market fit. He suggests asking your customers “How would you feel if you could no longer use this product?” With this question, you can find out if people are getting value from your product, and if these are the people who are going to help you grow it. If at least 40% confirm they would miss your product if it were no longer available, then you can safely move forward. If you don’t get 40% confirmation, it’s time to reevaluate and take responsive action.
Dive deeper into why your product didn’t satisfy these customers and learn how you can improve. Keep in mind what users answer in surveys is not always the same as their actual behavior, but it is an acceptable way of gathering this information and using it as a starting point to determine product/market fit.
Transitioning to the growth stage requires you to make that decision to grow at the right time. Having a product that not only solves a problem, but can also handle rapid growth when the time comes, will require you to spend a lot of time testing and perfecting your solution. And if you’re too eager, you can add your name to the list of 74% of startups who failed because they scaled too early. Make sure your product is ready for growth, and you’ll increase your chances of successfully scaling your startup.