Guest post from Andrew Lockley (@)
There are two fundamental approaches to building a startup, and founders are notorious for following the wrong one. In 90% of cases there’s no real technology proof point. The central challenge isn’t therefore building the technology – it’s in evidencing market demand. The other 10% (and perhaps as few as 1%) are what I term ‘talking dog‘ startups. These are those with genuine technology risk.
So, what’s with the talking dog?
If you rock up to me and pitch me a talking dog, I’m not going to say “Hey, let’s draw up a business plan. I reckon we should do some market research, and see how much people will pay to see your talking dog.” I don’t need to do that, because that’s not the central proof point. If you’ve got a talking dog, it’s obvious how you’ll monetize.
People will willingly pay to see a talking dog. There will be stage shows and TV appearances and all sorts. In fact, you’ll be falling over viable options for generating revenue. But what I do need to see is evidence that you’re actually for real. So, the key question is “Can you show me your talking dog?”
In tech businesses, occasionally you do get propositions which rely on a “talking dog” – a technological leap forward so large it has to be seen to be believed. You could argue that Blippar, Siri, wireless charging, Google cars, etc. fall into this category. But the vast majority of tech startups are actually fairly mundane. They rely on the application of well-proven technology to problems that need to be solved, not the creation of genuinely new technology.
So, you don’t have a talking dog. What’s next?
It’s all very glamorous (if you’re a geek) sitting in your bedroom for years and then wowing the world with your amazing, whizz-bang technology. You’d love to pull out a talking dog to amaze and impress everyone. But sadly, it just ain’t like that normally. You’ll probably be slaving away doing something much more mundane. How do you cope with that?
Nobody wants to waste a chunk of their life on some shitty startup that nobody cares about, that nobody buys from, and implodes shortly afterwards. Be honest with yourself: are you working on a talking dog? Because if you’re not, your technology development is likely to be a total waste of time.
Does that mean that all technology is pointless, unless it’s a breakthrough?
Absolutely not. What it means is that the technology for most startups just isn’t where the risk and problem lies. As such, working on that first is a waste of time. I just don’t care that you’ve built a specialist SaaS system for ginger hairdressers, or a CRM for ferret-fanciers. I just don’t f****** care. What I do care about, deeply, is whether you can evidence that there’s serious market demand for whatever it is you’ve built.
And here’s the great leap forward: you don’t need any technology to do this. Yup. You really don’t need technology. Because when people buy the basic, mundane systems which runs most of their lives, they don’t need to see a fully working version in order to determine their need. If you go to the ferret-fanciers and ask them if they need a specialist CRM system, they’ll likely tell you. If you ask them whether it’s worth them paying for, they’ll likely tell you. If you ask them about features, pricing, support, reliability, or anything else – they’ll likely tell you. So don’t bother building the system before you’ve asked the question.
Of course, there’s more to it than that. People are genetically programmed to be ‘nice’. That’s nothing to do with actually doing the best thing for other people, it’s all about doing the easy, short-term, conflict-avoiding thing. People will assume you are less likely to shout at them or hit them in the face if they tell you your ferret-based CRM is wonderful and lovely. So you’d then disappear off, deluded in the belief that what they’ve told you is true. Meanwhile, they’d walk off in the opposite direction muttering about what a deluded prat you are.
So don’t get caught.
Show them a range of options, without indicating which one you’re aligned with. Maybe the ginger hairdressing system you’ve dreamed up can be compared to a more generic hairdressing system. The question then becomes not “do you like it” but rather “which do you prefer”, “how much would you expect to pay for each of these systems” or “what features would you expect to see in each system”. That’s primary market research – the stuff you gather directly.
Furthermore you also need another type of research – evidence that there’s a latent demand. One of the best ways to appraise this is to look for workarounds. If loads people are looking for origami lessons on gumtree, or sticking up posters saying ‘origami tutor wanted’ on lampposts, then that means there’s an unmet need for an official channel for this service. You can then set up “OrigamiTutorsAreUs.com” with some degree of confidence. This kind of stuff is out there, but you have to be creative in looking for it. This is secondary market research.
None of this requires any code. So get out of your bedroom, and do your market research. (Unless, of course, you’re building a talking dog.)