9 out of 10 start-ups fail in the first three years of their existence. It's not even the high rate of failure that makes you listen up, but the fact that it takes three years to realize that it doesn't work - on average. How can this happen?
Please don't get me wrong, I don't want to lose a negative word about the failure itself - if you don't fail, you don't dare to do anything new, you don't enter uncharted territory, but remain a prisoner of the same old thinking - failure MUST be and should finally find its place in the German founder culture. But please only fail with single ideas and fail quickly! The main reason for failure shows that it doesn't have to come to that.
For days now, campers have been in front of the store, thousands of pre-orders, tens of thousands of downloads in the AppStore. So or so similar, more or less realistic and dreamy, many of the founders' ideas look like that. The idea is really brilliant, the market analyses were all positive throughout, the feedback from friends and family couldn't be better. The harsh reality is different.
Nobody wants your product. Fact.
With sweat and blood and bloody sweat, you've been working on your baby for months, sacrificing nights and weekends, and in the end nobody cares?!
'We didn't spend enough time talking to the target group and added new features that we really liked, but didn't get our customers' wishes,' says Jimmy Winter from VoterTide to t3n magazine.
So you didn't develop to the market and your target group! Four key factors that play an important role in this are timing, relevance, price and benefit.
Time - Your product is on the market too late or even too early
Relevance - Your product is not important enough for your target group
Price - Your product is too expensive for your target group
Benefits - Your product has no benefits for the target group
'We haven't solved anyone's problem. We made the big mistake of presenting our idea to people and asking them if they would buy from us. And if they said yes, we thought they meant 'Launch your platform and I order from you', in fact they said: 'I don't rule out that one day [...] I might be tempted to order a test product from you', says Michael Bohanes of Dinnr.
At the beginning of each idea, you should ask yourself four questions and answer them honestly and test them.
1. Do customers even understand the problem I want to solve? Or in other words: Does the problem even exist?
2. Will customers pay for a possible solution to the problem?
3. Do the customers pay ME for solving the problem? Can I build up enough trust?
4. Can I solve the problem and put my idea into practice?
And this is where the first problem actually begins. Many founders evade the first three questions or are simply not honest with themselves, after all, they fall in love with their idea quickly and are happy to overlook that there are still things to be sanded down. But the idea is so damn good! And we can solve this anyway, that's not the question!
So you start to design, develop and build a concept. Weeks become months and sometimes even years. Finally, the idea has slowly taken shape, has been made marketable and can now be released into the world. Corks are popping, the coffee that keeps you awake is finally being replaced by beer, and the joy is great. The metaphorical fall then becomes even bigger. One customer, two customers, the third jumps off, the fourth doesn't even come. What's happening?
The learning process for your own product occurs much too late. Only when the product is on the market you begin to understand it yourself, because now all the gears finally interlock. And you realize you don't understand anything. In the head everything is so logical, so clear, so simple. But the customers don't want the product or just don't understand it...?
Depending on how the start-up is set up, you can now switch, analyze and discard what doesn't work, adjust it if necessary, explain it to the customer and pivot. For many start-ups, however, clinical death has already occurred. The amazement at the great failure is only covered up by the even greater disappointment. But the idea was so damn good!
Maybe the idea is good, maybe even brilliant, but what the customer doesn't understand, he won't buy either. Why would he do that?
But how can you avoid that? How am I supposed to know beforehand whether the idea will be accepted if the product is not yet on the market?
As I have already indicated, the learning process is the decisive criterion to which much of its attention should be given. From the idea to learning, and as soon as possible. Build prototypes - simple facades, you don't even have to program them - test them on your target group, analyze the results, learn from them, improve the prototype, improve your idea, test it again, learn, build, test, learn! Tests quickly and efficiently. And if you have to, just drop your idea. Maybe it is not good enough, does not solve a significant problem or is not understood. You are now in the trial and error process. Trust the trial and long for the error, because only it will really get you on in the end. Provoke the mistakes consciously!
