Why too many startups suck

http://steveblank.com/2012/09/21/why-too-many-startups-er-suck/

by gghootch • 14 years ago

72 35 14 years ago

steveblank.com

GFischer• 14 years ago

I suspect that in many cases, it's hard to divest oneself of one's ego and sense of ownership of the startup.

Killing a failed project and going back to the drawing board is hard.

Also, most of us like doing. Searching for customers, not so much.

Peroni• 14 years ago

Forgive the defensive attitude here but 2 in 1000 venture backed startups will ever achieve $100-million or more in valuation. is a pretty poor example of "success".

If my start-up made a difference to peoples lives and generated enough revenue to allow me to focus on it full-time then I would consider my start-up a categorical success. Chances are that would happen at a point where my start-up was valued at a significantly smaller figure than $100-million.

jpwagner• 14 years ago

he says "venture backed". your example would not be measured by this standard.

mnutt• 14 years ago

That's exactly his point:

Thousands of entrepreneurs would be a lot happier if their focus was a solid, growable, defensible niche business that might never go public or be worth $100-million.

davidw• 14 years ago

> In my view, this is the nastiest of all startup sins: failing to involve customers and their feedback from literally the first day of a startup’s life, keeping the most vital opinions silent—those of the eventual customers—for far longer than necessary.

This seems like it may be a lot easier said than done. Steve seems reasonably humble, but perhaps he's forgotten what it's like to be a "nobody". If you don't have friends/connections/contacts, getting potential customers to notice you might be difficult, especially if you have nothing much to show them.

By having a prototype, you're telling people you've invested some time and effort in the problem already - so they're more likely to get something back if they invest some of their own time.

erichocean• 14 years ago

Steve suggests showing a prototype, but don't spend too much time on it, either -- you could be building the wrong thing.

Just focus on the kind of stuff that Apple would actually put in a marketing campaign -- the 1-3 "major" features that would actually make someone buy. Customers will assume you'll add all the boring "required" stuff anyway.

nancyhua• 14 years ago

His point is startups suck if they wait too long to get customer feedback to see if people actually want or care about their solutions.

Does this advice apply mainly to startups that aren't particularly new technology? While people like small improvements they often don't imagine changing their lives a tremendous amount. I guess most startups aren't that innovative either- maybe that's another reason most startups might suck.

filip01• 14 years ago

Could someone define "venture backed"? Do angel/seed rounds count? If so, I'd say 2% or even 0.2% seems pretty decent.

cletus• 14 years ago

This stood out to me:

There are two ways to interpret it:

1. Get something in front of customers ASAP as how customers use (or don't use) something will tell you far more than anything else; or

2. Ask potential customers what they want.

If Steve means (1) I strongly agree. If he means (2) I strongly disagree. As anyone who has had to work on software specifications and documenting user "requirements" can attest: people have absolutely no clue what they want other than "everything".

Look at Apple. They don't use focus groups or surveys [1]. IIRC I'm pretty sure the size of the first iPad was determined by Steve Jobs picking up several differently sized prototypes until he found one that felt right. If this is urban myth, I bet it's actually not that far from the truth.

Sadly I think Steve (Blank) means (2) since he says "eventual customers". But perhaps he means give away something you'll eventually turn into a revenue-generating product, at which point your users became customers.

[1] http://www.phonearena.com/news/Apples-Phil-Schiller-We-dont-...

Retric• 14 years ago

#2 is not about what they want it's a question of what's broken.

Spend some time around people at large company's and you can find a host of things that just don't work. EX: Time tracking software tends to track time but rarely integrates into any other useful system. You could literally make a billion dollar company focused on fixing that.

agilebyte• 14 years ago

2. is easy to disagree with. Yes, if you ask people "what do you want" then you might not get anywhere. But, if you ask, "what are you prepared to throw money at to solve a painful problem", then you are onto something.

It is easy to frame the question in a bad way. It is also easy to ask the wrong people. What you want is people with money that will pay for something that will make their life easier and are able to see value in it.

gghootch• 14 years ago

About half a year back, I was at some pitching contest where Steve Blank was a judge. He was bluntly clear about his point of view:

Think of a product; ask a hundred potential customers whether they'd buy that product. If not, discard and repeat this process.

mindcrime• 14 years ago

Sadly I think Steve (Blank) means (2) since he says "eventual customers".

