Why foresight matters for startups founders and what I got wrong in the past.

One word. And something I knew became something I grasped. It happened in a pizza bar in Naples last week. My colleague Mads L?ntoft and I were discussing the concepts of Original Insight and Original Thesis that we teach our startups at Accelerace .?

Original Insight means the founders have gained a deep and intimate understanding of their potential customers. Namely their beachhead. They understand how they work, how they think, and how they feel. They understand all aspects of their customer in minute detail.?

Through this insight, the founders have come to understand the nature of a problem that their customers face. A problem that the founders have decided to solve through their startup.

Outside work, most of us have Original Insight into our romantic partner, our parents and children, our own workplace, our best friends, and our siblings. Simply put, we know them better than most other people. And if we were to find the perfect gift for them, we would have a huge advantage over everyone else. Arguably, crafting the perfect product for someone requires the same level of insight as finding the perfect gift.

However, I also know that insight is not enough for founders who want to build category-creating innovations.?

I said to Mads: “Original Insight only gives the founder a deep and detailed understanding of the current situation of their customers. However, successful startups are not solving current problems as much as they are solving future problems. When startups grow it is simply because the problem they are solving grows in the future, and thus the startup scales in response.”.

Mads responded: “Having clarity of the future could be called foresight”.

Foresight! Finally. And so it happened. Something I knew became, something I grasped. And here it is:

Having developed clarity about the future situation of a customer is different from Original Insight. It is Original Foresight. Original Foresight is the ability to describe the future situation and problems of the customers.?

When NFT platforms such as Opensea and Rarible are valued at billions of dollars (2022), it is not because NFTs solve a big problem today. It is because some people harbor the foresight that NFTs will solve an important ownership problem in future “metaverses”.

At Accelerace, we have witnessed the power of Original Foresight many times. Among the most memorable was in 2007, when Peter Mühlmann, possessed the foresight that in the future, online stores would proliferate, and they would have a problem of communicating trustworthiness to new shoppers. To solve this problem, he had launched Trustpilot. Today, a unicorn public traded company.

But like Original Insight, Original Foresight alone is not enough. Unless the founders can identify a beachhead who has the problem today, the startup will not survive long enough for their foresighted future to arrive.?

Throughout the years, we have seen plenty of examples of founders who possessed only Original Insight, or Original Foresight. And every time, it created problems.

Founders who only possess Original Insight tend to get early traction, but their companies fail to scale. The reason is that the problem they are solving is not growing. Examples are plenty, but classic examples are workflow management software for stagnant niches. Like funeral homes, riding schools, and golf clubs. In aggregation, there are plenty of potential customers. And if the founders have Original Insight, they can articulate a reason why their product is better than competing solutions. But because no new customers are appearing on their market in rapid succession, every customer must be won over. Sales cycles are long, and CAC is high. Consequently, these startups always fail to scale. (Enough for VCs to be happy anyway).??

Founders who only possess Original Foresight can be captivating presenters and their clarity of the future instill admiration and excitement. However, they quickly prove unable to get started and gain momentum. The problem is that these founders do not possess insight into the current reality of their potential customers. Consequently, they are unable to convince potential customers to try or buy anything today. These startups never take off and they reach the end of their runway without enough traction to raise further funding.?

To succeed big, our experience tells us that founders need both Original Insight AND Original Foresight. When founders have both, they possess an Original Thesis. And it is the philosophical bedrock of a startup.

You can read my previous article Original Thesis here or check out Accelerace to learn more about our fund and acceleration programs.