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The No. 1 Way to Make Your Startup Fail

You don’t need my advice on how to build a successful startup company. The Internet is lousy with blogs, courses, e-books, podcasts, videos, and ancient scrolls that are chock full of tips.

That guy from the YouTube pre-roll ads will teach you how he went from having $47 in his bank account to living in Beverly Hills. Of all the hucksters on the Internet with a driveway full of leased cars and a course to sell – he's one of them.

Beyond that, you can find plenty of great info from people who built thriving companies. You should soak up as much knowledge as you can from those folks. But despite all the practical advice out there, 63 out of every 70 startups fail. And the top reason they don't make it is because there was no market demand for their product.

So my advice is that before you spend too much time focusing on all those best practices, you should turn your attention to the main reason so many companies flame out.

The No. 1 way to make your startup fail is by not talking to customers.

A lot of those failed founders could have succeeded if they validated the idea up front by talking to people in their target market. A few conversations can make a world of difference.

Listen to what your prospects say. Don't assume you know more about their business than they do. Then create the thing that solves their problem.

I recently gave that advice to a young starter. His response made it sound like he understood what I was saying – but his tone said otherwise.

Good luck to the kid. Maybe he’ll reconsider what I told him. Or maybe he'll hear similar advice from a few other people and it’ll sink in.

Let’s Not Do Coffee

I first met this founder at a networking event in March. Although his idea for a social enterprise sounded interesting, it sounded similar to a well-established non-profit already operating in the same space. I assumed he knew about that organization.

How could he NOT know about them? Researching the competition is one of the first things you do. 

Turns out he’d never heard of that non-profit. Had no idea they existed.

Red flag.

I exchanged contact info with Mr. Entrepreneur. He emailed a few days later and said he needed help with messaging, but he didn’t want to waste my time because there’s zero budget. His suggestion: Maybe we could meet for coffee or lunch.

I’m careful about how much time I spend in random coffee, lunch, or beer meetings. That shit can add up. Pretty soon you’re spending 10 hours a week doing those things instead of actual work. Plenty of people gave me free advice and guidance along the way, so I figure it’s only right to offer someone a hand when I can. But at the same time, you have to develop a sense for when it's right to give up a few of those precious 1,440 minutes in a day.

I nixed the coffee idea but told him we could hop on the phone for 15 or 20 minutes.

Mom Goggles

On the call with Mr. E, we took a deeper dive on his idea. I started seeing flaws in the business model. He was uncertain about some of the details. Despite all that, he seemed confident about his idea.

What makes him so sure?

Because he’s talked to a lot of friends and family members. They are slapping him on the back and telling him it's a brilliant concept.

Big mistake. For an honest opinion, don’t go to people who love you. That’s why so many godawful singers auditioned for “American Idol.” Behind every bad vocalist is a loving mom with a bottomless barrel of encouragement and support.

She means well. But she shouldn’t be your startup consultant.

So I talked to Mr. E about who his potential customers are. We narrowed it down to the type of companies and the decision makers he needs to sell on this service. I asked how many of those people he has talked to.


Why not?

"Because it seems premature to speak to them now when I don’t actually have a product. I want to wait until I’m up and running first."

I said flat out that he needs to meet those people now – not later. At this point, his job is to sit with them face-to-face, frame up what he sees as their challenge, propose his solution, and ask if it's something they would pay for. They will let him know if he's on the right track.

My suggestion seemed to make him uncomfortable. When the call ended, it sounded like he still planned to take the “Field of Dreams” approach.

Hey, man. I tried.

Words to Live By

There’s nothing wrong with tweaking the business plan when you’re only a few months into a startup. It's expected. But at a minimum, you need to know if there is market demand for the product or service.

At Channel Intelligence, we still pivoted and made course corrections after 10 years. We were nimble. Or we had shiny object syndrome. The jury is still out.

However, there were two things we always got right at CI. Our co-founder and CEO, Rob Wight, drilled them into us from the beginning:

• Eat your own dog food
• Everyone in the company should talk to customers. That’s how you learn what they want.

We talked to customers. A lot. Then we reacted to their needs.

I’m no Mark Cuban or Chris Sacca. But after working in two startups, talking to dozens more, and mentoring founders in an incubator, I’ll go out on a limb and say I know more about this stuff than the average mom or dad.

You can take or leave my advice about talking to customers. However, your chances of success go up dramatically if you take it.

And back to my earlier point about how I limit my number of random coffee, lunch, and beer meetings. I’m much more likely to do the latter. Just sayin'.

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John Terry