The Secret Killer to Your Startup (That No One is Talking About)

The startup demise usually starts not with a failed launch or misaligned pricing but with something deeper below the surface. If we peeled back what usually causes startup failure like timing, no market need, and lack of funds, we would see a common thread: assumptions.

All businesses are based on assumptions — someone wants this product in their life, this price point is around the ideal customer’s willingness to pay, or this is a great location for the pop up because of previous success.

And, you cannot know everything, so these assumptions can act as a “gut feeling” for your venture.

But as a founder, it is your responsibility to know what you know and know what you don’t. If you do not, then you will fall into what I call The Assumption Trap.

1. Becoming Aware

Having that ah-ha moment and becoming aware of a customer problem is like rainbows shooting off in your neurons for the very first time.

You saw something that has been overlooked, and this can be exciting when you are starting out. It is like getting your lab coat out in the world of business.

But often times, individuals shortchange the scope of their research. Becoming aware can mean only highlighting one facet of a complicated issue.

Let’s look at an example.

I was working with a social impact startup that is interested in creating ecofriendly menstrual products for a region that is deeply affected with period poverty. The team was looking at the issue of creating the pads. If they created pads, then (hypothetically) the problem could be solved — but the it was far bigger than that.

Becoming aware means looking at the problem like period poverty and peeling it back. This issue encompasses the supply chain, accessibility of these products for women and girls, economic and home life situations, as well as cultural customs and social taboos around the subject.

Often times, when I see startups tackling large scale issues such as global warming, plastic waste, health inequalities, educational access, and the “grand challenges” they can often only see this tediously interwoven issue from one angle. And, that in return, can create a myopic lens in their business.

2. Validating actively

Validation can be fun. This can be seen as the honeymoon phase of the cycle: putting that initial problem-solving momentum into action.

Questions, surveys, interviews, and focus groups — customer validation can forms. And though nerve wracking at times, it is exciting to see customers interact with your questioning or playing with your first prototype iteration.

Often times, when I see startups fall short in the validation phase, they fall into two broad categories:

• Poorly defined or executed questioning and sampling techniques
• Not a large, or diverse, enough sample size to quantify any valid conclusions.

Let me share the instance of a university founder I worked with.

There’s a brilliant student building a SaaS platform that was accepted into a competitive accelerator. When meeting with him though, his only form of validation was surveys to his friends and family and closed user testing with one of his societies. The questions were leading, and his biases were present in every interview he conducted. These implicit and explicit mistakes in his insight gathering left to faulty data causing cracks in his business model only months down the road.

So, if I am going to stress JUST one place to not make assumptions, it is 100% during this phase.

3. Creating Conclusions

Poor customer validation can lead to misaligned conclusions. As human beings, we have our own scope in which we look at the data, which can be riddled with bias, naivety, or the founder fa?ade of pure optimism.

Conclusions need to be rooted in evidence. Often times when 6, 7, or 10 users are giving you the same feedback, you can track those trends towards a solid conclusion.

What I see startups faltering though is rebuilding their product or service by one or two outliers and taking that as their business conclusion. This will just lead to conclusion whiplash, and money and time being invested in the wrong areas.

4. Accepting Complacency

Complacency can cause you to get comfortable with the initial assumptions you made. Teams can be bogged down with the operations of the startup, scaling, and product research that clouds the touchpoints with your users.

However, much like a loaf of bread, the assumptions you have made can become stale. People change, customers’ attitudes alter, and economies fluctuate. If you take a look at 2023, and really the first couple months of 2024 alone, you will see shifts in users’ behavior.

Being comfortable happens, but this security can hinder your ability to be agile. (Eyy, take a look at Kodak…)

Startups do not have the luxury (or runaway) to become complacent.

How to Mitigate The Assumption Trap

This is a cyclical process, and in some ways inevitable. But, there are ways to support you in all four of the phases.

1. In the Awareness Phase

As a team, it is critical to have a complete and holistic picture of the problem you are aiming to solve. This is more than Google research, but understanding the statistics, environment, customer profiles, and the nuances of the issue at hand.

Becoming aware is not following one thread of the problem; it is about opening the funnel of understanding and possibilities.

As a founder, you need to take of the blinders of your own preferences and biases, and if you are too close to the problem, bring in a third party to support you ( a mentor, advisor, etc.).

One founder I know spent three months just calling the beneficiaries of their potential food venture to peel back the problem. Cold calls, texts, driving to the fields to meet them for a coffee. Though tedious, this rich insight set the foundation for them being one of the largest youth social ventures in America. Think big, broad, and holistic!

2. In the Validation Phase

Primary research is crucial. There are ways to bake in empathy within your validation techniques, so that you are understanding more than just what tick boxes are checked on the survey. How are customers responding to your open ended questions? What are their body language cues?

And, ask yourself — honestly — if this question was presented to me, is there a predetermined answer expected of me? Do I have my agency to speak my mind about the product or service?

Validation is more than just one trend in answers. Ask, and keep asking throughout the iteration process to place the user at the heart of your process.

3. In the Conclusion Phase

Much like that common phrase: there is a difference between causation and correlation. Some tech people like to wear hoodies, but hoodies do not contribute to their coding acumen.

Track your data — early and often — and check it against other factors that may be beneath the surface.

Just the other day I worked with a mental health venture who saw that customers were more active in one month in the past ten months they were tracking. The founders thought that maybe it had to do with a new email feedback system they deployed then. Hmm, I probed that yes, this could be… or it could be because their audience were younger adults and students, and this was the month of their academic exams. Stepping back allowed them to see the whole picture before jumping to conclusions.

Step back, and like a scientist, what do the facts tell you? What factors are you measuring and are there any hidden variables at play?

4. In the Complacency Phase

Like any relationship, complacency happens, but the key is not to stay there.

Practically speaking, this means being in touch with your users throughout the process. This can be in the form of customer ambassadors, a strong user focus group, or feedback via newsletters, Trustpilot, and analytic tracking. Being comfortable can allow you the confidence to scale and grow, and that can be a good thing.

Allow yourself to sit on the assumptions you have made, but just remember to go back to the beginning of the cycle by staying curious.

1. Listen or Watch the Everyday Entrepreneurship Podcast this week you can check out the conversation around cash flows, launching later today!
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