Sunday, September 26, 2010

Startups - show a path to revenue or LOVE?

I wanted to share a few thoughts on whether startups should show revenue first or love? i.e. once the product is ready should it generate immediate revenue or display customer desirability and love. Of course, having both is ideal but tough.

I've seen and researched startups in many areas till date - social, mobile, etc. My thoughts are relegated to companies with some sort of consumer element to them (where the eventual customer is the end-user). My theory is that displaying immense customer desirability is a must-have and absolutely essential even if that comes in deference to immediate revenue generation. I can point out to many startups that became great companies (YouTube, Facebook) and new and upcoming ones which are generating interest. I'll not name them but you've ones that are reinventing Q&A using a social angle or displaying location based check-in and services using innovative display on your mobile phone. These are not new ideas but regurgitating old ones. YouTube was not the first video site nor was Facebook the first to market in social media. So, why have these worked and not others. Is it luck or something else?

It's their understanding of the end-user and making their product immensely desirable and loved. The world is all about how things are perceived, viewed, and consumed. Once you've these elements taken care of, audience follows. So, who is your user, there are generally multiple ones
  1. The eventual user or end-user or consumer. This is the audience that you've to please.
  2. Economic buyer, e.g. advertiser. She/he is the one who will pay your bills.
Ideally you've got to get love from both but given a choice follow this priority order.

So, what is the takeaway, in your startup team, make your product be loved. Love = more customer traction = eventual revenue. And how you can do that, apart from deeply understanding the customer and having a great product? Get the services of a great designer - a very important trait in addition to the engineering team.

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