Startup operations are inherently risky, and oftentimes entrepreneurs will work to mitigate the risk of their enterprise by asking potential clients (and even friends and family) whether their product or service is something worth building. In my many meetings with entrepreneurs, I'm often surprised to find how much stock founders put in the responses they get from users who have no skin in the game.

Entrepreneurs are understandably excited about the prospect of building their companies, and as such may be susceptible to this sort of confirmation bias. By that, I mean any sort of response that reinforces the idea that the company produces a worthwhile product that people will pay for. Unfortunately, many are the stories of entrepreneurs who rely on these responses from potential customers to guide their product development, only to find that sales don't materialize once the product/service is launched. 

What gives?

In part, I believe the dissonance between what potential customers say and do is a result of founders creating too easy a path to "yes" in trying to evaluate their companies. In truth, at this early stage, a founder should be creating as many potential paths to "no" as possible. If, at that point, an entrepreneur is still getting "yes" from customers, it means the idea is a good enough one to pass muster and may generate sales. But, in an effort to get a company off the ground, founders fall victim to the exuberance of trying to set a bar that their startups can pass. 

As an example, I talk with many startups that present anecdotal feedback from their core customers saying that they love the product and would definitely use it once launched. But, if the only question a founder is asking is whether a person would use the service or buy the product, that's the wrong sort of information to gather. If you are lucky enough to have time to ask these sorts of questions about your company to customers that might buy your product or service, try to probe a bit deeper:

  • In addition to whether customers will buy a particular product or service, how much will they pay for it?
  • Does it fit in with an existing workflow or do they need to create new workflows to accommodate it?
  • Who's the ultimate decision maker for this kind of purchase?
  • How long do they anticipate using said product or service?
  • What other products/services have they seen that are similar?
  • What feedback do they have about improvements? Where do they see shortcomings with the product as you've described it?

Again, the goal here is to collect as much information as possible. Not only will it help to guide your product development, but it will also demonstrate to investors that you've put your company's product through the appropriate paces. Give your customers as many paths to "no" as possible and the feedback you'll get will be invaluable. If they are still giving you a "yes" after all of that, you may be onto something.