The 8 Most Common Startup Death Traps
This is a guest post by Sam Hysell. He helps teams successfully innovate through effective experimentation and customer understanding with Known Unknowns. Sam has worked with companies like Lean Startup Machine and Techstars and has led workshops and helped hundreds of startups around the world. He’s also just launched an awesome course on mastering customer development interviews. Sam’s been kind enough to give us 33% off so if you’re interested in building a great product definitely check it out here. Otherwise, on with the post…
There are tons of really smart people dedicating themselves to creating products and brands that people love.
But… Time and time again, these people and startups fail. Some of the world’s most ambitious, creative and talented individuals are wasting their most precious resource (time) building something that people don’t end up using.
So why do so many startups fail? Below are 8 of the most common traps startups fall into and how to avoid them:
1. “How can we build this” (Market risk vs technical risk)
The real underlying risk of your startup is hardly ever technical risk; rather, it’s market risk. The question you should ask yourself early on is not “how should we go about building this” but instead “should it be built?” Further, the answer to should it be built is not a matter of you and your cofounder stringing together logic as to why it should exist, then backing it up with evidence that supports what you believe. The “should it be built” question entails interviewing customers to ensure the problem you’re looking to solve exists and is something they care about, and you know who “they” are.
2. “But we need this feature too” (build trap – shout out to Melissa Perry)
It’s so easy to come up with feature ideas, left and right. I admit it too, it’s fun. BUT, it can be a trap. Solving one big problem really well is way more valuable than solving 5 small problems through 10 features. Ask yourself, what are the must-have features and what are the nice-to-have features. Always seek to avoid building what you don’t absolutely need.
Ask yourself – what is the one core actions users would need to take to be happy. Give them that – you can always add more later.
3. “But it needs to be ready to scale” (premature scaling)
Think about it, what is the best problem you can possible have as a business? Hands down, the best problem is too much demand. There’s lots of other great problems that stem from having too much demand, but on the whole, it is the ultimate form of validation that you are creating something people need.
The trap people fall into is trying to build a product capable of mass scale before having 1000, 100 or even just 10 customers. I think Markus Andrezak puts it incredibly well: “As a startup, generate demand and solve for the problems that arise. Don’t solve for problems that will never exist.”
As a result, the top priority until you’ve generated too much demand is to strive to please 1 customer at a time. You should focus on automating things only when the thing you’re looking to automate becomes the bottleneck to taking on new customers.
4. “My customer is everybody” (casting too broad of a net)
You can’t please everybody. If your customer is everybody, your customer is nobody. Way too many times people seek to build a product for the masses without thinking about who their most passionate customers will be and what they need to do to please them.
You’re so much better off taking the time to figure out exactly who your customer persona is and interview those people to make sure, and iterate upon your persona. Overtime, as you begin to please all of your early adopters, it’ll be time to start adapting your value proposition to play into the masses, but start small. Even Facebook started at Harvard, then other Ivy Leagues, then High Schools, then everybody. Even today, different people use Facebook for different reasons.
5. “We’re not charging, it’s our beta version” (revenue should be a beta feature)
Way too many people feel like their beta version isn’t enough to charge, and that since the goal is learning, it should be for free. Let me ask you this, if you’re not learning whether or not people are willing to pay for the solution to the problem you’re attempting to solve, what are you learning that matters more?
Also, beta (not complete) products & charging are not it’s not mutually exclusive. You can learn and charge at the same time. Your objective should always be to solve one problem really well. Overtime you can iterate your product into a full fledged suite of tools revolving around the problem space you are in, but in the beginning solve one thing really well and continually iterate to solve it better and make customers happier. If you can’t get customers to pay along the way, then maybe you’re solving the wrong problem.
6. “We can’t get it in front of users until it’s built” (shortcuts to providing value DO exist)
Lots of time people think they HAVE to build this grand product before they can really start interacting with customers… FALSE! We live in an age of countless tools that enable us to do awesome things without having to write one line of code. There’s a concept known as the Concierge Minimum Viable Product that is one of the most powerful early stage startup tips and tricks.
