Rules of Thumb to Dodge the Early Failure
Almost every time I read a story about early-stage product failure the reasons are similar. The sad part? They are also largely avoidable.
The other day, I read a story about an entrepreneur who wasted $40k building something no one wanted. If anything, it makes me sad.
I mean, don't get me wrong. It has a happy ending. The founder realized the mistake, returned to the drawing board, pivoted the idea, and got back on track. It could serve as your typical inspirational startup story.
Still, it makes me sad.
Sad Startup Story
Here's a key part for me. You could rephrase the story as:
Ask people whether they like a product idea.
Build $40k worth of something without any actual validation.
Note that the author doesn't explicitly state the first point. However, mentioning that there were great user interviews and that the question "Would you use this?" might have popped up suggests enough.
My disappointment stems from how basic and entirely avoidable these mistakes are. And yet, how common they are, too. It's as if no institutional knowledge existed in the startup ecosystem.
I wish I could say with certainty that the poor founder didn't know any better. I would bet otherwise, though.
I've advised so many entrepreneurs going down the very same avenue, and it's always an uphill battle. No matter how many times I repeat the "build less, validate more" mantra, that goes against their deeply held belief in the idea. The confirmation bias does the rest.
(Not a Rocket) Science of User Interviews
Admittedly, the story suggests some rudimentary validation—the user interviews. Except, in this case, it sounded probably like the following dialogue.
- Can you please tell me that you like my product idea?
- Um, sure, why not? If it makes you happier...
- Would you use my product then?
- Well, yes, I guess.
When we organize internships, we often get our interns to work on an MVP of an internal mini-product. Part of the discovery process is them—the fresh interns—running user interviews. They've never asked, "Would you use this?" Like, not a single time. That's how basic a mistake it is.
Anyone who read Rob Fitzpatrick's The Mom Test, hell, anyone who read its first chapter, would get it. So, if you haven't yet, do yourself a favor and read it. It's a turn-pager.
Or, better yet, listen to the audiobook. It's by far the funniest and most digestible non-fiction audiobook I've listened to.
Always a Product, Sometimes Feasible, Never Minimum
Once we have improved the interviews, let's look at the product's first version. Somehow, my fingers resist typing "MVP" in this case.
I have a beef with how people use the term. Throughout my career, I have listened to over a thousand product pitches, most framed as Minimum Viable Products (MVPs). If there is a common denominator, it’s that people use the label to describe whatever they think the first version of their product should be.
The problem is, it's never minimal.
In fact, upon hearing the scope, it's easy to suggest a much smaller product version that would still be valuable to someone, and most importantly, it would enable learning. In other words, it would be viable.
Thus, my rule of thumb. When people say they have an idea for an MVP, I read it as: always a product, sometimes feasible, never minimum.
Whether $40k is a lot or a little for an MVP depends on the idea. In this case, I assume a much smaller increment would suffice. And it would enable the same realization: it was the wrong product altogether.
My knee-jerk reaction would be to recommend reading any popular book under the Lean Startup umbrella. Ash Maurya's Running Lean comes as a strong recommendation.
But then another issue emerges.
Learning from Experience
A few months back, I was talking with a potential client of ours. As usual, I passionately advocated running a discovery phase before developing anything, validating assumptions, and eventually building much less than they initially envisioned.
The founder listened attentively and returned with an excellent question.
"I'm reading Running Lean right now. How is everything you say different from the book? And if not, or not much, why should I hire you?"
Oh, by all means, if you can follow the book's advice, you probably don't need us. But if I learned anything from doing that for years, it is that as appealing as it sounds in theory, making it happen in practice is damn hard.
If it were easy, people wouldn't be coming to us with an overinflated, bloated scope of the first version of their products and calling it an MVP.
In fact, I repeatedly said that, in theory, we know how to build products well. Unfortunately, in practice, we don't do what we know. By the way, product development is but one domain where we behave so.
The poor entrepreneur whose story I began with might have read Lean Startup, Lean UX, The Mom Test, and others. Nevertheless, he made the mistake of blindly pursuing his original idea.
Experience, especially a painful one, is a much better teacher than any thought leader with all their books.
A side note: our would-be client—the avid Running Lean reader—chose to go alone but did not make it in the end.
Plague of Early-Stage
I wish these issues happened only occasionally. That's not the case. I learned to expect that they will plague just about any early-stage product idea.
