What if I told you that your business isn’t guaranteed to succeed? That your business has a high chance of failure? That going broke is far more likely than getting rich?
Despite your reaction, I’d be telling you the truth.
At least 8 out of 10 businesses fail.
Of course, no one starts a business thinking it’s going to fail — which means that 80% of entrepreneurs are at least partly surprised by their impending doom.
So what makes you think you’re going to be in the 20%?
You have a really amazing product?
You have a large startup budget?
You always deliver on time?
Your marketing strategy is innovative?
That’s not enough.
When the rubber of your business hits the road of customer wallets, the above dependencies won’t be worth anything.
In fact, according to Eric Ries, success requires an intentionally shitty product and a process for learning and making the necessary changes.
Here’s 7 lessons in doing just that.
1. Start With A Product That Sucks.
What do I mean?
That you should create a product that is going to fail, release it to the public and watch as your business slowly dies?
No. Of course not.
But I do mean that you should be a little embarrassed when you release the first version of your product. A friend once told me, “If you’re not embarrassed about the first version of your product, you waited too long to launch it.”
But why would you want to be embarressed?
Well, the key isn’t so much in your suffering ego, but in creating something that’s unfinished so it can flex and change according to your market’s feedback.
In other words, when you release your product, don’t plan on releasing a perfect product, but release a product that is your MVP (minimum viable product) and then get feedback from early adopters on how to improve it.
If you try to create the perfect product, chances are high that you’ll spend a ton of time creating something with features that people aren’t even interested in.
The better route is to create your MVP — a product that has the bare minimum features for it to be considered a “product” — release it, and listen to the feedback of those who purchase.
“The lesson of the MVP is that any additional work beyond what was required to start learning is waste, no matter how important it might have seemed at the time.”
2. Fail Fast.
Why would I tell you to fail?
Because failure paves the path to learning, and learning to successful businesses and products.
Again, instead of trying to make everything perfect from the beginning, plan to fail as quickly as possible. Because the faster that you fail, the faster you can adapt to the actual desires of the market.
Unfortunately, most people don’t know what product they want until they see it — you can’t just do a survey to find out. This means that you need to create a product you think customers will like and see what happens.
But the longer that you spend failing, the more money you’ll spend without a positive ROI. So make it quick.
“Failure is a prerequisite to learning.”
3. Use The Scientific Method To Determine Iteration (Don’t Just Make Changes).
I’d imagine you don’t usually think of your entrepreneurial undertakings as scientific experiments.
I sure as hell didn’t.
But Eric Ries says that we should.
Because the scientific method bases its iterations in fact, not lucky assumptions.
You can take this so far as to even create a hypothesis around your product. For example, in my case, “I think that entrepreneurs are too busy to read books, but still want to learn and thus they’ll make the time to read rundowns of relevant books.”
Of course, my hypothesis gets disproven if people aren’t reading the rundowns.
The next necessary step is to do more market research and determine exactly why they aren’t. Are the rundowns too long, too short? Are the books irrelevant? Would my readers prefer a podcast to a blog?
Ask the difficult questions that the scientific method demands and your product will have a much higher chance of success.
“Just as scientific experimentation is informed by theory, startup experimentation is guided by the startup’s vision. The goal of every startup experiment is to discover how to build a sustainable business around that vision.”
4. Find Out Why People Hate Your Product.
Not everyone is going to hate your product.
But some people will. I promise.
You might even get messages from nay-sayers who think they’re hot shit. And I know it’s tempting to ignore all of that negativity.
But here’s the reality: If one person gives you feedback (jackass or not) most likely other people are thinking the same thing, but just don’t have the confidence (or jackassary) to speak up.
Regardless of who is giving it, listen to feedback and contemplate.
On the other hand, sometimes people won’t directly tell you they hate your product, they’ll just silently hate it. In fact, most the time, this is how people will handle their hatred of your product.
