
You are an entrepreneur, a builder, and an artist. If you wanted to spend all day "writing up plans" or "researching" you'd be back in the corporate world, right? After all,
real artists ship. But one of the biggest mistakes startup founders commit is rushing to make, rather than taking the time to listen and learn.
In the past six months I have run across scores of eager entrepreneurs who put their heads down to build a solution without thinking through the basics of their businesses. I recall the crowdfunding startup that raised funds and raced to a beta version but failed to think through which customers they should build for. Then there was the advertising services company that didn't stop and learn about how the marketing world actually works. And I'll never forget the group texting startup that had no clue who might use its service and why. Each company was full of energy, brains and passion, successfully got something into the marketplace...and struggled to move past the early stages. No amount of A/B testing could get them past the basic misses that we already baked into their businesses.
There are many reasons that founders seem to be rushing faster-than-ever to build. First, the people who start companies tend to be those with the skills and confidence to put something in the marketplace. After all, software developers like to, well, develop software. Second, by now nearly everyone has read
The Lean Startup and taken as gospel that companies should get a "Minimum Viable Product" into market as soon as possible. Lots of investors have fanned the flames by encouraging pitching companies to, "Go ahead and build it...and come back to us when you have some traction." Too often this is an easy way to show companies the door without having to actually reject them and their ideas.
There are some deeper human tendencies at play here, too. It might sound counter-intuitive, but making something is often "easier" than planning your approach and getting feedback before you build.
Human beings tend to avoid two things, which can kill startups:
- Work you don't like to do - We all naturally gravitate toward the kinds of work that we like and think we're good at, but we need to put our feet in the mud once in a while and do the things we hate in order to get to the greener grass. Most software developers I know would rather bite off their right arm than go to a public park with a clipboard and ask strangers what they think of the new app they are working on. It's also a lot more fun to launch a web page than spend hours Googling for industry facts and figures. An no one likes to sit in front of a blank word doc and write out the 25 reasons why your company might fail. Unfortunately, these un-fun tasks are often the ones that help you learn to build better and dodge bullets.
- Rejection - We don't want people to judge our baby's name before birth, and we don't want people judging our startup idea before it's on the app store. That's why we tend to keep both out of the limelight until the product is delivered and people are much more likely to congratulate you than question your decisions. While it might be a smart idea for baby names, keeping your idea quiet is the absolute worst course of action. You should get as much feedback as possible as early as possible--as it is the best way to learn, adjust and check your assumptions. Ask everyone you know who is even slightly relevant for your business--and ask them to connect you with five other people they know. Don't spend too much time trying to sell or convince them that it's the next Instagram; rather, spend 5 minutes sharing the idea and 25 minutes (or much more) listening to what they like, what they hate, and whether and how they might use it. The earlier you are in the process, the more honest people will be--and after several dozen interviews like this you will vividly understand their needs, along with how you totally missed the mark on your version 1.0.
By failing to do the yucky work and embracing rejection, you're really just postponing the inevitable: A big, hairy, public failure--potentially with lost income, strained family relations, pissed investors, and a scar that might scare you away from the entrepreneurial path altogether.
No amount of advice can guarantee success, but I have repeatedly seen startups increase the odds of success (and significantly instill great confidence from investors) by learning before they leap. Here are three buckets of work you can do today:
Dig Up Graves
Many of the great ideas founders come up with tread on ground that others have cleared years before. Blogger networks, insurance quote sites, and family calendar tools have been around for well over a decade at this point, and we keep seeing ideas like this return from the grave. So one of my first questions when hearing a pitch is: "Who has tried this before--and what can you learn from them?" But too often the founders have not done their homework, despite hundreds of Googleable articles and even
founders fail posts. Smart founders dig deep into failures in order to avoid their mistakes, but also to uncover a new approach that might work. One of my favorite business school professors, Peter Golder,
wrote a book showing how most successful innovation comes not from the first mover, but from the follower who broke open the one or two barriers that prevented an idea from going big. You can do the same.
Believe it or not, you can even contact someone who worked at a company that didn't work out, and ask them an hour's worth of questions about what went wrong and why. Most people can be tracked down thanks to tools like LinkedIn, and people tend to want to help others who are following in their footsteps. A startup client of mine recently interviewed a founder who failed with a similar idea; he not only got priceless perspective, but discussed licensing his technology solution at a vary favorable price.
Fake it Before You Make It
Instead of making a full-blown solution, you can often learn faster and cheaper by creating your business in a way that feels very basic but works well enough to gauge interest. This is the idea behind Eric Ries's Minimum Viable Product. But too many startups don't think basic enough; they tend to want something like a completed house when all they really need is a false door and mailing address. If people knock on the door and put checks in the mail, you win; if not, you've learned a lot without taking out a mortgage and hiring contractors.
Eric Ries did this when he was thinking of turning his blogging and speaking topics into the book version of The Lean Startup. Instead of spending a year selling into publishers (yes, it takes a year
in my experience), he took book pre-orders on his website. If the book didn't get many pre-orders he could have given people their money back and saved himself a ton of time. Zappos didn't start with a warehouse full of products--rather, the founders tested the idea of online shoe ordering by taking photos of shoes from a local store, and when orders came in, they bought them from that store and re-shipped them. Or you can take my "false door" analogy literally, as one of the
newest trends for deciding on which features to add to an app or website is to build a graphic link or banner ad, and count how many people click on it.