Frankly, the only situations where we can turn the tide and convince founders to do otherwise happen either
when they are so cash-strapped that they can't afford to build according to their original plan, even using the cheapest available options, or…
they have already tried, burned through their cash reserves, and learned it was a mistake.
The founders who had the right mindset from the get-go are few and far between. I could count them on one hand. And yes, I base this observation on a pool of several hundred MVP pitches I've heard.
What's more, all those founders were ready to spend money on developing their ideas. There weren't just wanna-be dreamers playing with their fantasies.
It's almost as if they consciously decided to waste a good part of whatever funds they had at their disposal.
The Rules of Thumb
So, how can our protagonist founder—and hundreds of our potential clients—do better?
I've developed a few rules of thumb to help navigate through the earliest stages of product development. It's not even the pre-seed stage. It's pre-pre-seed. At that time, the ideation meets with the first building efforts.
It's where we make the first commitments and decide how we distribute our necessarily limited funds.
Build Less
If you remember only one thing from this list, make it this one. It is universally the best advice I can give any founder at the pre-pre-seed stage. OK, at any stage, really, but during the earliest days, it has the biggest leverage.
Whatever you want to build, it's too much. There's a smaller effort that can deliver the same value, learning, validation. Whatever you envision as an MVP, there's a more minimal version. Trust me.
And if you don't trust me, then challenge me. Reach out, and let's talk. You explain your thing, and we'll suggest how you can extract the value but with less effort.
I'm not being cocky here. We have been doing it for decades.
If You Can't Spare $10k on Discovery, You Aren't Ready
I use "discovery" as an umbrella term here. It involves exploring the idea and assumptions behind it, learning about the target ecosystem, and more. Anything that we can do before building the first feature falls under that umbrella.
The number I use—ten grand—is not fixed in stone. There are contexts where I would be fine with $5k. The crucial part here is that you should be able to spend that much and still have sufficient funds to build something to validate the idea.
If $10k is all you have, then fundraising, not product development, is the best way to use your time.
And yes, I know you've been reading stories about how you can vibe code a product over a weekend. Even if they were true (they are not, yet), I still stand by the statement above.
Choose Partners Who Challenge You to Build Less (and Later)
This advice aligns with the previous two bits. Sooner rather than later, you will need to compensate for the gaps in the skillset, be it technical, product development, marketing, or what have you, and seek partners to help you address the missing pieces.
Whether you are looking for a co-founder or an external consultancy/agency, their mindset is absolutely crucial. I would argue that in the latter case—external partners—more critically so.
If all they do is ask you about the scope, and they're ready to jump on it and build it, they're probably a feature factory. You want to avoid them as a plague, even if they are dirt cheap. The goals of a feature factory are directly opposite to those of a pre-pre-seed startup. The former wants more features built; the latter should want fewer.
If you are searching for an agency, actively look for one that would challenge you on the scope. You should want to feel like you had to fight hard to add anything to the product. You are better off when you’re pulled back to ideation/discovery/validation before committing to development.
Trust the Failure Record
Everyone's quick to share their successes. That much is obvious; we're stars of our own shows, then. What matters more, however, are past failures and how we talk about them.
Anyone claiming to be knowledgeable in product development should necessarily have plenty of failure stories. Why? Because we commonly agree that the startup failure rate oscillates around 90%.
Have a big enough data sample, and it's impossible to keep a perfect track record. In fact, the easiest path to avoid failures is to have only one luckily successful attempt and then refuse to play anymore.
That's, by the way, why I'm skeptical of using folks such as Jeff Bezos, Marc Andreessen (he was largely hands-off in his second and last startup), or alike as role models. Additionally, their stories are rooted in a world that's been gone for two decades already.
Instead, look for partners who can tell you how they (recently) failed and what they learned. The more failure stories, the better. That is, given that there are lessons learned in each.
What you're looking for is insight gained in lots of different circumstances. You don't know what awaits your startup, so you're better off accompanied by people who have experienced plenty of diverse scenarios.
Final Thoughts
If I were to generalize the advice above, I'd suggest our protagonist founder seek to fill the experience gaps. And the biggest one for almost any pre-pre-seed startup is the one around product development.
The first-time founder, by definition, has never built a product themselves. So-called serial entrepreneurs might have another product or two under their belt.
Curiously enough, you might easily find relevant experience in building multiple products across different domains. That's what agencies do. Most of them, however, would not have the right mindset. Fortunately, it's not that hard to validate which is which. I'd say, give me an hour-long chat with such a team, and I'll know whether I'd bet my own money on working with them.
But that's a topic for another article.