Very few product change the world, our fundamental ways of living and working. The iPhone was arguably the last big invention that solved a problem, we did not know we had. However, for most “regular” products, market demand dictates whether or not a product will fly or not.
When I started my career in digital marketing and startups in the mid-2000s, market size was everything. Every investor and startup founder conversation I had revolved around BANs (Big A** Numbers), alone. The larger the country, the broader the target audience, the better the business idea.
The reason why so many startups continue to fail, is that they focus too much on their own product or service.
Market readiness was not a topic that was on the table. Every startup founder thought they could be the next Steve Jobs. And maybe rightfully so. The beauty of startups is that founders can shoot for the stars. Disruptive innovation is not done incrementally, but is fast and brutal. Yet, it does not happen very often. I believe the main reason is that most new products and services might be good (enough to go to market), but the potential clients weren’t ready for the product.
Warm up potential clients to your ideas for the product
I have seen my fair share of business plans. At GANDT Ventures we deal with both corporate venture building ideas and those of young, early stage startups. What stands out, is that most business cases focus on the team operations, too much. The balance between product development and marketing (market communication) is off, 90% of the time.
Early stage products do not need to be perfect, they need to find an audience
It is a challenge to accept your product for what it currently is. However, it is natural that new products aren’t perfect from the get-go. It is far more important to share your initial prototypes with others to get honest and quick feedback. Any new product needs an audience, others who are passionate about the venture’s journey.
Smoke tests can help test the waters, but the best thing to do is follow-through with your marketing efforts right after. My advice would be to start small, push harder to find your target audience, ship whatever you’ve got and focus on the next iterations of your product after that. Most importantly, plan to spend at least 20-30% of your budget on marketing and communication from the start.
When your team salaries significantly outweigh your marketing and communication spendings, before you reach your first 50-100.000 EUR/USD/CHF of revenue, the company will likely have trouble scaling fast enough, to be interesting.
Learn from influencers, audience comes first
There is one group of startup founders who have understood that reach is key, influencers. Most start(ed) their influencer careers from a user niche. Sports, cooking, lifestyle, travel and fashion are just some of the areas that have dedicated insta-stars and champions.
The most successful influencers, did not start to promote products from the start. Most focussed on building an audience, first and foremost.
However, their reach and market potential are unparalleled in our social media-driven society. The beauty is that an influencer’s reach determines the potential to sell their own goods and services. While some have written books about how they can help their user base, others have brought out entire product collections.
What we can learn from this group of entrepreneurs:
- You have to tell your story first.
- It is important to be out there and inspire others with your skills, thoughts and ideas, before you place a product in front of your followers.
- Your future clients are more likely to buy your products because of who you are, than the miracle solution it sometimes promises to be.
- It is fine to create iterations of products – do something new and re-invent your service offer.
- You have to be out there, constantly. Don’t post something once, or run an ad campaign for a few days. Once you start, keep going.
Timing is key
Only a small portion of product-driven startups make it past the first 2-3 years. From my personal experience I can tell you that I think the main reasons were not funding, or poor operations, though. The key aspect of why most companies fail so quickly, is that they did not manage to build up an audience for themselves.
Of course, there is an element of luck and timing. But, I firmly believe that the companies I have worked in, have been successful, because of their marketing-first customer communication approach. The best and most beautiful product can fail miserably, if the team around it does not manage to develop an audience and create a market for what they have build.
Next time you have a great idea, think about how you are going to build an audience for it, before you start building. And do it.