Big Red Car here in the ATX, the glorious, sunny, warm ATX and loving it. Come on down, y’all. We’ve been waiting for you.
The Boss is working with some Techstars Austin companies. There is a constant drumbeat of raising money and how to do it.
One of the first questions any investor is going to ask is — “What do you intend to do with my money?”
One—not the only one—of the answers is: “Continue to develop our product.”
Most seed stage startups are struggling to create a “minimum viable product.” The MVP is, as the name suggests, the minimum set of features or capabilities that will appeal to the targeted customers.
The importance of the MVP is that it can now be trolled in front of customers and see if there is, in fact, a “product – market fit.”
[Wow, Big Red Car, MVP and product – market fit, a lot of jargon. Yes, grasshopper, a lot of jargon but this is the way the game is played. Sorry.]
The MVP and product – market fit is not where the process ends. There has to be continuing development to get to an “ultimate” product. Even then, product development continues for all time. Fovever.
Chinese Menu approach
The Boss likes to call his approach to such a process the Chinese Menu Approach. It suggests that a basic set of features or capabilities is enhanced and grown into three columns of increasingly rich features in much the same way a Chinese restaurant menu is organized.
Here is a graphical representation of that approach.
You can click on the graphic to see it at a larger scale. Here is the same graphic as a PDF: Product Development Scheme Chinese Menu
In reviewing this graphic note the following characteristics:
1. The scheme suggests logical, structural growth over time from a MVP to a more feature rich product by continuing to develop the basic capabilities and adding new capabilities.
2. The product differentiation provides a segmentation that can provide a basis for pricing differentiation based on capabilities. There is a pricing page screaming to be released from this scheme.
3. The approach lends itself to easily identified schedule milestones and compartmentalized development objectives. It is a management tool to provide guidance for the allocation of resources.
4. Note that the development scheme includes continuing development of what was originally the basic set of capabilities. This is an important consideration. This is a dynamic process and not a static process. No resting on your laurels, grasshopper.
5. The approach also lends itself to customer driven feedback as customers request new or expanded capabilities. It provides a basis for customer engagement when done well.
6. It answers the question — “What do you intend to do with my money?”
One of the most important challenges in raising money is the challenge to establish the nature of the product and business itself — this is done well using a business engine canvas.
One of the other important challenges is to determine how much money is being raised. More and more this is simply “eighteen months of runway.”
One of the other important challenges is to answer the question “What do you intend to do with my money?” This is answered well with the Chinese Menu Approach to product development as well as a dollar weighted organization chart.
If you need some help on organizing your thinking or plotting your strategy, call or write The Boss at email@example.com or 512-656-1383. Tell him a Big Red Car sent you.