Research & Refine

This is where a lot of people get longwinded. All those words behind the business plan, marketing mumbo jumbo, and strategic direction – all the planning stuff that, to be honest, can waste a lot of time.

I'm going to keep this section as short as possible for two good reasons.

You want to get to the next step and build a product!
If you're working on a project that legitimately requires this stuff, move to the next idea

The whole goal here is to get something up FAST. If you're spending hours researching competitors and plotting out the marketability of your product – that's time you're not spending actually building the product.

It's a waste.

But there are some important bits here – things you should think about at least for a moment before diving into your first product.

We're going to take a closer look at the market into which you're launching your product, the competitors (at least the ones you have to worry about), and how to talk about and promote what you're doing.

With some ammunition in the chamber, we'll then dive into actually creating the product.

Market Analysis

Back on Sunday we talked about the the big picture for the whole thing – how apps have evolved and are straddling that hybrid line between web-based and native. How technology has evolved, and where people are more likely to spend their time.

Now we need to look at where those factors intersect the product idea you've generated. What are other companies doing in this space and who are your ideal customers – basically, who's already selling here and how are you going to join them?

The Big Picture

We'll get to the competitors in a moment, but first, what does this space look like right now from a 50,000-foot level? What's selling? What's new? What's the biggest problem people face?

If your product is to help people find better apps for their device, you would look at the saturation of app stores, the lack of centralized support, even within Apple's store where volume has overcome curation and search algorithms are poor. Look at how other companies curate apps on their own websites quite successfully or offer free downloads as part of a marketing scheme.

These are the factors you'll notice and that will paint a larger picture of what's happening in the space. Here are some things to look for:

Is there a big problem that is plaguing the industry right now? How are others responding to it?
What are the newest products or tools currently available for the industry?
What is the biggest innovation of the last few years?
Who has been successful of late in this industry? Who has not?

Don't worry about who is a competitor or not – just focus on the industry as a whole and get a better sense of what's working, what's not, and what hasn't been done yet.

The Ideal Customer

Who is the person you want to sell your product to? Having at least a general idea of what the ideal customer looks like helps you make a lot of decisions – the language of your interface and documentation, the way you present the product on your website and in app stores. This will all be affected by the person who most wants it.

There are a couple things to keep in mind here.

First, we can't target everyone, so don't try. You will make your product to solve a single problem, hopefully a big one. So let's look at who also has those problems and focus our energy there.

Here's how that will look:

Map out 2-3 pain points – big fat problems that your product might solve.
Look at who is most likely to have those problems. Create a list.
Confirm that these people are in your buyer groups through some cursory research.

This entire process should take you no more than 15-20 minutes. Simply jot down the pain points you identified, brainstorm a few people you think would be best served by your solution and Google the results to see if your assumptions are confirmed.

If you find specific questions being asked in LinkedIn Groups, Facebook, Groups, on Quora, or in other industry forums, jackpot. You're set. If not, refine it a bit and try again. Aim to get 2-3 confirmations before moving on.

If you do this for more than 20 minutes and aren't finding anyone, consider whether this is really a good product idea. If there aren't questions or complaints floating around out there to match yours, it might not be as much of a slam dunk as you thought. Or maybe you're not describing it the same as your potential customers.

Competition

Guaranteed there are other companies out there doing something a lot like what you're doing. You aren't the first, nor will you be the last to tackle the problem your product is designed to solve.

This is not a big deal. In fact, it's a good thing. Competition means demand and demand means there's likely room for you to come in and build a business.

If there was no competition at all, you'd probably be looking at a barren wasteland with few or no customers. Which would you prefer?

So competitors are good because they mean there's money out there to be earned. They also offer one other major benefit – information. You can learn a LOT from competitors, from what they do right to what they do horribly wrong.

It's like watching someone else jump into the lake to see whether they get bitten by something. You're getting in when you know the water is safe.

You need to know three key things here – who your biggest competitors are (the ones that may not even realize you exist), who the stealth competitors are who may not be on anyone's radar yet, and what they typically do when someone else enters that water.

Pegging the Competition

Always start at the top. Who are the biggest, best funded, and most powerful competitors on the market and why?

