After building a demo and gathering key product metrics, it's time to learn. As explained in the previous post in this series about the Lean Startup, we spent more than a hundred dollars in ad campaigns in order to test our ability to acquire customers. The result wasn't good. So it becomes clear that our business model is wrong. what can we change to make it better?
Our most fragile hypothesis is proven wrong. We thought we could acquire leads about a general purpose tool through online ads. We never managed to prove this would be possible. We haven't discovered the right words to describe the admin-as-a-service product, or at least no word that would trigger curiosity. And when people corresponding to our customer segments arrive to our landing page, they simply don't understand what it is about. Transformation rates are dangerously close to zero. We are not able to get in touch with our future customers.
What we have learned:
Other customer acquisition strategies (most notably through sales) involve a high investment to get started, and are far from sure. At that point, we are not ready to invest more on our first idea because we know our acquisition failure reveals a deeper error.
The problem interviews were eye openers. When we managed to find people coping with the problems we target, it took a very long time to explain our vision of the solution. Most people wouldn't believe it could be possible. They would only accept to pay for it if we could prove that it solved one of their more specific problems beforehand. The tool they'd have bought would have to be packed with a ton of features. A general purpose tool wouldn't do the job.
We have learned a lot in the process:
Simply put, it seems we are trying to solve a problem that none has - like 95% of startups out there. We are glad to discover that before actually developing the product!
In the sad landscape of our dead-before-start product, we see a path to a maybe viable product. Every developer we talked to was enthusiastic about the solution. Every manager we talked to saw the potential savings a modern admin generator could bring. We know that ng-admin fills a need because it is already used by many developers across the world. Maybe we could focus on helping people spend less instead of helping to solve a problem that doesn't exist?
Could it be that, by switching from a B2B (business to business) to a B2D (business to developer) strategy, we could monetize our solution? Our experience and intuition tell us to be careful, because developers seldom pay for software nowadays. We can count many failed attempts at providing SaaS tools to developers (including some we've worked on like SensioLabs Insight), and only a handful of successful ones (GitHub, Travis CI, BrowserStack). But the rapid expansion of the user community tells us there is still something to explore.
Time to change the business model, time for a pivot! We'll explain how to do that in the next post in this series.
Thumbnail picture: Fire Juggling, by Daniel X. O'Neil