The Cricket Effect

“Why do so many founders build things no one wants? Because they begin by trying to think of startup ideas. That m.o. [method of operation] is doubly dangerous: it doesn’t merely yield few good ideas; it yields bad ideas that sound plausible enough to fool you into working on them.”

– Paul Graham, How To Get Startup Ideas

5, 4, 3, 2, 1, Crickets!

The majority of startup founders have been victims of it…

Discover a seemingly perfect business idea, turn it into a product, launch it, and then BAM, nobody wants it.

But wait, that’s not how it’s supposed to work; failing fast to succeed sooner?

Wait for it…NO!

Even though many people still believe that “if you throw enough mud on the wall some of it will it stick”, in reality, this lottery ticket mentality is a terrible startup advice and rarely ends up pretty.

As Rob Asghar rightly points out: “Embracing failure makes for a trend mythology, especially for the aspiring heroes of innovation. But it’s mostly a lip service…Forget the cute mantras. No one should ever set out to fail The key, really, shouldn’t be to embrace failure, but to embrace resilience and the ability to bounce back.

I know, living in denial can sometimes be comfortable but when it comes to startups it will come and bite us in the as*.

Anyhow, with this out of the way let’s go and see the main 2 reasons why building stuff that don’t sell is really happening…

Building stuff that nobody wants? Stop doing this!

So, what’s the root cause?

Well, the answer is threefold.

a) Coming up with a solution looking for a problem (aka the awesomeness factor)

It usually starts like this: “Wouldn’t be cool if…”

And that’s typically how founders come up with a business idea.

Named after Mark Zuckerberg’s famous quote from an interview with Y Combinator Partner, Jessica Livingston, it’s what I call the ‘awesomeness factor’.

During the interview, Zuckerberg was asked about the early days of Facebook, and he was candid enough to admit the following: “We built it and we didn’t expect it to be a company, we were just building this because we thought it was awesome”.

And even though for Zuckerberg this way of thinking obviously worked perfectly well, it normally leads people into the “solution looking for a problem” trap.

Which of course refers to the condition in which entrepreneurs work in reverse by coming up first with a business idea, spending months building a product and then start the quest for finding a problem that fits the bill for their solution.

But how is that a trap?

Quite simply because it often results in coming up with a business idea that provides the answer to either a problem that doesn’t exist or a “so so type of problem” people actually care very little about.

What makes things even worse, is the fact that by embracing this ‘product-first’ mentality you’re leaving yourself vulnerable to becoming locked into your solution and try to force it into the market.

After all, someone has to want it…it such’s a cool product.

The bad news?

Markets do NOT work this way and you set yourself up for failure.

That’s right, as Marc Andreessen famously put it: “Market matters most; neither a stellar team nor fantastic product will redeem a bad market. Markets that don’t exist don’t care how smart you are.”

So, since nobody pays (for a product) to “solve” a non-problem please don’t buy that guy!

b) Sitting at the wrong table with an edgeless undifferentiated commodity product

Let me break this down for you…

One of the first things you hear about starting a business is the following statement: “don’t worry about the competition, focus on your product and the rest will take care of itself.”

And the rationale behind this business mantra it boils down to this: spending your limited time obsessing about what your competitors are, or not, doing comes at the expense of building a better company because is a time not spend on making things happen.

Plus, especially in growing markets, as they say, “there are plenty of fish for everyone.”

The truth?

The advice is well-intentioned, partly true but nonetheless very dangerous for ‘pre-start entrepreneurs’.

And the reason why, is because it indirectly encourages people to rush things though and not do ‘their homework’, which, of course, exacerbates further the growing trend of half-arsed edgeless undifferentiated commodity products.

I know, we’ve all been conditioned to believe that “you build something, make it available, and if you’ve made a better mousetrap, people beat a path to your door as promised*” but in reality for overcrowded markets that alone won’t cut it.

Overcrowded?

Yep, make no mistake, in pretty much any established industry, supply exceed demand. And when you are starting out just thinking; “there are enough fish for everyone” is suicidal…

…because if there was enough fish for everyone you wouldn’t see those staggering startup failure rates. That’s right the math simply doesn’t add up!

My point? On today’s unforgiving competitive marketplace unless a) we have a good answer to the question “why should I buy from you” and b) figure out how to cut through the market noise (by setting ourselves apart from the crowd) turning our startup into a viable business it’s unlikely to happen anytime soon…

c) Thinking that “Ideas are a dime a dozen; execution is everything”

First things first…

Why do people think that ideas are a dime a dozen?

Well, according to Carol Roth, an advocate of that school of thought, “[i]deas have little to no value. It’s the execution of the ideas that holds value. It’s why Facebook is worth billions of dollars…and why myriad other social networks aren’t. It’s why the same company can be worth nothing or millions at different points of its lifecycle or under different ownership.”

My take?

Getting the proposition right is the half battle…so yes I do believe you need both a good idea and a good execution.

It always strikes me when people put all the blame for sinking business on the execution side of things and completely ignore that sometimes a business falls flat because the idea just plain sucks and is practically impossible to be turned into something viable since is fundamentally flawed.

Take for example CB Insights latest autopsy report. After crunching the numbers based on the analysis of 178 post-fail startups, “reveal that the #1 reason for failure, cited by 42% of polled startups, is the lack of a market need for their product.”

Of course from report to report the stats vary, big time, depending on the source, industry, methodology, business type but still this key factor is almost always there …so don’t call me a hater but rubbish business ideas are more commonplace than people think.

With all that said, I’d like to close today’s post with one key lesson drawn from poker which as you will see can be applied when starting a new business…

Which is that?

Rule #1: Make sure you sit at the right table

“In poker, people spend a lot of time learning the best strategy to play once you’re sitting down at a table. One of my biggest “ah-ha!” moments came when I learned from a poker book a long time ago that the game starts even before you sit down.

When you’re in a poker room, usually there are many different choices of tables that you can sit down at. Each table has different stakes, different players, and different dynamics that change as the players come and go, and as players get excited, upset, or tired.

As a poker player, the most important decision you can make is which table to sit at… An experienced player can make 10 times as much money sitting at a table with 9 mediocre players who are tired and have a lot of chips compared to sitting at a table with 9 really good players who are focused and don’t have that many chips in front of them.

In business, one of the most important decisions you’ll make is what business to be in. It doesn’t matter how flawlessly you execute your business if you’re in the wrong business…”

– Tony Hsieh, Zappos CEO − Poker, Business, and Life: It’s Never Too Late to Change Tables

***

Ok guys, that’s all from me for today.

If you enjoyed today’s post, check out my brand new book, The Aspiring Entrepreneur Entry Strategy: A practical Step-by-step guide for finding a validated, winning business idea that stays true to who you are, that is currently available at Amazon.

I hope to see you soon.

Best,

Andreas

“The first principle is that you must not fool yourself and you are the easiest person to fool.”

– Richard P. Feynman

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