Launching a Tech Venture, One Iteration at a Time

by Rosemary Kendrick & Aleem Mawani

It’s been, well, a very rewarding semester working on Rewardly.  As we reflect on the main tools we employed this semester—merchant interviews, business model generation, generating mockups, and developing a prototype—we have a few takeaways we’d like to share.

First off, when it comes to interviewing local businesses, be prepared to throw enough darts.  Local business managers are tough to pin down with understandably ever-shifting schedules, so we found ourselves juggling a bunch of cancellations and rescheduling.  It’s helpful to remember that the customer discovery process is a sales process: you start with a lot of cold leads, eventually secure enough interviews, and then ultimately score a few letters of intent.  A corollary to the throw-enough-darts mantra is the realization that you don’t know what you don’t know.  It’s hard to predict which local businesses will be the most helpful to talk to, and it’s even harder to anticipate what insights will emerge.  This is particularly true in the diverse landscape of locally-run shops.  So don’t spend too much time calibrating who to target: just get out there, get in front of business owners, and listen.

With experience, we learned what made the best pitches and meetings.  Often, having a letter of intent signed was a particularly big barrier for local businesses.  Managers varied in their familiarity and comfort with signing what seemed like an official contract.  We tweaked our strategy accordingly and approached the letter of intent as the end goal of a long sales funnel.  Some of the most useful questions we asked were incremental, along the lines of ‘what would you need to see next in order to sign this letter of intent?’  Additionally, with our meetings—and likely any sales process—a product demo speaks louder than an idea.  This is certainly true when you’re a startup trying to tackle the initial customer acquisition hurdle (we imagine it might be different for algorithm-based tech startups).  Our initial concept-based interviews were extremely useful in generating feedback, but our most promising conversations started when we were able to put a product in front of businesses.  The prototype was very rough, with many features and mechanics ‘faked,’ but it was nonetheless an extraordinarily powerful communication and sales device.

This leads to an even larger takeaway about the entrepreneurial process.  Throughout HBS, we often hear that cash is king, but we propose that in some tech startups product is king.  For a startup at Rewardly’s stage, pitching to investors (at least to non-seed investors) was not the best use of time.  Most meetings became coffee chats and yielded few concrete next steps -- the time would have been better spent just building and refining the product.  This is especially true for a startup with first-time founders.  It may be that entrepreneurs with deep domain expertise, an all-star team, or a strong track record can gain much more traction with investors early on in the concept stage. 

As we learned more from our customers and our product, we spent a lot of time refining the business model.  Like so many other steps in the startup process, we found that business model generation was an exercise in prototyping: expect a lot of iterations.  But perhaps more interestingly, we realized that we first needed to reframe our goal.  Given our wide range of potential customers, one size didn’t fit all.  Providing a suite of different payment options was key to meeting the wide array of small business needs.  More established businesses often preferred the regularity of a budgeted monthly flat-fee, whereas newer and scrappier business wanted a pay-as-you-go, performance-based plan.  All local businesses, given their relatively small size and budgets, insisted on a risk-free introductory option.

Building the product is the next step for Rewardly.  We were able, though, to complete wireframing and product prototyping this semester, and we learned a lot in the process.  Our wireframe evolved from a low-fidelity product (paper sketch) to a higher-fidelity rendering (a professionally designed mockup).  When it came to our first interaction with the designer, we discovered that it was important to be specific about the goals and agnostic about the exact details.  The professional designer had a toolset of specific methods; what they needed from us was a clear articulation of the goal of each page and the type of work we wanted completed (e.g. user interface exploration versus graphic design).  Once we had a first cut of the designed wireframe in hand, we could then go back and forth with the designer, incorporating feedback and tweaks through several iterations.

All the steps we took with Rewardly this semester—through interviewing, business modeling, product prototyping, and wireframing—reminded us of the power of iteration.  As hackneyed as that may sound given lean startup mania, it is important to reemphasize as it is distinct from much of what we learn at HBS.  Business school often focuses on the end-points, the funding pitch, the polishing, the analyzing.  But with Rewardly, we learned that the first step in starting a startup is often, well, just taking a ton of steps, and seeing where the customers, product, and business lead you.