6 Chapter - Valuing Usability for Startups

Abstract

Building a business that can operate profitably is the goal for any successful venture; it lessens or eliminates the need for further use of investment cash. To do this, startups need to build products and services that their customers will buy and use. The quantity of purchase orders for the products eventually determines whether the company will be successful. The Bell-Mason diagnostic provides a tool for user-centered design professionals to understand the competing priorities for startups during each stage of development. In addition, user-centered methods provide entrepreneurs and venture capitalists with a tool to better understand their customers and their customers' behavior. The combination of these approaches can help venture capitalists to manage risk and entrepreneurs to build more successful startups. Gathering data about the role of usability at a startup is extremely difficult. Much of the data used comes from companies that have gone public. Determining the value of a startup company is more complex than determining the valuation of an established business. Generally accepted business valuation approaches often leave investors with little insight or meaningful information about the value of a startup. Most startups, such as dot-com companies, have limited operating histories, have never generated a profit, and project significant growth. This combination of characteristics makes it difficult for investors to establish the fair-market value (valuation) of the company. Usability, like other product development activities, requires an investment. The focus for usability in startups needs to be on the business drivers and the creation of products and services that deliver compelling value to customers.