But why does this happen?

In our story, it's all because they skipped a crucial step: validating the idea. They proceeded with development without proof that there is a real problem their product could solve.

This misstep is just one example, but it points to a bigger issue – Startups don't understand exactly what, in what order, and when needs to be done.

A tool to solve it was created – a traction roadmap.

The underlying idea is that all startups go through certain stages in their development.

The traction roadmap describes each stage and what needs to be done at it.

With this map, a startup can pinpoint its current position, figure out the immediate challenges, and focus on the actions that matter right now.

Today we will make an overview of a startup’s typical lifecycle:

1️. Problem-Solution Fit
Confirmation that the problem exists and your solution matches it.

2️. MVP
Development of a product with minimal functionality to start solving that problem.

3️. Channels Search
Finding the best ways to drive traffic your way.

4️. Product-Market Fit
Doing something to make users want and ready to buy your product.

5️. Scaling
Growth by investing in proven channels.

6️. Maturity
Building processes, moving out of chaos.

Our example startup skipped this crucial first stage, leading to project failure. But why? Isn't it obvious to validate the idea before pouring resources into it? Well, yes, but the paradox is that those who skip this step often believe their idea is validated.

They might think their personal experience and need for the product are proof enough that the service is needed. But it's not that simple. Hence, the first stage in startup work is Problem-Solution Fit. Problem-Solution Fit confirms the existence of a problem and that the proposed solution addresses it.

Often, clients come to us with ideas for what product to build. But at the project's start, it's essential to set aside those ideas and focus solely on the problem. Ask yourself:

1. What problem do I want to solve?
2. Will my product really solve it?

Perhaps there's no problem at all, and you stumbled upon it due to lack of information. Or maybe there's a problem, but it could be solved more straightforwardly. And maybe you need a different product altogether, not the one you initially thought of.

To check Problem-Solution Fit:

• Consider who your target audience is.
• Describe the problem you want to solve.
• Conduct interviews. Ask your target audience how they solve this problem. Do they even encounter it?
• Propose your solution. Will they like it?

By the end of this stage's work, you might conclude that the project isn't worth pursuing. That's okay. What matters is you came to this conclusion early on without spending too many resources. Alternatively, you might confirm the problem and move on to the next stage.

The next step on the traction map is modeling the economy.
So, you've found a solution to the problem, but will the project be profitable?

At this stage, we estimate what revenue we need and what expenses we'll have: how much it'll cost to create the product, how much it'll cost to acquire customers.

If the economics work out even in the most pessimistic scenarios, then we can proceed. To calculate this, we need to choose metrics that characterize it and obtain their values. Usually, the key metrics are LTV (customer lifetime value) and CAC (customer acquisition cost).

For the economics to work out, LTV must be greater than CAC. But where do we get their values? That's where MVP comes in. There's a popular misconception that MVP is just a trimmed-down version of the planned product. That's not quite accurate. In reality, MVP can be anything that helps test hypotheses and obtain metric values.

MVP should include only the functionality necessary to test the viability of the idea. Nothing more. In many cases, it may not even be an app. Maybe a presentation or a landing page would suffice. Something that already provides or can promise value to the user.

You can consider the MVP stage completed when the product metrics meet the target values for this stage. This confirms that the product is indeed needed, and you can move on to the next stage: finding scalable user acquisition channels

In the previous stage, we crunched the numbers to ensure the product's economics aligns. Now, it's time to implement it and find customer acquisition channels.

A customer acquisition channel is where your app's traffic will come from. It could be targeted ads, social media, context, and so on. Due to time constraints, startups often test hypotheses in several channels simultaneously, which is a mistake. With this approach, it's hard to track cause and effect and assess which channel is more effective. It's better to test channels sequentially, one after another. Then you can accurately determine which one led to the observed metric values.

There are numerous traffic sources. To understand the order of testing, rank them based on three points:

• Does this channel have a target audience? We can't know for sure in advance, but we can judge based on the experience of similar projects.
• Does the team have expertise in working with this channel? Hiring new specialists before having a stable financial model is risky. You could consider outsourcing, but there might not always be budget for that.
• Is it possible to scale this channel? Startup growth relies on continuously increasing the number of users. Hence, it's essential to estimate beforehand how much traffic the channel can provide.

Then start conducting small experiments and track metrics: the economics in the channels should align.

Besides inbound traffic, another critical success factor for a startup is user engagement. Users should be actively using the app, not just downloading it and forgetting about it.

How many apps have you downloaded and forgotten about? You might have used them a couple of times, and that's it. Some apps fail to solve a problem, while others, you just couldn't figure out how to use. There are countless reasons.

Now, imagine the same fate for your product: downloaded and forgotten. Not a pleasant thought. To avoid this, every startup aims to achieve product-market fit (PMF). PMF is the stage where a company has created a product that users recognize its value.

If users are regularly using the app, the user base is growing through recommendations, and the product gains ambassadors, then PMF has likely been achieved. PMF is characterized by the metric Retention Rate, which shows how long people remain users of the app. It's calculated using the formula: (Number of users at the end of the period - Number throughout the period) / number at the beginning of the period.

