Understand your customer if you are to succeed
An entrepreneur can have the best idea is the world, the most startling and innovative technology, and even the finest, most talented team — but if the company doesn’t execute the right business strategy in a focused and superior way, the odds of that startup achieving commercial success are not very good.
Execution is a word that angel investors and venture capitalists use all the time. It describes the cumulative effect of the daily decisions, great and small, that a founding team makes — decisions that either cause customers to buy and stakeholders to cheer, or decisions that cause the startup to languish or to fail outright.
I can’t think of a single entrepreneur I’ve worked with who ever intended to fail. Entrepreneurs are among the most creative, tenacious, hopeful people in the world. They have to be. Yet no matter how focused an entrepreneur is on building a new company the right way, it’s easy to get off track and execute poorly on a great idea.
Surprises are a given in the startup world, but, in my experience, unexpected disruptions, as painful as they may be, are not, in and of themselves, the main source of problems of execution. It’s more prescriptive than that. The seeds of poor execution are baked into the layers of what an entrepreneur believes.
The path of poor execution starts when the founding team is convinced that the startup’s technology is wildly superior to any other technology, so superior in fact, that once the marketplace realizes just how great that technology is, customers will clamor for it. This belief is often reinforced by the entrepreneur’s friends and family who have listened (probably for hours and hours) to the entrepreneur’s enthusiastic vision of all the problems the technology will solve.
There may be a few associates who express some doubts, but the intrepid entrepreneur listens selectively and, confident that he knows what potential customers need and want, builds a prototype based on a value proposition that seems obvious.
When sales don’t materialize, the entrepreneur still believes that the product is great, but that he picked the wrong customers or the wrong path to get his product in their hands. There are so many valuable opportunities out there after all, that the startup just needs to refocus on a more innovative, profitable, exciting (fill in the word) industry or channel.
The entrepreneur’s beliefs haven’t changed. He is still in love with the technology and the product. He knows the prototype is a winner; he just has to find some customers who agree with him.
The challenge, of course, is that he never will find those customers.
Investors expect entrepreneurs to make mistakes — but the mistake of not talking directly to customers in the markets you hope to serve leads to errors in execution that aren’t usually recoverable. The first key to success for any startup is understanding your customer.
DID YOU KNOW? CB Insights reports that the No. 1 reason startups fail is that there is no market need for their solution.