At a basic level, any start-up must fulfil a customer need. This could be in the form of a solution to an unsolved problem, a superior solution to one in existence, or a solution to a problem not yet identified. While the first two are straightforward enough, an example of the third are the ride hailing apps. It was not as if the world was waiting breathlessly to get a ride with a click on the phone until Uber happened; and now, one cannot imagine how we did without it earlier. The swiping on an iPhone is another example of an innovation making life more convenient, even though folks were quite satisfied pressing navigation buttons on a keypad.

Start-ups can also address opportunities thrown up by existing market conditions. HCL addressed the computer hardware demand in the early days of the IT revolution in India in the 1980s, whereas Infosys built a strong business out of software services in the 1990s by focusing on overseas clients and leveraging cost arbitrage.

When we launched India’s first ecommerce site, we were solving an unidentified need. Shoppers were happy going to stores and did not feel the need to have products conveniently delivered at home, that too at lower prices. Recently, at Again Drinks, we successfully addressed the challenge of developing healthy beverages with a long shelf life in ambient temperature without using preservatives or refined sugar. This is an ‘industry first’ and we have been awarded patents for our drinks.

Once a product or service is ready, entrepreneurs must focus on what is popularly referred to as finding a ‘product-market fit’. This is a critical point in the company’s evolution. Depending on the nature of the industry (B2B or B2C), a start-up must extensively test the product or service with clients and answer the following with an unequivocal ‘yes’: (1) Is this product addressing a customer need? (2) Will customers pay for this service? (3) Will clients use this solution regularly? (4) Are there enough paying customers?

This sounds easier than how it actually is. Most customers avoid giving honest feedback, especially if negative; it is worse when entrepreneurs approach friends and relatives for “honest” feedback. Further, customers cannot realistically estimate if they would be willing to pay for the service. Before we launched Again Drinks, I spent days inside corporate canteens, sampling the drinks with young employees (our target) and noting down the feedback religiously. I did not reveal I was a founder and everyone thought I was a third-party research analyst.

Also read

The chat fest: Biz leaders and start-up founders turn podcast hosts   

India’s gaming industry attracted FDI of about $500 million between 2014 and 2020, and more than $1.5 billion between January 2021 - June 2022.

Online gaming firms, bodies seek review of 28% GST in open letter

How digital health lockers are revolutionising healthcare records in India

A good product-market fit is the perfect foundation for start-ups to launch and sell.

(The writer is a serial entrepreneur and best-selling author of the book ‘Failing to Succeed’; @vaitheek)