We are a food discovery startup which tells its user the best dishes to have in a restaurant. The initial growth and retention for us has been quite low and we have not been able to make a single $ in revenue yet. From the initial customer interviews, we were quite optimistic that the product has great potential, however, things are turning out to be opposite of what we anticipated. At what stage should we take the business decision to continue/discontinue the product?
A good question. The fact that you don't have revenue yet may be result of a number of factors. Without knowing more specific information about your product, key customer segments, your team, and other key data, it's not possible to give you a definite continue/or shut down recommendation.
That said, generally, I would recommend adding a third decision point - the pivot. Many businesses don't see the expected returns after initial launch or MVP testing, and decide to pivot to a different direction, ultimately finding success. The pivot can be a slightly different product (product-based pivot), a slightly different market segment (market-based pivot), or both.
Here are some recommended action items to help you uncover extra insight as you examine whether to continue, close down, or pivot:
1) How did you organize the initial customer's interviews? What kinds of questions did you ask them, and were any of them leading questions?
2) Review your core customer segment(s) at this point. How did you determine a product-solution fit to them? Are the customer segments clear and specific enough?
3) Did you run a MVP (minimum-viable product) to test potential product-market fit? Were any findings contrary to your initial assumptions?
4) Consider running another set of quick interviews. Determine any differences between the new interviews versus the initial customer interviews.
5) Make some hypotheses on the key assumption or factor that could have contributed to zero revenue. Run a basic test to confirm that hypothesis. If correct, you may be able to pivot by eliminating that factor or substituting with something else. For example, pretend that your core assumption is that young urbanite foodies will appreciate recommendations on best dishes. If that assumption turns out false, then you may need to consider pivoting to a different customer segment (professionals who don't have time to research the best dishes?)
6) Examine your pricing model. How did you determine it? What tests have you made? Try running a few simple tests with alternative pricing schemes, and see if anything changes.
7) What is your current monthly burn rate, and how long can you project to last at this rate?
Answered 8 years ago
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