#2 | ?? The 9 Deadly Mistakes of Startup Product Development
Daniele Dellavalle - October 18th, 2023
Historically, companies in the 20th century relied on a product-centric model when launching new products. While this model, consisting of four stages - seed, product development, Alpha/Beta test, and Launch/1st ship - suits established companies with a well-known customer base, startups navigate a uniquely different landscape. In fact, as highlighted in the startup classic, "The Startup Owner's Manual" by Blank/Dorf, “A startup is not a small version of a big company”.?There are nine flawed assumptions that are particularly detrimental to startups:?
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1. ?? Assuming “I know what the customer wants” ? On day one, a startup has no customers, and the founder can only guess about the problem, customer and business model. Success requires validating these hypotheses, and quickly changing the incorrect ones?
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2.? ?? The “I know what features to build”?
Founders shouldn’t follow the classic product development method, designing and building a fully featured product when there is uncertainty on whether the features appeal to customers. Fixing the product mistakes after promoting, building and shipping the entire product can be costly. Or even deadly.?
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3. ?? Focus on Launch Date?
Obviously, every company wants to get a product to market and sell it, but that can’t be done until the company understands who it’s selling to and why they’ll buy. And without assuming that customers will come based merely on good engineering solutions. It’s not a matter at shooting a great bullet but to shooting on target?
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4. ?? Emphasis on execution instead of hypotheses, testing, learning, and iteration?
While grown companies execute business models where customers, problems and necessary product features are all knows, startups need to operate in a “search” mode to learn from the results of each test, refine the hypothesis and determine a scalable and profitable business model.?
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5.? ?? Traditional business plans presume no trial and no errors?
Forget about the traditional financial metrics. Startups board and management should ask specific questions about test results?and experiments to validate its business model components, always with an eye on the cash burn rate and number of months’ worth of cash left in the bank.?
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6.? ?? Confusing traditional job titles with what startup needs to accomplish?
Established companies' job titles are applicable when they execute a known business model. Startups, by definition, are out searching for the validation of customers, product needs and market! Because of the dynamic environment, early-stage startup executives need dramatically different skills from executives who are working in an established company.?
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Startups should welcome professionals that –wearing multiple hats- are eager to learn and discover, led by curiosity and creativity.?
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7.? ?? Sales and Marketing execute to a plan?
Based on a traditional product introduction model, the Sales team attempts to acquire lighthouse customers and track their progress based on the business plan revenue goals. In the meantime, the Marketing team creates buzz through websites, social media, presentations...?
In most startups instead measuring progress against a product launch or revenue plan is simply false progress since it transpires in a vacuum absent real customer feedback, instead of searching for an understanding of customers and their needs and replacing assumptions with facts.?
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8. ?? Presumption of Success Leads to Premature Scaling?
Among established companies, even the most experienced executives are often pressured to hire and staff per the plan, regardless of progress. Apply this approach to a startup and this leads to the next startup disaster: premature scaling.?
Only when sales and marketing processes are predictable, repeatable and scalable should hiring and spending accelerate. Hiring and spending should accelerate only after sales and marketing have become predictable, repeatable scalable processes.?
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9.??? Management by Crisis Leads to a Death Spiral?
“No business plan survives first contact with Customers”.?
Not recognizing failure is an integral part of the search for a business model will lead to costly implementations of sales and marketing processes. A slim test-and-iterate process instead will allow to quickly pivot and adapt to the validated hypothesis.?
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Stay tuned for more insights from the startup world, and feel free to reach out to us for support on your entrepreneurial journey! ???
* S. Blank and B. Dorf, “The startup owner’s manual”, 2012?