Make the user feel smart really quickly #product #ux
A network of connectors is exponentially more valuable than a network of end points.
Putting a ruler over a startup idea before you get sucked into months of customer development is a big time saver. I’ve always wanted to have a guiding formula that captures areas to consider.
Here’s my first cut:
Idea potential is proportional to: (M x A x S)/(C)
M: Market Size
M = LTV x number_of_customers
LTV: Lifetime value of a customer
A: Adoption rate
a) Disruption type
- is this an unmet need (folks not participating in the market due to some constraint or context) and/or
- is this a low end disruption
If it’s a *sustaining disruption* you will get out gunned by cashed up incumbents and meaningful adoption will be super slow (impossible)
b) Can the on-boarding process become low-friction? This directly affects customer acquisition cost (CAC)
Is the product naturally sticky (i.e. low churn)?
Section A(a) requires that the new business is disruptive and not sustaining in nature, but it’s still worth comparing the incumbents RPV against the new business here just to be sure.
b) Fast followers
Are there any companies with the same RPV as you? By selecting a market that is unsexy and requires a lot of *customer development* you create a large barrier to entry from fast follow competition in the valley. A good test for this is if startup folks tune out quickly when you answer the question *so what does your startup do?* at parties….then it’s unsexy.
Billionaire Jack Ma, the founder and ex-CEO of Alibaba Group, as well as one of the most successful Chinese Internet entrepreneurs, shares his wealth of experiences. Jack Ma: The mistake I regretted the most In 2001, I made a mistake. I told 18 of my fellow comrades whom embarked on the entrepreneurship journey with me that the highest positions they could go was a managerial role. To fill all our Vice President and Senior Executive positions, we would have to hire from external parties. Years later, those I hired were gone, but those whom I doubted their abilities became Vice Presidents or Directors. I believe in two principles: Your attitude is more important than your capabilities. Similarly, your decision is more important than your capabilities! Jack Ma: You cannot unify everyone’s thoughts, but you can unify everyone through a common goal. Don’t even trust that you are able to unify what everyone is thinking; it is impossible. 30% of all people will never believe you. Do not allow your colleagues and employees to work for you. Instead, let them work for a common goal. It is a lot easier to unite the company under a common goal rather than uniting …