Source | Entrepreneur : By Ajay Jain
According to a 2014 CB Insight Analysis discussion with founders of unsuccessful startups, 42% startups failed because there was ‘No Market Need’. No market need to be defined as ‘tackling problems that are interesting to solve rather than those that serve a market need’. It must be noted that the survey allowed the founders to select multiple reasons. Still, 42% startup founders agreeing that their product did not have enough paying customers is quite staggering! A distant second reason is ‘Ran Out of Cash‘.
Let us look at two techniques that can help reduce this high percentage failure, viz. engaging a good sounding board & thinking from the first principles perspective. These suggestions can be effective because they not only ensure that the founders do not build castles in the air but also get them to delve deep into the fundamentals. Let us analyse these two techniques from the market need lens.
Sounding board in the dictionary is defined as “a person that you use to test something such as a new idea or suggestion to see if they will accept it or if they think it will work”. In my opinion, a sounding board needs to have the following qualities:
- Be a patient listener
- Understand the growth trajectory of startups
- Have the ability to call a spade a spade
- Have detached passion towards the idea
- Ask the right questions
Any person with these traits – be it a friend, mentor, coach or even the next-door startup founder can qualify as a sounding board. It might be interesting to see a bot play this role in the future!
For this role, the founder needs to choose a person with whom he is comfortable discussing not only his plans but also the issues he anticipates during his entrepreneurial journey. The founder needs to trust the sounding board & be transparent about his plans. The sounding board, on her part, needs to listen to the founder’s inputs patiently & dig deeper into the assumptions. She can use frameworks such as lean methodology, business model canvas & others to help structure the discussion. This requires constant interactions for several weeks while covering the strategic & operational aspects of the business. These interactions need to be professional & bound by economic viability. It might be in both parties’ interest to sign an NDA to enable mutual trust.