The Path Forward
Turn an idea into a valuable business in twelve months.
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The approach, tactics, practical advice Forward Partners have captured in The Path Forward and supporting ‘Paths’ have been a massive help to me over the last year as we’ve grown Lexoo from a raw idea to a fast growing business connecting hundreds of companies and lawyers each week.
Daniel van Binsbergen - Lexoo
What is The Path Forward?
The Path Forward describes the journey of ecommerce and marketplace startups from raw idea to valuable business in the space of 12 months.
It's a practical guide for entrepreneurs that stresses the importance of acquiring a deep understanding of customers’ real needs, building emotional resonance into products from the start, quickly getting to revenues, growth and scaleable economics.
Our thinking has roots in the Lean Startup methodology and in Design Thinking but first and foremost it’s a distillation of what we've observed and learned working side-by-side with nine startups in our offices over the last two years.Scroll to the next section
Definition of the Steps Forward
An idea is valid when it has been translated into a product concept which resonates rationally and emotionally with customers. The product concept should be validated through well conducted customer interviews and customer responses to early versions of the product.
Valid Idea Waypoint 1: Proven Need
The need is proven when customers validate the problem space by describing their frustrations and actions they’ve taken to find solutions and there’s clarity the market size is big enough to support the company’s vision. The descriptions should be elicited through questions about past behaviour and observations in real life settings.
Valid Idea Waypoint 2: Resonant Prototype
The prototype shows that the product concept taps into the customers’ emotions. Development should be limited to the minimum feature set required to deliver the central customer benefit.
Valid Idea Waypoint 3: Right Skills
Companies should have the product skills to write and wireframe a compelling value proposition, the development skills to instantiate it in a prototype and the hustle to find a few customers. There should also be someone to challenge and support the founder (often a co-founder). Typical team size: 1-3 people.
The product is valued when it has provided real value to a significant and growing number of customers, some of whom love the product enough that they have become evangelists.
Valued Product Waypoint 1: Passionate Advocates
Passionate customer advocates show the company understands how to connect emotionally with customers and has captured that in the product and messaging well enough to inspire spontaneous statements of support in public forum and private emails to founders.
Valued Product Waypoint 2: Growing Product
Growing product is achieved when the company has laid the foundations for scalability from a technology and marketing perspective and built a habit of strong month-on-month growth, albeit from a small base.
Valued Product Waypoint 3: Emerging Team
An emerging team should have two or more senior people who act as partners (usually co-founders) and have secured core capabilities on long term arrangements. Typical team size: 2-4 people.
The business is valuable when there’s a clear path to profits. Customer lifetime value should be on a path to exceed the cost of customer acquisition, the company should be on a strong growth path and the team should be strong enough to grow the company by an order of magnitude.
Valuable Business Waypoint 1: Scalable Economics
The economics are scalable when the gross profit over the life of the customer is greater than the cost of customer acquisition (CAC) averaged across all channels AND one or more of the channels has the potential to scale 10x without significantly increasing the average CAC.
Valuable Business Waypoint 2: Rapid Growth
Rapid growth is achieved when the habit of fast growth is deeply ingrained at a company. The annualised gross-transaction value run rate should be £1-2m growing at 20-30%+ per month.
Valuable Business Waypoint 3: Empowered Team
An empowered team should have expertise across all the key functions, include at least one person who is a true partner to the CEO (usually a co-founder), and have the genesis of a strong culture. Some structure will be emerging and the CEO will increasingly be freed from day to day tasks and focusing on the business. Typical team size: 5-10 people.
Why get on the path?
- Discover the key Steps we put our businesses through in order to invest, evaluate their progress and maximise their success
- Retain practical, actionable insight from key industry influencers in a variety of fields pivotal to developing your own startup.
- Accelerate success by building the right product first time, forming strong emotional connections with customers and developing an authentic brand.
- Contribute your own experiences, thinking and insights to be included in the ever evolving The Path Forward and help us learn from you whilst also guiding the success of other future startups.
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