The Startups Chasm!

India celebrates 100+ unicorn every now and then and that is really harming the Indian Startups Ecosystem! How? Unicorns are built either thru a innovative product or a business model that proves to be? disruptive. But what happens to 100,000+ other startups? Well majority, 90%, of them fall into a ‘chasm’ (it is also called valley of death). Most startup founders get overwhelmed by the stories of these unicorn rather than the ‘intrinsic motivation’, required to build a successful venture. The wannabe founders forget that entrepreneurship is a process and not a blind chase of an idea. Hence, I say that mythical figures of Unicorns are leading the startups into chasm. ?????

I am sure most people have read Geoffrey Moore’s ‘Crossing the Chasm’ where he has very well explained that majority of business fail because of their inability of ‘Crossing the Chasm’ between ‘Early Adopters’ and ‘Early Majority’. His explanation is in relation to customers only however, after meeting almost 3000 startups, I realized that Indian startups have same issues, but their manifestation is different than as explained by Moore. Here are five major reasons that 90% of Indian Startups fall into the ‘chasm’:

1.???? Solution looking for problem: in a recent session with 20 startups, I asked them what the problem is they are solving and started listing them. Surprisingly, each of them mentioned what solution they are buildling or offering rather than talking about teh problem they are solving! On further probing, not one was still able to spell out the problem associated with their solution! This is leading to building products and solution may not be needed by large number of people making the startups venture redundant!

2.???? Product centric, not customer centric: Almost all founders I have met have never met their prospective customers! Many of them have conducted a ‘survey’ either thru emails or thru social media or have done some ‘checking’ with people they know. They don’t not realize that survey will only give them ‘quantitative’ data and not ‘qualitative’ input considered to be most important for understanding the potential customers apparent and latent needs. Further, the ‘checking’ with people they know, provides some very biased opinion. So, what these founders end up is with products/solution that virtually has no demand leading to failure of venture.

3.???? Pricing is not value proposition: Being different is one thing, creating value is another! Most founders don’t even know what value proposition means. They either mistake it for pricing of their product or the revenue they can generate form sales of their product. None of them understand that value is in building or creating user centric innovation. However, because of being product centric, the founders miss out on user centric innovation and hence the value creation or lower customer willingness to buy, another step towards ‘chasm’.

4.???? The missing link- Sales: Most tech founders are not fully conversant with sales processes as they do not have any real sales experience and have no clue about ‘customer buying journey’. They believe that going online with SEO, SEM, SM marketing can generate enough leads to ‘acquire’ customers. Whereas, as startup, initial sales must be offline to ensure they are close to the customers for their feedback on the offerings! They must get out of building to sell! This plays a major role in initial traction that provides confidence in product and getting some crucial user/customer feedback. Without real sales skills, most startup are stuck at early adopters unable to cross the ‘chasm’ to reach ‘early majority’.

5.???? Chasing Funding: ?Instead of chasing the potential customer first, founders start chasing investor. Even before they figure out the real problem, innovative solution, value proposition and sales strategy, they consider themselves valuable. This is waste of their precious time as investors are looking to invest in startups that provide ‘solid evidence’ of problem being validated by potential customer, identifying the exact need(s), developing core to solve the problem, building innovation that creates value for potential customers and finally, helping them make an informed decision to buy their product/solution. Without all this, a startup is chasing a ghost.

Now imagine if a startup is building a product or a solution without addressing all the five issues, where do you think it is heading! To the Chasm! So Indian startups founders need to stop chasing a Unicorn dream and start chasing potential customers to avoid falling in the “Chasm”.