The main thing about launches that I’ve realized is that people put way too much emphasis on them. They end up focussing too much on a one-off event, rather than on building a successful business. Sometimes, they end up paying a price for suboptimal trade-offs they make.
The goal of a traditional launch is to work towards a specific date. Your customers will expect to see the product on that day. You product development team has to get the product in a presentable shape. Launching works well as a tool to build anticipation.
But a launch is also a planning tool. The thing is, you commit to plans based on your assumptions. And if you are creating a new product, or entering a new market, there are bound to be some wrong assumptions.
For example, I’ve run or participated in a few Lean Startup Machine weekends in the past. Of the teams that are formed at the beginning, I’d say about 10-20% are still working on roughly the same product at the end.
This means 90% of early stage founders generated significant learning by speaking to their customers. If any of those 90% of ideas were launched without any customer engagement, there would have been a lot of back-pedalling to do. After speaking to many prospects over the weekend, most have an epiphany or two.
Engage with your market as early as you can. Here’s why you should do so in your startup:
- If you earn (or are already earning) revenue, you are proving the commercial viability of your idea with your chosen niche
- If you eventually do a traditional launch, you can start testing your marketing and positioning now. This typically involves getting your message in front of different traffic sources. Seeing what speaks to each niche. Optimize your growth. Improve your message market fit. Avoid low-ball price wars as a commoditized product or service.
- If you have revenue (ideally cash flow) then you can finance further growth. You can create internal positive feedback loops within your company. Self-finance your roll-out to different audiences.
If you are concerned you’ll be losing out on the marketing effect of “launch anticipation”, run a limited small scale test. Try giving your product away for free to a handful of ideal clients. Confirm that they actually spend the time to engage with it. Listen to their feedback. If it’s good, you can include the reviews as testimonials. If you need to improve, then at least you find out before you do an entire media blitz.
Or sell the product using paid advertising. Make 30 sales. Use those numbers to figure out all of the critical factors in your marketing. Quantify market size, customer acquisition cost, and conversion rate at different price points. Then you have a legitimate baseline for planning further investment in the product, or to reject it as a bad idea.
Once you do that a few time, you will be ready to start building anticipation. Do all of the usual “launch stuff”:
- schedule media appearances
- get in touch with your PR contacts and influencers,
- try to get TechCrunch coverage…
Whatever is relevant for you and your product.
So there’s definitely a place for a traditional launch. It’s just after completing a lot of experiments–including marketing ones.
[image: dave cholet]
When releasing a new product, the first step is to get a minimum viable product (MVP) released. The minimum viable product encompasses the essence of the Lean Startup ethos. An MVP helps go through one cycle of the Build-Measure-Learn loop. Eric Reis warns “Customers don’t care how long something takes to build. They only care if it serves their needs.” You also need to already have a customer chosen in order to be addressing a customer’s need. The main goal of an MVP is to learn about the customer and the market. You want to validate or reject your hypotheses.
Let’s say you want to build a software company helping people learn foreign languages. Entrepreneur Derek Sivers points out that you can get started by just scheduling a language teaching session. It’s very manual. It’s not automated at all. At the same time, it’s an extremely high-bandwidth way to learn about your customers’ needs. Most importantly, it’s useful for them. Once you have some experience delivering this type of service, you have much better chance of successfully prototyping a solution which addresses the same customer’s need.
You identify one specific need the customer already has. You learn what the customer thinks about it, how they dream they could overcome the problem. You hear them vent about their frustration. You dig deep into specific aspects. You seek out find you can address. You find out how your customer thinks about the problem. This is gold. It helps you identify where to focus your efforts, so that you address what your customer finds the most vexing.
By focusing on the must-have features only, you release a product or a service that addresses a particular need. It’s rudimentary. Yet it works. It might not even require a line of code. Must-have features are essentially all related to specific changes you want to induce. Your target customer will not consider the product valuable otherwise.
It’s also consistent with Ken Schwaber’s value burndown charts. Develop the highest value features first. If the product ends up being successful, then in fact, these are the extremely valuable core product features. They define the product. If it’s not successful, then try to repackage the core with a new set of extra features, in order to go into a different niche.
