By Jason Shafton, Founder & CEO of Winston Francois, a growth marketing firm.
In my experience, empires and success stories are built on sturdy foundations, which themselves are underpinned with proper preparation that misses no details. So when people ask why 90% of startups fail, my answer is often a straightforward one: Blame hastily-built foundations.
Generally speaking, I often see the vision tending to get in the way of the substance. Everything might look good on paper, but in most cases, the founders haven’t created the foundation for a product that solves a real-life problem and/or don’t create distribution channels that are repeatable and scalable.
It’s a sobering reality to know that nine out of ten startups collapse. In 2023 alone, 543 Carta start-ups have shut down, according to Peter Walker, Carta’s head of insights.
The odds aren’t great. But if life and success were about heeding the odds, many of us would never play the game. Entrepreneurship is about being undeterred by long-shot odds and moving ahead, and that means learning from those whose dreams and vision ran into their own limitations, usually at the seed or series A stages.
With that in mind, and as someone who has worked with hundreds of founders, executives and startups, I’m going to break down the three top areas where the most successful companies have got it right.
1. Make sure the product is a winner.
You’ve got to build a great product. One that meets a wide market need.
It sounds obvious, but you’d be amazed how many businesses fall at this hurdle. Essentially, any new product or technology has to solve a real-life problem, or at least dramatically improve something that’s already available.
It doesn’t matter if experts rave about your concept or if some great innovation lies behind it. If there’s no market fit, you’re likely on a mission to nowhere. So become curious and ask yourself what the practical application and benefit would be for people. Ask yourself every single day until the solution and clarity arrive: “What problem am I solving here?”
In devising a product or service, I always tell founders to draw up a list of the biggest problems or frustrations they face in everyday life—in, say, food, transportation, communication or wellness. Then pick the one that applies to the most number of people.
Once that penny drops, you’ll be tempted to blaze a trail. But before doing anything else, first hit the streets and approach at least 100 people to see if they share a similar problem. Ask them, “If this thing existed, would it help solve your problem?”
Always stand in the shoes of the person in the street. Look at it through the customer’s lens, not the founder’s rose-tinted specs. This kind of early market research can provide invaluable feedback that allows you to create something that is useful and widely available. Figuring out the potential strength of your customer base is the first concrete layer of your sturdy foundation.
2: Don’t believe in ‘Field of Dreams’ marketing.
Nothing beats the passion of a startup in its embryonic stages. Energy is high. Optimism is bright. And the idea of your great product making a difference in the world is intoxicating. But just because you built it doesn’t mean they will come. That belief only belongs in Kevin Costner in a baseball movie.
No, you’re going to need to work for it. Every great product goes hand in hand with great distribution, and that’s where marketing comes in. It could be a founder sending an email to 75 friends on launch day, backed up by a social media push to 500 followers. Increasing product awareness, or at least intriguing people enough, requires strategy and effort.
For example, when I co-founded my healthcare company, I set up a tent at the Brentwood Farmers Market on the west side of Los Angeles and handed out branded hand sanitizers while one of our doctors explained how we carried out house calls. This grassroots marketing led to our first 100 patients. But it wasn’t a sustainable or scalable way to grow.
We knew we needed to create a distribution engine, growth marketing funnels and systems that could scale. In our case, this meant identifying the channels where people went to make a healthcare purchase decision—their employer, insurance company, friends or family.
When you know who the customer is, you understand where to best target the marketing and that tends to shape the direction and placement of your messaging. Find your audience, then go meet them where they are.
3: Never stop experimenting.
At the startups where I’ve consulted, I’ve probably sounded like a broken record saying the same thing over and over again because it seems all I ever hear myself say is: “Test, test and test some more.”
This is the stage when experimentation can cultivate a growth mindset, and growth is really about looking at each step of the user journey and optimizing it.
The most successful startups I’ve worked with have created a robust experimentation engine and continually iterated on their product and marketing channels. Their product teams are shipping constantly and testing things that move business metrics.
What’s more, they are aggressively focused on the products and features that work while deprioritizing or killing off those that don’t. And those same teams are testing every channel constantly, carving out a healthy piece of their budget for expansion channels and always asking what else they can test.
I find it’s this exhaustive pursuit of excellence that drives constant testing and a marketing strategy that drives brand awareness. This unrelenting mindset, coupled with building the right teams that bring the know-how, can go a long way toward making sure your startup grows into a sustainable business.
The right product coupled with effective marketing and endless testing all help lay the foundations for long-term stability. Get those three things right and I quite like your odds of success.
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