What should startups focus on at the start?

Let me share a story: I have a friend, Jane (not her real name), who decided to exercise more and eat healthy starting this year. She tries to cut down on her calories intake and planned to go for runs and work out in the gym. To show her determination, she bought our school's £190 gym membership. It is a way of forcing herself to keep up with her workout routine too because since she has spent so much for the membership, she has to go to the gym often enough to make her money worthwhile.

Knowing about her situation, I recommended Pact to her by sending her the link to their website. Pact is a mobile phone app that allows users to make weekly pact to exercise more or eat more healthily. If users do not keep to their pacts, they will pay a certain amount of money determined by themselves to other users. If they keep to their pacts, they will receive cash from those who did not. After reading the website, she thought that the idea is brilliant and downloaded the app to use immediately.

While I was happy to have helped a friend in a way, I realised that this can be applied to how startups go about selling their products or services initially.

Cookie Monsters

In Lean Startup's terms, my friend would be Pact's cookie monster. In layman terms, this is probably how she had reacted when she learnt about Pact:

Pact users set a certain amount of money they have to pay if they do not keep to their pacts. So, there is a monetary pressure to keep to their pacts. Jane signed up for the expensive gym membership so that she feels pressured to workout regularly. Otherwise she will be wasting her money. Her behaviour is similar to the concept of Pact. Therefore, she could relate to it immediately.

Applying this idea to startups, one of the first few things a startup should do is to approach people whose behaviours match the concept of its solution. These people come up with their own methods of solving the problems they face (Jane signing up to an expensive gym membership so she does not skip her workouts). When the concept of a startup's solution matches their behaviour (pay others if you do not keep to your pact VS waste money if she does not go to the gym), they can relate to the solution immediately. These are the people who are most likely to sign up or make a purchase.

More often than not, they feel that the startup's solution is better than their own solution. Therefore, they are more inclined to adopt the startup's solution. For the startup, this means increasing the number of people who are signing up to its solution (Activation).

I suggest that this is one of the first few things a startup should do because of 2 reasons.

One, this approach is the fastest way to get people who will try its solution because they are the easiest to convince (low hanging fruits) and they belong to the startup's targeted customer segment. When there are people trying its solution, it can collect feedback from them directly (asking them directly) or indirectly (see how they use the solution) to improve its solution. Only when there are people using its solution, the startup can learn how to make its solution better for its target customers because it knows what areas to work on.

Two, also, only when there are people using its solution (Activation), the startup can work on other aspects of the business such as keeping the customers (Retention), getting its current users to spread the idea (Referral) and earning money (Revenue).

Therefore, one of the first few things a startup should do is to get people to use its solution. In conclusion, a startup should approach the right people so that it can quickly get people to use its solution. When people are using its solution,

• it can learn from them and improve its solution, and
• it is then meaningful to improve other aspects of the business.