How to fail a startup 101: When NO means NO and YES means NO

Published in

How to Fail a Startup 101

7 min readMay 17, 2016

Hello StartUp-ers,
Knock knock. Who’s there? It’s me again to bring a pinch failure to your day (Oh no a “knock knock” joke really?).

It’s time for the second portion of magical tricks that you can employ in order to achieve the much desired FAIL and go broke.You should by now know how to get to the stage in your life that you need to ask your friends and family for food. If you are not sure how, click here for a pleasant reminder. Now I will show you how to up your game a bit.

What to expect from this post?
Section I: “Purely fictional” case study
Section II: When NO means NO and YES means NO?
Section III: How to find something that means YES?
Section IV: Now what?

Section I: “Purely fictional” case study

First things first. Let’s put a perspective on the topic with this purely fictional case study. (Kind of reminds me of something I’ve read though)

Six months ago, me and couple of friends, decided to create a SaaS solution for the pharmaceutical sector — “A service to optimise your deal margin and give you a state of the art analysis on the market”. Unlike other “developers turned entrepreneurs” we decided to do it the smart way — The Lean Startup way. We decided to validate our assumption that the market wanted our solution. Our action plan : “Create a prototype and start meeting pharmaceutical companies to see what happens. We will tell them how it is going to work and they are going to love it and give us their money.”

Three months later We’ve had couple of offers that clients had said YES to and a bit more offers that the clients had said NO to. Seven months late we still have no money in the bank account despite all the YESes.

Voila, say hello to our old friend, the failure ;)

Section II: So, when NO means NO and YES means NO?

What happened here? We had YESes and still the result was a big fn NO. What did we do wrong and what was our mistake?

It appears that our mistake was not diving deep inside the human psychology. I’ve only later been able to put the explanation into words:

People don’t know what they want until they see and feel it. Until then they only know what they don’t want!

This fact of life hit us in the face in two ways.

Mermaid progress

Mermaid progress is when all signs point that you are making progress towards your desirable goal, and it does look and feel like you are making progress, but in reality you are, at best, not moving.

Just like the mythical stories of sailors seeing a very beautiful and desired sight, only to be dragged to the receiving end of a beatdown and eventual death, clients will tell you what you want to hear and then strike their mighty blow. If you don’t see it coming and don’t guard against it you will 100% “die”. If you see it coming and guard against it you have 50% survival chance.

Clients saying YES is a mermaid progress, unless it is backed by something tangible that they really care about — $$$, money, bucks, quids (you get the idea).

Keep in mind the following though — the biggest part of your clients do not do this on purpose. Most of the time they have some interest in your product, and they are telling you YES driven by the “fear of missing out” syndrome. However, if your product benefit is not stronger than this emotion you end up being a “sailor”.

Prototype is not MVP

The second suicidal act we commited was not making a difference between a prototype and an MVP. Trust me on this one, there is a small but VERY significant difference.

Prototype, on one hand, is how a system will look like — the visual part. MVP on the other hand might have nothing similar in looks to the end-product but solves the root-cause problem.

Prototype solves nothing — it’s just a tool for sales. Something for the sales reps to fool the clients with.

MVP, despite being small, is still a product. It might not be scalable, it might not be fast, it might not be easy to use, but it does one thing —THE thing — it solves the problem!

We created a prototype, but never created an MVP. Why? We didn’t know better. We thought we have an MVP. However our prototype was not able to answer whether the client experience our target problem and does he/she want it solved.

Failure “Trick” #3: Create a prototype and try to sell it for number of months. Then analyse the results

If you are looking for the previous tricks — click.

Our prototype gave us one thing — the chance to ask : “Do you have problem X?”. You know by now that the answer is YES, but it means NO.

Section III: How to find something that means YES?

Be smarter than me(which I am sure you already are) and don’t trust words as words always mean NO. Do two things instead. First capitalise on words but don’t trust them. Second — find something else that actually means YES. I will show you how.

Capitalise on words

I’ve found out the hard way that there is infinite truth in the old proverbs. Especially this one:

The iron is shaped while it’s hot!

It appears that verbal YES is still a YES, but one with a very very very short (did I stress this enough?) expiration date. More precisely about 5 minutes. Shape the iron while it’s hot.

Set up your sales and marketing to be able to close in the next 5 minutes after the YES. Otherwise it expires and you end up with a NO.

If you are doing sales — ALWAYS, ALWAYS have a prepared written contract with you to show. You can’t mail it to the customer after the meeting. You can’t come tomorrow with the contract. It’s truly now or never. If the customer stalls — it is already a NO.

Failure “Trick” #4: Don’t bring contract with you in sales meetings. You can send it after the meeting. After all we are “think green” and should not waste paper.

If you are leaning more on marketing and advertising — You need to set up your customer journey in a way that once the user thinks of buying (the proverbial YES) you present them with the easiest way to buy (pre filled forms and as few clicks as possible). Otherwise the YES expires again.

Actions speak louder than words

According to our new mantra about people not knowing what they want, we cannot ask them to tell us, but we can “trick” them into showing us what they want. I’ve shown you in the previous article how to create an MVP. Go ahead and do it.

Make sure your are creating an MVP not a prototype. Then measure, analyse, change. See what your visitors are doing and what are they not doing and act according to your new knowledge. Their actions are giving you clear answer YES on whether they want/like to do something.

In practice

I am humble enough to preach only what I practice, so here is what I am currently doing.

For some time I’ve had the idea - a website builder suitable for quick and cheap creation of great websites suitable for validation of ideas. I had two options:
a)Start building website builder that I can later show to users and tell them how they will be able to build sites using my tool soon.
b)I’ve came across the concept of Concierge MVP in this post. I can offer my service manually, using other existing services, in order to find whether the world wants websites done for them and what form do they want it in.

By now you should be really clear that a) is a prototype and b) is an MVP. Needless to say I’ve chosen option b). I am midway in the validation period. (btw if you want quick and cheap website to validate your idea, done in 24h — here)

I am measuring traffic, what is holding people’s attention, when they bounce, etc. People buying is a YES. People telling me this is a great idea and clicking away is a NO. I have clarity on this and so should you.

Section IV: Now what?

If you have existing business think about the following : “Am I deceiving myself with a mermaid progress? Am I swallowing NOs as YESes?” Check your data and trust that the truth is in the data, not in your gut.

If you have an idea you want to test, think in terms of MVP and how to measure real intention — it could be mail subscriptions, it could be actual sales, or something as simple as clicks on a fake buy button. Verbal surveys should be a last resort.

Now, go act and make sure you know my “tricks”.

Through them, a great failure you shall achieve.