Iterate Until You Nail It Before You Scale It!

Most entrepreneurs feel like their journey is unique. And it truly is.

However, most startups follow the same roadmap during the search phase of company building. To put it in Steve Blank’s words in his famous book Four Steps to the Epiphany:

“However dissimilar the stories may be in detail, their outline is always the same. Most entrepreneurs travel down the startup path without a roadmap and believe no model or template could apply to their new venture. They are wrong. For the path of a startup is well worn, and well understood.”

This outline for startups during the search phase includes three steps. Within each step, you have to iterate until you figure it out and only then move to the next step.

The faster you iterate, the sooner you find an inflection point and can move on. Speed is your greatest ally as you’re on borrowed time during this stage of company building.

Step 1: Idea / Customer Discovery Phase

The first phase is all about figuring out if your idea is addressing a real problem (1) with a clear and compelling value proposition (2) for a specific set of customers (3).

To validate your idea use The Mom Test framework by Rob Fitzpatrick: You shouldn’t ask your mom if your business idea is a good one. Especially your mom is very likely to lie to you and say it is regardless of the idea (because she loves you).

Instead, the Mom Test framework provides a simple set of rules for crafting questions that even your mom can’t lie to you about. Including these three rules:

1. DO NOT pitch the idea as YOUR idea! Most people feel bad about giving honest feedback (especially your mom) - just saying “this sounds cool” is way easier. Instead, frame it as somebody else’s idea “I met this guy Connor at a conference and he had this idea about building a startup reinventing networking - what do yo think?”. This will lead to more honest feedback and 10x better customer discovery.
2. Talk to your (potential) customers about their lives and challenges instead of your idea. Thereby, focus on specifics in the past instead of generics / opinions about the future. Specifically, you want to understand how they solve this problem today. If they have already invested in either a solution or hack, listen carefully as they are much more likely to be early adopters with fantastic feedback! For example, when Connor talks to people about the idea of Bridge, his eyes light up when they say "Can I share my screen - I want to show you my Airtable and Zapier hack I built to help me manage the intros I make and ask for".
3. Make sure to also assess their willingness to pay for a product like yours.

Step 2: Product / Customer Validation Phase

The focus of the Product and Customer Validation phase is on building a product that delivers at least one very compelling value proposition (4) for your customers.

Before you start building your full product, do “Riskiest Assumptions Tests (RATS)”. This means “testing” your riskiest assumptions regarding your product, customers and business model. For Connor and Bridge, aiming to build a product for making introductions better, RATS included testing whether users would interact with the form Bridge sent them prior to making introductions independent of whether they were Bridge users already. Once he got assurance that they would, he moved on.

When you’ve started building the product, always be on the lookout for “despite moments”– i.e. “despite not having a specific key functionality yet, are people jumping on the product regardless?”. These are good early indicators that you’re on to something.

Once your product is in your customers’ hands, the main way to know and measure that you are delivering value to them is usage (5). While high usage is great, keep in mind that unfortunately, usage doesn’t always go hand in hand with willingness to pay. On top, make sure to measure the ROI for your customers at this point by looking at THEIR unit economics (6) (not just your own).

Step 3: Marketing & Sales / Customer Creation Phase

After figuring out your idea and product, the third phase is all about figuring out your Go-To-Market (GTM).

As part of this phase, you need to nail your positioning (7) – i.e. are you better, cheaper, different or newer than other offerings? For more, make sure to check out the book Positioning by Al Ries and Jack Trout. Or take it a step further and look at category design - see the book Play Bigger by Al Ramandan et al.

The same goes for your messaging (8). Make sure to capture what your customers / users are saying about your product. Is the messaging consistent? Or are they all saying different things? Consistency in customer messaging is key to PMF (and something investors will certainly look for at this stage).

On top, you also need to figure out your distribution channels (9). Finding ways to generate consistent leads is oftentimes the hardest part especially for first time founders. While doing so, optimize for running experiments to search for a viable GTM. There are almost infinite options when you combine positioning x messaging x channels. Thus, having an experimentation mindset combined with building an experimentation culture and capability is key.

The last step is to then figure out your sales process (10). While marketing is near infinite in its combinations and complexity, sales is fairly easy in comparison. It’s pretty universal and well understood. As part of figuring out your sales process, make sure to NOT hire sales people until you have too many leads to handle and the founders have closed at least five deals themselves first!

ONLY START SCALING AFTER YOU COMPLETE ALL TEN STEPS

The time for scaling comes when you’ve completed all ten steps and reached PMF. Defining and measuring PMF is a topic for another discussion (see e.g. Superhuman’s engine to find it).

If you start scaling before you have steps (1) to (10) figured out and need to pivot (which you’re constantly doing in a smaller or bigger way during the search phase), money, time and energy gets wasted very quickly and your chances of success decrease significantly.

To avoid this, make sure to focus on search until you complete all (10) steps and get to PMF. Only once you’ve completed all ten steps and have nailed it, then you should go ahead and scale it!

How Connor does this at Bridge:

Nailing it before you scale it means:

• Knowing where you are on the ten steps at all times, focusing ONLY on that stage and ONLY optimizing for that stage.
• Having the discipline to know when to go slower in order to build the foundations you need.

Obsession with distribution: While 1st time founders are obsessed with product, 2nd time founders are oftentimes obsessed with distribution:

• From Day 1, Connor and Bridge optimized everything to run experiments around distribution as early on as possible. This included listing their GTM assumptions and testing the shortest path to validating them using Riskiest Assumptions Tests (RATS).
• On top, the way the Bridge product is built, every introduction made via Bridge is an opportunity to win a new user (product lead growth). Thus, Connor is constantly iterating around building a viral flywheel. If they can drive usage and retention, then leads (distribution) are baked in with the way they are building Bridge.

Thank you for sharing this insight Connor!

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