By looking at examples of companies that failed, TheFourStepstotheEpiphany explains the key insights startups need to achieve and sustain success, and to steer clear of the path to failure.
Key idea 1 of 9
Unlike large companies, startups need to find their customers and prove that their vision is viable.
Many business people labor under a fundamental flaw in thinking: they believe that startups are just tiny versions of big companies, and therefore to succeed they just need to use the same methods as the larger businesses. Not so.
First, unlike large businesses, startups can’t usually introduce a new product to the mainstream market.
Established companies have a pre-existing customer base and know their competitors well, so to come up with new products they use a productdevelopment process: first design a product and then find suitable customers.
Startups on the other hand don’t understand their market environment, and need to first get to know their potential customers before developing a new product. They use a customerdevelopment process: first build a customer base and then create a suitable product.
For example, Webvan, an innovative start-up that founded the first online grocery business in 1996, shows this customer development approach is crucial. Instead of researching its customers and their needs, the company focused on the product development process, and failed miserably.
Second, unlike big companies that know their market and know how to sell to it profitably, the founders of startups have no idea whether or not their business idea will actually fly. It’s up to them to prove that their vision is viable.
In this sense, entrepreneurs are like classical heroes, who are called upon to undertake a quest, and must journey into the unknown along uncertain paths, facing obstacles and difficulties. But thanks to their powerful initial calling, they persist and become heroes when they reach their goal.
Similarly, entrepreneurs must also find a path to making their vision into a reality. They learn as they go, discovering who their best potential customers are and how they should conduct business.
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