While I don't like investors who send companies away with an order to "just launch it," as an investor I do like to help startups think about how they might learn with a very basic MVP. For example, one company recently told me about their idea for a web matchmaking service to link brand marketers with social media mavens. The founders spoke with big brands and their PR agencies, who were eager to buy, and they intimately knew the maven audience, which was willing to get involved with big brand campaigns. The company asked me for $X dollars to build an online portal to make the matches. But I said, "Hey, why not go ahead and tell the brands you are in business and begin making matches?" They could run the whole business at an early stage with just email and phone calls, giving them a chance to work some of the bugs out and test brands' willingness to really fork over their dollars.
Test your Minimum Viable Concept
Speaking of which...Why create a Minimum Viable Product, when you can get a great feel for receptiveness to your idea by just sharing the idea with a large number of the target audience? That was my inspiration to create the
Minimum Viable Concept Test. I was tired of seeing companies struggle after spending months and money getting a product into market, so I developed a simple, affordable research tool to get unbiased feedback from a few hundred general market consumers across the U.S. Today, I'm able to get startups real, invaluable data on consumer interest, likes, and dislikes, within a couple of days. And the results are compared to my database of dozens of other startups' tests, so you get a better feel for your odds of success against the noisy din of new ideas.
Unfortunately, Steve Jobs
gave market research a bad name, and not a week goes by without hearing his famous line: "People don't know what they want until you show it to them." Entrepreneurs often take this legend's words as yet another excuse to just launch it, baby. Well, the fact is that you can "show" people your idea and get a response at a tiny fraction of the cost and effort with a basic write-up or video animation and asking a big group of people what they think about it.
Ironically, as I was half-way through writing this post I took a call from an aspiring entrepreneur who pitched me an idea that had more than half-a-dozen holes in it. I listened for a bit, then started prying, prodding and pushing at the idea--as investors are wont to do. It was clear that he needed to stop pitching, cease building, and start over. I wanted to help and seriously feared that he would be risking a great deal personally by continuing down his current path. So I amped up my voice and proceeded to vigorously walk him through the suggestions laid out in the post here. He sounded rejected at the end of the call and my partner in the other room remarked that I sounded "a bit tough." If you, dear reader, are the person I was speaking with--or anyone that has been or ever will be on the receiving end of my passionate reactions--I apologize if it felt a bit too "vigorous."
Please know that my passion comes from my belief that entrepreneurs hold our future, and my commitment to helping you avoid the mistakes and pain that those of us before you have felt deeply. If you stop building for a moment, you might discover a better way.
You should learn more about the MVC Test here, and follow me on Twitter here.
+Bob Gilbreath
Thanks so much for writing this entry, Bob. It really speaks directly to some of the frustrations I’ve been having with my site, Potluck, and I feel a little better hearing certain things “said out loud.” My frustrations have been with what you are referring to when you say that investors say something to the effect of “just build it, and get back to us when you have beta data.” That’s exactly what I’ve been told, but I have a background in biz dev and marketing, and as I’m not a developer, I’ve hit a few roadblocks with trying to “just build it.” I’ve successfully teamed with a talented designer/front-end guy, and have done six months of marketing the launch page, engaging with the appropriate community of customers, and developing the biz/revenue structures while he’s been working on the look and feel. I’d absolutely love for an investor to take a look at our pitch and the work we’ve done so far (as I’m sure they’ll see a very viable product,) but I keep coming up against the whole “build it” issue.
Anyway, thanks again for showing me I’m not crazy by developing the biz/market research FIRST.
Bob,
I could not agree more. Not only do most young/inexperienced tech entrepreneurs completely fail to ascertain who thir customers are and what they want, they are often arrogant about their idea even if it has been done 100 times before, I ascribe part of this to insecurity on the part of neophytes and part to a general laziness. Doing the market research takes effort and you may not get the answers you want. On the other hand, if an entrpreneur sets his ego aside for a moment and listens, he/she may actually end up with a viable business.
I have been a serial entrepreneur, consultant and mentor for aspiring entrepreneurs for more than two decades. I have watched tech start-ups fail at a far higher rate than brick and mortar companies, including the ones backed by VCs. There are a lot of reasons for that, but failure to understand the market and know one’s customer is high on the list. I am currently in the process of developing a major information services initiative for higher education institutions. Not only are we reaching out to our customer pre-process development, we are actually involving them directly in the research and R&D through an advisory council. The result — major buy-in even before we have an actual product.
So, like you, I advise all aspiring entrepreneurs to take a few months to get to know their operating environments. Matching vision to reality is the key to maximizing the potential for success.
I love Ray Liotta’s voice in the movie ‘Field of Dreams’ – if you build it, he will come. As an entrepreneur, I’ve plowed under more than one field of my corn – sometimes they came, and sometimes they did not. I was tempted to dismiss this article because ‘I like to ship’, but after a read, I think it should be required for anyone starting a business, whether it is your first or the next of several.
It’s about striking a balance between building something before you have any real idea of the market, and suffering a slow and painful death from meeting after meeting of ‘brainstorming, noodling, thinking out loud and paralysis by analysis’.
Nice work Bob. You’ve given me some food for thought on the next chapters I’m writing.