9 out of 10 Startups Fail for This Reason. Here’s How You Become the 1 That Survives

Introduction: Why Do Startups Fail and What Can You Do to Prevent It

The idea is perfect in your head. A revolutionary app. A game changer product for the industry. A never-seen-before service You are so smitten with your idea that you are willing to put it all on the line: your time, your savings, your endless energy.

Pause for a moment.

As a recent article in CB Insights pointed out, the number one reason startups fail is not because they run out of cash or get out-maneuvered by a competitor. ‘No market need’ is the single biggest reason, accounting for more than 35% of all failures.

They built something nobody wanted.

The good news? This dumb failure is nearly completely avoidable. There is a science — a systematic process that distinguishes dreamers from successful founders. It is referred to as validating your business idea. This is not questioning your gut; this is a way to galvanize your gut with real evidence. This is the roadmap to navigate the startup ‘valley of death’ and become part of the 10% that survives.

Now, we get you started on creating a business that is not just built to last, but built to be loved.

Stage 1: Stopped Guessing, Started Investigating with In-depth Market Research

The mother of all sins for an entrepreneur is assumptions. You have to be a detective before anyone has written any lines of code or molded a single prototype. This means your goal should be: discover the market truth, not the rationalisation of your idea.

Uncover Hidden Trends with Data

The market is never static in nature. It is much easier to ride a growing wave than it is to swim against the tide.

• Google Trends: This is not just a tool to check popularity. It allows you to compare search terms. As an example, if your idea is a specialty coffee subscription, what are the search trends for specialty coffee vs coffee subscription vs home espresso machine? Is interest rising steadily? Where the trend is the most robust urban? This data is the first indication of market appetite for your product.
• Examining Reports from Industry-Bases: Search research firms reports (e.g.Statista, Nielsen)or even industry-specific publication. They can often have truly useful information regarding demographic, market size and growth projections. We’ve got actual digits as to how large of a ‘pie’ the slice you are attempting to obtain is.

Utilize the following capture tool for organizing your research, analyzing trends, and planning your market analysis.

Deconstruct the Competitive Landscape

You will never work in isolation. Gaining an insight into your competitors is not about imitating but about spotting those areas where you can succeed.

• Direct & Indirect Competitor Identification Direct competitors are those who have a solution that solves the same problem you are solving (e.g., another project management app). Indirect competitors, which use a different method to solve the same problem (for example: a meal delivery service, a fast-food restaurant, or a recipe app can all solve the problem of a convenient lunch)
• Simple SWOT Exercise: Take your High 2-3 competitors and map out Strengths, Weaknesses, Opportunities & Threats Where are they weak? More often than not, the complaints of your clients will be your golden opportunities. Check out their reviews on the App Store, Google Play or on forums. This is free market research.

If you want to understand how to model a business while looking at competitors, consider reading the book above (~$20–25) which contains useful frameworks.

Get Straight to the Best Source of Truth: Your Prospects

Sure, trend data and competitor intel are a must, but nothing like the voice of your potential users themselves.

• Create an Intelligent Survey: for instance with Google Forms or Typeform. Steer clear of questions like: “Would you purchase product X?” because humans are generally polite and will say, yes. Instead, inquire about previous behavior and existing challenges:
  • What do you remember about the last time you attempted to do [the problem you’re addressing]?
  • What do you currently use to solve [the problem]? What do you love / hate about it?
  • And how much do you currently pay for that solution?
  They are an indirect proof of the problem and the willingness to pay.

For anyone interested in organizing your customer interviews and tracking your feedback more efficiently, test the tool above.

Stage 2: Craft the Smallest Version of Your Big Idea (Minimum Viable Product — MVP)

When your research indicates some early green lights, it’s time to start developing. However you aren’t crafting your whole entire dream castle. It’s only a single watchtower that actually works. The concept behind this is that of the Minimum Viable Product (MVP), a term that gained more attention with the book ‘The Lean Startup’ from Eric Ries.

Bringing out an MVP helps you learn the most with minimal effort and cost.

