I have a long (and painful) career in enterprise B2B but have also founded and coached startups. What I realize is although there are big practical differences in how these types of organizations operate, startups and “grown ups” make many of the same mistakes when it comes to new product development. Here are some of the most dangerous (usually tacit) hypotheses I see organizations make.
We will solve the market’s problems.
A market comprises all the entities with the means and interest to buy your product. Every market can be divided into “market segments”, which are cohorts within the market with similar requirements or priorities. One of the most common mistakes I see startups make is trying to generalize their product so they don’t forego opportunities when they launch. It’s a defensive position. In my experience, a much higher practical threat is not thrilling at least some segments. It might take you out of your comfort zone, but find a small number of segments (1 is optimal) and thrill them with your product. Think deeply about how you’ll then thrill other segments over time.
We’re seeing huge interest! Surely people are ready to commit.
I’ve seen many startups throw a landing page online and make big commitments based on a bunch of people being willing to share their email addresses. These types of quick/easy approaches can be valuable, but it is critical to differentiate interest from commitment. A rough rule of thumb is that for every 100 people who are interested, there’s one who’s ready to commit. In this context, the most relevant type of commitment is spending money. There is a relatively massive barrier between interest and the first penny someone has to spend.
To overcome the false exuberance of validating interest, always develop experiments that will help you validate commitment. Instead of pure freemium, ascribe some minimal cost to your product (even if later you plan to offer a freemium plan)
We have a huge advantage because I am my user!
You are NOT your user. Regardless of your experience and level of empathy, once you begin thinking deeply about a problem space and the associated solution, your perspective changes fundamentally. You no longer think like a “normal” user or prospect. This means that to derisk new product development we need to validate our ideas and assumptions regularly and take our personal preferences with a grain of salt.
If I build it, they will come.
Most startups invest way too little time, money, and effort in go-to-market. GTM comprises all the activities that get a market-ready product into the hands of customers. In my experience, failure to address GTM adequately is the most common reason startups fail.
As I said, virtually all product development organizations make these mistakes, regardless of their size or level of maturity. Depressing news: there are many more!
What are the most critical mistakes you see product teams making?