
Why too many startups suck - gghootch
http://steveblank.com/2012/09/21/why-too-many-startups-er-suck/
======
cletus
This stood out to me:

> 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.

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-...](http://www.phonearena.com/news/Apples-Phil-Schiller-We-dont-use-any-
customer-surveys-focus-groups-or-typical-things-of-that-nature_id32896)

~~~
mindcrime
_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.

------
marknutter
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
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
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
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.

------
nopassrecover
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
_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.

------
davidw
> 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
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.

------
JabavuAdams
> 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.

------
Peroni
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.

~~~
mnutt
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._

------
dkrich
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_S
> _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.

~~~
dkrich
"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."

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.

~~~
Domenic_S
> _When you make something useful for a market large enough to make a
> successful business out of, there is no mystery._

This statement is where a trope, meme, and axiom collide in a nuclear
reaction. Sure there's no mystery, but you're describing the end state after
you've already done all the analysis. Although you're also missing the
'profitability' metric, which is important.

 _make something useful for a market_ : How do you know what's useful? You've
used the "saves time" metric a couple times here, but that isn't always
enough. Bikes save time over walking, but people still walk. Cars save time
over bikes, but people still bike. Ditch-digging machines are orders of
magnitude faster than human ditch diggers, but people still dig ditches.
Buying fast food saves time over cooking, but people still cook. Netflix is
more efficient than cable and Redbox, but people still buy cable and rent from
Redbox. Quickbooks is more efficient than paper bookkeeping, but legions of
small businesses still use paper. The examples go on forever. You can't know
if your product is useful unless it's fundamentally obvious (lightbulbs,
toaster, eyeglasses, cups, dog food) and most products aren't this way. Most
are incremental improvements on stuff we've owned or done forever. Is your
product a significant enough increment? That's where validation comes in...

 _for a market large enough_ : The perpetual question. Total addressable
market is not a simple thing to figure out. Surely you're familiar with the
traditional startup pitch: _If we could get just 1% of this billion-dollar
market..._ It's a dream-killer, that one. And it's really only useful in
context -- consider a theoretically perfect product like, say... perfect
socks. They magically match whatever clothes/shoes you're wearing,
automatically adjust thickness depending on your feet and shoes, wick moisture
better than anything else, and never wear out. Addressable market: everyone
who wears socks. Home run. But now say they cost $10,000/pair to manufacture.
Total addressable market: like 500 people. From a home run to hit-by-pitch
just like that. My point: TAM is important, and non-trivial to calculate for
all but the simplest idea. Talking to customers helps figure out what segment
of the market 1) wants your product and 2) will/can pay for your product.

 _to make a successful business out of_ : That means margin and profit. If
your theoretical $300 sedan above cost $350 to manufacture, it doesn't matter
how revolutionary your idea was. The LIFX bulb is a possible example of this.
Can LIFX deliver on their product for $70/each? A lot of people are saying
it's impossible. If it ends up costing them $100/bulb to make it exactly like
their Kickstarter campaign says it will be, that business is not going to be a
successful one. There are armadas of good products & services that went belly
up because they cost too much to make compared to what people would pay.

~~~
dkrich
"How do you know what's useful? You've used the "saves time" metric a couple
times here, but that isn't always enough. Bikes save time over walking, but
people still walk. Cars save time over bikes, but people still bike. Ditch-
digging machines are orders of magnitude faster than human ditch diggers, but
people still dig ditches. Buying fast food saves time over cooking, but people
still cook. Netflix is more efficient than cable and Redbox, but people still
buy cable and rent from Redbox. Quickbooks is more efficient than paper
bookkeeping, but legions of small businesses still use paper. The examples go
on forever. You can't know if your product is useful unless it's fundamentally
obvious (lightbulbs, toaster, eyeglasses, cups, dog food) and most products
aren't this way. Most are incremental improvements on stuff we've owned or
done forever. Is your product a significant enough increment? That's where
validation comes in..."

Yes, but every one of the products you mentioned is successful and has created
billions of dollars of wealth. Markets, like people, are complex, and rarely
satisfied by a single solution. This is great news for new businesses that are
afraid of competitors.

But whatever you are attempting to sell has to be better on an important
dimension by an order of magnitude. I agree that "better" can be subjective,
but I do not believe that you are going to achieve success by switching from
idea to idea, hoping to strike a chord with consumers. No successful
innovations come about that way. You have to know what you are building and
why. Marketing the product should be the easy part. Talking to customers to
learn how to make those types of product innovations is a pointless endeavor.
Let's stop pretending that it doesn't require some innate talents to build a
compelling product. It is really hard and not many people can do it. Many
people can learn to code and launch websites. This mismatch is why there are
so many shitty products on the market that never make a profit.

------
bengi
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.

------
nancyhua
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.

------
GFischer
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.

------
filip01
Could someone define "venture backed"? Do angel/seed rounds count? If so, I'd
say 2% or even 0.2% seems pretty decent.

------
perfunctory
Because the majority of any area sucks.

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

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

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

~~~
dkrich
And most startup founders aren't successful.

------
paulhauggis
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.