If you want to dive into MVP strategies, check out the Udemy course above — its an A–Z guide to mastering product-market fit.

Defining the Core ‘Must-Have’ Feature

Think of your product as a Swiss army knife. An MVP is not a shit-done Swiss Army knife. An MVP is a rock-solid tool, a well-oiled machine, a knife with one blade

• I think the #1 Problem: Of all the problems your idea could possibly solve, there is one MOST painful one for your target audience. The features of your MVP needs to solve that one problem you have selected well.
• Create a Feature Backlog: Write down every feature you can ever think of. Then brutally sort them into: ‘Should-have,’ ‘Must-have,’ and ‘Nice-to-have.’ An MVP only contains the ‘Must-haves’

For more about prioritizing and building MVPs, read the above book priced around 20–25$.

What Type of MVP to Choose

A MVP doesn’t necessarily mean a working app. There are a number of ways to test your hypothesis which are ‘cheaper’:

• Concierge MVP: You do all the processes by hand behind the scenes. For example: Your idea = AI-based personal styling service. Your MVP is simply you offering styling advice through WhatsApp to your first few clients (5-10) and making it look like a system will make it through AI. You understand the customer 🧻❤️ without writing AI code.
• Wizard of Oz MVP: Close to the Concierge, but here the user thinks he/she is communicating with a completely automated solution. While the front-end appears fully fleshed out, behind the scenes it is a man pulling all the levers, Wizard of Oz style.
• Landing Page MVP– This is the most basic version of an MVP. A sales page that explains your product in detail—even if it hasn’t been created yet, along with a ‘Buy Now’ or ‘Sign Up’ button. It’s not about the sale, it’s about who will click. It’s the ultimate demand test.

Ideal for those who want to learn how to build a MVP without coding, and are looking to do it FAST

Stage 3: Create an online ‘shopfront’ to test market demand

One of the most valuable validation tools available is a pre-launch landing page. It is the link between the research stage and the product stage. This page is designed with one purpose only, to turn passive visitors into active leads.

The Structure of a Landing Page That Converts

That means that everything on your page has to do some hard work to sell the visitor.

• A killer headline: it must answer “What is this and what’s in it for me?” within 5 seconds. Focus on the ultimate benefit or outcome.
• Unique selling proposition : a clear, concise sentence explaining why you’re different and better than the alternatives.
• Compelling visuals: product mockups, a short explainer video, or images that evokes the right emotion.
• Social proof: even if the product does not exist, you can include the testimonials from the people you’ve interviewed “I can’t wait for this product because it will solve X problem for me!”
• A clear call-to-action : one primary, standout button. The text should be specific; “Get Early Access & 30% Off” is far better than “Submit.”

To make sure that you are doing the right with marketing Landing Page, check this guide for mastering affiliate strategies.

Measuring the Vital Signs

You can try to use other tools to cluster and manage your progress with landing page, but the main tool would be Google Analytics.

• Conversion rate : the percent of visitors who leave email. This is your key health metric. The rate of 2-5% is a good start.
• Traffic source : where did these visitors come from? Facebook ads? Some online community? If it comes to a community, what type of it?

You can try this tool for your excel task tracker to-do list.

Stage 4: Become an Essential Ears for Customer Feedback

You’ve launched your MVP or landing page. Data and feedback are beginning to trickle in. There’s one primary thing you should do now. Close your mouth and open your ears. Feedback is the raw gold that will shape your product.

Crafting a Well-Conducted Customer Interview

Communicate with your early adopters (those who join your landing page or use your MVP) is a must.

• Tip 1: Use open-ended questions and not yes/no questions. It could start with anything from, ‘Tell me about…’, ‘Walk me through…’, ‘What were you thinking when…’.
• Get the Inception: If a user says, I hate this button, don’t just stop it there. Ask, ‘Why?’, ‘What did you expect to happen when you clicked on it?’. Keep digging till you get to the root cause.
• Watch Body Language and Emotion: When walking through an MVPit, pay attention to where they scowl or look puzzled or beamed. More often than not, what they do not say is even more relevant than what they do say.