Step one here is to just jot a few names down. You probably already know a few from what little research has been done. Once you're done, though, take it at least one step further and look for the little guys who are trying to work their way up too. I always use Google for this. For example, if you were looking for a company that sold custom dress shirts, you could type in "custom dress shirts" but then you'll just find the big guys. Instead, search for much more specific terms like "button down shirts made from scratch just for me". Wit this search, you'll get the little guys just getting started. Other tools you can use include the following sites:

These will give you a bit more data on which companies are competing with each other online and how they compare to one another. There was a time when digital presence didn't equate to company size. That time is long gone – if someone has a big, powerful website, they are a big powerful company. Period.

Your goal here is to determine who the "Coke" of the industry is. Once you know who that company is, ask yourself a couple of questions:

Do they innovate and introduce new solutions and products to the market?
Do they wait for others to innovate and then buy those companies to grow?
Is it somewhere in between the two with heavy investment in both R&D and M&A?
How does the public view this company? As a helping hand or a corporate goliath?

These questions will have a lot to do with the warmth of the water when you jump in. A company that actively innovates and invests and is viewed positively by the public is harder to make a dent against than one that is content to sit back and wait for little guys like you to do all the hard work. Neither is bad, but it affects the type of situation you're stepping in to.

Are There Any Stealth Competitors?

The big guys are easy. They leave their prints on everything and are proud of it.

For these guys, look for the following:

Signs of Disruption – Has anything changed dramatically? Is someone trying to upend what is considered "normal" in the industry in a way that changes or breaks the standard. 37 Signals' low cost, feature-light tools are a prime example of a stealthy paradigm shift in the project management and CRM space. Basecamp and Highrise have millions of users now (and are name brands), but when they first hit the scene as upstarts with new ideas, the big guys didn't pay much notice.
New Ideas and New Concepts – Sometimes technology enables us to do something completely different than we've ever done it before. This can create competitors in a space where they didn't exist before. It's how Apple can become a competitor to Barnes & Noble. Or how Uber can upend a centuries old industry in major cities. Technology changes everything. Look for this in your field, or signs that it could be coming.
Beginning Shifts in an Industry – Industries change all the time often because of technology, but sometimes they're just getting started (or have yet to make a shift). Disruptions take time to catch on. Travel is a great example, though. The travel industry looks NOTHING like it did 20 years ago. Priceline, Kayak, TripAdvisor, and AirBnB are just some of the technologies that have upended how we travel. There will be more.

Look for signals and shifts like these and note where the changes have occurred. There doesn't have to be a competitor out there actively changing the way something works either. It can be a weak point you notice – something you think will change in the near future due to technological advances.

How Does the Competition Respond?

When you come in to the market, stomping around with your new technology asking people to give you money instead of those other guys, how will they respond? Every situation is different, but guaranteed there have been competitors in the past who did the same thing.

Look at what those past competitors did and how they did it, and then review what the response was.

Do the big guys just buy up anyone that gets in their way? Do they ignore them? Do they build to compete and squash them under their superior install-base and marketing budget? Or are they legitimately cool with competition in the space and help to foster it?

That last one is pretty unlikely, but you never know – humanity can surprise you every now and then.

The truth is that most companies with any kind of success have their ears to the ground constantly and will take action if they see someone trying to carve a piece out of their market share.

Spend some time reviewing previous run ins with other competitors to see what will happen to you in the same situation. The last thing you want is your micro-startup with no budget and a brand new product being steamrolled by a big guy with a mega-budget and no qualms about ruining your business. This happened to me with stam.pr. I found my biggest competitor had a history of buying new little guys like me. So, to set things straight, after I started, I reached out to him and sure enough, he wanted to buy me out. I declined.

What's Your One Liner?

With the competition out of the way (or at least on your mind), it's time to think about how you'll talk about your company.

Seems like a small thing, but in the coming weeks and months you're going to be talking about your product and your burgeoning company a LOT. Every time someone ask what you're building or you attend a meetup, or you meet with a new contractor or even an investor – you're going to use the same handful of sentences to describe what you do, why you do it, and how it's different.

So it had better be good.

There are two ways to answer this and I recommend you have an answer to both.

There's the elevator pitch – which is a bit longer and goes into some detail what the product is designed for and who will care. A good elevator pitch paints a picture of why your product exists and how it differs from every other one out there. A bad one rambles on and leaves who you're talking to even more confused than before they asked.

Most elevator pitches are bad.

