For a startup to succeed, there are generally three core components making up that success: a strong product, a well-researched go-to-market strategy, and a strong organizational culture. Each of these components can be a struggle to get right individually—and ensuring each of them works together can be even bigger. We’ll break down each element of what makes a successful startup and provide tips on how to bring them all together.
At this year’s Forum, we were fortunate to have Jyoti Bansal join us as a keynote speaker for a captivating fireside chat with our Managing Partner, Joe O’Callaghan. The two discussed the topic of what really makes a successful startup, as Jyoti brings a wealth of knowledge and experience launching multiple, incredibly successful companies, including Traceable and Harness.io.
“It’s important to realize that a good product is not enough; you need two other things to be successful: good go-to-market, and a good culture.” - Jyoti Bansal, CEO & Co-Founder of Harness, Traceable AI, and Co-Founder of Unusual Ventures
Successful startups have a great product—what makes a great product, though?
What qualities define a genuinely great product? It seems like an obvious question, and you can probably think of numerous examples of "great products." But can you define exactly what it is that makes them great? This is a common question asked in Product Manager interviews, and it never fails to lead to a pause.
Of course, any good product evolves and changes its business model over time as it grows, but you need a strong concept, to begin with.
What does a good product look like? Here are some directional elements most successful startups use in preparing to launch a new product to market.
A quality product that directly addresses user needs
Your product needs to provide new value to a user or deliver increased value over existing solutions; if you try to engineer the next Amazon, you will struggle to find customers if you aren't adding any incremental value.
One of your guiding lights through this process to startup success is the value proposition.Scrum.org defines your value proposition as the reason that your organization exists. It's the value that your product will deliver and why consumers should buy your product or service over an alternative.
From the customer's point of view, your product's value is equal to its benefits minus its cost. Your value proposition should always focus on the customer and their perception of your product's value.
A thorough go-to-market plan to launch your product
Succeeding without proper planning is rare, so it's important to have a strong product launch plan that clearly defines your product, and the user needs it satisfies. This forms part of the go-to-market strategy, which we'll discuss further.
Here are some of the key activities and information that should be included in your comprehensive plan:
An analysis of the market that you're targeting
What are your product's key differentiators / unique selling points among the competitors already trading?
Insight from your prospective users or customers
Work out which users you're targeting. Speak to those people to discover pain points with existing solutions.
Details of an MVP, first-iteration product
Most companies work in an Agile framework, ensuring that an MVP (minimum viable product) can be created early to prove hypotheses and show that the product is saleable.
Defined roles and responsibilities among your product team
Everybody involved in product development should understand what's expected of them.
A roadmap that highlights key milestones
You should know the timeframe for developing, testing, and launching your product to ensure you're staying up to date.
Plans for gathering user feedback
When your product is ready to ship, you need to know how to gather user feedback to ensure that it meets user needs and leverage that feedback, constantly adjusting your roadmap and keeping the customer in mind.
Clearly documenting your plan means that everybody involved in the company has a guide to refer to throughout the development process. Everybody should be working toward the same common goals and deadlines to ensure they’re reached. Successful startups don't over-engineer the MVP and focus on directly addressing the user needs that are not being satisfied by existing solutions in the market.
A product that changes to meet user expectations
No matter how good your launch plan is, it's unlikely that your final product or business plan will look the way you imagined it, and that’s okay. Successful products are shaped over time by the customers or users who interact with them. These are the people who directly feed into your company's profit and general success, so you need to listen to them.
Creating avenues to generate customer feedback and acting on that feedback will ensure that your product remains successful as it grows. This can be done through simple, automated chatbot technology, user surveys, panels, and more.
While it's easy to become attached to a passion project, developing a product based on personal preferences alone would be a mistake. Listen to your market and trends from venture capital firms, or other respected advisors in the space and ensure that their unique needs and pain points are being addressed. That said, it’s easy to fall into the trap where you attempt to solve everything for everyone, and that’s a recipe for failure. Considering user feedback and aligning that to your core mission as a product or solution, and triaging that feedback appropriately into your product roadmap is an art.
A product with strong branding and marketing
In the early stages of a startup, entrepreneurs look to keep their budgets lean. It's tempting to cut startup costs in areas that don't seem essential to a product launch.
Consistency is key when you're building your company and brand's reputation. If you lack a consistent message across your organization, app, website, and anywhere else, it can be difficult to land new customers and retain them.
