Oh come on. We have all heard the words come out of our own mouths: “It’s been done” or “Huge-Company-X will squash this”
But that’s precisely why some startups succeed. They ride on the tide that other, more successful ventures, have started. Rather than try to come up with some of my own amazing thoughts about this I should point you to someone who has already dispensed wisdom on the subject, Amit Paka on TechCrunch http://goo.gl/FPd6AQ
As a consultant in go-to-market strategy I am bias to the notion that one of the first things a startup must find is their ideal customer. One of my clients recently did some intense work developing a customer persona to pursue for their SaaS solution and that is just one important element of go-to-market.
As a founder one of the most important things you must do is learn whether or not your idea resonates with its market. So many founders get an idea then they develop that idea around their own experience with its function or value proposition before they even think of testing it on others. This is a first mistake that we have all made as founders. Just because we think our invention solves a need for ourselves or the immediate group surrounding us doesn’t mean it will resonate with enough customers to make it a successful product or business. Understanding this will help you decide whether this is a cottage business idea or a scalable global sensation.
One way to visualize finding your customer persona is to imagine the circles of a target. Then imagine them shuffled out of symmetry, add several more “center target” sized circles scattered about, and you are looking for the smallest circle closest to the center of your new disheveled target. Once you find it that’s only the beginning.
Can you reach these people quickly to test your idea? Are they even looking for your product, service, or solution? Do they even need it?
Until the iPhone was released most people did’t know what they were missing. Now a new generation looks at most single purpose devices that were absorbed by smartphones, watches, cameras, calculators, maps, alarm clocks, video cameras, and don’t forget phones, and they say, why?
My advice to founders who have what they believe to be a runaway, slam dunk, idea is to put their alpha, beta, prototype, or MVP into the hands of their ideal customer according to the persona they have at least contemplated and listen what they have to say. Then repeat, a lot.
Once you have discovered that the unicorns trotting on rainbows in your head actually have traction with your market then develop a pitch and go looking for money to back it.
As a beginner at funding but a veteran at managing businesses I am conflicted on this topic. Founders believe in themselves and their idea so much so that most who listen to their pitches think they are blinded by their own enthusiasm. While their are some investors, some in my own friend group, who think they are smarter and have better prepared to make “good picks” than others.
That may be true to an extent about founders but I would argue that no one can consistently pick winners in any business, science, industry, or race. Some may have found ways to scoop up the right ones at the right time often enough to claim they are startup geniuses but how many of those are willing to publicly claim their losers?
Tod Francis at Shasta Ventures recently put together a nice observation of this. Please give it a read. In a nutshell he says “There is no formula, expectations are often wrong, and each success story is unique and unprecedented… but that doesn’t mean there are not patterns worth paying attention to.”
I think aiming for unicorns might make you broke fast and really piss off your LPs but let’s keep listening to what he has to say. I will aim for more attainable goals for my first fund. Who knows? Maybe we’ll see a rainbow or two.