EstBAN Angel Camp, which took place at the beginning of October, brought more than 50 angels and representatives of startup ecosystem to Tartu. We will give you the best overview of presentations, one of them is what should every startup keep always in mind, based on Aive Uus presentation.
“Product market fit”
The first mistake is that startups don’t validate their idea sufficiently. Product market fit is a first step to building a successful venture where the product satisfies a strong market demand. Startups tend to fall in love with their product, and they feel that they know exactly what the end-customer wants. However, it is not really how it is, founders can get into a trap by assuming that their product fits customer’s needs, but assuming this can get quite expensive. And that’s why it is important to validate the idea and this validation will provide an understanding if customers need the product and will actually use it. Said differently, validation will show if a product satisfies market demand, i.e has market fit.
The second thing to point out is that founders need to have a perfect prioritization skill. Sometimes startups forget to figure out what is the most important business goal at the exact moment. Startups are normally constrained by money and time, to operate in such environment, a founder should identify the priorities correctly and execute them fast. In growth hacking, it is called the Northern Star. Also, this is something that should be shared with the whole team, founders, sales, developers and investors. If founders and the developing team work closely together to achieve growth goals, Northern Star can be put into a nice angle – end-user monitoring marketing and development in a way that it helps to bring more growth. Ideas can be multiple, but for a good plan or strategy, feature prioritization is a must.
“Setting KPIs and measuring results”
Last, but not the least important is setting KPIs and understanding the importance of suitable measurement. To be able to improve on something, one needs to understand how to measure it first. Every startup should plan on how to measure the results. If they don’t plan it ahead, later on, they might not have the data that could be used to track the progress. So it’s important to understand what to measure, to plan it, and to get the data for the measurement to make a conclusion. After that, when startup has set the KPI’s, they should develop a strategy on how to improve those KPIs.
As an example of the importance of setting the right KPIs – Facebook wants to maximize the users’ stay at the platform and therefore their main KPI is how much time the person spends on the platform. And they can improve this KPI, i.e increase the time of scrolling, by using AI to recommend content that they believe will make the user keep on scrolling and stay on the platform. This way Facebook’s KPI is not the number of users on the platform but rather the time spent on the platform.
With Airbnb, they care more about booking rates – so their KPI is the number of bookings. If Airbnb offers a faster and easier way to find an apartment for a customer, then it is more probable that a customer will book and not bounce out. Therefore, Airbnb uses AI to do real-time personalized recommendations to the customers based on what they have looked before. This makes finding an apartment much faster which leads to a higher booking rate. By introducing personalized recommendations Airbnb increased the booking by +3.8%. This showcases how important it is to find a correct KPI that defines your business model and have the focus on improving this KPI with the current technologies.