• No one was willing to pay for our product at the time.
• Our product over-promised and under-delivered.
Image: SHUTTERSTOCK
Such a sensational headline! No, this article is not about the low down on some CEO somewhere. It's about tough answers I got from an experienced CEO whom I encountered once in my journey as an entrepreneur. This encounter would serve as a pivotal moment in my entrepreneurial journey. This article is a continuation of my startup lessons.
In the words of Mary G Waithaka, a Digital Marketing Strategist, and a member of the WomenWork community, '’The business graveyard is full of businesses whose founders were too attached to their products/services; instead of their customers needs." Not enough startup entrepreneurs understand how true this is. For me, the shocking reality of this fact would hit me 3 years into a product obsessed stupor. This stupor was slapped right out of me in a single encounter.
The Most Uncomfortable Conversation in My Entrepreneurial Life
This happened when I had a chance encounter with a big tech firm CEO at a local tech hub. It was a small chat. During this chat, he asked me very blunt questions which I then proceeded to answer with long-winded stories and examples. With each answer I gave, he remarked with such blunt responses that I felt were mean & it hurt. Our conversation went something like this:
1.The mean CEO: Who is your customer?
Me: Some long-winded story about how anybody and everybody was my customer because we all needed to make it easier for our customers to find us online - The product was a business directory
Him: You have no market!
2. The mean CEO: What is your value proposition?
Me: We offer online marketing for businesses.
Him: You have no product!
3. The mean CEO: How do you make money?
Me: Annual listings, events and commissions on market linkages (The conversions were extremely slow and staggered that our cashflow was thoroughly affected.)
Him: You have no business model!
Like anyone else, my first reaction was irrational and defensive. In my mind, I wondered, “how dare he?! How dare he rubbish my experience, time and hard work? “ Luckily, I’m not a person too keen on being irrational or illogical for too long. So that evening, I sat down and reviewed his feedback objectively. That evening, on my laptop I did some research and stumbled across the MIT Entrepreneurship Bootcamp courses on EdX. Immediately, I enrolled. This was where I would learn why his questions were the crucial blocks that make or break a business. This was also where I learnt about customer development.
User-Centric Product Development
When developing a product it is important to be customer/user-centred. If you are focused on listening in order to identify common problems amongst various target customers with whom you speak, you are more likely to develop a product that customers will pay to use. This is because your product will address genuine pains that they would eagerly pay to alleviate.
No one was willing to pay for our product at the time. Our product over-promised & under-delivered. To the customer, the ROI was too immeasurable and long term for customers to want to keep paying for it. The timing did not help too. Again too early in the market where customers were very analogue and reluctant to go online.
Market Segmentation
I also learnt about the need to narrow down to one customer niche despite having a product that would appeal to multiple markets. In the beginning, it’s important to focus on a beachhead market that’s easily satisfied by your product while profitable to your business. the problem was
Problem-Solution Fit
In my case, I had identified the problem - which genuinely existed. But fell short on how I chose to solve the problem - my product was the problem. Lack of clarity on the product and trying to be all things to all people was an issue. Product obsession had wasted more or less 3 years that would better have been utilized building products that customers would really need and therefore paid for.
Business Planning
I’m guilty of putting fellow founders through similar pain. This happens when I have given them equally blunt and painful to swallow feedback about their businesses or products. Most of us feel personally attacked whenever these facts are given to us. However, I have found that a proper business planning session will easily identify these issues early enough in your startup and prevent you from wasting precious time and money building in the wrong direction. Join me in the WomenWork community, I’d very much love to connect and interact with you about bitter truths that you had to hear but helped you grow.
Susan Karanja is Growth Hacker and Entrepreneur with over 10 years experience in marketing, business development and customer experience. She loves to hit the goal by supporting entrepreneurs and startups with knowledge, practical skills and processes for growth.