In The Pursuit of Traction – 8 Reasons Why Traction is Key for Startups
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29 May
Security or Utility? This is the question.
28 June
By Ajoy Mallik and Eliav Alaluf
“Why do you put so much focus on traction?” we’re so commonly asked. “First, give us the money, and then we can build a product that will generate traction”, the entrepreneur would say.
Well, it doesn’t matter if we’re using the reverse problem-solving methodology for enterprises or the Raving Fans® algorithm for identifying emotional connection between customers and products: we are obsessed with traction.
Even though one of us is in Silicon Valley and the other is based in Startup Nation (Tel Aviv), we both share the love for entrepreneurs who have an idea – but not just an idea. They usually go out to the market and test it in various ways and come back to us 18 months later, after they have the 4th revision of their product, with plenty of market-testing wisdom and ready to shake the world.
There are all kinds of traction which, in the interest of keeping this piece short, we won’t elaborate on. But it is important to note that incidental results are not traction, of course. Traction is not when a customer, whether business or consumer, buys your product. As much as early signs of oil are not oil, sometimes even a signed deal is not real traction.
We define traction as when your product or service becomes an integral part of the way a critical mass of the buyers does their business or lives their lives.
Why do we emphasize the pursuit of traction? Here are our reasons:
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The right team
Traction increases the chances that the entrepreneurs in point are “the right team”. You don’t need to ask a team if they are driven, capable, and know how to sell.
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Meaningful work
Traction could reduce the chances of you wasting your years. If you’re a talented person, why on earth would you want to spend 3-5 years of your life trying to build a product or service few people are willing to use or pay for? Traction increases the likelihood that your professional life will mean something to others.
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Commitment
Although traction is not the only way to measure commitment, we feel that the pursuit of traction is a good indication of a committed team: how else can you build an MVP product using lean startup thinking, in your spare time, with your own capital? It shows that you’re not just playing startup.
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Execution, not ideas
Traction makes the point that entrepreneurship is not about ideas – it’s about execution.
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Industry understanding
Traction forces entrepreneurs to have a great understanding of the industry and its needs. If you have traction, you’re probably know what you’re doing.
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Worst-case scenario
Traction forces you to think about the worst-case scenario: if you know that no traction means no funding, it gets your mind in the right place.
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Reality check
Traction means reality. It forces you to focus—not on your product, your “story”, or your idea—but on the true needs of the customers: who will buy your product and why? At what price point? What demographics? How will you build critical mass? How would you scale? Very often, you can hear the “capital-junky” entrepreneurs who are used to having easy access to cheap capital complain about “those idiot customers that just don’t get it”.
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A reminder of your goal
Traction is a great reminder to the team that the goal is not “to crush the competition” or to “win the sale”. Business is neither sports nor war. Business and traction are about making your product or service an integral part of the life of the customer.
In Israel, where we speak Hebrew, the term “venture capital” is translated as “risk capital”. Very often, entrepreneurs interpret this as meaning “you’re the guys that are supposed to take risks and gamble that money”.
To that, we typically answer with a smile: “We’re the capital, you’re the risk.”
And more seriously, traction substantially reduces, in our view, the “holy triangle of startup failures”: no product-market fit, wrong team, insufficient financing.
Traction isn’t everything, of course, but it’s a very good indicator of a real company doing meaningful work. We believe that traction is essentially what makes an investment in a company different from a bet in the casino, separates hopes from reality, and distinguishes dreams from real businesses.
In sum, the difference between a great vision and a mere fantasy is called traction.
