What can we learn from failed startups?
According to a Fortune study, 9 out of 10 startups fail. When you dig deeper into the study, you find something interesting. Surprisingly, most startups don’t fail initially but between the years 2 and 5, when startups are typically getting ready to scale and pitch for Series A funding.
The top reason startups fail is that they make products no one wants. 42% of failed founders identified the “lack of a market need for their product” as the biggest reason for failure. It’s like the heart disease of startups.
This is the event recording, edited to preserve the participants' privacy
Product-market-fit is only a portion of brand strategy
To zoom out, we have to look at strategy as a whole. We want to achieve positioning, the holy grail of brand strategy. It provides clarity about who we are and what we’re good at. It gives us direction about what to offer to whom and why.
You find product-market-fit when you match what your brand can own with what your ideal customers want. But you also see that only finding product-market-fit is not enough for your winning positioning and your startup's survival. You also need to defend it in the marketplace from your competitors. You’re never alone in the arena. When you match what your company can authentically own with what you can do better than the alternatives, you find a company vision that attracts your most important resource: talent.
The perfect match between company and customer is where you'll find the answer
Product-market-fit is the perfect match between company and customer. To match those two perfectly, you have to dig deep on both sides and collect data and insights. You have to be able to say what makes your company unique and who your ideal customers are and what their most pressing needs, wants and frustrations are.
Like in a real relationship, the perfect match between your company and your ideal customers has to happen on two different levels. It has to make sense and emotionally appeal to them rationally.
A short research guide
To be able to answer these questions, you'll have to start with research. Don't just use your personal preference and your gut feeling. I hate to break it to you, but you are not the customer.
Every research starts with setting objectives and formulating research questions that guide your data analysis. If you're not clear about what you want to find out, your findings will be useless. For product-market-fit, you have two research questions:
• What associations can the brand authentically own?
• What do your ideal customers increasingly want?
These questions guide the research team – you don't ask these questions directly.
2. Desk Research
Then you start with desk research, which is the analysis of secondary data: Everything you can find out without talking to people. The goal of desk research is to understand the size and composition of the addressable market.
• Data on the category
• Google trends, keywords
• Facebook insights
• Press mentions
3. Qualitative Research
The next step is qualitative research, I usually recommend semi-structured interviews with one person at a time. Don't lead your participants anywhere with your question and be curious about what comes up for them.
• Founder interviews
• Stakeholder interviews
• Customer interviews
4. Quantitative Research
After the qualitative research, you should be able to see patterns and formulate hypotheses that you want to test. Now quantitative data analysis comes into play. These questions are closed-ended like multiple-choice questions, and you'll be able to quantify and to evaluate them statistically.
• Employee survey
• Brand survey
Research > Strategy > Tactics
Here's another helpful advice: Don't jump into tactical decisions after seeing your research results. Research informs strategy and tactics. If you want a practical example of using strategic thinking, watch the live event recording. I'll walk you through a fictional e-scooter company and how their findings lead to a better product-market-fit.
This event is part of a Phoenix Brand Consultancy event series for startups. Level up your brand strategy to answer the questions investors pose to entrepreneurs during pitches. Lay a solid strategic foundation to inform your decisions and grow your business to success.