KP

BLOG

Your SaaS startup is not a lemonade stand.

Often times entrepreneurs like to use simple analogies to explain what running a startup is like. The most popular one is that of a lemonade stand. I think it conveys the wrong message.

The lemonade stand analogy perhaps takes its origin from traditional businesses. It works well to demonstrate the scale part of a startup but in every other aspect it falls short. 

Unlike startups, there is a clear definition of a customer at the lemonade stand. There is a clear product offering (the lemonade). There is a great chance of knowing your differentiation quite early too (for ex: your product could be strawberry infused pink lemonade with crushed ice versus another rival with another product). The biggest difference is in the perception. All of these are tangible features and benefits. Customers can touch and feel your product. At the end of a purchase, your customer will walk away with a lemonade in hand. (tangible) Same applies to any other business selling physical products. 

However, in a software startup, it's about code and design. A startup in this context is aiming to build a business by providing a relief(solution) to customer's hassle/pain. It is unique in the sense that relief is very subjective. You have no option but to carefully listen to/collaborate with customers in making and selling your product. (It rarely happens in hardware!) You don't have absolute authority in design decisions, UX flows and/or marketing messaging. You just have to keep testing. In fact, what's worse is you don't even know which customer has the most pain in a set of similar customers. The uncertainly is unparalleled in the hardware world.

The closest analogy that comes to my mind in regards to software startups is being a chiropractor to customers. In most cases, despite years of experience, you might try and fail in your latest technique to fix your customers' problems. But it isn't failure. It is called validated learning. (h/t to Eric Ries)

I started reading his book, The Lean Startup and it's been very insightful considering my recent lapse with ClosingPage. 

What else? What would you use as a proper analogy for a software startup? 

Photo by  Rod Long  on  Unsplash

Photo by Rod Long on Unsplash

KPSTARTUPComment