Here at RevRoad, we recently held our first-ever Give Your Business a Shot competition for entrepreneurs, and we were delighted to see so many promising founders making serious progress. There were excellent companies at many stages, from idea to early customer feedback to post-revenue and seed funding.
Since the competition, we have talked with many of the 18 judges about what they saw (in the name of transparency, both myself and my co-author Rebecca were among the judges). Many of the judges are active investors, and all have experience in helping businesses grow.
One of the most important themes across the board was traction. We saw examples of companies that had made great strides in this area, and our 3 prize winners were definitely among them.
Judges also noted that companies that were further along had made great strides in a short timeframe. Focus was the primary differentiating factor. Companies that focused on proving out their business model, early and simply, showed that they are winning.
What Makes a Winner
We also saw some companies that still had work to do in terms of getting traction and problem validation, so we decided to put together a quick guide that we hope can help.
First, let’s talk about what we mean by traction. In the world of entrepreneurship, traction is evidence of demand for your product or service. Ash Maurya put it more specifically:
“Traction is the rate at which a business model captures monetizable value from its users.”
For investors, the best proof of traction is sales. But depending on your stage, other proofs of traction may be more relevant:
- User signups
- Insights from customer interviews (specifically, problem interviews and solution interviews)
- Letters of intent (LOIs)
- Testimonials from experts in the field (or recruiting them to your advisory board!)
- Recruitment of a strong management team
- Strong sales channel partners
- Customer feedback that your solution is a “must-have” (40%+ is the magic threshold)
For more ideas, check out this list from Fundable on traction for different types of businesses.
Shining Examples from Give Your Business a Shot
The competition provided some great examples of young companies that had already gained significant traction. Check out the great line-up below.
$1,000 Fan Favorite Piero
The founders of this portal (doorway) management company interviewed facilities managers and wheelchair-bound students to identify a problem important enough to build a company around. They started with the premise that life is more difficult than it needs to be for the disabled. Then, they identified 4 possible solutions, only one of which had anything to do with doorways.
Their interviews showed that building entry and exit is a huge problem for both wheelchair-bound students and facilities managers. Automatic door buttons for the disabled are often difficult to find, doors often close too quickly, and facility managers have no easy way of knowing whether they are functional.
Focusing on doors, Piero built an initial solution of automatic doors that could be opened by a smartphone based simply on proximity. Their problem is focused and specific, and they know exactly what their customers want. They also know they’re addressing a large market.
$2,500 Runner-up Neighbor
Neighbor, which connects people with extra space to people who need storage, has also gotten far in terms of traction and problem validation, and it shows in the company’s go-to-market strategy. It all started when one of the co-founders, Preston Alder, couldn’t find affordable storage space when he was headed out of state for a summer internship.
“We launched with little more than a Google Sheet” Alder said.
Through renter and host signups, the company proved that Alder was far from alone in wanting more reasonably priced and conveniently located storage space. Next, the company built robust, geographically focused technology solutions. They’ve avoided expanding too fast while they optimize their solution.
$10,000 Champion JourneyFront
JourneyFront, our overall winner, offers predictive hiring technology to help companies find better employees. In terms of traction, this company hit it out of the park. It has earned the business of 20 corporate customers since launching in February of 2017, and has given 16,000 assessments. This has resulted in annual contracts worth tens of thousands of dollars. In addition, the team represents a deep bench of expertise, proving that some of the best people in the business want to be part of its success.
Final 12 Contestant Mentionables
Mentionables has done a ton of validation interviews and has learned who their main 3 early-adopter customer types are. Having learned exactly what problems their customers face and who their best customers are makes them highly focused and efficient. They can reach these customers in highly cost-effective ways.
Final 12 Contestant Unbird
Unbird, which helps product managers understand and react to customer feedback, proved traction by the best available metrics: signups and sales. Already, the Software-as-a-Service (SaaS) company has 110 customer signups, 31 companies in its system, 2 sales, and 10 companies evaluating its solution for purchase.
Final 12 Contestant Portal Power
Portal Power, which provides charging for phones and devices via one simple cord, did a lot to validate that heavy power packs and a mess of cords are a problem for many people. The company learned focus during its participation in the Lassonde Entrepreneur Institute at the University of Utah, conducting a market outreach survey with 500 potential customers. Nearly 80% said they would prefer a portable charger that was in the form of a normal charging cord. Next, Portal Power ran simple advertising tests with online ads, proving an ability to reach new paying customers in a cost-effective way.
How to Get There
Entrepreneurs are impatient by nature, and they often focus on getting big before they focus on proving they have a compelling solution to a widely held and painful problem that people are willing to pay for.
For example, many entrepreneurs try to raise capital before gaining meaningful customer traction — nearly always a no-win path. There are surprisingly simple steps entrepreneurs can take to gain traction very rapidly and thus dramatically improve their chances of startup success:
Find people who would be your early-adopter customers, meaning people who would be most willing to pay for your proposed solution. Then, ask these questions and keep careful track of the answers:
Some people say X is a problem. Is it for you?
- Why, how and how often?
- How do you currently get around the problem?
- How big a problem is this for you?
- Are there other elements of the problem we have not addressed
This is your next step. Once you’ve identified and documented the customer problem you are solving and built a prototype or even mockup solution, select several customers for a follow-up conversation. Ask these questions:
- We found many people had problem X and we’ve developed this solution. Do you share this problem?
- Would this solution solve it?
- What do you wish were different about this solution?
- Will you sign up for our pre-launch to be notified when this is available?
- Will you pay $X now to reserve you solution and be among the first to receive it
Landing page with sign-up for notification on launch:
This is great for software companies, social networks and even e-commerce. Set up a landing page version of your site. Craft an offer but keep it simple — just find a way to showcase on one page your value proposition, a demo of your solution and pricing. When people visit, ask them for:
- Email address
Did you attend the competition? What did you learn, and which contestants did you find most inspiring? Let us know on our social media channels @revroadutah.
Rebecca Palmer, RevRoad Strategic Communications Champion, contributed to this article.
Big thanks to Freepik for the use of the header illustration on this article.