4 Myths About Successful Startups – Part I: How Startups Can Use a Lean Approach and Still Miss the Mark

A version of this article will appear in the forthcoming ebook on startups for the Washington Technology Industry Association

If you’re in the startup world, it’s a good thing that you can’t cross the street without running into The Lean Startup methodology. Implementation of a lean approach has helped successful startups identify and build solutions with a product/market fit through the process of customer discovery and iterative development.

Image Credit: ThinkGeek Store

The gist of it is:

“How fast can I find out if my premise is right?”

and if it’s not right,

“How effectively can I pivot my ideas to meet real customer’s needs?”

Without the right product and market fit, you’re just developing “cool stuff” that no one else thinks is cool enough to buy – and that’s been the downfall of many startups.

Be Nimble, Be Quick

As Steve Blank states in a Harvard Business Review article, “Lean start-ups use a ‘get out of the building’ approach called customer development to test their hypotheses. They go out and ask potential users, purchasers, and partners for feedback on all elements of the business model, including product features, pricing, distribution channels, and affordable customer acquisition strategies. The emphasis is on nimbleness and speed…”

For successful startups, it’s all about quickly testing a theory about a product or solution that meets an envisioned need of a customer or market segment. Where it goes wrong is when startups assume to know who their customers will be and what they want, rather than talking directly with potential customers to find out what they care about, what they need, and what they’re willing to buy.

Without this critical step, many startups fail to recognize early enough in their cycle when there isn’t a product/market fit.

The bottom line? Research makes a huge difference for successful startups.

POPULAR MYTHS, MISTAKES, AND PITFALLS AMONGST STARTUP FOUNDERS & CEOS

We’ve seen brilliant teams invest time and resources into seemingly lucrative ideas for viable products or services and still ultimately fail due to tunnel vision and failing to be proactive with targeted customer research. Here are 4.5 myths you can avoid as you think about how to “conquer the world” to become a successful startup:

Myth #1: Validation from colleagues and self-evaluation is equivalent to customer and target market research.

DIY research and validation from colleagues may seem attractive due to its deceptive “low cost, quick start, and lower personal risk” appeal. Talking to your network of colleagues as a starting point can be a productive process, but it’s risky to build your business on that alone.

By ignoring or failing to sufficiently commit to the crucial process of direct customer research at the outset, startups are doing themselves a costly disservice.

Armed with input from colleagues and other “known” sources, entrepreneurs enthusiastically start out with a supposedly great product or service concept, ramp up their development efforts, and create a prototype – only to discover that there’s no one seeking or interested in their solution at the level needed to create a viable, scalable market.

Effective customer and market research is important at every stage of your development cycle, from initial ideation to completion. Building research into your process saves money and resources. Listening to your customer’s real challenges can save you from developing features you and fellow colleagues think are “cool” but your target customers don’t care about or aren’t willing to buy.

Myth #2: Following your gut instinct ensures success.

Gut instincts are good and can take you a long way towards success. But, there’s also the reality that as the founder-creator-builder of your solution, you’re too close to the subject and are inadvertently biased in evaluation research. Regardless of intention, it’s almost impossible not to skew the analysis.

We’ve witnessed this phenomenon firsthand:

The CEO of a SAAS solution startup insisted on personally conducting a focus group roundtable with potential customers. He was a very smart founder who had identified a valid market challenge and developed a unique way to solve it.

The target customers participating in the focus group were savvy, engaged, and open to offering feedback on the idea. In the process of the discussion, the CEO subtly discounted or reframed any input from the group that didn’t fit with his picture. He was so entrenched in his own “story,” and his certainty of the market he was targeting, that he literally couldn’t assimilate feedback that didn’t match his vision.

As a result, he was unable to hear solutions that could have provided a successful pivot. There simply wasn’t a product/market fit in that version of the solution. We conducted market research to validate a new direction that would fit, but by then the startup simply didn’t have the resources to make the pivot and get their solution to market.

Startup founders can certainly be effective in getting feedback on their own. Just don’t drink your own bathwater. Recognize the inherent bias and pull in other resources who can listen and help you validate in an unbiased way.

More Insights Into Successful Startups

Stay tuned for the last 2.5 myths in our next article in this series.

Are you a startup looking for go-to-market guidance? Sign up for our complimentary strategy session today!