Before a startup can achieve product-market fit, founders must first listen to their customers, build what they require and fashion a business plan that makes the whole enterprise worthwhile. The numbers will tell the true story, but when it happens, you’ll feel it in your bones because sales will be good, customers will happy and revenue will be growing.
Reaching that tipping point can be a slog, especially for first-time founders. To uncover some basic truths about building products, we spoke to three entrepreneurs who have each built more than one company:
- Pouyan Salehi, CEO and co-founder, Scratchpad
- Rami Essaid, CEO and founder, Finmark
- Melonee Wise, CEO and co-founder, Fetch Robotics
Find out what your customers want — and build it
First-time founders often try to build the product they think the market wants. That’s what Scratchpad co-founder Salehi did when he founded his previous startup PersistIQ. Before launching his latest venture, he took a different approach: Instead of plowing ahead with a product and adjusting after he got in front of customers, he decided to step back and figure out what his customers needed first.
“Tactically what we did differently at Scratchpad is we tried to be much more deliberate up front. And what that looked like was [ … ] to not start with building, even though the product is such an important part, but really step back and understand what we are doing here in the first place,” he said.
He added, “If you just look at the current state of the [market], what is [the problem] and what already exists … It becomes almost an exercise in product marketing, which is more positioning and thinking about where a gap or entry point is and discovering where we are able to come in independent of what our skills are. Then we can ask is this something that we can do, is this something we’re excited about, something that we feel like we can meaningfully impact.”
Hire a product manager early
If this is your first company and you’re not a product manager, you lack the requisite skill set to understand the product development process. Hiring a proper product manager early on can help you as your company builds and sells its first product.
Rami Essaid, who today runs Finmark, which helps companies build sophisticated financial models, helped found Distil Networks in 2011. He says one of the lessons he walked away with after selling Distil was to hire a product manager much earlier — if you don’t have someone on the team who can speak for your customers, you’re making a big mistake.
“We didn’t hire our first product manager until we had 100 employees. Instead, we had a co-founder listening to customers and then telling the team what to build. And it messed up so many times where we missed the mark on a feature or a product release or something that forced us to go back and redo a bunch of things,” he said. “Whereas if you listen to the customer, if you talk through it and walk people through a prototype, it takes a lot more time up front, but it saves you so much more time on the back end.”
Set realistic customer expectations
While it’s important to listen to customers before building a product, it’s also important to understand when customers aren’t exactly clear on what’s best for them.
Melonee Wise, who has started a couple of robotics companies and is currently CEO and co-founder at Fetch Robotics, says that one of the lessons she learned the hard way how to get ahead of the marketing message, which means setting realistic product expectations and being more proactive with customers.
This manifested itself early on at Fetch when customers said they wanted all the software running the robots on-prem in their private data centers. It turned out that when it came to supporting those robots, having the software on-prem wasn’t practical. Customers didn’t realize they needed a cloud product, but in the end they understood that it worked much better, especially from a maintenance and support perspective.
“We made a very difficult decision early on to basically move everything to the cloud, and we heard from a lot of customers that it would be a business-killer and that no one is going to want a cloud product, but today we have more than 100 customers in 26 countries,” Wise said.
Craft a compelling product story
As you begin to understand what your product is going to look like, a natural story about that product should begin to develop around it. It shouldn’t require you to write it after the fact. That’s one thing that Salehi learned along the way.
He says that even armed with information to build what you believe is the right product, you need to be able understand the requirements of your user beforehand, before you develop the product itself so the product story writes itself.
“Another lesson that we learned was that storytelling is one of the most powerful assets that you have. You need a compelling narrative, a story that you can summarize in a sentence or two, even if it’s not perfect, just as long as it’s something you believe in and can tell to the target customer audience,” he said.
Don’t skimp on product engineering
Essaid tried to save money at his first company by hiring more junior people, but he learned that people with less experience were more likely to make mistakes. With his latest company, he chose to go with more senior people and pay them accordingly.
“I would rather have half the number of engineers that are more senior than a volume of engineers because the number of mistakes that junior people make, and the number of times that we had to refactor the platform, the number of times that we had to redo our database because it stopped scaling — that was all [related to] the seniority of the people developing the product,” he said.
Building a company is a complex undertaking. So much can and does go wrong for founders. You can learn from people who have done it more than once, and you can take these lessons and try to apply them to your startup.
You’ll probably stumble and make mistakes just like these experienced founders have, but if you can learn from your mistakes, you can grow and develop, and at least start down the path of building a successful company.