Fork in the road before startup execution and definitions of PoC, Prototype, MVP, PMF, MB!
Now you know about “Eureka moment” and “What is a startup company! If don’t, check my previous articles.
Today, most founders have been focusing too much on their product first then looking for an investment as a pre-seed or a seed level.
On the other hand, investors mostly venture capitals, have been looking for startups about to scale.
They mostly go upon metrics such as an eight people team, ready to go global, MRR & ARR, a churn rate, a monthly 20% growth rate and so on…
The truth is they usually plan x3-x10 exits from those metric based startups. Their motto is “You can’t manage what you can’t measure.”
Yes. That makes sense. It is also important for founders as much as investors.
On the other hand, angel investors mostly experience about startups in those VCs. I mean from experienced one. After that, they maybe prefer to invest alone.
So there are no crazy angels investing 10–50 startups at too risky levels at the same time.
Investments are always problem.
When you think all of them, what should a founder focus on?
They should become neither product focused nor investment focused. They should focus just only marketing and sales from the first moment!
Marketing and sales are going to reshape your product with pivots and bring an investment.
After an eureka moment and a deeply market research, you are going to come to the fork in road as a 2 ways exit before execution.
At this moment, you should be aware of “product-market fit — market entry barrier”
“product-market fit — market entry barrier” Don’t forget about it!
What is a product market fit?
Product-market fit (PMF) starts with first sales of a startup:
When you have $0 of MRR, you have no product/market fit. From $1 to $10k MRR, you have the illusion of product/market fit. $10k to $100k MRR is a semblance of product/market fit. $100k to $500k MRR is a product/market fit sweet spot. $500k to $1m MRR, product/market fit founded.
What is a market barrier?
Market entry barrier (MB) is the thing that how much you should invest in your business. If the risk is maximum, market barrier is low. If the risk is minimum, market barrier can be quite a little bit higher.
So before definitions, I mentioned that there will be a fork in the road before to starting execution:
So, the first way:
There can be startups as competitors reached after a sweet spot of PMF step. They can be a local or global.
It means, there is a market barrier. They crossed the chasm. They create a market includes innovators, early adopters and early majority. It means the risk is low and the market barrier is high so you need to invest in a branding, sales and marketing plus a product and a user experience better than them from the beginning.
If you plan a something disruptive against rivals, you also have to solve money issue at your early stages because it can be copied but not so fastly. Still an empty market (your market) is your advantage and means much more lower market barrier with lower risk. (About copy issues in next articles we will see what is defensibility!)
The second way:
There can be startups not reached a sweet spot of PMF step.
They can be a local or global. It directly means that still risk is high and market barrier is low so you can decide to start your execution journey.
You can start with proof of concept (PoC), prototype and MVP. It means you are going to validate an idea. You will have pivots and it will take a little bit time.
In two ways, a product is just only a product in the universe that noone knows on internet if there is no marketing and sales. That is why you should start from the first moment. For example, writing blogs can be a good start. (We will deeply dive marketing and sales tips in next articles!)
So PoC, prototype, MVP! What are those buzzwords?
PoC means proof of concept. It will show you that your idea operationally feasible or not. Is there any legal issue? It should be an app or a website? If it should be connected with any other app, is it possible? It means something can be done or not?
Prototype means how to demonstrate. I mean how it will be look like or it will be used. It can be unfunctional and can include fake buttons etc. Mostly co-founders will understand the product journey and some market tests can be done in this step. Maybe with a little working landing page?
MVP means minimum viable product. MVP means will your potential customers buy it or not? It changes from a startup to a start up. Today mostly means minimum product that can be sold. It will lunched with minimum features but makes people imagine about the future.
Than with your first sales, whether you earn $1, your product market fit journey starts.
But even you earn $1, you are still in death valley. Death valley means you are away from break even point and you are in -revenue (We will talk about death valley in the another article.)
Free users can be misleading about pivots but paying customers even after 10 sales will show you how you are going to plan your product development and financials.
Mostly in markets, painkiller products are still not reached final product market fit. Vitamin or candy products are more reachable about final product market fit. (We will talk about product types in another articles as well!)
As a result of all:
-Check your competitors position from the view of product market fit steps,
-Check your position at fork in the road before execution,
-Remind always that you should be marketing and sales focused from the first time. Not product and investment,
So, which one is your way? The first way or the second way?
Are you going to take it or turn this challenge back?
Are you personally ready for this kind of “The hobbit: An unexpected journey”?
Be carefull!
It can be a start of the long journey and very important decision of your life!
