5 Catastrophic Mistakes Start Ups Make…and How to Avoid Them

As an entrepreneur, you undoubtedly started with a great idea. Step two was validating the idea to make sure you weren’t going to waste time and energy. Like many startups, your only validation may have been your own experience, since the product is something you wanted for yourself.?If you went the extra mile, maybe you checked in with colleagues or professional contacts who gave you a thumbs up (??).?Whatever you did, you garnered enough confidence to get started.?

And here’s where it gets tricky because this is the point where the vast majority of startups go off the rails… Here are five catastrophic mistakes startups make when they design and build their first product.

Not Talking to the Right People

Every early stage entrepreneur I have ever met says they are working with customers, but who are these ‘customers?’ ?Guidebooks for startups recommend you define buyer personas and then survey a representative group of these people to get their input. Alternatively, some recommend you work with focus groups that represent your buyer persona cohort. ?Both ideas are dead wrong. In fact, nothing could be farther from the truth.?Here’s why these don’t work. First, the people you are polling have nothing invested in your process; you are simply asking them for input.?Sure, these people want to be help you build a good product, but for them, it’s a theoretical exercise. ?They have no skin in the game. ?Second, to paraphrase Henry Ford,* “If I had asked people what they wanted, they would have said a faster horse.” Most people don’t know what they want because they don’t think outside the box.

I’ve been down this road with startups and the result is always the same; the startups build exactly what the focus groups asked for, yet when they show up 9-12 months later with the product, not a single customer wants to buy it.

Where’s the Problem?

Simply put, almost all buyers look for commercially available products. ?Their frame of reference is comparing existing options.?Only a tiny subset of the overall buying public (2.5% - 15%, according to the influential Technology Adoption Model) are the innovators and early adopters who can envision novel solutions. But it’s precisely these personality types you need to find in your target market who have the problem you want to solve. Then you need to convince them to work with you to help define your product.

Not Asking the Right Questions

Guidebooks recommend surveying your buyer personas about their pains and needs and then drawing insights about how to solve those problems. Wrong.?Most people are terrible authors.?They don’t know what they want, so they certainly can’t tell you… But most people are good editors, which means if you show them something, they can give you feedback. They can tell you why your idea is no good, not relevant for them, or what would need to change to be interesting. This is the kind of feedback you desperately need. ?So, present customers with a something visible – a product concept, screen mockups, a canned demo, whatever – as long as the presentation enables your audience to experience for themselves. ?Then they will be able to provide valuable feedback. ?And, the sooner you get feedback, the faster you can course correct…. and the faster you will get to market with a winning product.

Not Responding to Customer Input

OK, assume you found the right people to engage, you presented them with some ideas, and then got their feedback. That’s great. Now what? Well, if you are like most startups, you’ll put feedback in your product backlog and deal with it at some point in the future. Here’s the mistake. The people giving you feedback are investing time with you because they want a product that fulfills their needs.?After your meetings, they will expect to hear what you did with their feedback. If you tell them “it’s in the product backlog”, you risk losing them. These people want to be an active part of your design process. ?If they feel their input is not important, they will drop you like a hot potato. And there goes your lifeline to market success.?On the other hand, you already have a product plan, you can’t keep changing plans after every meeting. So, what should you do? Before answering that question, let’s take a look at another common mistake, which is the flipside of not being responsive to customer input…

Believing Everything the Customer Tells You

While people expect you to be responsive to input, not everything they tell you is gold.?All people, (like all your future customers) have unique quirks. That’s why you need to correlate feedback from all your sources, to uncover the ‘must have’ pieces of the product and identify what can be put off for now. Being overly responsive is not good either.

The right approach is the middle ground. Partners need to know you are listening, that you value their input, and that at least some of what they are proposing is being added to your product.?Your communications plans need to be crystal clear, so you manage expectations effectively. ?This is not always easy, but most people are reasonable, they understand time and resource constraints. ?If you are up front with them, and they get most of what they want, you should be able to get them on board as paying customers.

Falling Prey to Biases

One of the biggest problems everyone faces when making a decision is falling prey to biases.?And entrepreneurs are no exception. There are many ways our brain tricks us into thinking we are being rational when we are clearly not. Two important biases that quash entrepreneurs’ success are the confirmation bias and the situational bias.?

All entrepreneurs are familiar with the confirmation bias; it’s when you give greater weight to feedback that confirms your own opinions, while disregarding input that conflicts with your current thinking.?So, when a customer tells you your product is great, you overvalue that input.?In contrast, when a customer tells you your product stinks, you think of reasons to disregard their input.?Falling prey to this bias can be deadly, and it’s extremely hard to overcome because you are emotionally attached to your product.

Another bias to keep in check is the situational bias in which particular situations skew your assessment of the current state of affairs. ?For example, if you are under time pressure to meet an investor’s deadline, you may disregard important feedback at a critical stage of development.

There are many other biases in play, you can find more in the article, 5 Cognitive Biases That Are Killing Your Business. ?Also, I highly recommend two books that explain how biases influence decision making - Nobel prize winner Daniel Kahneman’s Thinking Fast and Slow, and Dan Ariely’s Predictably Irrational. These are excellent resources for entrepreneurs who face critical decisions on a daily basis.

Why Would People Spend Time with You?

By now, it should be obvious why you need to work with real customers from the get-go.?But why would they work with you??It’s clear what you have to gain, but “what’s in it for them?” This is literally the $1M question. The answer is that the right people want to partner with you because you are addressing a real pain; a pain for which they are actively seeking redress. The right people are early adopter types who yearn to influence your direction, to obtain a product that fulfills their needs. But it’s more than that. These people crave the satisfaction of being an influencer who is actively making a difference.?They crave your admiration and the admiration of their peers. For some people, this is literally why they get out of bed in the morning.?You are providing them an outlet for their creativity; a way to contribute while providing you with valuable input.?It’s a win-win proposition. That’s why these people are called “Design Partners” – you need to treat them as partners and not merely as future customers.?Finding, recruiting, and working with the right partners is the number one challenge in your product journey.

Now, how do you find these people and how do keep them engaged while you are building the product? Great questions. Stay tuned…. There is more to come in a future article.

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* It’s quite likely Henry Ford never said this. See for example, the HBR article, “Henry Ford, Innovation, and That ‘Faster Horse’ Quote.”