The Fallacy of the Build Mentality
Everybody wants to build, nobody wants to sell.
I was recently asked the question, “where do most founders go wrong when building and launching a business?” I had my theory but thought I would ask other successful entrepreneurs the same question. And you know what? There was a strong recurring theme that matched my own observation: most founders become derailed when they endeavor to build a full-blown product first, instead of starting with the unglamorous work of trying to invalidate the product idea.
Many entrepreneurs start their journey the same way:
- They have a product spark that is triggered by a particular experience or observation (this is a solid starting place)
- They do some market research to discover existing solutions (a solid next step)
- They ask friends and family for input about their idea (this is where things start to go off the rails)
- Maybe they conduct some prospect interviews (too often this process produces misleading results)
- They build a product based on a false positive set of conclusions
The primary piece of advice that I have been giving to first time entrepreneurs is to talk to prospects. But taken too literally, this advice provides a course of action that can be too easy to check off. While talking to prospective customers, it is super important to spend a non-trivial amount of time formulating thoughtful questions that do not lead the prospect to the answer you want. Leading questions result in false positive results; answers that validate an idea but may not be completely reliable. These answers may lead you to believe that your solution is viable but do not necessarily get to the heart of whether the solution is important enough for someone to pay money for it. So, I’m beginning to think I should rephrase my advice: what I really want to tell entrepreneurs is to try to invalidate their business idea. This is hard, unglamorous, idea-busting work that nobody really wants to do.
The Build Mentality
Armed with false positives many founders believe they need to start building, believing things like: I need something substantial to release, I don’t want to be embarrassed by my solution, I need every conceivable feature, my solution needs to be fully baked, etc. None of these beliefs are true! If you have landed on a solution that prospects ‘need to have’ versus one that is ‘nice to have’, people will adopt the product no matter what it looks like.
As long as you are solving a single fundamental job that needs to be done by your prospects, the solution will be adopted no matter how many features are missing, what the interface looks like or how the backend is working.
Build mentality beliefs are dangerous stall tactics, because let’s be honest, it sucks to learn that your solution might not be what the market wants. And furthermore, it’s much easier to build a product than it is to sell a product.
I recently talked to someone who was getting ready to spend several hundred thousand dollars building an internal tech team — the company has no customers, no prospects and no pipeline. There was no targeted customer hit list and the company was focussed on building enterprise software. All software can be challenging to build and sell but enterprise software has some additional unique challenges. There is a longer sales cycle, the product needs to be more robust to pass inspection and oftentimes the product needs to integrate with other business tools.
I suggested to this founder two alternative strategies:
- First, instead of building a full enterprise tech platform, a) build a minimal amount of tech powered by some manual manipulation behind the curtain, b) tune up the marketing message to highlight the one important job being addressed by the tech, c) release that product. My reasoning for this recommendation: the company won’t spend hundreds of thousands of dollars building solutions people don’t want and, by performing some functions manually behind the scenes, the team will have a better understanding of what the tech should do resulting in a foundational product that will wow early customers. Furthermore, it has been my experience that for companies with less than a few hundred customers, internal tech teams avoid idle time by building features that are not driven by customer demand or business case. And this is an unfortunate waste of resources.
- Second, because this particular company had performed a number of prospect and sales interviews, I suggested that they go back through those interviews to pull out secondary recurring themes. The objective of the prospect interviews is to try to invalidate a business idea. If the outcome of those interviews supports a product thesis (tells you what to build), it is very likely that there are several secondary themes that will help understand how to sell your product.
Avoiding the Build Mentality
Getting prospects involved at the beginning of your startup journey is scary and emotional but ultimately can save you a lot of time and money. The important thing to remember is that although many times initial ideas are invalidated, many successful founders who go through this process end up landing on better ideas that customers are willing to adopt.
In order to set up for greater success in evaluating the potential of your product idea:
- Conduct as many interviews/sales calls as possible with questions that are not leading (think about asking someone how they currently do their job, what tools they use, etc and avoid asking whether a particular tool, i.e. your solution, would be useful to them)
- Review your interviews to discover secondary themes — prospect interviews may support a product thesis but analyze the results more critically for secondary themes that will help sell the product
- From the interviews develop a clear and concise objective for the product (what is the one thing the product will do that prospects will pay for) — build that functionality with off-the-shelf tools for early discovery about whether you have accurately identified the needs of your potential customers
- Offer additional features that many be performed manually to determine what other functionality your customers are willing to pay for — a good product team will be able to move from manual function to semi-manual to a fully-automated solution
- Build a solid pipeline of prospects for your initial customers — don’t look for the whales (too hard to land) or the low value customer (who will drain your resources)
- Work toward getting to 100 customers who love you and lean on them for insights
Most people want to build, heck I was even guilty of it myself once or twice, and most entrepreneurs don’t want to sell. But conducting a rigorous market analysis can potentially save time, money, sweat and tears down the road.
Stay tuned for my next article discussing the tough questions.