Avoid this Common Startup Mistake and Save Thousands
5 min read
Over the last six months, we’ve talked with over 170 aspiring & early-stage founders and heard countless ideas or solutions, but far fewer clearly defined problems that they’re attempting to solve and an audience for whom those issues are important. At Female Founder School, we decided to focus on the fundamentals of customer discovery to ensure they’re building the right foundation for long-term growth.
We’ve all heard the common reasons why startups fail: run out of cash, co-founder conflict, legal challenges, major pivots. But do you know reason numero uno? According to a 2018 study by CB Insights that looked at over 101 startup post-mortems, the №1 reason for failure was, in fact, failing to solve a market need. So before spending thousands of dollars hiring a developer, building a beautiful, multi-feature solution, and spending hours-on-end trying to raise money, apply our five step plan; We guarantee you’ll gain the insight you need to build the right foundation for your company (and save major time and cash)!
1. Start with a Problem:
Start with a problem that is unmet or underserved, or identify a problem for which you think you can improve on current solutions 10x. One of the best ways to identify a significant pain point is to have actually experienced the pain point yourself. One ideation exercise that we recommend starts with writing a list of problems that resonate with you. Add plus signs to those that align with your professional experience and stars to those that you’d be highly energized to solve. Start exploring the problems that you’ve identified as intersecting both your professional experience and passions.
2. Identify Potential Early Adopters:
Ask yourself, “who experiences this problem?” You should have a handful of distinct groups or “customer segments” (eg. professionals who travel often for work; vacation travelers; weekday commuters). These customer segments are your potential “early adopters.” What we mean by early adopter is people who:
experience the problem,
are aware they experience it,
are looking for a solution,
are willing to use an unpolished product to solve it (extra point if they have hacked together something themselves)
and are willing to pay for a solution.
Early adopters are your first customers!
3. Create Customer Personas:
How would you identify these potential early adopters if you saw them in real life? Create customer personas! Give each customer segment a name (they can be a real or made up person) and write out his/her demographics traits and what you believe to be his/her psychographic characteristics, pain points, behaviors, and goals (eg. this is Cheryl. Cheryl is 35 years old and works in business, she lives in San Francisco, but travels domestically ¼ of the year. Cheryl is worried about being on time for meetings and prefers a transit environment where she can take calls. Cheryl also feels unsafe using public transport in cities at night and really dislikes waiting for taxis or having to go find taxis in unfamiliar neighborhoods).
4. Identify Your Assumptions:
Now, this step is a bit counterintuitive, but assume everything you know is false! In other words, what you believed to be true in steps 1 through 3 are what we call “assumptions” — beliefs that need to be tested to determine whether or not your customer personas are your early adopters (eg. women like Cheryl think waiting for or finding taxis is a big pain point, or women like Cheryl prefer not to use public transportation) Then ask yourself, “which of these assumptions are most important for my business opportunity to exist?” and, “which of these do I know least about?” These are your riskiest assumptions and the ones you will want to test first.
5. Do Customer Interviews:
The best method for testing your assumptions is getting out and talking to people that fit your customer personas. The behaviors and demographics that you listed in step 3 should give you a good idea of where to find them. In-person interviews are most effective! First, qualify that he/she indeed matches the demographics of your customer persona (e.g. the person you’re interviewing is a women in business who travels ¼ a year for work). Then ask him/her open ended questions to understand his/her habits, consumer behaviors and experiences as they relate to the problem you’re targeting. For a practical guide on Customer Interviews, we recommend The Mom Test by Rob Fitzpatrick. Fitzpatrick provides specific examples of how customer conversations can go wrong and how you can do better.
Nice work! Doing customer interviews is hard and it takes practice to get good at cold outreach and talking to strangers. Now evaluate what you’ve learned from doing five to ten customer interviews and use these learnings to revise and enhance your customer personas. Do this entire process (steps 1 to 5) at least five more times and you should be well on your way to figuring out who your early adopter is and who your early adopter is not. Keep in mind, despite this framework, your learnings won’t always be linear and things will get messy. We recommend embracing the chaos by drawing with pen, paper, post-it notes, and whiteboards, so that you can visualize your learnings as you go.
If you want accountability to implement these concepts, feedback from mentors and peers and a community for support, check out Female Founder School (FemaleFounderSchool.com). You’ll do this process of customer discovery throughout the lifetime of your company — which by the way is going to be a whole lot longer if you master the steps we outlined!