I don't think so. Steve is pretty clear in his books and videos and what-not that the goal is to A. understand customer problems and pain-point, and B. find out if the product you are proposing to build (based on those pain points) has a viable market or not.

So no, he isn't saying "ask customers what they want" in the "a faster horse" sense. He's advocating for talking to customers, engaging with them, finding out what their needs are, demonstrating your proposed product to them, and determining if there is a market for "thing I propose to build" before spending a tremendous amount of time and money developing, advertising, and promoting "thing I propose to build."

Or at least that's what I've always gotten from his materials, and it seems like a pretty clear message to me.

bialecki• 14 years ago

Listening to Steve talk, he's very upfront that there is no blueprint for creating a successful business/startup. His advice is not meant to be taken as "here's a list of steps, do them, and you'll be successful." His advice is more like a set of guidelines you'll likely want to pay attention to (or at least knowingly disagree with).

With respect to asking potential customers what they want, he's said specifically that you should do that, but don't take their answer and create exactly that. In his view, there's an "art" to startups that involves taking feedback and turning it into something that's useful. For example, the iPod/iTunes ecosystem wasn't something mp3 player users' would've come up with, but they probably would say, "I want it to be easier to get music my music on my mp3 player" and that's something Apple definitely knew.

There's definitely ambiguity around what you should asking potential customers and I don't think he'd claim there's a right answer about what to ask or not to ask. But it seems pretty likely that talking to people is worthwhile activity.

That said, he also admits there are exceptions to every piece of advice. You could avoid talking to anyone and still be very successful. It's just something he's seen correlated with success.

I'm not sure this is where I remember most of this from, but I think this podcast [1] has most of what I'm paraphrasing.

[1] http://startupsuccesspodcast.com/2012/02/show-134-prof-steve...

drumdance• 14 years ago

I think the Apple example is oversold and in any case apples to oranges. In the very first days of Apple computer, they built a computer that Woz would want to use, then showed it to fellow hackers. That was enough to get the flywheel going and they built from there. Later they did more radical innovation, but remember that those often failed (Lisa) or needed tens of millions in marketing to really take off (Macintosh). As much as we venerate the Macintosh now, it had trouble getting traction at a profitable price in the early going.

nopassrecover• 14 years ago

This isn't a direct comment on the post (which is quite good) but I had a tangential thought while reading.

I get the lean startup "talk to customers first" thing, and it seems perfect for so many startups. However, I can't help feeling there are some cases where you are selling execution not innovation and therefore "show don't tell" is more important. In these cases customers already have an existing solution which they probably don't consider a pain point and you literally have to show how their lives could be better to convert.

Some off-the-cuff examples include Facebook, Google Search and Google Chrome (unlike Google Maps which could have been a lean startup), Xero, the iPod and iPhone, nearly all media/entertainment.

I still think "release early" and MVPs are essential to avoid investing more effort than you have to in order to test a hypothesis. Likewise, I still think that getting in touch with your target market early is important as well (you're going to have to reach them at some point, so better start early to make sure they actually exist). But I question whether conversion potential can be evaluated for a pain point your customers don't realise exists until they see the alternative.

dhimes• 14 years ago

I get the lean startup "talk to customers first" thing, and it seems perfect for so many startups. However, I can't help feeling there are some cases where you are selling execution not innovation

Talking to potential customers first is still an excellent thing to do. Find out, in their view, what the pain-points are in the current solutions. If you can't find any, you will have a difficult time marketing your product.

You have an advantage here: the customer is already familiar with what the products do (and, more importantly, what they don't do). And furthermore they already have a sales process for buying the product. Be sure you ask them about these things. Then you will know what to build.

Why are these things good for startups to do? Because that's what the big boys do. Suppose bigPharm inc has an idea for a nasal delivery device for medicine for treating osteoporosis found (primarily) in elderly ladies. Who wouldn't rather have a nasal delivery than a shot? Can't miss.

However, they won't spend a penny until they talk to the docs. Turns out, elderly patients don't mind shots. They get a million of them. Now, make a cheaper medicine--that's a different story.