To learn about validation techniques the book above (15-20$) is worth picking up.

How To Use Complaints To Create A Product Roadmap

Aggregate every form of feedback—email, survey, interview—all in one location.

• Cluster by Category: You will begin to see trends. 5 people say that the sign up process is confusing, 7 people ask for feature X, 3 people say that speed is a problem.
• Impact vs. Effort: Do a simple matrix What feedback items will impact the experience the most – and which ones are the most painless to implement? So, that’s the first thing that you iterate on for the next product version.

Plan your roadmap with the tool above.

Stage 5: Realization of whether someone will pay for it Testing the Business Model

It’s fantastic if it’s a product that people enjoy. That is a business — a product people love and they are willing to pay for it. The test of whether your idea is worth investing in is the last Stage in validation.

Finding the Pricing Sweet Spot

Few prices are harder to price. Do not assume your pricing based upon your costs or your competition.

• Apply the Van Westendorp Technique: In a survey or a interview, ask the following four questions:
  • For how much would this product be too expensive that you would stop considering to purchase it?
  • Whats the price at which you would start to feel this product is expensive and would think twice before you buy here?
  • What price would make this product feel like a steal—a good deal?
  • At what price would this product be too inexpensive that you would question its quality.
  Those answers would provide you with a range of prices that would be acceptable in the view of the market.

For more info to verify your idea, sign up for the above Udemy course.

Evaluating Your Revenue Model

How will you make money? Your product and marketing strategy are heavily influenced by the model you choose.

• Subscription: Predictable, recurring revenue. Great for ongoing services.
• NOT SUBSCRIPTION — One-Off purchase: Straightforward, applicable for digital or corporeal goods
• Freemium — attract a high volume of users with a free low-value product in the hopes some will convert to a high margin paid premium version
• Marketplace: Earn a fee of every transaction on your platform.
• Consider LTV And CAC — Breaking LTV down, it is simply the total revenue that you anticipate getting from one customer. CAC, or Customer Acquisition Cost, is how much you spent to acquire that customer. Your LTV should be much greater than your CAC for a healthy business.

For book on comprehensive customer development, $20-30 (See above)

Stage 6: The Endless Development: Iterate, Pivot, or Persevere

Validation is Build -> Measure -> Learn. Each comment and data you record is an energy for the following loop.

The Intelligent Pivot — An Art

Even based on what you learn, your first guess might be inaccurate. This isn’t failure; it’s progress. A pivot isn’t revolution — it’s an evolution, updating or adding direction rather than starting completely over.

A famous case: Slack — the multi-billion dollar team communication platform — started as a gaming company called Glitch. So they scrapped their game, but noticed that the internal tool they built to communicate with one another was really valuable. They made a turn and went all-in on that particular tool. This turned into the Slack we know—and love—today.

For $15-20, find out more about pivoting with the book above.

Course — If you want only quick validation without code, then try the above course.

Knowing When to Hit the Gas

You might be doing something that resembles product-market fit when your data starts –

• This is a situation where there would be very disappointed early users if your product ceased to exist.
• Without you ever having to ask, people begin to suggest your product.
• You have a high retention rate (users return).
• You begin to receive more demand you can handle manually.

This is the go ahead to begin ramping up: raise capital, hire team, and expand.

Check out the above book to get tips on launching fast.

Lastly, take a look at this free introductory course above.

The Idea Is Invaluable, The Assumptions Are Worthless

The path from a great midnight idea to a growing business is never a linear one. A series of controlled experiments aimed at finding facts instead of assumptions.

This process of validation can seem like you are stalling yourself. Actually, it is the quickest road to achievement. It protects you from your largest threats, saves your most precious resources, and guarantees that when you release your product into the world, there is a crowd not just ready for it, but ready to pay you for it.

So, look, your idea that seems so smart now. What one small piece of validation can you do today? Use these to get started, and keep in mind that crazy things happen when you start taking regular action.