Month: August 2014

Traction

One of our criteria to be able to invest in a company is that the company must have traction. There’s been lots of confusion about traction: what it means and how you can get it without spending lots of money. This post aims to help clear up the situation so that you can focus on getting traction faster, without spending large amounts of money.

Let’s start out simple. What is traction? Traction is numeric, demonstrative evidence that someone wants your product. Traction shows that you are on the right track to being able to prove that the problem you are trying to solve is real and that it’s painful enough that people will pay you to solve it for them and that your solution is the right solution.

We value traction in the following order:

  • Profit
  • Revenue
  • Users
  • Partnerships (real ones, not affiliate programs)
  • Letters of Intent
  • Offline demonstration of model
  • Traffic to a landing page/social media

We require traction because its cheaper, easier and faster to test out your business ideas now than ever before. If you are not willing or able to find some amount of traction for less than $500 of spend, you’re either not trying hard enough, doing it wrong or you are trying to solve a problem that is not painful enough that people are will to pay to solve it. Or your solution is wrong.

From an entrepreneur’s perspective, you always want to get some amount of traction before you invest your time and hard earned money into an idea. It doesn’t make sense to try to invest your time, money and ask for someone else’s time and money if you don’t know if you’re solving a real problem. You should be testing out hypotheses and validating them before taking the plunge and trying to run with an idea.

From an investor perspective, if you’re not able to at least demonstrate some amount of traction, how can we believe that you’ll be able to build a business when you have money?

So how can you do it? How can you prove that the problem is real and painful without spending any money? The easiest way is to validate your problem offline first. If you’re selling a product, sell it offline or via social media. If you’re selling a service, sell your service manually. You can also use vaporware or prototyping services, landing pages or even Google ads to validate traffic. Do something to take you one step closer to validating that the problem you are trying to solve is painful enough that people will pay you to solve it for them.

Stay tuned to our blog for more creative ways you can validate your idea for free or a small amount of money.

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