According to the popular networking site AngelList, Silicon Valley has over 25,000 startups. Shockingly, 90 percent of these startups are doomed to fail. Why?
"The No. 1 problem I've seen with startups I've advised has been that they don't actually have product/market fit when they think they do," said Alex Shultz, VP of Growth for Facebook.
Fortune even reported the "top reason" that startups fail was that they make products no one wants. A survey of failed startups determined that 42 percent of them identified the "lack of a market need for their product" as the single biggest reason for their failure.
In order to find a solution, Silicon Valley Entrepreneur, Bobby Mukherjee, created a two-day "Jump StartUP" workshop offered through his app development company, Loka. Mr. Mukherjee understands that being the first to market is crucial for success in the startup industry, which is why Loka's Jump StartUP workshop is an effective solution for helping entrepreneurs build a successful startup.
Based on the Jump StartUP workshop business model, here are 6 tips that will help entrepreneurs take their startup to the next level:
No. 1: Start with a well-constructed plan
Planning and strategy are key when it comes to building a startup. Having a well-constructed plan in mind before getting started can save entrepreneurs both time and money.
Before turning an idea into a product, it's important to consider these three key elements:
- Your product's key value proposition
- How your product will test against the marketplace
- How to build and define a roadmap for the future
Keep in mind that many entrepreneurs choose to spend $100,000+ on building a mobile app, which might not even have the correct product market fit due to lack of planning. Loka's workshop, however, allows startup founders to understand their product's key value proposition, test it against the marketplace and define a roadmap for moving forward in a cost-effective manner ($5,000 vs. $100,000+).
No. 2. Know if your product is "nice-to-have" or a "must-have"
It's common for startup founders to love their idea, but how do they know if their users will? Talking to potential customers is the only way to determine how a product will perform in the marketplace.
Entrepreneurs should define their target market and ideal users by speaking to customers, getting feedback and thinking of ways to develop a product with those users in mind. This allows startup founders to narrow their target market and fully understand their user base before building their product, a factor that can lead to a successful product launch.
No. 3. Understand the critical features of your product early on
It's typical for startup founders to get stuck on an idea and build it out until it's perfect. This can be a time consuming and costly process though.
Before getting started, it's best to understand your true Minimum Viable Product ("MVP") to pinpoint your product's most critical features. Building a product with your user's needs in mind will help reduce costs by allowing entrepreneurs to make informed decisions about launching, marketing and communicating their product to the public.
Keep in mind that your product might also not be perfect the first time around. In fact, this is the case with most startups.
"If you are not embarrassed by the first version of your product, you've launched too late," said Reid Hoffman, LinkedIn's Co-Founder and notable Venture Capitalist.
No. 4. Learn to identify problem areas in your concept and model
Being able to identify problem areas in your concept and model early on will also help founders make better-informed decisions as they move forward. For instance, rejection from investors and venture capitalists is common in the startup world. However, entrepreneurs must adopt the mindset that they can learn from their mistakes.
Listening to feedback from investors whom initially reject your ideas can help you bounce back next time. Fixing your product based on investor and user feedback is a best practice when it comes to building a successful startup. Once changes are made, an entrepreneur can go back to these investors and users and show them the improvements.
No. 5. Get users to love your idea and use your product
A recent survey noted that the average app loses 77 percent of its daily active users (DAUs) in the first three days. Within 30 days, the average app loses 90 percent of its DAUs.
A key point mentioned during Loka's Jump StartUP workshop is that it's critical for users to love your app during the 3-7 day period after its launch.
Understanding these 5 elements will help ensure retention of your DAUs:
- How do users find you?
- Do users have a great first experience?
- Do users come back?
- How do you generate income?
- Do users tell others about your product?
No. 6. Monetize your app
Finally, building a mobile app might seem easy, yet monetizing that app can be difficult. There over a million apps to choose from and an overwhelming amount of those are free. As a result, trying to earn revenue with a paid app can be risky. On the other hand, while a free app is likely to earn more downloads, founders have to be smart about monetizing.
Entrepreneurs can gain an understanding of how to monetize their app by understanding the benefits of key models such as:
- In-App Advertising
- Freemium (Gated Features)
- In-App Purchases
- Sponsorships (Incentivized Advertising)
Know Before You Go
Having a great idea, a domain name and a mobile app that you love might seem like the best way to get your startup up and running. However, having a set plan in mind will help ensure that your product is successful.
Fortunately, solutions such as Loka's Jump StartUP workshop allow entrepreneurs to develop a lasting plan to better understand their user's needs, critical product features, problems to improve upon and ways to monetize their app for future success.