You have a good idea for a software product. If you are an entrepreneur and startup founder, you are eager to bring this idea to life by building an MVP (minimum viable product) to validate your assumptions and get initial users and funding.
However, building software is complex. Most startups fail in their first attempts because they don’t have enough technical know-how, have unrealistic expectations, don’t have product-market fit, or do not have enough money to continue running their business.
This meticulous guide will take you by the hand if you are starting to build your first tech product back as a startup.
Determine Your Goals and Success Metrics Upfront
Clearly defining specific goals and key results to measure with your MVP is the first step. Some examples of startup goals with an initial product include:
Validating core assumptions about the problem and your solution
Getting early user feedback to improve product-market fit
Demonstrating traction and initial revenue potential to attract funding
Establishing technology feasibility and the ability to rapidly build features
Testing channels that will work for user acquisition
Decide on the number of 1 to 3 metrics that signify success, for example, how many users, conversion rate, revenue produced, or the number of users that come back again. The right metrics to track allow you to focus on the priorities rather than the vanity ones – something a seasoned SaaS development company can help you define early in the product lifecycle.
Conduct In-Depth Competitor Analysis
Before starting product development, it is necessary to do thorough market and competitor research. By identifying existing solutions, you will understand customers’ needs better and better pinpoint where the gaps are that your startup can fill uniquely.
Analyze both direct competitors as well as alternative solutions that customers use. For each competitor, capture details around their product features, technology stack, business model, pricing, user base, funding raised, and weaknesses.
Look for potential white spaces in the market in terms of demographics, pricing, platforms, or use cases not served well. The insights will help scope your MVP’s key differentiators to stand out from the competition.
Define Your Target Customer Personas
While the temptation is to create a product for everyone, no startup has the resources to be all things to all people initially.
For that reason, you should define one or two primary customer personas before you start building. Detail their demographics, goals, fustrations and workflow to zero in on the right target users who are most likely to value your provided solution.
Designing the first version for a narrow, well-understood audience will enable tailoring the product exactly to their needs and priorities. Customer development techniques like interviews and surveys can provide further clarity on the personas.
Map the End-to-End User Journey
Next, map out the entire user flow – right from initial discovery of your product to onboarding to regular usage and referrals.
Outline key tasks users would want to achieve at each stage and how your software can help them accomplish them easily. Also note where they might face friction.
This exercise brings up aspects to address in the product experience, copy, tutorials, etc,. so users clearly understand your value and can extract it seamlessly.
Prioritize Must-Have Features for v1
Don’t be tempted to build all features on the roadmap first. This is how you establish ruthless focus by articulating the minimum set of core features that make up the essence of your product and that will give users the most value.
Group features into:
Must-haves for v1: Critical for delivering core value proposition
Nice-to-haves: Enhances experience but is non-essential
Future roadmap: Functionality for subsequent releases
The 80/20 rule is a good guideline – 80% of user value tends to come from 20% of features. Build just the 20% must-have feature set for your MVP. Release extras later based on user feedback.
Calculate Your Total Addressable Market (TAM)
While the TAM may be a rough estimate at this stage, doing a bottom-up calculation helps quantify the revenue potential and size the opportunity.
First, estimate your serviceable available market (SAM) – a subset of consumers realistically accessible to your startup in terms of demographics, reach, etc. Next, evaluate serviceable obtainable market (SOM) – consumers open to purchasing from a fledgling startup. SOM indicates your initial realistic buyer base.
The first cut of TAM is finally to multiply SOM by average contract value and period. It will also help to support fundraising conversations by painting a picture of market potential beyond direct consumers.
Set Realistic Timelines
First-time founders often grossly underestimate effort timelines, which jeopardizes planning. As a rule of thumb, building software takes much longer than anticipated.
Breaking down features into engineering tasks, getting developer estimates to set realistic schedules by applying 20 to 40% on top of the schedule to account for undue complexities, and understanding how much time you will need for them.
Also, budget for testing, bug fixing, documentation and refinements pre- and post-launch. Make customer testing cycles flexible for discoveries of timelines. If needed, plan fundraising to extend the runway.
Choose Technology Stack Aligning with Long-Term Vision
The technology platform and architectural decisions made for v1 live with the product for years. So the tech stack choice should meet both immediate feature needs as well as scale to accommodate plans without major rewrites.
