Startup Survival Guide: The Perils of Misjudging Customer Commitment

An old proverb states, "It's wise to learn from your own mistakes, but it's wiser to learn from the mistakes of others."

This wisdom rings particularly true in the startup world, where mistakes are plentiful. With this in mind, I'm launching a series of ‘startup survival’ case studies to identify common pitfalls and offer practical advice on how to avoid them.

In this first case study, we’ll look at a company I will call “Praxis.” I will let the CEO tell the story himself.

Hi, my name is Keith, I am a first time CEO and this is my story… I started my company a year ago with two co-founders. ?We started Praxis with a vague concept about helping businesses process orders faster by filling gaps in their existing ERP systems.? We lined up two ‘customers’ and secured basic funding to tide us over through the first year of operations. We hired a few developers and set up shop in a local temporary office space.? ?

We were confident we were on the right path because we had solid customer validation and a preliminary thumbs up on our product direction.? We took those inputs and spent the next nine months developing our MVP (minimally viable product).

The MVP launch was our first big company milestone. ?We assumed we would install the MVP with customers and then obtain their endorsements to ramp up marketing and sales operations. ?

Because this was such an important milestone, instead of just releasing the product, we wanted to meet our customers in person, share our progress, and demonstrate what we had been able to achieve in the short time since we last met with them.

We secured onsite meetings with our two customers, polished a product demo, and prepared a slide deck highlighting our progress.

The Worst Day Ever

Arriving at the first customer (I’ll call them BETA), we set up the equipment to demo our product while our champion, Jill, went to round up her team.? With the team in the room, I could feel the excitement. It was electric.

It didn’t take long for excitement to turn to terror. Within 3 minutes of starting the demo, it was clear something was wrong.? The look of discomfort on Jill’s face was palpable. What was it? What was wrong?? I stopped the demo. Jill looked down at the floor, coughed and sputtered, and after what seemed like an hour, she shared that she didn’t remember what her team had told us but what they were seeing wasn’t something they could use. In fact, the whole product concept that excited the same team just nine months ago was now ancient history. Priorities had shifted a couple of months back and BETA had decided to take another direction.? Jill was truly sorry we came all the way out. But because she valued our time, she suggested we stop the demo and pack up our things to avoid wasting any more time.? She offered to introduce to other people in the company who might be interested and apologized again.

Still smarting from the morning’s meeting with BETA, we arrived at customer #2 (let’s call them GAMMA) after lunch. ?The situation at GAMMA was markedly different than BETA. Our champion, Max, had left GAMMA several months ago and we were now meeting with his replacement, Tess. Tess introduced us to the team, some of whom looked familiar from our first meeting.

With introductions out of the way, we kicked off the demo. Tess was enthusiastic to see our presentation, so things started off great. Then, as the questions started rolling in, something seemed a bit ‘off.’ The team was asking about all sorts of situations we have never considered and quite honestly had never received from GAMMA. What was going on??

Again, I stopped the demo to do a ‘reset.’? Tess gave us an update on what was going on at GAMMA. It turns out the project we originally discussed was cancelled and the team had been reassigned to another initiative. ?The team still thought our product could be useful, that’s why they agreed to take the meeting. ?So, this time, we finished the demo, but only to discover that our current product didn’t address GAMMA’s new business need.

Where do we go from here?

What Went Wrong?

Keith's story is not unique; many startups face similar challenges. The primary issue was the assumptions they made, such as the following:

• Initial interest in the product signaled a critical long-term business need
• The customer had real intentions to buy the product
• Expecting to stay ‘top of mind’ for the customer throughout the product development process

These assumptions led to a mismatch between their perceived progress and reality, resulting in a significant setback. ?What could they have done differently?

Lessons Learned

To avoid Keith’s mistakes, here are three key takeaways:

• Qualify your customers to ensure they have a real business need and are early adopters who are willing to use innovative, but unproven products
• Maintain continuous contact with your customers throughout the product development process. Regularly present new material and seek their feedback. This will help you detect if something is going off track
• Set and maintain mutual expectations with your customers from the beginning

By learning from others' experiences and avoiding common mistakes, you can increase your startup's chances of success. Reach out to learn more about how to ensure your startup succeeds by "doing it right the first time."

Limited Time Offer

For a limited time, you can sign up for our exclusive limited time "starter pack" offer that provides the following customized deliverables for your company.

• Two 1-hour consultation sessions
• Pain sheet
• Marketing one pager
• Slide presentation for design partners
• 3 emails to outreach to potential design partners
• Design Partner program timeline
• Design Partner Engagement Document

Qualified organizations can take advantage of this offer until the end of 2023 for US$1995 (normally a $3000 offer).? If you want to learn more, complete this form.

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