extreme business planning (again) - you're nobody's market and embrace failure

Hey guys, this is for you! Yes you.

Actually it's for those (there are many of you) who strike up every conversation with:

"Who's your market", "how will you enter the market?", "how will you reach the decision makers?", "what's your go-to-market strategy?" and "what's the value proposition for your target market?"

After an initial urge to walk into the trap by actually answering those questions specifically (again), I get the blinding flash of the obvious (again):

Forget those questions, they are dangerous, very, very dangerous. Here's the reality.

"Failure is the best friend of the startup, fail fast and fail often!"

With a new product it will always be like walking in the dark, take one step at a time, be very aware and welcome resistance immediately for instant change of direction. Small and early failures increases your chances to get anywhere, thus seek failure as fast as you can.

There is absolutely no way I can plan for everything, nor is there a chance in hell that I know everything - so I have to face it and try out every step. If I think I have full daylight when navigating the dark corridor I will crash. No ifs or buts there.

Great article in Business 2.0 have some good examples.

[UPDATE: And here's a really good one in Redeye VC.]

"Neither I nor you is the market!"

Actually, this is more of the same - you really do not know much about the future at all. Well, I certainly do not.

I suspect the biggest single reason for startup failure is the leadership sitting in a closed room convincing each other that "those guys over there will use it for that", then proceeding to pour money in that direction as in development, marketing,  building a specific distribution channel and pouring cement over a pricing model.

The chances that it will be "some other people using it for something completely different" is almost certain - so if I painted myself in a corner as above, I would basically be... eh... not in a good place. More here.

Do not find the market, let the market find you!

So what to do? Plan and act according to reality.

This is what we try to do at thingamy (we're an excellent example, boy do I know little):

1. Create a product with real flexibility to do a lot.
   Check. Thingamy can in fact do a lot different things (too much in the mind of many, utterly confusing when they think along the lines of the questions they ask). But it is built with that in mind, a bit like a spreadsheet that way.
2. Create a product that is easy to change, tweak and expand.
   Check. We have rebuilt the code from scratch umpteen times, halving the lines of code each time and we stick religiously to some simple basic principles where code and philosophy enhance each other. Adding a new feature is more hours than days. Effort goes into "platform" solidity and nimbleness, then let the market decide what else is needed over time.
3. Make it easily available to the widest possible group of people.
   Not yet. Within four weeks it should be easily available for test & play on our servers. So far only as download for people who can live with much head-scratching.
4. Pull not push.
   Do not target people, make it available to all and let people decide themselves if they're interested, then make it as easy as possible for those to find out how they can make real use of it. Examples, metaphors, stories, more examples, demos, discussions, community, low risk entry, extremely low risk no-brainer do-not-have-to-ask-boss implementation - working on it.
5. Make it as easy as possible to understand and use.
   Working on it, working on it. This is the basis for any useful feedback after all. But it is also a bit of chicken and egg as we really do not know what "makes the stuff easy to use"! So we have to try, let people try, try to understand how that worked, change and try again. Never ending story. Try, try, try.
6. Have the mechanism ready for fast feedback.
   Reminder to self: Get this better, much better, now. Current method is much too dependent on one-to-one discussions!
7. Never ever pour cement over anything - product, price, terms, distribution.
   Check. We do suggest a simple pricing and license model and so far have not heard any "ouch" or "yechh" so it might gel. And we have leeway for all kinds of "distribution" models where third parties adds much of the value for the end user - consultants, infrastructure suppliers, SaaS, anybody with a good idea willing to try.

Actually, the biggest difficulty is to find the balance between "blowing with the wind" and being "utterly stubborn". Have to remind myself all the time as stubborn and persistent is after all an import trait for the entrepreneur, just have to know when not to be that.

Hat tip to all the people who asked those questions in the first place, you know who you are ;)

Comments

[Thomas Otter]

Sig,
Indeed, and funny enough if you look to the history of my employer, there is a good deal of that.
R/3 was meant to be an SME product, but the big guys loved it.

I think also you will enjoy this post from Jeff Walker.
http://radiowalker.wordpress.com/2006/07/19/how-to-ruin-a-perfectly-fine-product-with-marketing/
übercool.

[sig]

Thomas,
ah, excellent example and the post you linked to again argues for what seems almost like a no-brainer!

Thinking about it again, the questions I started off with did all come from (now going into tongue-in-cheek mode so as not to insult people) more like... eh... "finance and marketing oriented" chaps, the less than daily-dirt-on-hands and have-to-live-with-it ones? Ah, now I will surely have offended some, sorry guys! :D

[Natalie Ferguson]

I think it's important to have a flexible plan that you can update as you realise new things about your product - key markets, major requirements of these markets, new competitors and your market strategy. Business plans int he tech industry have a bad name now because technology changes so quickly, your plan generally doesn't keep up and becomes irrelevant too quickly. We built a product to combat this, allowing for a flexible plan that you can easily track and update. It's called PlanHQ, I'd be keen to hear your feedback :)

[sig]

Natalie,

nifty product you've got there! Easy to grasp, seems easy to use...

But you got me thinking though, as I am a tad more radical when approaching the ways business could be run.
In essence I would say I depart from the "goal / event" drivenness (and thus plans as such I might suggest) as it often is based on the wrong (my words again of course) needs; me as supplier, my shareholders etc.

I'm more into focus on "increase value of objects" in full cooperation with potential customers and other resources. Value is entirely up to the potential customer of course, my task is to continuously try to increase that (and keep some for myself).

I suspect your question warrants a full post though! :D

[daksh]

Sig,

Nice post however I've some questions.

From my understandign, typically the 7 steps mentioned above are applicable when you've competitors in the market.

Here you've mentioned "Do not find the market, let the market find you!".

Well, this is only possible when the market is facing a problem or there's a need felt. A startup has to come up with a unique idea to solve the problem. A fresh idea doesn't have any initial competition.

Just a thought why're we considering "Demos" as a part of pull strategy ?.
Giving demos of your product is more of a push, only when the customer feels interested it would become pull.

Also, what if two products are built on the same tech. platform and also fit in the 7 categories. How would you diffentiate then ?

[sig]

Hi Daksh,

actually when you mention it, the seven points does not really take any competitors into consideration as such. After all the point being not "think you know who the market is" would imply you would not know precisely who your competitor is either.

And competitors are quite an iffy term - some are both partners and competitors (more often than not!), and most often a competitor is defined from the product side and not the use side... hard to pinpoint. Let's say they're always there! :)

"Solve a problem" is another term I disagree with, again much too narrow, and all too often defined based on what products exists already.

Obviously best is to have a product that does not compete, rather makes the legacy products irrelevant... does cars compete with horseshoes? They certainly once made them irrelevant.

So, you might not even solve a direct problem, you might make many problems and "good enough"s become irrelevant and make life easier, more fun and more profitable for the user.

That's where the conversation and history telling comes in - if interesting enough product, including it's "story" - today's market should be cluetrain enough to convert your story into a pull.
And with a seed of a pull you'd better be prepared with demos, built in agility so you can tweak according to where the users find the use and so forth. Thus the demo is neither a pull nor a push, it's simply a mean to feed a beginning pull - or a push if that's your choice.