Which is why you need to actively ask for honest feedback from your audience. The only way to figure out why people aren’t buying, using, or engaging with your product is by asking.
I know that’s scary, but if you can’t get over it, you probably shouldn’t be an entrepreneur in the first place.
“We must learn what customers really want, not what they say they want or what we think they should want.”
5. Ignore Vanity Metrics (And Listen To More Important Metrics).
Man. It’s super fun to rack up page views, “likes” on Facebook, and even social media shares.
But it sure isn’t very profitable.
These type of vanity metrics threaten to make you think your business is doing well when it’s actually dying. If your business doesn’t sell products and retain customers, than your business is failing. Period.
That’s easy to say now, but when you’ve invested countless hours and dollars into a passion project of yours, it’s far more difficult to admit the upcoming funeral.
Here’s Eric Ries’ advice: Don’t pay attention to vanity metrics — the metrics that make you feel good but really mean nothing for your business model. Instead, pay attention to the important metrics.
But what metrics are important?
Here a few: Business profitability, churn rate, customer retention rate, and customer acquisition rate.
Don’t get blindsided by the death of your business. Pay attention to the metrics that matter and you’ll either accept the death of your business and move on with your life or pivot to make necessary changes.
But one thing is for certain: Deceiving yourself won’t get you anywhere.
“Compare two startups. The first company sets out with a clear baseline metric, a hypothesis about what will improve that metric, and a set of experiments designed to test that hypothesis. The second team sits around debating what would improve the product, implements several of those changes at once, and celebrates if there is any positive increase in any of the numbers. Which startup is more likely to be doing effective work and achieving lasting results?”
6. Uncover Business Problems By Asking “Why?” Like An Annoying Little Kid.
It turns out that the little kid who annoys any adult with a moderate amount of patience, asking, “Why? Why? Why?” is smarter than we all thought.
Or at least, the concept of asking “Why?” isn’t as nonsensical as some of us have assumed.
In fact, asking “Why?” regularly can help you uncover problems in your business — problems that appear technical in nature, but are actually be caused by humans.
Eric Ries calls this the 5 Why’s.
Here’s how it works.
You start by asking the question regarding your surface issue.
1. Why is the car battery dead.
A – The alternator is not functioning
From there, you ask deeper and deeper questions until you get to the true root of the problem.
2. Why is the alternator not functioning?
A – The alternator belt is broken.
3. Why is the alternator belt broken?
A – The alternator belt was well beyond its useful service life and not replaced.
4. Why did it go beyond it’s service life?
A – The vehicle was not maintained according to the recommended service schedule.
5. Why wasn’t the vehicle maintained well?
A – Because Joe was responsible for that car and he doesn’t think the alternator belt needs to be replaced very often.
By asking “Why?” 5 times, the problem went from a technical issue, to a human issue that can be solved.
You can use this in your business to determine who isn’t pulling their weight and why any problems your product is experiencing have recently reared their ugly head.
“By asking and answering ‘why’ five times, we can get to the real cause of the problem, which is often hidden behind more obvious symptoms.”
7. Always Maintain Your Entrepreneurial Spirit.
Whether you’re a solopreneur or have a thriving business, maintaining your entrepreneurial spirit is critical.
What do I mean?
I mean that all businesses, big and small, need to be sensitive to the changing times and the evolving market. One day, people might love your product and the next, they might hate it.
Yes. In today’s world, sometimes things do change that quickly.
This means that you need to always be ready for the next necessary iteration of your product, and the only way to do that is to keep asking difficult questions, keep acting like your an entrepreneur, and keep accepting the feedback from your loyal customers and your leery prospects.
Stay entrepreneurial and you’ll succeed.
“The big question of our time is not Can it be built? but Should it be built? This places us in an unusual historical moment: our future prosperity depends on the quality of our collective imaginations.”
And a quick thanks to everyone who recommended that I read this book. You know who you are 😉