Next week is the fourth edition of Tech In Motion** (TIM), an event at which a startup “pitches” its product, and panelists and the audience analyze the business.* In November, I participated in TIM III as a panelist along with Troy Henikoff, CEO of Excelerate Labs, Bob Sell, a Partner for Seyfarth Shaw, and Matt Cobb, VP of Product of the Chicago startup Valkre to hear from the presenting startup, Spontaneous.
During the Q&A session, we broke down what I consider the key elements of any startup business model: (1) identify the problem; (2) learn from customers and/or partners; (3) develop a corresponding solution; (4) prioritize which network to target; (5) revenue model; and (6) implement customer acquisition strategies. The last point is often a black box for startups. Dashfire brainstorms with a number of startups, and before we discuss technical feasibility, we always touch on customer acquisition and ask, “how will you acquire your first 10,000 users?”
The most common response is “we will build an awesome site that will attract new users.” Unfortunately, this is not the field of dreams. Just building something does not guarantee that people will come. Our attention is divided between 500K iPhone apps, 300K Android apps, and a gazillion web applications. Attention is a currency and startups need to focus on building up their reserves. Having a defined customer acquisition strategy is integral for a startups; the dreaded scenario is launching a site to no audience.
A business that targets end users (B2C) is often the most challenging. Where do you find your users? How do you convince them to not only try your application but to return? Going viral? That’s not something you can just will. It takes a perfect combination of position, product, and luck. Facebook? Twitter? Both are options, but the user bases are so vast making it difficult to target the key demographic. Search? The associated individual user acquisition costs with Facebook or Google can be a gamble and expensive.
Instead, go to where your customers currently reside. Make channel partnerships. Find a business, a group, or a targeted network and gain access to their users. It may be a longer sale cycle, but once executed, you can grow from 0 – 10,000 more quickly and cost effectively than acquiring users one at a time.
*Our very own JC Garrett will be a panelist at TIM IV.
**Video highlights from TIM III: http://vimeo.com/32249128