This post is Part 1 in a series.
If you work for a tech startup, you know that the smartest thing to do is “fail fast” - devise a hypothesis, figure out the quickest way to validate it, and, when it doesn’t work out, scrap it and learn from it to move on to the next, improved hypothesis.
“If you review your first site version and don’t feel embarrassment, you spent too much time on it.” – Reid Hoffman
“If everything seems under control, you’re just not going fast enough.” – Mario Andretti
Everyone loves to talk about “fail fast”, but how do you do it? Ideally, you started out with a specific metric or criteria to meet – but not everyone planned that well from the beginning (and some of us inherit others’ poorly-laid ‘plans’). How do you recover and move on from there?
How do you know that what you’ve got now isn’t working and isn’t salvageable? Here are 5 signs that it’s time to move on:
- The environment has fundamentally changed. The Hummer had unique appeal, but not enough to compete with the one-two punch of $4-a-gallon gas and environmentalism becoming increasingly mainstream. Even once gas prices fell again, the damage was done.
- You’ve captured the market – and it’s not big enough to sustain your business. Lots of successful companies cater to a niche audience. But to be profitable, that audience has to be willing to pay more than it costs for you to sustain the product/service. (Rocket science, I know!) If you started out free, you may not be able to move them to “pay”. Or a specialist audience may demand feature development and support that drive your costs too high.
- Your product doesn’t have sufficient adoption to create value. Any product that relies on people – social networks, collaboration tools, knowledge bases, review sites, communities – are virtually value-free until they hit critical mass. If your product doesn’t encourage viral distribution and low-cost marketing isn’t bringing people in, you’re stuck. Buying a product audience is not a fast-fail means to reducing risk.
- The alternatives to your product are substantially cheaper/easier/more well-known. Every product has an alternative, even if the alternative is “do nothing”. Even if customers agree that your product is objectively better than the alternative(s), there is friction involved in them spending more money, spending more time, or even just choosing a different brand than what their friends are using.
- You’re competing against entrenched competitors who are better-funded/more well-known/have substantial market share. This means you can’t compete with them on their terms – you’ll need to try something different to create a Blue Ocean for your product.
If any of these are true, it’s time to stop, re-evaluate your market and your customer’s needs, and look for the next experiment – as quickly as possible. Continuing to improve upon your product may get you incremental gains but at a time, opportunity, and funding cost you can’t afford.
Have you experienced any other sure signs that it’s time to change your product strategy? Please share with us in the comments.
This post is Part 1 in a series. Read Part 2.