The number one deadly mistake founders (and consultants) make

The cardinal sin of startups: taking too long to release.

It’s a death sentence, in most cases. Yet most founders fall into the rut and make the mistake automatically. And it doesn’t help that given any kind of fee structure (except equity and fixed price), it’s in the best interests of the consultant to take as long as possible too.

It’s a fatal mistake for both sides:

1. For the founder, that is valuable time lost which could be used to test product-market fit and make the necessary pivots. In fact, it makes any kind of pivots harder down the road.
2. For the consultant, the losses are invisible but still severe. If the founder doesn’t have a business, nor will the consultant. It’s a loss of future income made more severe by the fact that if the startup had actually taken off, then that would bring valuable clientele to the consultant too.

As far as the consultant is concerned, it suffices to say that you need to align your interests with your clients or your consultancy wouldn’t last — that is, stop thinking that your profit is tied to your fees; it’s tied to the success you bring to your clients.

The founder side is more complicated, and I talked about it in a recent post: The Repeatability Illusion.

To summarize why founders are lulled into blowing up their MVP scope:

1. They did it, so we just have to 'copy' them (copy how?)
2. They did it, so without it we're not even in the competition.

“They”, as in, the competition.

I objected to the first intuition in the post, so you can check it out there. The second intuition goes deeper. It comes from a fundamental misunderstanding of how business works in general.

The Shortcut Mentality

It’s very easy to think that if you can provide the same features as your competitor plus something special, then it should be easy to win over their customer.

The question is: Are your customers really their customers right now?

In most cases, the market that your competitor has failed to capture is the one you should be going after instead of trying to convert theirs. So, if I’m Fintech app number 10000 in Pakistan, then instead of going after people who’ve already designed their processes around Easypaisa or Jazzcash (i.e., shopkeepers), I’ll go after freelancers instead (which is what SadaPay did, and it worked). Or take Airtable for instance, instead of converting the office users who are used to Excel, they went for the people who do not know how to use Excel but they need to (i.e., founders :P ).

If the captured market has perfect overlap with the total available market, then you are already fighting an uphill battle and no number of N + 1 features are going to help you. Only something radically different or simpler will suffice. In either case, the longer you delay going into the market, the higher your chances of missing the right penetration strategy.

You have to stop thinking that there exists some shortcut that you can take, some surprise feature you can implement, that will make the ‘selling’ part easier. If you reinvent the wheel, your audience will say, “But I’m already using X”, and if you really invent something new, your audience will say, “Yea but what’s the point?”. In either case, it takes considerable work to acquire customers.

Selling will always be harder than building. You should be building fast so that you can get it out of the way and get down to the real business which is selling.

Pivots Are Good

Another sleight of hand implicit in assuming that you must build a ‘complete product’ before launch is the thought that pivoting is bad or difficult. That is simply not true.

Nearly every successful startup you know has pivoted hard at some point. Netflix pivoted from DVD rentals to the streaming service we know it is today. Slack pivoted from a gaming company to a team communication app. Even YouTube started out as a dating app (didn’t expect that, did you?).

It may sound like these were big business-level pivots and should have nothing to do with an MVP.

Wrong.

A startup is always in MVP until it finds product-market fit. And that can sometimes take years. Let that sink in.

In that duration, there will be dozens of week-to-week pivots that will add up to become the big business-level pivots that we get to hear. Ask any founder who has scaled a business to any reasonable level, and you’ll discover that pivots are a necessity, not an option.

So, why do first-time founders think that pivots are bad, and even experienced founders try to ‘optimize’ the possibility of a pivot?

Reason: Sunk-Cost Fallacy and Ego. Plain and simple.

Sunk-Cost is a somewhat valid concern, but would you rather incur a small loss of time and effort (which nonetheless involved valuable learning) or would you just lose the business entirely?

In most cases, it’s plain old ego. You’ve been saying you are X but now you have to retract your words and say you are Y or maybe ~X. And that is a very difficult thing to stomach … for your ego.

Pivoting hard only means that you care about the survival of your business more than your ego.

In business, there is no room for hesitation. In fact, we at Antematter have gone through multiple pivots and we’re only just a year old.

An excerpt from the now-controversial Eliezer Yudkowksy really helps:

Let the winds of evidence blow you about as though you are a leaf, with no direction of your own. Beware lest you fight a rearguard retreat against the evidence, grudgingly conceding each foot of ground only when forced, feeling cheated. Surrender to the truth as quickly as you can. Do this the instant you realize what you are resisting; the instant you can see from which quarter the winds of evidence are blowing against you. Be faithless to your cause and betray it to a stronger enemy. If you regard evidence as a constraint and seek to free yourself, you sell yourself into the chains of your whims.

In simpler words: Don’t do more of what doesn’t work. If your old strategies are not working, there is no harm in adopting new ones.

The Right Consultant

In a lot of cases, the pushback against pivots and ‘changing requirements’ actually comes from the consultant side. There can be a few reasons for this:

1. The fee structure is set up to incentivize fixed requirements. For example, fixed-price projects are only profitable if the requirements remain fixed.
2. The consultant doesn’t understand startups.
3. The founder is adding new features as a ‘Hail Mary’ to save herself from selling.

For starters, you should only do fixed pricing after brutally cutting down scope to a few weeks release at most, and then don’t touch the requirements until the product is released. The handover terms should be discussed from the beginning, i.e., what happens after release, what should be the fee structure, what should support look like etc. The possibility of pivots should be explicitly discussed, not assumed.

The right consultant will probably bring these things up in the closing call. If he doesn’t, then the founder should make it a point to discuss these things because unfortunately, in many cases, the consultant feels that too much of a pushback will cause him to lose ground.

The wrong consultant probably doesn’t even know the difference between ‘custom solution’ and MVP. But that’s a topic for another day.

In any case, planning for MVP should be led by two questions:

1. Is there some version of the product that already exists, and we can start selling within a week? (i.e., off the shelf solutions, no-code solution, a simple landing page, manual ops etc.)
2. What happens if we need to make a 100% pivot right after release?

The founder-consultant partnership should be made on grounds that accept the nature of the business: An ever-changing chaotic miasma.

The partnership should not be based on things that appease one side or the other. The fee structure should also flow from that mutual acceptance. All too often the structure of the partnership forces both sides to conjure up a waterfall approach to MVP development with post-release configurations left undefined. Needless to say, you don’t put the cart before the horse, nor do you sacrifice your MVP to the whims of a poorly defined partnership.