Think about a concierge at a hotel. You tell them what you want, and they make it happen. How it happens doesn’t matter but at the end of the day they get it done. Like I said earlier, lots of startups like to build for scale before demand has come, and that you should only automate the biggest bottlenecks to serving more customers (which early on is solving a real problem of theirs). A concierge MVP is you providing your value proposition without creating any new technology. Here are two examples:
Food on the table (you provide food preferences and zip code, they give you a set of recipes and a grocery list with discount codes for local grocery stores): Before building a thing, they interviewed countless people. When they felt they were ready to start solving the problem instead of just exploring it, they went to a grocery store and took down people’s preferences and emails with a clipboard and emailed them the recommendations before automating a thing.
Skillshare (a marketplace on a mission to democratize education by allowing people to learn from those who do): When Skillshare was founded the two founders promised each other they wouldn’t write one line of back-end code until there had been 1000 tickets purchased. Instead of building a massive market place, they built a simple landing page with links to Eventbrite pages for classes and manually recruited teachers. They hit 1000 and haven’t stopped growing since.
7. “I talk to my customers, when ever I pitch them.” (Seek to learn, not sell)
Early on, it’s super easy to hype up your idea when talking to everybody, including your potential customers… The problem is that early on you want as much unbiased feedback as possible and whenever you tell somebody your idea they will either seek to please you and say it is a good idea and/or be thinking and conversation within the context of your idea. Dave McClure says it best – “customers don’t care about your solution, they care about their problems”
With that said, when speaking with your customers and interviewing them, the longer you go in the conversation without mentioning your idea the better off you’ll be. And when you finally do mention your idea, don’t be close minded to their feedback. One of my biggest pet peeves is when entrepreneurs try to counter the objections brought about by their customers instead of seeking to understand them more deeply.
With that said, the more unbiased conversations and interviews you have with (potential) customers the better off you’ll be. When in those conversations, seek to learn, not to sell.
8. “It will succeed because ____” (Blind belief in assumptions)
Having a vision and beliefs as to why you will succeed is vital to your success, but blindly adhering to them is fatal. When Christopher Columbus ventured to find new land, he didn’t have a GPS telling him exactly where to go, but he had a vision and use data-driven decisions and iterations to get there. He’d go for a bit, then him and his team would collect data as to where they were using astrology and other measures. Using that data they’d make their decision as to where to go next. Sometimes they’d go in the wrong direction, but then they’d figure that out and back track. Using data they iterated their way to success.
In the context of your startup, YES! have a vision, but what if Christopher Columbus right off the bat said “let’s go that way” and never looked back. He probably would’ve died or ended up somewhere differently, let alone know how to get back to Spain.
With that said, be clear about your vision, but also constantly seek to bring it’s underlying assumptions to light. Assumptions are unquestioned beliefs as to why you will succeed. The most common assumptions I’ve seen revolve around who exactly is your customer? Why will they be driven to purchase your product (functionally and emotionally)? What features do you need to make them happy? Ask yourself these questions, externalize your assumptions and seek to see whether they true or not. Even if they are wrong you better off knowing you spent a little time going the wrong way and course-correcting instead of operating under a blind belief in your assumptions.
All in all, it’s easy to fall in love with what you’re working on – you should! But at the same time, what’s more important: that you make your customers happy and create real value, or that your original idea comes to fruition exactly like you wanted it to from day 1.
Successful people and companies know the power of iterating and using data to make decisions. Elon Musk in an interview even credited his success to proactively seeking out negative feedback. In closing, success as a startup is not about taking one giant step from idea to successful product, instead it is the aggregate of a bunch of baby steps, some in the right way, some in the wrong way, but all en route to make your customers happy and create real value.
Wow, loved all those stories and examples. I can definitely relate to many of these based on my experiences and conversations with other entrepreneurs. If you want to learn more about Sam and his course on customer development, click here.