Why one in ten startups fail

Dear Startups,

We love you. Your drive, your ideas, your passion, your risk-taking abilities, your visionary founders. We love how you can create something from nothing. And often light up a room when you speak. We love coming into your organizations and feeding off your energy.

Inevitably though, there will come a time when you’ll start to hear differences in opinion on what you should do vs what you shouldn’t. You’ll get pressure from your teams, consultants, the competitive landscape and , and from potential or current investors. It will often be overwhelming and sometimes all too-convincing.

Our advice: It’s OK to pivot. It’s OK to evolve. But it’s not OK to change your strategy every quarter at the whim of one person’s opinion. That has more ripple effects than you realize - from an organizational standpoint to employee morale. And then there are the financial ramifications. It’s all about a balancing act.

Now here’s the thing you’d be surprised about. One in 10 startups fail because they ignore their customers.

Don’t be these guys:

“We spent way too much time building [our product] for ourselves and not getting feedback from prospects — it’s easy to get tunnel vision. I’d recommend not going more than two or three months from the initial start to getting in the hands of prospects that are truly objective.”

“We didn’t spend enough time talking with customers and were rolling out features that I thought were great, but we didn’t gather enough input from clients. We didn’t realize it until it was too late. It’s easy to get tricked into thinking your thing is cool. You have to pay attention to your customers and adapt to their needs.” (CBInsights, Nov 2019)

Being customer-obsessed isn’t just a buzzword.
It takes a lot of work to really understand who your valued customers are - and what about your product or service they are and/or aren’t happy with and why. Every disgruntled and happy customer is an opportunity. Feedback is a gift. Oftentimes, instead of repositioning yourself, changing your target audience or chasing the latest trend, what you’d be better served doing is paying attention to what you’re not doing well and getting the customer feedback on what would make it better.

If you’re not developing your product roadmap and/or company strategy aligned to your customer needs- none of the noise will ultimately matter. And if your product doesn’t pay off on its promise, the greatest marketing in the world won’t fix it.

The takeaway here: your customer relationships matter just as much as your marketing budget.

Start with client advisory boards. Capture feedback from your customer success managers. Have a place internally where you share feedback and have a plan to act on it. Make sure that feedback is shared across your organization. Invite a mix of customers (happy and unhappy) to beta new products and give them a voice. There are likely hidden jewels there to help you with positioning, marketing messaging, content ideas and ways to improve. If you do the one thing that’s hard for most of us, listen.

Warmly,

The Favorites