Your message should be tied to your value proposition and product. It should center around your unique selling points and the value your customers will derive from using your product or service. It should also be crafted in a concise, yet exciting way that converts potential customers into loyal followers and positions yourself as an honest company.
Marketing doesn't have to be costly at the beginning for startup companies, either. Leveraging strategies through content marketing, email marketing, influencer management, and social media campaigns can be relatively inexpensive on a small scale, depending on your niche.
A great end-to-end customer experience
As many as 84% of companies that sought to improve their customer experience reported an increase in revenue. This is just one of many statistics highlighting the value of implementing a strong customer experience across your entire sales and marketing funnel.
Your product should be approachable, highly visible, and easy to use. Over-engineered interfaces don't necessarily add greater value; they can make your product feel clunky and unappealing.
Focus on simple and clean designs that are responsive. Cater to the easiest and most common payment solutions. Make customer service widgets and pages easy to find rather than burying them deep within your website.
In the beginning, small businesses that focus on customer experience set themselves up for huge success. When your customers have a pleasant user experience at every possible turn, they're more likely to become champions of your brand and return time and time again.
The most successful startups have a robust go-to-market (GTM) strategy
A GTM (go-to-market) strategy defines how you'll bring your product to the market and can be essential for startup success. This strategy measures a product's success and can indicate performance based on similar products, market research, and other factors and data. Having a go-to-market plan is easier when you're treading familiar ground; for emerging technologies, it's less clear-cut but even more critical.
How to create a smart go-to-market strategy
There are two main types of GTM, which are the product-led strategy and sales-led strategy. As the names suggest, the former focuses on acquiring new customers via the product by delighting customers with impactful features. In contrast, the latter focuses on marketing efforts to attract new business before a sales team follows up with leads.
There are five key parts to a go-to-market strategy.
Identify target market:
This is where you define your customer persona - often called the ideal customer profile (ICP). This describes your preferred customer and the needs your product will satisfy.
Refine your value proposition:
Next, you need to research the products you're competing with. You need to understand where exactly your solution slots into the current market. With this information, you'll be able to uniquely target the right market segment with your product and realign your value proposition. You can work out exactly what pain points your prospective customers have with alternative solutions.
Establish a pricing strategy:
Choosing a pricing strategy can be tricky, as you could lose sales by aiming too high or hurt your profits by underpricing. However, you've already gained an understanding of competing products, which can guide your decision.
Find and choose sales & distribution channels:
Successful startups find a beneficial balance between sales and distribution channels. Sales channels are the avenues through which your target audience can purchase your product. Distribution channels are the delivery means to get your product into their hands.
Craft marketing & promotion strategy:
This is your plan to market your product to your users or customers. You should set out the steps you're going to take, as there are many bases to cover across marketing.
What makes a good company culture?
Previous research has highlighted how 80% of prospective employees research an organization's core mission and culture before applying for a role. This is not a new trend, with past studies highlighting that startups and other companies with a strong culture have outperformed the S&P 500 for attracting and retaining talent in many cases over the last decade.
It’s not just about monetary compensation to attract the best talent to a successful startup. So, what makes a good culture for a new startupthat will have potential employees vying for a role in your startup?
How to build a successful company culture
Startups and small businesses often generate a bad reputation for being fast-moving environments filled with poor communication, infighting, micromanagement, and poor retention.
While this can be true for some ventures, it's certainly not a rule, and it needn't be. There are several ways to encourage a good working culture. We've highlighted some of the critical approaches in brief below:
Building culture through diversity
There's little excuse for not embracing diversity in the modern world, and failure to do so will quickly draw negative attention. In one study, diversity has been shown to increase company profitability by 19%, while gender diversity has explicitly demonstrated increased productivity.
Building culture through accountability
Employees dislike few things more than micromanagement. When you hire new talent, you need to trust in your ability to gauge a person's skills and trust in their ability to apply them to their daily tasks and get the job done. Micromanagement only fosters discontent and can leave employees feeling burned out from constant, unwanted feedback. A lack of accountability can play a significant factor in why many startups fail.
Building culture through respect
Employees should be treated with the same respect and feel they are part of a united team. Striking this balance is often more challenging in a startup environment with far fewer bodies in the company. However, it's crucial to avoid creating an "us vs. them" environment in which senior leadership is far removed from your customer service and operations teams, and successful entrepreneurs know this well.