Decide which of the options suits the criteria best of Speed of Development, Talent availability, Library/tools support, Scalability, Performance, Security, Costs. Most work for startups that use the cloud-native stacks on AWS/Azure, or if you are doing lean, Django/NodeJS works really well.
Hire Slow, Fire Fast
As the saying goes, A players hire A players, while B players hire C players. Spend time recruiting strong technical talent, even if it takes longer. Apart from coding skills, evaluate problem-solving ability, communication, speed of learning, and team culture fit.
Establish a rigorous standard for the initial engineers who will lay the groundwork for subsequent recruitment. Also, proactively replace non-performers early despite urgency. A stellar team significantly enhances the ability to execute.
Implement Rigorous Processes Early
To get features, it is all too easy for startups to not put processes in place, creating problems in the future. Ensure quality and velocity from the outset by enforcing strict adherence to documentation, code reviews, style guides, automated testing, and other practices that are not negotiable.
Institute checks like staging testing, pre-deployment, rollback procedures, and monitoring to prevent outages. Refactor periodically so technical debt doesn’t accumulate. The right processes will boost productivity.
Validate Riskiest Assumptions First
The key purpose of your MVP is testing hypotheses so you can refine the product. So prioritize validating the riskiest assumptions around customer problems, willingness to pay, and usability first through experiments before committing to full features.
For instance, create a concierge MVP to take users through a mocking of your solution in manual mode, receiving first feedback rather than investing in an expensive, fully automated product. Pick the 20% of features that will make or break adoption.
Understand Compliance Considerations
While regulations vary based on industry, data privacy, security, etc., it is better to avoid noncompliance in the early stages, as it will be expensive down the line. Research requirements such as HIPAA in healthcare, PCI-DSS in fintech, or GDPR for European customers that you have to fulfill.
Consult legal counsel on appropriate consent flows, disclosures, or audit trails needed in the product design phase itself to avoid rework down the line. Budget for any mandatory third-party security/compliance audits annually.
Institute Cybersecurity by Design
With so many breaches in the news, it can no longer be an afterthought either. Train the teams to write secure code, use encrypted connections, and understand is Principle of least privilege etc. – make security a priority from the very beginning.
The regular penetration testing is to catch vulnerabilities early. Therefore, you can consider setting up a bug bounty program with them by inviting ethical hackers to find flaws. Use WAFs or RASP-type tools to continuously monitor and defend dynamically at runtime.
Validate Technical Feasibility Early
Nothing kills startup momentum faster than realizing halfway that your solution is not technically feasible, too expensive, or will take forever to build. Before locking down specs, create a proof of concept or spike key technical challenges unique to your product, like real-time performance, payment integration, or ensuring regulatory compliance.
Building the riskiest 20% of the product early helps uncover complexities, gives more accurate timelines, and ensures no showstoppers later that require changing course after significant investment.
Model Unit Economics and Pricing
To arrive at a viable business model, analyze the costs associated with delivering your software – hosting, development/maintenance, sales, marketing, and support. Based on expenses and margin targets, decide on pricing tiers.
Also, evaluate the lifetime value of a customer. If LTV is lower than the costs of acquisition and support, unit economics won’t work regardless of market size unless subscriptions increase over time. Price accordingly.
Raise Enough Funding for 2-Year Runway
Statistically, 90% of startups fail due to running out of cash. To build a complete product and growth engine, raise enough funding to sustain operations for 18-24 months without revenue.
Budget for not just product development but also setting up sales processes, marketing campaigns, and customer support, which take time to convert into paying clients. Underfunding early is risky.
Obsess About the User Experience
Even if you’re the match cinch with the best technology in the world, intense competition means that users will switch as soon as your product is not intuitive or fun to use. Focus on the details customers notice that can be simple, visual design and convenient and responsive.
Skip those quick and constant (if not daily) touchpoints on a launching product that are necessary to augment data we already know, and instead prioritize UX investments like rapid prototyping, user testing or addressing feedback when development cycles. In fact, limitations in functionality can be compensated by great design.
Conclusion
Building the first version of a software product for your startup is exhilarating yet daunting. Follow the above guide on scoping the MVP, assembling the right team, validating assumptions early, focusing on user needs, and budgeting appropriately even before writing the first line of code.
Planning this way puts your first product release and your startup trajectory on a successful path. If you have a stellar product that really solves a problem for customers and passionately stay true to your vision with a flexibility to correct on evidence, this is all you need to build your startup glory.
Related: Background Checks: Why Your Business Needs Them
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