Why do you think many startups don't validate properly?
About half of all startups that fail cite "No market need" as a reason for their failure.
This seems insane in some ways, as I'm positive that almost 100% of them would have been SURE that there was market need for what they built. Otherwise, why build it?
I have a couple of theories about why products get launched without proper validation (and, of course, you can never 100% remove the risk). But I'd love to know why other people think that many startups skip this step, or just don't do it properly.
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I think it's an internal defense mechanism in play. People are afraid to learn their idea is not valued by others. They then bias their work and validation to prevent this conclusion. Then the market gives them the answer they didn't want to hear.
We're all prone to this at least I know I am!
Oh man that hit close to home. The last thing you want to hear when you're really excited about a new idea is that it's bad and no one wants it 😆
But we need to overcome that and validate our ideas so we don't fall into that trap.
Yes, 100%.
Definitely a bit of sunk cost fallacy, plus some other cognitive biases come into play. I've certainly been guilty of it myself in the past!
Many reasons. Just few off the top of my head: it's difficult, it's resource consuming, it requires getting out of your comfort zone, a lot of wantapreneurs probably don't know how to do it, they're often blinded by the 'genius' of their solution and are overconfident, they underestimate difficulty of creating a successful business.
Gee, I sound like I have actually achieved something when in fact these are pretty much the things I do. The only difference is that I am very aware of that and somehow I'm very much okay with the prospect of failing. Gosh, I feel stupid now. Thanks a lot!
Hahaha! I think all of us are guilty of it in some ways. It takes a lot of discipline and objectivity to avoid falling into that trap.
Really appreciate the feedback.
I wonder how you get people to avoid falling victim of the cognitive biases around their solution...?
I'm a wantapreneur and haven't created any successful businesses yet so take that into consideration.
Perhaps I'm oversimplifying but to me the answer is quite simple - ask others. A lot. Particularly your customers. At least that's what The Lean Startup has taught me and right now it makes a lot of sense to me.
Yes, agreed!
I suppose the challenge i'm facing right now is convincing people of the importance of validating their ideas in the first place.
Other than those who don't realise it's a formal step they should go through (so, the ignorance angle), I think some people get caught up in their own idea. It's such a good idea, surely it must work.
Some are also extremely protective over their ideas whilst they're being developed which, again, seems insane, but they're convinced that it's so good that someone else will steal it, so best not to validate it anywhere.
Yes! How would you get over the "ignorance" hurdle?
I was a bit naïve a couple of years back when I first approached our local government for assistance on a startup idea I was working on. I thought they would provide someone to help road-test the idea, suggest how and where it could be validated, give their own feedback and challenge it. I got a bit of that, but it was mainly in-the-room, ad-hoc opinion from people not familiar with SaaS businesses. It was all a bit disjointed and lacking enthusiasm.
I had thought there would be some framework that my business and I would fit into, and we'd go from there, with the risk of rejection (or advice not to pursue) a possibility at each stage on the roadmap.
Now, at the other end, you have your Lean Startup founder who's read a few modern business books, found out about things like The Mom Test and educated themselves. As you've identified (reader: Neil and I know each other), there's a swathe of people in the middle who may have great (or rubbish!) ideas, but just roll on with them without hearing how good (or bad!) they are.
I knew that accelerators existed, but cynically thought those were only for people with investment or who wanted to be on the path to securing investors - not everybody is.
In terms of addressing the ignorance factor, I suppose I would've welcomed some kind of tool to walk me through the stages of business development, some way of assessing whether I could get people from stated to expressed interest. The Business Model Canvas and SWOT analysis are great for considering the idea yourself from different angles but less great at guiding you through getting feedback from others.
More recently I've been using the Value Proposition Canvas from Strategyzer, which has been much more useful in directing you to understand the pains and drains on a potential customer, from speaking with them in advance.
It's hard to find a single tool to help you with entrepreneurship. Much like Agile is simple in theory, it's actually really hard to implement. Entrepreneurship is (IMHO) very similar: You're going to have to incrementally validate your assumptions and follow the 'value-trail'. If you do this while starting from a solution, you're going to get stuck soon. But if you follow the trail of problems, you'll probably end up in a different places than expected.
I'd love to hear some more of your learnings on how you've successfully validated ideas. And If there's something I can do for you with Validator.phalox.be I'd like to hear that too!
@jaymie Great insights, Jay. And we both know the local issues you're talking about... ;-) Let's have a coffee soon?
I don't think I can add much to the reasons why. Protective or Afraid are probably the biggest ones; curiously also resulting in the biggest failures. Too many startup stories sound like "I got 10k MRR in the first month". Reading a little deeper, usually years of work went before to even reach such a point. The "first month" just sets unreal expectations.
Entrepreneurs just think that they can grab a slice of the seemingly big pie. In reality the pie is much smaller, and requires a lot of work to reach.
This entire concept of early validation is what I've built Validator.phalox.be upon. I'm currently validating its value (yeah, very meta) and I've got my first alpha tester currently using my services. I'd be happy to receive 2 more!
Feel free to provide feedback!
And finally a question for you: Why did you ask this question?
PS: I've seen greater numbers than 50%.
Yes, survivorship bias is a real problem in entrepreneurship. It definitely makes success (depending on how you define it) appear easier and more widespread.
Validatr looks great! Funnily enough, the reason I asked the question is because we're looking at some tools and processes to improve validation ourselves. And we're, ahem, validating! ;-)
Love the approach you've taken. We've got some similar stuff in the works. Although I think we have some crucial differentiators which mean we won't be in direct competition. Besides, the market is huge, right!?
I think this result could occur for a lot of reasons but I think it's either that people didn't validate their idea at all because they're too protective of it or fear getting a negative response, or they validated only within their own bubble where they didn't get honest feedback, didn't accept honest feedback when they actually got it, had no idea how to actually get it fit in the market or the idea sounded good on paper but lacked in execution.
I think saying "No market need" is also an easier out than coming to terms with your start-up failing because of your own lack in operational / financial knowledge, so results might as well be higher because of that.
Good points. Especially about the reporting of No Market Need. Hadn't considered that. I haven't looked into the methodology of the studies I took that from.
It is comfortable to stay in your own reality.