Decision: product scrapped.

BTW- good to talk to the insurance companies too in this case.

perfunctory• 14 years ago

Because the majority of any area sucks.

marknutter• 14 years ago

Steve's point is well made here. I think there are a combination of reasons this happens all too often:

1) Most programmers are introverts and are more comfortable interacting with their code than they are with actual people (no disrespect intended)

2) It's easy to get excited about an idea and then subconsciously avoid trying to invalidate it through customer feedback. Often times throwing up a simple landing page explaining what your product with a place to sign up or even enter in a credit card can validate or invalidate an idea. Ignorance is bliss, though, and it's easier to pretend your idea will become a success if you just add enough features and polish.

3) Too much emphasis is placed on "launch day". All too often startups think of the day they release their software as the make-or-break day for their company. Rarely is that ever the case. Most startups become successful long after their initial launch. It's a marathon, not a sprint, and often times the successful version of a product ends up being very different than the launch version.

4) Fear of success. If you launch something and people actually start using it, now you're held accountable for whether or not it works; especially if you charge for it. There's a lot of stress that goes along with actually gaining traction and I think a lot of people keep pushing their launch off to avoid that stress under the guise of trying to make the product "perfect".

The tragedy, of course, is the opportunity cost of sinking so much of your time into a product that nobody actually ever wanted. In the beginning stages your number one priority should be trying to figure out the cheapest, fastest way to validate your idea, whether that be a simple landing page, a barebones prototype, or whatever other clever mechanism you can think of. When you finally do come up with something people actually want and even pay for, then spend every waking moment making it the best product you can.

typicalrunt• 14 years ago

I fit into each one of these points...sadly. At the very least, I feel a bit better knowing that there are other people that have the same thoughts as me.

I will also add one to the pile:

5) Fear of failure. The worry that starting something is just going to end in disaster and be costly (money or time).

ekidd• 14 years ago

A painful first-hand lesson:

If you do a demo for your potential customers, and they say, "That's a great product. I can see how that would be really useful," you can safely assume that you're doomed.

Keep looking until your customers are desperately trying to write checks for dodgy prototypes.

tarr11• 14 years ago

The first few customers are not necessarily a market signal - they are often acquired via personal relationships or they want to leverage you to do custom development for them via your prototype. Neither of which are scalable businesses.

JabavuAdams• 14 years ago

> Why, then, are so many founders so reluctant to invest even 500 or 1,000 hours upfront to be sure that, when they’re done, the business they’re building will face genuine, substantial demand or enthusiasm.

Because starting a startup isn't really a rational decision. Or perhaps, more conservatively, maximizing the value of a business isn't the overriding reason why people start businesses.

Why do coders spend 2 days automating a task that won't consume 2 days of manual time over the next year? Because they like to code, and they don't like data entry. This is rational, I suppose, as long as we don't believe them when they say the goal is to save time.

elchief• 14 years ago

Ya man, just like Jobs and Brin and Page did!

If you're good, then customer feedback is just design by committee.

dbecker• 14 years ago

Most startup founders aren't Jobs, Brin or Page.

dkrich4• 14 years ago

And most startup founders aren't successful.

nandemo• 14 years ago

Did you read the article?

> Can every startup skyrocket like Facebook or Square or Google? It’s downright impossible. The solution: understand your startup’s “honest trajectory” and align objectives of the founding team and—importantly—its investors to define and agree about what “success” looks like.

mirsadm• 14 years ago

It is funny how often this comment comes up. If anybody has seen Steve Blank's lectures on Udacity he has a small clip that has a response to 'but Steve Jobs didn't do it'.

paulhauggis• 14 years ago

I can't tell you how many bad startup ideas I've seen...especially at those hacker/startup meetups.

I'm in the Chicago area and one of the winners (startup weekend winner) was a clone of twitter that allows 300 characters instead of 128. I can't see this ever really making it.

I think the problem is that too many people focus on "me too " ideas and don't even think about how they are going to actually make money.

The other problem is that the end goal for many of these startups is to get venture capital, not build a successful business.

dkrich4• 14 years ago

First, this was not written by Steve Blank, but rather Bob Dorf.

