Continued from: Start-up Series (Part I): What we do for the start-up entrepreneurs that hire us

Last time, we talked a bit about what we do for entrepreneurs that come to us with an idea for a consumer web or mobile start-up. Today, we’ll quickly go through the process we use to get to BETA.

First, it’s important to remember that there are usually two challenges that most startups face when they start building their BETA.

1. Somewhat blurred product vision
2. Limited capital

Having blurred product vision is pretty common. This comes in many shapes and forms. For instance, we often see a fairly decent vision, but a long list of features. Parts of the product may have been worked out, but other key parts, such as the user experience is full of holes. This is OK. It is often the reason why entrepreneurs come to us in the first place.

Having limited capital is a given. Sometimes though, there are also limited resources available as an entrepreneur may not have the time available to put 100% into the startup and often is not familiar with the large work load that comes with starting something from ground up. This is where our process comes in handy.

The basic steps are:

1. Entrepreneur provides all documents to Fabric for review
2. Q&A session with entire team – including product leads, design, experience, marketing, and tech
3. Fabric will produce a high-level estimate (Scope of Work)
4. Entrepreneur Funds Project
5. Definition: Detailed definition is developed for the first release of the product
6. User Experience Design: Wireframes and Functional Specifications
7. UI Design: Making it look great!
8. AJAX (or Flash is you are crazy)
9. Development: Database and Programming
10. Hooking to 3rd parties (most web startups are full of API hooks)
11. Admin Tools and such
12. Deliver website or application on Staging Server
13. Testing & QA
14. Deliver Alpha or BETA website/app to Production Server
15. Deployment: Tell everyone you know about your amazing product!

This is the quick and dirty work flow. In some cases, we have to work hard on concept development while other times it's more a matter of focusing on key user experience challenges. There are two rules we always follow:

Keep it simple and focus on the one thing you have to get right for users

Get your BETA up fast!

Once the BETA is up, we start working on the Product / Market fit, which is really just all about user feedback loops and product iterations. In our experience, this is really the hard part, but it's also the fun part. There's nothing as exciting as getting real people to give you feedback on your invention!

Next time, we’ll look at what kind of documentation we are looking for when we start working with you (hint: it’s not your business plan).

Start-up Series (Part III): Where is your business plan?

For the past few months at Fabric, we've seen several entrepreneurs pitching Internet/Software concepts in the idea stage. They have brought investment decks, paper drawings, wire frames, and product descriptions. (Thankfully no business plans). They are all pre-Seed and they are all meeting with investors. Some of them have started building their product, but 50% have not.

The few that have not started building their product give different reasons for this. Common excuses are:

• We need to raise the cash first
• We have not “figured out the product yet” (read: we are in sketching mode)
• Our product requires a full build out to work and we can't afford that now

While these reasons seem to make sense, they raise a few flags with our team. Here's what we worry about:

You don't need to raise money to start to build your product

If you are committed, then you should put all your cash into product development now. That includes your credit cards and whatever you can borrow from anyone. We've seen Wordpress “products” built for $2k to test a hypothesis. The first version of Groupon was a Wordpress site. Why? Many investors won't even see you unless you have something live. That's a fact. (More reasons below).

Product development is different - and much harder - than sketching

We've had many people come to us with hand drawn wire-frames with very little detail. We're happy to see these things - it's better then nothing - but it's not enough. When you work on the details of your product through flows and mock-ups, you are forced to make decisions that you don't have to make when you are in sketch mode. For instance, you have to settle on database structure and priorities. You have to make left or right decisions in areas of your product that will impact other decisions down the road. You have to be super clear on your product description and you have to communicate the nuance of your thinking. You can avoid all that when you are in sketch mode. It's different. Very different. Who's telling you this? Dennis the Foursquare founder.

Learning fast is important

Many of your assumptions are wrong. (Einstein was wrong most of the time!) The trouble is, you won't find out until you put some part of your product in front of users and test. The longer you wait, the longer you stay in never land. It's nice in never land, but you'll have to get testing sooner or later. It should always be sooner because when you learn which of your assumptions are wrong you can correct - which of course is critical to progress. This is basic science and it's shocking to see so many people get this wrong.

Strong social products RULE the world and social products are different

To win today, you need to learn how to build social products. Building social products - or community products - is really different than building, for instance, a direct marketing product. You'll need to think about how to build context into your interface and, in many cases, where your growth model is dependent on viral coefficient you have to build loops - essentially social loops - into the core fabric of your product. The challenge? It takes time to learn how to build a solid product - a social product - for your users. You'll need to start as early as possible on this journey since there are many lessons to learn.

But what if my product requires infrastructure and complex architecture to work? What if it's a transaction product with a deep back-end?

It doesn't matter. Some of the coolest products was started without a backend. You don't need any of that stuff to prove some level of product/customer fit. Besides, never put a large part of your budget into tech until you are certain that you NEED that tech. You should test, test, test, before you invest in tech. If you worry about scale, just limit growth by capping your Alpha to x users. Also, you don't need real transactions to show investors that users would likely go through with a transaction. Be creative.

Traction

Most of the entrepreneurs we work with go after consumer Internet. They all need to raise more money to get past their next milestones and most investors care about traction. It's simply impossible to show traction without a product. To get traction, real traction, you have to figure out what makes your early adopters tick. You have to understand your different user segments and you have to identify your key users - the ones that drive viral growth. To do this, you have to build, test, learn, and iterate. You have to build a culture for rapid development and you have to train your product, design, marketing, and development team members to work on the most important aspects of your product. This all takes time.