You don't have to test your prototype on hundreds or even thousands of people. In fact, five people are enough to discover 85% (!) of the faults in your product. If you ask more people, the effort increases immensely, but the output remains very low. Instead of finding the remaining 15%, it is actually more efficient to improve the 85% and then test again. Building, testing, improving, learning. Many thanks to Jake Knapp for this great revelation!
'But I don't have a product to touch, but a service! How am I supposed to test that?' I hear this phrase often when I tell others about the lean approach (Eric Ries). But strangely enough, this is also true: 'My idea is a product that people have to touch. How am I supposed to test that?"
One thing has to be said, absolutely every idea can be tested in a few days. To do this, you have to detach yourself from fixed lines of thought, blockages of your experiences. If you were asked to build a paper plane in two minutes, which should fly at least three meters, do you sigh and build a plane like you know it from your school days, or did you come up with the idea to just pop the sheet into a ball? Do you see the problem or the goal of the three meters? Can your plane make the three meters? Martin Gaedt often presents this task to his seminar participants, which leads to some amusement. But you can surely imagine how many people craft the old-fashioned paper airplane and block themselves by their own experiences?
Remember that you don't need a completely realistic product, but a façade that only seems to be real. If your product is software on a screen, use simple tools like Keynote, Powerpoint, InVision or Marvel! Is it a service? Then become actors! You need a special location? Then use an existing location and modify it to your needs! Is it a physical product? Then use existing objects, reassemble them, use a 3D printer or just do the marketing for the product!
No matter what you do, everything will lead you closer to your product and the most important thing is to get you into the learning process. You are finally beginning to understand your own product. The motto is therefore 'Just do it!' Building, testing, learning, building, testing, learning,...
With a quiet click the website of MyMuesli went online on April 30, 2007. At this time nobody could have guessed what a success story was just born here. Hubertus Bessau, Philipp Kraiss and Max Wittrock came up with the idea for the self-mixed muesli on a hot summer day in 2005, so it took almost two years between the idea and the start. Two years of development. Two years of not knowing. Packaging had to be designed, distribution channels and suppliers had to be found. Don't forget the website. And all this besides the studies! For two years the guys were in the dark without knowing whether they could ever sell any cereal at all. The success proved them right and for that my greatest respect. But couldn't it be easier?
Wouldn't it have been possible to buy individual ingredients for their muesli in the supermarket instead of ordering large quantities directly from the supplier? Instead of a website with a complicated, digital cereal mixer, simple text fields to click on or even telephone orders? Probably even easier. And no, please no polls.
The guys had asked hundreds of people if they would order cereal online. Only one guy said he'd order if it was cheaper than in the store. But luckily they didn't listen!
The online shop Zappos, which was sold to Amazon for 1.3 billion dollars in 2009, did not start with a ready-made shop system, a gigantic warehouse and perfected distribution channels. In fact, the founder Nick Swinmurn did not have a single shoe at the start in 1999. All he had was a website with pictures of shoes he had shot at a stationary retailer. With every single order, he went to the retailer, bought the pair of shoes, packed and sent them to the customer. He wanted to test whether there was even a market for shoes in online sales. Would people buy shoes without ever having seen them, let alone worn them? Nobody believed him.
And yet, under Tony Hsieh's leadership, Zappos still generates billions in sales every year. The effort for the launch? Almost non-existent. But in the end, he knew it could work.
I don't write these words as a joke, but I want to show that it's absolutely okay to fail as long as you learn from that. I myself make countless mistakes every day, and that is a good thing. You try something new, you get into territories where no one has been before. So there is no map of the place. Like the people who ventured into North America at that time, we do not know what to expect. Step by step we approach and record our path. Sometimes seemingly insurmountable gorges come up. Then you have the decision - are you looking for a way around or are you building a bridge to help other people move forward faster?
We, too, made countless mistakes with Raumbild, especially with regard to the topics I have touched on here. Our bridge-builders were Emanuel Steger (visible bytes) and Maximilian Moehring (keyp), through whom we got to know the principle of Lean StartUp. I can't thank you enough for that!
I will certainly report about Raumbild's story at a later date.
Today I would like to advise everyone to question their ideas now. Did you really start with your idea as small as possible? Are you sure? Ask yourself this question again, because I will do it again and again.