For startups, those questions include:
- What do your customers need?
- What is their customers' pain points?
- Are you solving the right problem?
- How does your clients feel about the work they do?
- Do you have the understanding and empathy to see things through your customers' perspective?
- What problem are you solving and what are you bringing to the market that's not already there? Or that's an improvement over current competitors? (Note: sometimes what startups may be solving isn't through a new technology but through a new approach or business model. For example, GE changed how it charged for maintaining aircraft engines, with a pay-by-the-hour that proved to be more cost-efficient than the prior model, and very effective for engine owners and for GE. Really it was a change to how it charged customers.)
- What story can you tell about your company and its offerings?
- Can you tell that story without hiding behind jargon?
- What is your value proposition? (This is a standard question but we once met with an experienced team and they did not have that answered. It took the CEO about five minutes and three false starts before he nailed this, and we knew that was a problem, and would have walked away except we had worked with them before; they did quickly solve this but it was a big concern for us.)
- Have you stress-tested your assumptions? (It's one thing to go with your gut but you need to test out the market that you're right. And then you have to realize that even market testing won't always be correct or else we wouldn't have the Museum of Failure, which highlights more than 50 failed products from some major, experienced companies.)
- If there are other companies addressing the same pain points as your company, how is your approach different or better? Are you going after a different set of customers? For example, a competitor may target small businesses so you could target midsize or large businesses. We worked with one company whose software integrated directly to other software, like databases or key other applications than its competitors -- the key advantage was easier integration with all the other tech their customers use.
- How much money do you need to launch or continue? How much money do you have? Do you have sourced for additional funds, in case you need more money, which you will.
- Are you and your co-founders, early investors and first set of employees all on the same page? We've once met with a prospective company that told us they were a month away from launching (which is why they called us in), but when we talked with the CEO, chief technology officer (he was also the actual founder) and VP of sales, they each described a different company. Even as they described the tech in similar ways, they talked about different customer segments, different ways the technology would be used and different pain points they were addressing. We walked away, telling them that if they couldn't agree, they were more than a month away from launching. Unfortunately, this is not the only time we've encountered a management team that described a vastly different company. We walk away from those situations.
- Who are likely investors in your startup? What do they bring to the table other than money? Can they open up doors to end customers or distributors? Can they help approach key partners?
- What does your investors' presentation look like? Is it professional? Does it answer questions investors are likely to ask? (We've seen some that focus exclusively on the technology being developed, not on the business. You need to make sure the investors understand your business goals. Also, since investors often decide to invest based on the quality of the management team, does your presentation emphasize what your management team brings to the table -- as in why should investors risk money by betting on you? (When we did a messaging project for one startup, and presented to the board, we realized a few board members really didn't understand the business of the company they had invested in; that's a problem.)
- Are you planning to raise money via Kickstarter or Indiegogo? You'll need a different approach from what you'll need going to VCs and other investors. These are customers, and they will expect delivery of what you describe. Which means, if you get the funding you request, you can't pivot your company or offering -- as you could if you bootstrapped or received angel or VC funding. (There are other challenges in going the crowdfunding route, and this article won't go into depth on that, except to point out that it will be hard to get vendors -- like a website designer, SEO agency, content developer and PR/social media team -- if you don't pay them upfront.
- Do you know how you're going to sell your product or services? Do you have a pricing strategy?
- What's your company's culture? How does it help? (This is important because the bro-culture of startups like Uber have at some point been a big distraction that has lost it good will and customers.)
- What's your Amazon strategy? You don't have to be a retailer to need an Amazon strategy. Amazon has expanded to so many different sectors that you may be competing with Amazon and not realize it. For example, if retailers are using cloud services, they may want to avoid Amazon Web Services (AWS) because, by using AWS, they will be underwriting a competitor. A.I. companies need to figure out how they play with Alexa or compete with Alexa; because even though Alexa may be stuck inside Amazon's Echo speakers, that's true for today but may not be true in 2019. This is a topic/challenge we'll discuss more this year.
There's a good flowchart from Inc. that outlines some other key points for startups to consider.
This is not intended to be the end-all of questions that startups and more mature companies should be asking themselves. But these questions (and we have many more we ask, like about the company's mission and core messages) can help companies figure out what they need to be asking themselves.
If you have any questions, drop us a line at info at birnbachcom.com.