Start Up Blog

4 factors for webpreneurs – Guest Post

Posted in entrepreneurship by Steve Sammartino on December 30, 2010

1. Technology is easy – getting customers to pay you is outrageously difficult.

When was the last time you heard about a web startup failing because the product didn’t work?  Almost never.  With the greatest respect to all the hackers and engineers out there coding away, making a product do what you want is simply a function of time.  Spend enough development time on it, and you can write code to do almost anything you want. Getting a customer to pay you some money for that feature you just added? That’s an entirely different proposition. The vast majority of web startups fail because they don’t find enough customers, at the right price and in enough time before they run out of cash.  If we spend as much time on marketing your startup as you do on writing and shipping your code, and we just might beat the odds.

2. Customers can always choose to do nothing

When pitching a prospect we are generally trying to convince them to do one of two things:
(i) Leave a competitor and join you
(ii) Stop doing nothing about their pain problem and join you

Who knew that getting them to leave a competitor was often easier than getting them to stop doing nothing? At least if they are using a competitor they recognise that they have a problem that needs solving! The truth is, many prospects are indecisive, stagnant, glacial, apathetic, unwilling, and unmotivated.  Demonstrating your product and then asking for the sale is just as likely to be met with a yawn and a scratch of the arse as it is with a chequebook. If you understand how difficult the process is, then there is a good chance you will approach it with the right amount of preparation and effort.

3. Financial models are fantasy
Their is one good reason to construct a financial model prior to having any real customer data.  Do it to prove to yourself that the fundamentals of your model will produce a profitable business over time.  Think of it as a sanity check. Once you are happy that the model works in theory, throw the spreadsheet away.  Never look at it again, and for christ sake don’t go out and try and raise investment funds off the back of it (guilty as charged!). Just launch your product and get as much real live data as you can.  Months later you can giggle about how wrong your projections were, but at least you won’t be making life altering decisions based on nonsense.

4. There is no replacement for quality user testing

User testing pays for itself many times over.  This doesn’t mean getting your mates over to play with your creation in return for a 6 pack.  It means getting real life customers/strangers to use your product while you watch. True story.  Our startup is an online event registration solution that allows customers to sell tickets and accept registrations for any sized event. Three months after launch, we sat and watched via web cam while a Canadian tester spent 15 MINUTES just trying to create an account. In one of our releases, we had cannily decided not to display a “register button” to anyone using Internet Explorer.  No-one using this browser  could get in and use our product, and it had been that way for over a week.  He eventually managed to get in, but man was he pissed!

What else do you wish you had known before you did your own web startup?

Post by Scott Handsaker founder of Eventarc

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5 Responses

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  1. Tim Bull said, on December 30, 2010 at 11:12 am

    Utility tops features every time. You’re kidding yourself if you think that the “next” feature is the one that will attract users. If they haven’t fundamentally “got it” on your first, flawed, rushed out of the door dodgy release, then you really are pushing it up hill from here.

    I wish we’d thrown some ideas away a LOT sooner in hindsight.

    It doesn’t mean new features aren’t good – they are and they do attract new types of customers, but you can also waste a heck of a lot of time putting lipstick on a pig too.

    • Steve Sammartino said, on December 30, 2010 at 12:03 pm

      Totally agree – simplicity and intuition in use are game winners. It was the same with http://www.rentoid.com – not until we removed features like rental approval and other ‘security’ features did the site really work. We gradually reduced features to optimise usability and ended up with a simpler classified style site – which worked much better.

      The really great sites I think learn how to add features without impacting on simplicity. A very hard thing to do.

  2. Sam Sabey said, on December 30, 2010 at 2:00 pm

    I don’t claim to know all the answers, though there is a lot to learn…
    What I do know from my own adventures is this:

    1. The biggest competition is do nothing.
    2. Sales don’t happen by themselves
    3. Technology doesn’t happen by itself either.

    All take commitment, and a lot of effort.

    And sometimes that “feature” can be the reason to not do nothing, though that “feature” is often dependant on all the other stuff being done along the way, including sales.

    Sam,
    @samotage

    • Steve Sammartino said, on December 30, 2010 at 2:19 pm

      Yep, the integration of these 3 things are essentially what needs to happen in a tech biz.
      SS

  3. Mike Boyd said, on January 1, 2011 at 4:42 pm

    Number 1 hits home for me.

    It has always baffled me how tech startups think they’ll be next big thing upon launching their super-secret-exclusive-private-ultra-alpha-version to a select 5,000 of their closest friends. It’s bullshit. Even the most amazing startups have to sell and they sure as shit didn’t get noticed without selling hard in the early days.

    A quote from Biz Stone, Co-founder of Twitter: “Timing, perseverance, and ten years of trying will eventually make you look like an overnight success.”

    Similarly, some notes I took at a conference last year when Siimon Reynolds was speaking are also on the money.. “Need to spend 70% of day on sales and marketing your business especially in the first 3 years. Average is only 11%. Number one reason for going out of business is lack of sales.”

    At the end of the day you can build the greatest startup/product/feature the world has ever seen, but if you can’t sell – you’re fucked.


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