So, get started on your product now. You'll need all the time you have.

On Monday, we launched Bidzilla - a new entertainment auction site from a Florida start-up. We always knew it was going to be a challenge. Of course, that's partly why we did it, but we really got our hands dirty on this one.

Auction sites are tricky to architect and build. Here's why:

1.    “BETA” is not available

You can't do a “BETA” and make excuses as you fix bugs and errors. Why? People don't like to pay for BETA products. You can Alpha and BETA all you want with small-time applications such as Twitter - but this is about money.

2.    Good experience = conversions

Your user experience and interaction design has to be really good. Unless it looks and works really well, people won’t trust you and they won’t be excited about getting into it. If you look at a lot of the penny auction sites out there, you'll see what I mean. For instance, look at Bidblink. That looks a bit cheap to me. You’ll notice the same problem here Edubli. The design does not breed confidence. That's a big problem for conversions. Keep in mind, people will look at five sites at a time. You want to stand out as the most trusted brand. You can't let design get in the way.

3.    Web auctions are mission critical business systems

If your content management system fails, you just republish. Had a misfire in your video player? Just fix it and people forgive you. People are a bit more sensitive about their money. Once that credit card is in, you have to deliver.

4.    Your system must scale

Auctions are real time and every second counts. Data processing is high volume. The system needs to be efficient and it must scale. Your profit is probably going to be on volume, so you'll want to serve a lot of users. What happens if you get hundreds of users entering any one auction at one time? You have to be prepared or you go out of business.

We’re excited to have built Bidzilla. It was a real test for the Fabric development team. Thanks to everyone who made it happen!

When we wake up every morning, we drink coffee… and then we get on with it. We develop products - web products mostly.  We love this! In fact, we've found this type of work so challenging and rewarding that we created a Product Development Group within Fabric Interactive. Next to our Social Media Marketing Group, it is our main focus area at Fabric.

For the past two years, entrepreneurs, media, agencies, and brands have come to us with napkin ideas, business plans, or complete Product Development Plans for various consumer products or applications. In some cases, we've found that the expectations for what is possible and realistic outpace the budget and experience of the team we're working with. This means that our first job is to close this gap, provide leadership, and to focus the product development process.

I know many of you are thinking about developing your own web product or already have plans for launching a new business or product line based off an application or website. To help you, I want share our experiences with you. From our experience shelf, here are some of the challenges you're likely to encounter as you blaze down the path of product development:

Initial Product (Version 1.0) does not meet audience needs

Relax. It is highly unlikely that your product will connect with your audience right out of the gate. In fact, it may take 12-months to get the traction needed to meet user acquisition requirements needed for your next investor round. The cost of Product Development over 12 months may be significant and most certainly will match your initial investment.

Product does not deliver clear differential value for core audience

Right. Most web products – advertising or subscriber supported – are unable to fix this problem. In our experience, this comes down to a lack of focus. To win today, you need to focus on one specific audience and one particular unmet need. If you try to do too much for too many audiences, you will likely fail. This is universally true for ventures with limited funding. Again and again, we see small fish trying to compete with big well-funded players without laser focus on brand or audience. You must narrow focus. Then, you can execute brilliantly.

Attracting users to a new brand/product

Starting from zero can be very hard and quite costly. For instance, organic growth (from Google natural search index) will be very slow for 12 months for a new domain in a competitive area. Many co-marketing or traffic partners won’t partner until you have traffic and a tested product – so it can be a chicken and egg problem. For many, the only way to gain traction is to buy traffic in the beginning.

For some new ventures, it may be worth acquiring a blog or two (many are for sale) and grow your product from the established acquired audience. Part of your traffic – and product strategy – may be to build a network of sites all with a slightly different value proposition for your audience(s).

Getting people to use your product

Beyond getting users to your site, the main challenge is to get them to use it. For example, acquiring your first 5,000 users can be a major challenge. For instance, gaining momentum is a major issue for most social networking sites and absolutely critical to all reputation based products. There are no short-cuts really. It’s just hard work.

Unknown Brand and User Generated Content model

It can be difficult and costly to build a new brand where User Generated Content (UGC) is part of the model. Beyond the importance of appearance (design) the main challenge is in the actual UGC itself. It is hard to get people to do stuff. Also, from a management standpoint, even with the best of systems, there is cost in maintaining UGC quality and relevancy. The cost of scaling is – naturally – variable in that you’ll need additional human resources in managing increasing user numbers.

Underestimating Competitors Strengths

Competition is usually much stronger than it may seem. The attention of your audience (what did you say?) is limited and you will have to fight hard to win their trust. For instance, there are many well funded competitors targeting the “new parent” market and acquiring new users from this audience may be difficult for a start-up.

Underestimating the in-house resources required to build and grow a web product

Building and growing a web product is a 120% full-time job. We have seen many start-ups trying to do this on 50% of the founder’s time and they have all failed. The truth is that if you launch a venture part-time, you will likely lack the pace and commitment needed to win. “Oh, once I get this going, I will quit my day job.” To which we say, no you won't, because if you were committed you wouldn't be in your day job. To succeed, it is likely that you’ll need several people full-time for 12+ months. Anything less than that makes for a half-effort and will likely lead to frustration and failure. (Most start-ups take 3 years to build and does not make much money for founders until year 2+. Can you handle that?)

Those are some big challenges, right? Well, it doesn't matter to you, because you're going to do it anyway are you not? You are going all the way. You'll make it happen. Yes, you will. If you just focus and put your mind to it. Let's go!