The second way to answer this is the one-liner. To me this is arguably more important. When someone asks what your product does, they don't want to hear a long description of the product's synergy with modern technologies, blah, blah, blah. They want to know what it does.

One line.

This is not easy, and it will take many iterations to get it right. But you'll eventually get it and when you do, you'll find that people are much more engaged when you explain your company.

Here's an example using the century's most successful consumer tech, the iPhone:

One liner: It's a computer you carry around in your pocket

Elevator: It's an Internet connected computer you carry in your pocket that let's you install apps from a private, curated software store.

And that's a short one – a really short one.

Bottom line is that when time is short and clarity is vital you need to be able to boil down your product's purpose and functions into a single line.

I've met and worked with a lot of startup founders in my life and this comes up a lot. One guy I know who recently received VC money for his company went through numerous elevator-style descriptions of his companies (or longer) and I still had no idea what he did. When I finally looked at his website, it was instantly clear to me what he did – and it wasn't complicated.

Yes, the benefits of your product, the cool unique features, and the tweaks that only you can offer are important, but don't start there – make sure they know what you do first, then get into the nitty gritty.

Strategic Direction of Your Business

Ever notice how a lot of startup founders drop out of business school? There's a good reason for that.

Instead of sitting in a classroom talking about the theory of starting a business for 2-4 years, these people want to DO it. Just like you.

That said, there is some good stuff buried in all the noise that can help you get a better sense of where you're headed and more importantly, why you're headed in that direction.

So I'm going to boil down the business school stuff to the next couple of pages, point out what you need to know, skip over the rest, and you should have everything you need to get started launching your business.

What's a SWOT?

Business school textbooks are littered with acronyms that don't mean much. SWOT is one of those – it's an incredibly stupid, suit & tie name for a very useful concept. Here's what it stands for:

Strength

Weakness

Opportunity

Threat

And while I don't recommend you go to the trouble of actually completing one of these in the kind of detail that an MBA class would require, the concepts behind it can come in handy with the information you just gathered about your competitors.

The idea here is to know and be perfectly honest with yourself about where you stand against your competitors. This is an extremely difficult thing to do. Even the best of the best scientists are subject to wanting their hypothesis to be true, and at times being biased in their analysis. We all think we're awesome and want others to know just how awesome. So this can be tricky. It's why a lot of companies hire a consultant to come in and do this for them.

Strengths – What do you have that other people don't have. What makes your perspective uniquely strong and how can it help you succeed? A lot of this is your agility as a startup and someone who is building from the ground up. You have no customers to please, just a cool product to make.
Weaknesses – At the same time, where are you weak. You're new. You're small. You're inexperienced (arguably strengths too but bear with me). And there may be others – depends on who your competitors are and how aggressive they can be.
Opportunities – What kind of holes did you find in this space? Are there things your competitors aren't doing that you can? Technologies entering the space that everyone else is ignoring? A looming paradigm shift that you can jump in front of?
Threats – What's going to get in your way as you get started. Identify the threats in advance and you can prepare for them. Negativity from your friends and family. Competitor backlash. Lack of funds. Slow growth. We've covered all of these – make sure you keep them top of mind.

Don’t spend any more time on this until you have a stable product and paying customers. Consider coming back at various milestones to work on this and refine it as you build out your ideas. In the meantime, be wary that these things exist. Write them down and keep them in mind as you get started. More importantly, spend time watching what others do and when they make mistakes, be ready to pounce on them.

The Business Model

This is simple: make money. Your business model isn't about getting bought or acquiring funding or changing the world. It's about making money first and foremost because this way, when no one wants to buy you, you can still eat.

If you're not pulling in money, you're doing it wrong and should start over. And with this book, you should be on your way to doing that in just a few days. But don't get caught up in mapping out your profitability over time, or prepping financials, or in hunting down investors (we'll get to that).

Focus on one thing and one thing only, both to ensure you get something out of this and to make it as easy as possible on yourself – make money.

What's It Going to Cost?

We spent a fair bit of time on this on the first day. You now know roughly what it costs to do pretty much anything that will be needed in building your product.

Development costs. Support. Software purchases. Maintenance. Testing. It's all outlined in that chapter, so go back and take a look frequently as you get started.

More importantly, keep an updated list somewhere.

You don't need a fancy spreadsheet that outlines what you'll be spending for months or even years in advance, but you should have a clear idea of what you'll be investing in the hear and now and what you hope to get back out of it.

