Founders: Keep your eyes on the prize…your users
If you are a founder of a startup, it’s no secret that the odds are stacked against you. There are literally thousands of reasons for why a startup might fail.
However, in my opinion, there are two major reasons that startups fail: timing and a lack of focus on customers. Given that timing is extremely hard to combat, I recommend trying to focus on customers and users.
A founder’s job is to have a clear understanding of the wants and needs of their customers/users. In it’s simplest form, most startups are founded based off of the premise that they have a solution to a problem that enough people want solved.
Depending on how large the perceived “problem” is, there will likely be a handful of competitors. The “winner” will be the one that best satisfies their customers wants and needs.
In the early days of a company’s lifecycle, it’s not uncommon to see founders and investors obsess over their competition. Closely watching every move, trying to figure out their bigger vision, MAU, paying customers, etc.
However, if you obsess with competitors too much, you will likely “pivot” —move away from your original product offering to a new direction. As a founder, it is important to question to why you are pivoting.
If you pivot, it should always be based on the premise of getting closer to finding product-market fit, not solely based off competition. The holy grail of all startups should be to find product-market fit.
To quote legendary founder and investor, Marc Andreesen:
Product-market fit means being in a good market with a product that can satisfy that market.
In order to obtain product-market fit, you need to really understand what your customers (or users) want and need. If you are only following and mimicking the moves of your competitors (not talking to customers or users), there is an exponentially higher chance you failing.
The exception to this, is if your competitor has obviously found product-market fit via a different strategy. The moment a company finds their product-market fit, we will start to see a lot of competition emerge. It is important to talk with customers and users to ensure that this really is the product that satisfies their needs/wants.
Over the past year, Facebook has become notorious at copying competitors that have found product-market fit via a blue ocean strategy:
- Instagram Stories (copying Snapchat stories)
- Facebook Live (copying Periscope/Meerkat)
- Messenger 10.0 (copying Snapchat)
The difference in these cases is that Facebook already has an extremely large user base and these moves are very calculated. In my opinion, these moves by Facebook are largely done to prevent their existing user base from churning to Snapchat, Periscope, etc.
As a startup, if you change your company’s direction based off of what your competitors are doing — you need to be extremely confident that this is a move your users and customers want.
As early stage investors, we need to have full confidence in the founders that we back will figure it out. If two startups are competing against each other in a new space, we are 100% betting on a founders execution and understanding of the market/customers.
As always, if you are ever interested in chatting more about VC, startups, OR if you want me to write about a specific topic - I'd love to hear from you.Twitter: @blakeir