HOW TO ACHIEVE PMF?
1. Segment your target audience and verify if you're really targeting your users.
It's trivial, but users won't use an app they don't need. Check if the product description in the promotional materials matches what it actually delivers. Maybe users aren't sticking around not because the app is bad, but because they expected something else.

2. Understand who's actually using your product. How do they differ from those who didn't start or stopped using it?
Moreover, since the app was downloaded, the primary need is the same for both groups. To find differences, try describing users as personas, in the first person. Describe their character, motives.

For instance, if you've created a health monitoring app, Tom, who likes to control everything, uses the app. Meanwhile, Sam wants to climb the career ladder. He heard that successful people take care of their health but he's a novice in this area. For Tom, the app needs to gather a lot of reports, while for Sam, the interface should be user-friendly, and he should be able to share his achievements with friends. From the target audience's perspective, "People who care about their health," Sam and Tom belong to the same group, but they'll be satisfied with completely different apps.

3. Analyze how the usage scenario differs for product advocates from those who didn't appreciate the app.
A user doesn't become an advocate immediately. They take certain actions that lead them to realize the product's value. For instance, to use the app, registration is required. The first user has a Google account, so they easily logged in and got the benefit. The other user only has an email, and they can't remember the password. Maybe they even can't remember the email itself. As a result, they uninstall the app.

From this situation, we understand that the ease of registration determines the subsequent interaction between the user and the service. And to approach PMF, we need to simplify registration or allow partial app usage without it.

Previously, we found the user acquisition channel and reached the product-market fit — where users recognize the app's value. The next step is scaling.

Before diving into it, let's check:

• Does the app genuinely solve users' problems?
• Does the economy align with the found user acquisition channels?

If the answer is yes, then the company is ready for scaling. Here are a few steps to take:

Step 1: Scaling Up Traffic in a Validated Channel
In simplified terms, a business ready for scaling should resemble a well-oiled machine where you "input" money and get even more money out. The more you "input," the more you get out.

To understand how much money you need to invest, we use Unit Economics. The main idea is to calculate costs per one acquired customer. For instance, you found a channel from which customers are coming. You spent $10 000 and got 1,000 users. So, the cost per acquisition is $10. When scaling, if you decide to attract 50,000 users, it'll be 50,000 * $10 = $500,000. Hence, you need to "load" the mechanism with $500,000.

Step 2: Hiring a Professional
A specialist with specific expertise knows the ins and outs of the channel, adding another growth driver. Moreover, at the scaling stage, generating new users should become a constant process. Hence, there will be a lot of workload, so hiring is justifiable. However, ensure they have all the resources to achieve goals. Besides a specialist, you might need to hire a designer, copywriter, web developer, etc.

Step 3: Establishing a Hypothesis Testing Team
Scaling a user acquisition channel is one way to increase user numbers. Essentially, it's increasing the input of the marketing funnel. Increasing conversion rates at intermediate stages also leads to more users. Therefore, to grow, create a team that constantly analyzes funnel weaknesses and tests hypotheses for improvement.

This approach is called growth hacking. The team's work is structured as follows:

1. Analytics: Based on data, identify the bottleneck in the funnel.
2. Hypothesis Generation: Propose solutions that affect metric values.
3. Prioritization: Choose which hypotheses to implement first. Criteria: ease of implementation and impact on the metric.
4. Implementation and Evaluation: Check the results to see what worked well and what didn't.

After the scaling stage, the startup transforms into a steadily growing company.

The final stage in the traction map is Maturity. It marks the transition from a startup to a business. You might wonder, "Haven't we been doing business before?" To answer that, let's understand the difference between a startup and a company.

Startups seek attractive business models, while companies already have them and focus on executing them successfully. Interestingly, startups don't necessarily involve technical innovation — they focus on new business models. Technologies are merely tools for realization.

Therefore, a startup becomes a company when it finds a stable model. Confirms the problem, tests hypotheses, finds traffic channels, gains user loyalty, and starts scaling — in other words, goes through all the stages of the traction map we discussed in previous posts.

After all stages, the startup gains extensive knowledge, welcomes new employees, and begins to form business processes. Hence, the first step in transitioning from a startup to a company is systematization and organization.

1. Develop Job Descriptions
In a startup, everyone does everything. Today you're a salesperson, tomorrow a developer, the day after tomorrow a marketer, and that's normal. However, to ensure the smooth operation of the business mechanism, each employee should understand their area of responsibility and know who to turn to for what. Moreover, without job descriptions, the work process relies on individuals, not positions. And that's a risk — if someone leaves, there might be no result.

2. Create a Knowledge Base
For the same reason, start compiling knowledge into a unified base. People will change, but the knowledge base will remain. Essentially, it's the backbone of the company. Collect everything you've learned during the startup phase. Describe working schemes, mistakes made.
There's no need to complicate things or look for specialized solutions; Notion would be sufficient.

3. Streamline Business Processes
As the company grows each day, there won't be the possibility to keep everything under personal control. Task trackers, CRM, and BPM systems — if you don't have them yet, it's time to implement them. Thanks to them, work will be built according to established standards. The analytical data they collect will show where processes can be improved.

Throughout the startup's life cycle, it goes through various stages. They're described by the Traction Roadmap tool. By using it, a startup can determine its current stage and understand what tasks need to be solved right now.