I've been discussing with our board of directors a number of web startups that have been launched recently. We were discussing the portfolio of web based businesses Paul Graham and yCombinator have put together, and were pondering what success statistics will result from this array of web startups.
Here is the list of yCombinator web startups i have found out about so far:
It's interesting to think about all these new web startups and compare them against a bunch of criteria that we at HacStart believe are critical to success.
We think all of the ycombinator startups score fairly well on these factors. How does your startup stack up?
1. Is the product message simple enough?
Web users have almost zero attention for your new startup in there busy web lives. In a bull market attention economy, ask yourself, do you website visitors understand what your service actually does and do they understand why that matters to them?
You have 5-10 seconds attention on average - if you're lucky - to get a potential customer to your review site's homepage and to determine what your product does and if it is relevant.
We have seen entrepreneurs learn the hard way, first impressions really do count.
2. What is your call to action? Why do i sign up with you today?
Will your website visitors wait a week, a month, a year before they add economic value to your online business? Whilst you are waiting you, may find your burn rate sends you into bankruptcy.
You may have had 100k customers, but their sum of their collective decisions to put off purchasing your product will sting if you cant hold on till you make the sale.
3. Is the perceived pain of adoption less than the pain incurred by not choosing your solution?
How much effort does it take your customer to adopt your solution to whatever problem your intending to solve?
If you signup wizard takes 5 minutes, you are already ruined unless you are going to offer your customer some serious benefits.
Basically we look at how much "pain" is involved in using the solution vs how much "pain" is relieved by using the solution. This is a great way to qualify new business ideas or as a thought process around designing your website user interface.
4. Is the product infectious?
Will you customers become your evangelists? With so many new web services and web site emerging every day, it can be difficult to even be discovered even if you have a fantastic web service that solves every problem ever had by everyone ever.
The old axiom "build it and they will come" is a total fallacy. It is our experience that new web based businesses are rarely "discovered" but must be spread like a virus.
5. Does it have a solid business model?
Ok, so you are getting a some decent traffic to your website and your getting a few trial signups to your service, but even if you get 10k or 50k signups, will they convert into enough paying customers at the right price to make this all worth while?
We have seen some businesses with 50k members that are only making a few grand a month. Is it really worth all that effort and risk unless there is a real opportunity for some serious dollars?
Unless your business model supports a 20-30x ROI over 3 years, in our experience it is difficult to get investors to take interest in your web startup.
6. Are you in it for the long haul?
So you have built your new web business and your launch got a bunch of customers and champagne is popped and pats on the back go all round. But beware, for most online businesses there is an inevitable lull that will occur after launch and this can be extremely disparaging for new entrepreneurs.
In our experience successful online businesses are never "Launched" but are "Built" over a period of time. This is a common misconception by many young web entrepreneurs.
Make your you love your business idea enough to still be working on acquiring new customers for your business in whatever way you need to in 2,3,4,5,10 years time to keep your business successful.
7. If you are successful someone will sue you eventually. Are you prepared?
Make sure you have a trademark on your domain name. Don't even consider using a domain name that has been trademarked in a major legal jurisdiction (US, UK, Europe, Japan).
Once you have invested in all your business branding, good will and customer recognition with a business name, if you then have to change your name due to a trademark conflict you will kick yourself.
If you use a trademarked domain name, expect to have to cash up an extra 10,20,30,50k in legal fees somewhere down the line.
And as obvious as it sounds, make sure your Terms & Conditions are locked down. The extra 1-2k in legal expense upfront to get your butt covered may be worth it 100x over down the line.
What do you think? Are there any other major factors in your experience that you feel we have not mentioned? Feel free to leave a comment.