Since Apple was founded, a number of big changes have swept the technology world. Your clients live in a very different world. As a result, you market in a different environment. If you’re a technology entrepreneur, you need to be very clear on exactly how you are addressing the following:
1. Shortening Attention Windows: If you want to sell something, you need to attract and hold your prospect’s attention. As time goes on, the consumers you want to reach are awash in marketing messages, for products new and old.
In 2000, the average attention span was 12 seconds. Today, it’s 8 seconds. Less than the 9 second attention span of a goldfish. 1
Considering that the ancient part of our brain, i.e. the one we share with lizards, is responsible for attention, your message is up against an increasingly tougher competitive environment. This “wetware” evolved over millennia to cope with hunting for bugs and occasionally running away from tigers. It wasn’t “designed” for viewing hundreds of ads per day or checking your email every 3 minutes.
Within each niche, it becomes increasingly important to differentiate in order to grab attention…yet most messaging looks exactly like everyone else’s.
On the web, you have a few seconds to make an impression, according to various UX experts. In person, it’s pretty much the same. That first impression comes from one phrase or sentence said to the right person at the right time, in order to make a promise. It isn’t physically linked to anything about your product, service, or widget. It doesn’t even require a product, or writing a single line of code. If you figure out what your customers want, it’s much easier to deliver it to them.
2. Global Competition for Psychographic Segments: If you are selling online, for many product types your ideal consumer can live anywhere…from Alabama to Antarctica. Geographic location tends to be less important than unfulfilled psychological needs. Location doesn’t matter as much as it used to.
Particular if you are selling software or anything online, it’s better to group people together into common unfulfilled needs. In fact, online communities have arisen naturally around this. If you look at popular niche blogs, you’ll often see an entire community of people following that company or person. They usually share one or a handful of common needs, and find it helpful to share war stories with others.
While this started in the early days of the web, as time goes on, these are becoming increasingly fragmented. Based on feedback loops, where like attracts like, it’s critical to engage with the specific niches based on their interests. It’s much easier to sell something, if it’s already something that group of people want to buy.
For example, marketing psychologist Dr. Glenn Livingston did studies showing a person searching for “guinea pig health” and “guinea pig vets” are looking for vastly different things and are at different levels in the buying cycle. Glenn explains, “When you do a marketing information segmentation, you might find that people talking about guinea pig health and guinea pig vets are actually two different kinds of people that don’t really belong in the same group. People that are talking about guinea pig health might be people who really don’t own a guinea pig yet.” 2 This distinction is critical for your success as an entrepreneur, much more so than your physical address.
Moreover, the cost of buying or reaching targeted traffic is slowing rising over time. As demand for advertising increases, the cost of reaching a particular keyword–once you know how it works–tends to increase over time. It’s similar to inflation. The “price” of acquiring the same type of prospect goes up.
The same principle holds across other sources of traffic. For example, if you’re going after “free” traffic sources, you’re up against the same dynamic. Instead of paying for the advertising, you need to spend even more time and effort to make a dent.
3. Unmet Long Tail Demand: In his ground-breaking book “The Long Tail”, former Wired editor Chris Anderson picked up on a peculiar pattern in sales across a number of industries. Because the cost of distribution has gone to (nearly) zero online, most industries have a large number of sales in a handful of products and a large number of products with a small number of sales.
Previously, the second group of products was completely ignored. Who cares if you like both Reggae and Jazz, when you should be buying the latest boy-band’s album? The focus was on the mass market. By going after what the average user wanted in a large group, businesses maximized their profits. The cost of distributing the other options was prohibitive.
Now, the opposite is true. I found a number of great albums combining Jazz and Reggae online in the late 1990s, without visiting Jamaica. In fact, the genre is called Rocksteady.
By catering to this explosion of niches, you can take advantage of the improved economics of distribution. Now you can buy Rocksteady albums online. You aren’t limited to a few massive record stores in New York City to get selection. Neither are the customers in any niche you choose.