Building a culture focused on customer value
Tying back into the importance of your product's purpose and branding, your customer values should be intertwined through everything the company does. It's important that your employees are brought on-side and bought into your mission.
Building a culture through transparency
Transparency enables openness and communication between your senior leadership team and employees. It's crucial for building trust and job satisfaction while boosting morale.
How to implement culture in a remote or hybrid workforce
Companies have been facing increasing challenges since the Covid-19 pandemic began. While employees worldwide have celebrated remote working, companies had to and will continue to adapt to an environment that looked very different before the pandemic.
Aside from figuring out the logistics of remote working and the cybersecurity and people management challenges, organizations face another question: how do we retain company culture in a remote or hybrid environment?
Culture starts at the top
Your leadership team(s) are the champions of your startup culture. The best startups lead by example and embody the culture that your organization strives to maintain. While employees may be spread around the country - or globe - you can quickly garner their feelings toward company culture with anonymous surveys, which will tell you whether changes need to be made.
Culture must be clearly defined
Whether you've recently moved to remote working or your company is starting anew in this landscape, you'll need to communicate your company's values and goals clearly. These can be documented in online, communal spaces, such as through Confluence or similar business software. They can be reaffirmed in regular, monthly, bi-annual, or annual, companywide messages. They can be incorporated into the messaging that your company disseminates.
Utilize remote technology for companywide gatherings
Many startups and larger companies have regular, virtual, companywide conferences to provide key strategic direction and milestones updates. It doesn't have to be dull; some leaders also use this as an opportunity to recognize performance, give employee awards, share success stories, and engage in social events. You can use these opportunities to reaffirm your company's culture.
Encourage regular collaboration and communication
Communication and collaboration are crucial to a startup's success, even more than before, as the world has embraced more remote and hybrid working. There are now more tools than ever to encourage cross-team communication, including Teams, Slack, and Zoom. Similarly, workflow tools such as JIRA ensure that teams can continue to work together on projects.
Remember employee wellbeing
Focusing on employee well-being alongside performance and output is important. Many employees who now spend most of their time at home get less social contact than ever before, which can lead to feelings of isolation and loneliness. Numerous tools are available to support employee well-being, including benefits platforms, mental health support, and employee assistance programs that reach outside of a traditional health insurance plan.
The importance of strong culture for innovation in emerging technologies
Successful startups are constantly changing; it's a necessary trait for survival. Aside from your product, your business working practices and culture will also change and evolve. This is why fostering a culture of innovation in companies of all sizes is essential. After all, a business with an innovative culture will be better positioned for success. Why is this important?
A strong culture encourages innovation from within
Only a minute subset of employees feel that their suggestions or complaints influence organizational change. According to a study from Leadership IQ, only 6% of people say that good suggestions or valid employee complaints lead to important organizational changes. When change is acted upon, the suggestions will continue coming, and employees will feel encouraged to give their ideas. Innovation will then only come from serious investment rather than from within. If you embrace employee-driven innovation, positive change can happen from having everyone in the business seeking out new, innovative tools and processes on a day-to-day basis.
A strong culture can help you come up with better ideas
When the senior leadership team or project managers are solely responsible for driving change, you'll only receive strategic direction from a select few people. By harnessing the ideas of a more inclusive audience, i.e., your entire workforce, you'll have a greater range of potential ideas to act upon.
A strong culture can increase diversity throughout your company
When you're open to ideas from a broader pool of people, you'll naturally attract a range of different thinkers. This means you'll inevitably attract talent from all walks of life who have different approaches toward work. Your employees will be more likely to share their ideas and feel included in a more inclusive environment.
How do product, go-to-market, and culture combine to enhance startup success?
While it may seem like the product is the most crucial element to a startup, without a good GTM strategy and a good culture, that product won’t go anywhere.
All of the points that we've discussed are closely interlinked. To create a successful, high-quality product, you must ensure that your brand, message, and user-guided development are all spot-on. However, you'll need a diverse group of employees who are bought into your company's objectives and customer values to achieve that.
When your product, culture, and GTM are aligned, you can set yourself apart in the startup environment and rise above your competitors with a product that your users or customers sell for you. At Vation Ventures, we see this validated with our clients daily. Whether it’s evaluating your go-to-market strategy or looking to receive invaluable product feedback from global executives on your roadmap, we have solutions to help at every stage of your growth journey.
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