By Gilad Shamri, a serial entrepreneur and CEO of Growth Artists, a startup growth consulting agency based in San Francisco.
Most startups fail — it’s the sad truth. As entrepreneurs, we want to think our startup will beat the odds and be that one that makes it big — be it via an exit through acquisition, growth at an extensive scale or even an IPO. One can dream, right?
That being said, dreams don’t always pan out and we must often pause, take a good, hard look at our reality and start figuring out our next steps. Facing the truth is not an easy thing to do, but as entrepreneurs, we’re constantly forced to reckon with hard decisions, and as we all know, being informed is key.
While it’s important to acknowledge the fact you’re most likely to fail, this fact should not discourage you on your path toward entrepreneurial success. On the contrary! Failing fast means you can move on to the next idea, or at least pivot as needed. By playing the devil’s advocate and thinking of all the (endless) ways your startup can fail, you are, in essence, learning what not to do, so you can circumvent common hurdles and pave your path to success. Let’s drill down a little deeper and analyze this concept from a few angles: the market, the user, the investor and, of course, you.
The market is not ready for you — or it’s just too saturated.
Maybe, it’s just not the right time for your next big idea. Maybe you’re trying to operate in a saturated market, or the opposite is the case: Your product or service is so innovative that it requires educating the users as to why they need it in the first place.
As we all learned from 2020, some things are just black swans and cannot be anticipated. While the past year was a time in which remote work products were allowed to shine, it was a dark time for many startups in retail, HR tech and other sectors. This was especially true of those startups that were not agile enough to shift gears and come up with a whole new roadmap that was aligned with the “new normal.”
The users might not be interested in what you have to offer.
Startups develop products and offer services for a few reasons, such as to solve an existing pain, improve users’ quality of life or offer a better solution than the ones that already exist. Most often we, as entrepreneurs, come up with solutions to problems we personally face. But in some cases, our target audience is not us or anyone we know. The potential users are out there, but you might not know them — you only know about them.
Before initiating a new venture, we are asking ourselves: What is the demand? Thinking we know the answer intuitively is a very good way to fail — if that’s what you’re interested in. Asking your friends, family and neighbors might also not be enough, especially if they like you too much to be honest with you.
Don’t be lazy. If there’s one takeaway I wish you would take from this piece it’s that you should test your idea for minimum budget before you are committing to building something. Conduct conversations with your potential audience. As many as possible. Ask them questions, and keep in mind you won’t necessarily get the answers you want to hear, but you would get the answers you need. Create the most basic landing page and run ads targeted to your potential audience. Do they click on it? Are they leaving their details and showing interest?
I’ve learned it the hard way, and it’s a lesson you have to learn again and again. You don’t really know what your audience wants unless you ask them. Never assume and move forward — always start with testing, asking and questioning. You don’t want to spend your valuable time and money only to realize you could have gotten to the same conclusion much earlier.
The investors are not waiting for you.
Thinking your startup is the next big thing is exactly the attitude you need when meeting with potential investors, but you have to back this up with data and proofs. I’ve seen many startups who managed to raise money only based on a landing page and a solid business plan, but they had all the answers for their investors’ hard questions. They did their homework, talked to their target audience and maybe even had a tentative agreement with users, which is especially beneficial if you’re in B2B and your potential clients are either small- to medium-sized businesses, enterprises or other startups.
Investors want to put their money where it will yield the highest possible profit. This means that some demand is good, but it’s not enough. Your product or service should be needed or wanted by as many people as possible. But you already know that, so you need to prove it. That can be done by research, building the most basic product you can (MVP) and show interest.
If you tried raising money in the past, you are probably familiar with the feeling of getting no after no. As entrepreneurs, we know it’s part of the game. You also know that a yes can very quickly turn into a no because one VC will only invest if another one will.
Finally, there’s “the hype.” One day everyone is interested in cryptocurrency and fintech and the next day, voice chats with strangers are all the hype. Like many things in life, timing is everything.
You are only human.
Entrepreneurship requires so much strength and stamina. It requires having a personal financial runway, support from your partner and family and the ability to wake up every morning to uncertainty.