How to guarantee your digital startup fails first time?


The key factors of success for startups According to an urban legend, during World War II the Royal Air Force (RAF) wanted to reduce the number of its planes getting shot down by the enemy It checked all of its planes back from combat and found that the bullet holes were under the wings. So it decided to reinforce the armour plating on that area of the planes Unfortunately, this had no effect Why? Because the RAF made an analytical mistake known as “survivorship bias” By examining only the planes that made it back its audit excluded all those that were shot down because their tank got hit Had the RAF taken all of its planes into consideration it would have realized that it should rather protect the tank. This “survivorship bias” is an analytical error often made by entrepreneurs. It’s a methodological mistake to learn from successful businesses and leave out all those that failed So to identify the key factors of success of Internet start-ups we need to look at successful companies as well as those that failed. What are the factors of success of digital start-ups? Customers first Many start-ups fail because they don’t reach out to their customers early enough. The benefit of reaching out to customers early on is invaluable. It allows companies to test their “product market fit” Drew Houston, the founder of Dropbox, was well aware of this. Before even developing his document sharing and storage service, he made a product simulation video. He posted this video on the forum “Hacker News” and got 75,000 subscribers on his waiting list Reaching out to clients before even building a product is now a very common practice in the start-up world. Hence, the now prevalent expression: “Fake it until you make it” Caring before scaling Many entrepreneurs are tempted to design integrated and global solutions from the outset They think in terms of “market share” and validate the relevance of their offer based on the size of the target market. This can be counterproductive by distracting start-ups from their core mission: to solve a problem that matters to their customers. Proposing a solution to alleviate a real “pain” for its customers means “caring” before “scaling”. If a start-up tries to make everybody happy it won’t satisfy anyone. Paul Graham, the founder of Y Combinator, summed up this best practice in his famous post “Do things that don’t scale”. Craiglist is a good example of this best practice The US classified ads website first positioned itself in the developer and computer specialist niche in San Francisco The start-up listed only events that could appeal to this very specific category of the population. It expanded its target market later on. One niche at a time the platform became a means to share classifieds on any topic. Simplicity Many start-ups make the mistake of trying to cater for all possible use cases. They add functionalities and often complexity to their product to cover all possibilities. Yet a product’s simplicity is a major asset, for two reasons. First, simplicity contributes to a successful user experience. Second, simplicity facilitates user acquisition as messages are easy to grasp. Just think of the greatest digital products like Google, Shazam, YouTube or Twitter At first, these platforms had only one button on their website. User experience was limited to entering information in a search bar and pressing “send” or “search”. Finally, entrepreneurs should not consider the three key factors of success discussed here as strict rules to apply across the board. Best practices all have exceptions. This is what gives digital entrepreneurship its flavour: no one can predict a start-up’s success with any certainty, irrespective of their attitude.

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