In any case, I completely disagree with this notion that customers are some complex, mysterious enigmatic force that require a laboratory and several months of conversations to build a successful product for.

I think the best advice is to start by building something useful. People pay for utility. If you can make tasks significantly easier, or enable people to do things they couldn't previously do, they will pay you. The sad reality is that most startups suck because their products simply don't meet that criteria. They come up with an idea and just start building it, without actually using it themselves. A good sign you've got a winner is if you yourself find that you miss not being able to use it. If you don't, then don't expect anybody else to pay for it.

All that said, talking to people accomplishes nothing. People have no idea what they want. They are typically followers and do what they are told and use what is put in front of them. That's why the best products are typically not built by large corporate research departments, but rather single innovators solving a single problem with which they are intimately familiar.

Domenic_S2• 14 years ago

> I completely disagree with this notion that customers are some complex, mysterious enigmatic force that require a laboratory and several months of conversations to build a successful product for.

Customers are intrinsically complex because they lie. Sometimes unknowingly, but they do. Here are some ways I've personally experienced it (I'm going to say "lie" in quotes because often they're not trying to intentionally mislead you):

1) They "lie" about their objective: Spend some time selling, even somewhere low-pressure like a hardware store. All day everyday customers will tell you they want A when they really need B. Granny tells you she needs some CLR, but when pressed, it turns out she's trying to fix a leaky faucet. She actually needs a new valve.

2) They "lie" about their actual need: This happens in consulting frequently. "We need a team of 5 to finish this project for us" - in actuality the project was ill-conceived, the business is falling apart, and what they really need is strategy/finance/etc consulting.

3) They "lie" about what they'd pay: Needs little explanation; it's why experienced businesspeople tell you that promises for orders are worthless and actual orders (with P.O./check attached) are golden.

> People have no idea what they want.

Quite true, but you can get to the bottom of what they need with a skillful enough approach.

The thing is, you have to talk to potential customers or you're taking on more risk than you need to. Yes, you can build something "useful", but what you and I find useful might be useful to 0.0001% of the population and not have wide enough appeal to make a business out of.

If your product is simple or easy-to-understand enough, your conversation can be a simple sales pitch and a preorder form -- if you get the orders, customers want it. Boom, validation. Don't waste your life building something you and your buddies/family think is useful until you find a bunch of people willing to pay you for it.

dkrich4• 14 years ago

"The thing is, you have to talk to potential customers or you're taking on more risk than you need to. Yes, you can build something "useful", but what you and I find useful might be useful to 0.0001% of the population and not have wide enough appeal to make a business out of.

I'm sorry, I completely disagree with this line of thinking. When you make something useful for a market large enough to make a successful business out of, there is no mystery. I think we lie in the product development phase by telling ourselves that we are going to make X much easier than it is today but in reality we are just making an additional way to do something that may or may not save people any time or accomplish something that they couldn't do before.

Yes, people do lie about what they need/want, but there can still be money selling into that market. What I'm referring to is obvious, large jumps in innovation. Would another system for writing down todo's sell if I could integrate it with Outlook? Maybe, maybe not. I'd have to hear more and have it demoed, etc., etc., etc. In any case I probably wouldn't pay anything for it.

How about a car that travels on 1/3 the gas of a typical sedan and costs $300? I'd be interested in buying that no matter what. It turns out the challenge is not in understanding customers, but having the ability to build things that are really, obviously useful.

Obviously those are extreme examples, but if you look at a more granular level, the same applies. If you have to complete some job every day that requires three hours, and somebody shows you a tool that can automate much of the work and have it done in ten minutes, I think it's safe to say you'd open your wallet. Most startups don't provide that type of utility, and thus fail at closing any customers.

bengi• 14 years ago

As with a lot of posts on Steve Blank's blogs, it contains a lot of good observations but hasn't been very well thought out. Recommending that entrepreneurs target niche markets makes sense, but you shouldn't prefix that advice by implying that a venture-backed startup that fails to reach a $100 million valuation "sucks". And as other people have pointed out, since when is $100 million a useful cutoff for success? By that metric, should Viaweb's inflation-adjusted exit be considered a failure? One gets the impression that the number was picked simply to generate a low success rate, and subtly encourage people to buy the author's book.

Why too many startups suck

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