4. The Mimicry Epidemic: The dark side of copy-paste? It’s way too easy to just copy something without actually thinking. In internet slang, copypasta means “derogatory term for forum posts which contain a direct or nearly direct copy-and-paste of memes, posts from older forum discussions, or other material, often accompanied by an attempt to pass off the contents as new and original.” 3
At some point, all of this information overload has turned off our brains. It’s not original, and it doesn’t move the ball forward–either for you or who you want to serve.
In a wonderful Facebook rant titled the mimicry epidemic4, Srinivas Rao notes: “We settle for the guarantee of a mediocre replica over taking the risk of something that could blow up in our face, or make us stand out from the crowd.”
Copying someone else means you avoid taking a risk. Without taking a risk, you won’t make an impact. You’re also much less likely to make a profit.
You may not have not realized it, but launching a new product-based startup requires that you navigate a number of chicken-and-egg problems successfully. Which comes first? While seemingly logical, there are a number of preconditions which you need to meet in order to stop being a startup and become a real business.
I once visited an industrial chicken farm. I had a friend who bought a chicken farm with some investors, hoping that he could turn it around. As it was initially in a state of disrepair, his primary effort focussed around re-establishing a clear marketing and promotional strategy. The original owners only thought of themselves as chicken guys. As a result of that mindset, they had inadvertently positioned themselves as commodities. They could only compete on price.
In fact, he discovered, not only were there 39 different types of chicken-each serving a different purpose either when sold in retail or for industrial purposes, there were a number of things he could do with the eggs. One of the most profitable he discovered at the time was to sell dried eggs as an intermediate component of various baking mixes. For example, pancake mix is just flour and dried eggs. The rest depends on what you do with it. He ended up turning it into a 12 million dollar business.
As a business founder, your primary aim is to make money with your new product idea. Unfortunately, if you don’t have money to invest, you can’t make more money. That’s the first big problem you need to solve. What comes first then, the chicken (the earnings) or the egg (investable product idea)? That’s just the beginning of your worries.
Here are a handful which I’ve experienced both in my previous attempts to launch products, and from my discussions with entrepreneurs:
- don’t know how much time to invest in a specific idea, if you don’t have much resources and you have mouths to feed
- don’t know who your clients will be, so you can’t figure out the most common need in a particular niche
- don’t know how to reach buyers, because you haven’t decided who they are
- don’t know what to sell, because you aren’t sure what will be attractive enough for people to want to give you money
- don’t know how to position yourself against competition, because potentially anybody is your competition (since what you sell defines who you’re competing against)
- don’t know how to approach potential investors, because you don’t feel confident or clear enough about your idea
- don’t know how much money to raise to implement your idea, because that depends on the scope of your idea
- don’t get customer feedback, because you don’t have any paying customers yet
- don’t know how to describe your product attractively for prospects, so that they are instinctively pulled towards your idea
- don’t know what to charge, because you don’t know what you’re selling yet: units, transactions, monthly recurring service, spread, upfront, freemium
- don’t want to hire more staff to free yourself up to do more valuable things because you don’t have enough money
There’s a very simple way out of this complex mess. To succeed as a business founder, you need to make money first. Ideally, you can re-invest this money in the business.
To get money, you need a sale. For a sale, you need a prospect. To convert a prospect, you need an offer. The offer is the starting point, then, of all business ventures. If you have a powerful offer, you can then proceed to figure out the remaining pieces based on trial, error, and experimentation.
The beauty of starting with the offer and dashing to the sale is that you can re-invest the revenues you earn into improving the offer. Revenue is the lifeblood of every business. Once you have revenues growing, you can redirect the revenues to invest in the business to help you improve the offer. In the case of a product business, this will typically mean actually building out the product.
Why not start with building your business systems around that? Try iterating on that as quickly as possible.
To summarize, if you want to break out of the chicken-and-egg logical loops, here is the sequence you need to iterate on quickly:
offer -> prospect -> sale -> money -> improve offer
Once you get money, reinvest it in the offer. Rinse and repeat.