From MVP to Market: Why Product Management in Health Tech Startups Needs a Rethink
August 5, 2024
The Startup Journey: Setting the Foundation for Success or Struggle
The potential in the world overflows. Every day, new technologies, advanced tools, and the unmatched evolution of AI opens doors that were impossible to realize just a year or two ago. For startups, particularly those operating in health tech as it relates to radiology or diagnostic imaging solutions, this market is primed with opportunity and formidable challenges, especially as they near later stages of growth, go-to-market execution, and commercialization.
We have all heard the aphorism, "How you start something is how it will be." Nowhere is this truer than in startups, especially health tech. The push to create a Minimum Viable Product (MVP) for testing a notion is the usual way, and while not inherently incorrect, it often lays the stage for long-term cultural and operational pitfalls. Then, let’s look at a startup's journey in these early days and how decisions taken during these stages will impact its future and product management.
The Race to MVP: Right and Wrong Things in Startups
Start-ups typically concentrate on getting from concept to MVP as fast as they can. The main objectives are simple: make sure their idea is feasible, create a working prototype and bring it to market by raising funds. But despite the efficiency of this model, it often possesses blind spots which prove difficult to correct later on. Here is how the route usually goes:
1. Pre-Seed Stage: This is where it all begins, often funded by the founders and their friends or family. The goal here is to validate the idea of one's business and get ready for future rounds of funding.
2. Seed Stage: In order to get the product to a state where it can actually be tried out, for startups this step helps them start operations, make initial market contacts and structure the simple facilities and infrastructure that will go into making a viable company.
3. Series A: A startup's first major round of funding, where real cash comes rolling in to fuel growth, add teams and adjust products so they can be accepted by the mass market.
4. Series B: At this stage, the company is ready to scale. Series B funding is focused on expanding the business beyond initial markets, increasing production capabilities, and growing the team even further. The goal is to take the validated product and establish a stronger market presence while improving processes to handle larger demand.
5. Series C: This round is all about scaling rapidly and gaining market dominance. Series C funding is typically used for large-scale expansion, entering new markets, developing additional product lines, or even acquiring other companies.
Starting with events staged at interplanetary speeds and the absolute minimal viable product, this abbreviated journey highlights something vital that gets overshadowed by startups in the pursuit of product development and funding. Startups tend to prioritize product development and funding over building a sustainable, scalable culture and product management framework. The culture that comes out of this is centered around rapid development and investor narratives. It is not on the broader market or end-users who ultimately drive the decision to purchase.
A Culture Created from Speed Instead of Strategy
In the typical early-stage startup, the drive is development speed, often guided by a set of specialized industry advisors and the foundersˈ own vision. The usual playbook for this consists of:
· Engage several very specific industry users - for example a small group of physicians or specialists like radiologists.
· Get the product out fast using familiar technologies.
· Raise funds to achieve MVP.
· Focus on Series A funding, hone your messaging and storytelling skills for investors.
· Gather some end-user feedback, market data, and competitive analysis.
· Structure the company around its development process.
· Basic understanding of regulatory requirements; often in a reactive checklist style.
· Hiring fractional roles or consultants for areas such as regulatory compliance and quality assurance.
· Obtain some level of market penetration and start to prepare for the next round of funding.
· Seek Series B funding to scale and realize your product development and delivery scalability is challenged.
In the short term, while this method is practical, it has long-term consequences. The culture that was set up during these early stages is one of speed and minimal viable quality, which can be difficult to evolve as the company grows.
Because limited resources are constantly spent doing development without any clear target audience to serve them up against, an emphasis upon rapid product development can lead to deficit gaps in both product management and broad market alignment that will be clearing obstacles for us down the road in scaling, customer satisfaction, or innovation.
The Heart of a Company is the Product
At the core of every company is its product. Without a product, there’s nothing for developers to build, nothing for marketing to promote, nothing for sales to sell, and nothing for support to maintain. This in turn leads to the fact that all other remaining departments are pointless, without a product. But the success of every other department all revolves around that product, even though too many startups still don't invest in a sound product management structure early in startup life!
Instead of cultivating an implemented product management organization, startups instead rely on ad hoc processes led by development teams and founder instinct. This can result in messy product roadmaps, unclear product delivery, software bugs, technical debt and features which serve only a small section of users rather than the wider market. As a result, this affects customer satisfaction, market leadership, and your future funding choices: it really makes it difficult to grow effectively.
Building a Culture Today for Tomorrow’s Challenges
As founders, it is essential to look beyond the immediate need of getting your product on the market to establish a culture which is not only appropriate to today's goals, but also sets things right for future expansion and flexibility. This means implementing strategic product management early on, establishing clear processes, hiring product professional with a background in product management, and creating a broader, unbiased vision that goes beyond the initial group of advisors, company culture, corporate structure and early users.
Finally, it's possible for a startup to choose both. The Conclusion: the way most startups approach their initial journey sets them up for long-term challenges that are often avoidable. It’s crucial to build your startup with an eye on the future, ensuring that your culture, product strategy, and overall company vision are aligned with your exit strategy. Your exist strategy should be an IPO. Manage and drive your startup with one goal in mind, IPO. In the next article, we will explore why, as founder(s), your one objective is to manage and drive your company to an IPO.
James Conyers