If you don't know what it costs, how can you decide if it's profitable? And it needs to be profitable to keep going.

The Marketing Plan

Last point I want to touch on from the business school side of things before moving on to the next day – marketing.

Here's what my quick and dirty startup marketing plan looks like:

Marketing is not yet about building your business. It's about learning what your product looks like, what your business is capable of, and whether your model is viable.

That said, there are some things you absolutely need to know – if only so you can create a better product. Things like how your competition is acquiring users, what you can and should spend on marketing (if anything), how to price your product, and when to promote it (and how) once it's completed.

Again, I want to keep this short because the most important thing you can do is invest time and money into actually building an awesome product, but you'll now know how to get your first handful of users when you reach that point.

What Is the Competition Doing?

Fortunately, you've pretty much already done this. You know what the competition is doing and whether it's working or not (more or less). Your own budget will be small (or non-existent), so this can help you pinpoint easy, quick wins when you start pushing your product out there.

Here are some things to look for:

Where are they writing about or talking about their product?
How much money are they spending to promote their product? Is it working?
Are their multiple players in the space gunning for the same attention?
How much content is written about the problems and issues in this field?

Are you going to come out of the gate doing all of the above? Probably not – it's a waste of time this early, but by knowing what the competition is doing and finding any weak spots if they're out there, you'll have a few trump cards in your back pocket when the time comes to play them.

When Will You Start Marketing and How?

So if a marketing campaign is far in the future, what will you do now and how long will it be before you can start actively promoting your product?

Keep in mind that this is new…very new. You haven't even built it yet and you don't know if it's going to be a success.

Why invest time and money promoting something that's yet to prove itself one way or another. Anything can be successful if you throw enough money at it. That's why we wait. We want to land on the product that can be successful and explode with an actively growing user base WITHOUT spending thousands on marketing. After that, it's the cherry on top – you can accelerate growth, but only once you can accord to pay for that acceleration.

What I want you to know now is:

Who you're selling it to
Why they want it
What you can do easily when the time comes

With those things in mind, the product will be better and have a stronger chance of reaching the point at which marketing makes sense. Right now, we're not there yet.

Positioning, Branding, and Product Strategy

With the little bit of research you have done, you now know a fair amount about the competition, what works and what doesn't, who's buying, and what other people are spending money on to promote in this space.

So you can start mapping out, at least in the ridiculously early, on a napkin stages what your position in this space will be, how you will brand your product, and what the pricing and distribution will look like.

Hint: right now, it doesn't really matter. If your product does something really well, that's your brand and your positioning and your strategy rolled up in one. You sell on that differentiator and if it doesn't sell, you have your answer, but there are some things keep in the back of your mind for the steps after that:

Name of the Product – Don't waste time on this yet. Just keep it in mind – whatever you name it, it should be memorable and reflect what the product does.
Company Brand vs. Product Brand – Is your product your company or do you want to make more of these things? Think about it now and start separating the two if necessary.
Distribution and Pricing – You already know where your product will be distributed (native app store or web app). You also know roughly what it will cost based on competitor pricing. Write it down and start planning around those things. It will affect a lot of stuff down the line.
Launch – There will be no formal launch and very minimal pre-launch. Your goal is to get something done and get it up so people can start using it. If it works, it's worth launching – in fact, we'll spend the entirety of the last section of this book on the launch and feedback cycles. Don't worry about it from a marketing perspective.

As you can see, marketing is an afterthought at this point. Is it important? Eventually yes. Right now, barely. There's some cool stuff out there, and it can help drive user growth, but it's such a time sink and this early on, time is at a premium. Awesome product first, promotion of said product later.

Bringing Everything Together

There you have it – we just boiled down several books' worth of MBA-level worry into 15 pages.

It's not that this stuff isn't important. If your business takes off someday and you need to grow, hire people, promote products, and manage the scaling of your business you'll need to know a heck of a lot more, but right now that stuff is far in the future.

Right now your primary concern is building an amazing product and what we've covered in the last few pages will help you get there. A business plan, big time funding, and expensive marketing efforts won't.

It's all good stuff to keep in mind, though, so don't forget that it's out there. If all goes well, you'll need to start thinking about these things sooner or later and knowing what you don't yet know is just as important as the knowledge itself. But give it some time. You have a ways to go yet.

Seven Day Startup