The one thing you need to create a successful start-up: #2

I wonder if anyone didn’t agree

Yesterday I talked about the overriding importance of having a team when you are creating and growing your start-up. Many people might think the team is, at the very most, the second or third most important thing. I know lots of people who know for certain, as far as they are concerned, that the technology, or product or service is the most important thing – for how can you have a company without an offering?

Well I will be confounding those people with the second item on the list of things you need because it is not the product, but the customer.  How is it possible that the product has been relegated to below second place in the list? Surely the product is the entire identity of the company, the reason the start-up came into being?  I do not deny that a large proportion of companies are started around a product or idea, however an almost equally large proportion of companies fail because that is what they have done.

Delusional

The entrepreneur or inventor in isolation is the worse person to determine how great the product is. They have a bias. The world to them is quite blinkered as those who will benefit from the product and those people who don’t yet know they would benefit from it. It is their idea and it is clearly the best thing since sliced bread. Some entrepreneurs realise this bias and so set about testing their idea with friends, relatives, colleagues. The positive reaction they receive, even if nothing more than human nature, is taken as validation. Any negative response is discounted as being an outlier that forms an unimportant minority. It is clear and easy to justify the success of the test.

Other opinions

Some of you, who read yesterday’s post might say – “Aha, he is going to use this as another reason why having a founding team is important, to act as counters to the delusions of the individual!” Sorry, no. It is almost as easy for the entire team to become equally deluded, if not more so by feeding of each other’s energy and vision. Others of you might take the leap and talk about third party, independent validation – talking to investors and prospective customers. Trained originally as a scientist, you will understand I can never “guarantee” anything as a certainty, however I feel quite certain I can make the next statement. As long as your idea isn’t outright crazy and as long as you present it well, you will get a good percentage of these independent voices to say:   “your product is interesting” or “worthy of further investigation” or “yes, we would buy that” or that they will “keep a watch on it and see how it goes” or they will “want to meet with you again to discuss it in the future”. 

For many entrepreneurs, even if you have managed to avoid the self-delusion above, when you hear so many independent positive views,  it completely confirms the validity of your idea and you feel entirely vindicated to follow the path to creating this product or service and the company around it. What more proof could you need after all? These people have nothing to gain by lying to you. You had a great idea and they agree.

The issue with positive self-reinforcement

Here however is the key – something I have, as a coach and mentor, had to deal with time and again. All that positivity, all that apparent validation, everything you have heard above is worthless. Have you proven a real, unmet customer need that customers are definitely prepared to pay for sufficiently to create a profitable, sustainable, (scalable) company?  No.

Market traction

If I show you a catalogue of amazing products for your favourite hobby, how many of them would you ring as being interesting? How many would you actually go on to buy? What would be the deciding factor to actually induce you to buy that specific product?

The first issue here is that interest does not equal intent to purchase. You need to make sure you are confident you have sufficiently solved an unmet need well enough to have a proportion of customers compelled to buy from your start-up as soon as they are aware of the product.

The second issue is tougher still – if you go to a customer with a product, they can only be positive or negative about it. But is it a product they actually want enough to buy? Would it not be far more sensible, if you are risking your life, wealth, health on your start-up dream, to find out explicitly what the customers really want? 

Two ears, two eyes, one mouth – I wonder why.

What would happen if you went to customers not with a product, but with a method to find out their unmet needs, or even better to discover their unknown, unmet needs? Doing this means you don’t even need to have an idea for a product at the start of the process, you won’t have needed to protect the idea with a patent and spent time and money developing prototypes. All you need to start your company are your ears. 

I will cover this topic in more detail in the future, but next will be the final thing needed for start-up success – luck.

Thanks for reading.

Dominic Mikulin

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