Mentor Moment – Traction: What Is It & How Much Do You Need
One of the questions I hear quite from founders is “What is traction and how much traction do I need?”
For an early stage startup, traction is when a startup has a meaningful amount of users and user growth to validate and prove that what they’re building and the direction product development is headed, is something users want and see value in. There are also signs of a repeatable process to acquiring your users.
Founders typically build their initial product based on what they believe is an opportunity in the marketplace. They might get some early feedback from a few potential customers but for the most part, that initial MVP is built with the input and perspective of a limited amount of people.
There are many assumptions that need to be validated and flushed out from the perspective of ACTUAL users. Things like which product features to add, keep or remove, what customer segments to focus on or the pricing models and revenue streams to use. These are just a few of the many components of your product and company that you will continually iterate to achieve product-market-fit.
The number of users or paid customers that a startup needs to express traction really depends on your specific company. Always remember that traction is really customer validation that users are starting to like your product and this needs to be shown in the growth metrics for your company.
In general, consumer focused startups will need to have early traction with thousands of users, compared to B2B startups who might only need tens or hundreds since they typically have higher price points and longer sales cycles. An example of traction for a B2B SaaS startup might be 800 paying customers, growing 20% month-to-month, with low churn. Or, a more complex enterprise software solution startup might have 5 pilot enterprise customers trialing their software for 30 days with 4 turning into paid customers.
An example of traction for a consumer focused startup might be a free mobile app with 1.3 mill installs growing organically 20% per month, with 60% active and engaged users and 5% of users conducting an in-app purchase per month.
Keep in mind that these metrics are just examples and the KPI’s that best represent growth and traction for your startup might be very different.
Tour our offices, and see why this is the best place to grow your startup.