Startup unicorns don't just materialize from sheer luck. It's important to build a great product. But it's even more important is to identify and integrate habits that improve your chances of long-term success.
The startup graveyard is filled with products that were unique and valuable but struggled to find traction in their market.
Founders of these failed startups either had a focus to just build a product that would sell itself, or they put too much faith in viral tactics and growth hacking.
As data shows, this almost always leads to failure.
Here are excerpts from interviews with the some of the founders:
“We never hit real product/market fit. We built a product that was too generic for a very niche-based industry.” – Hivebeat
“This all fell flat due to our lack of product/market fit in the new markets, distracted significantly from product work to fix the fit…” – GroupSpaces
“The founders acknowledge they made mistakes along the way. They spent too much time on the product and not enough time on growth and distribution. They began marketing too late.” – Everpix
The survey above revealed that 42% of entrepreneurs cited the “lack of a market need for their product” as the single biggest reason for the failure of their business.
Most entrepreneurs get completely hooked with their business idea. In an effort to be the first to market they shift all their time and resources to build their dream product.
But as they start rolling the product to their users, they get a tepid response realizing that the need for the product did not even exist.
The lesson is to first spend time understanding the need for your product before you spend time building it.
Startup unicorns talk to their target audience. They conduct qualitative and quantitative surveys to understand the problems.
Uber did this for urban transportation and Salesforce completely changed an archaic sales management process. These companies did not start with building a product. First, they identified an acute need and then built a great product to address it.
When creating their go-to-market strategy, startup unicorns rely on market research and surveys to nail a clear value of their solution. Value that is aligned with solving the user problem and a message that is easy to identify with.
The fastest growing startup unicorns understand that marketing is a highly-specialized field just like any other function. You wouldn’t hire a software engineer to do your taxes. Nor would you ask your HR manager to build your product road-map.
Marketing requires a unique mix of critical thinking, communication, writing, analytics, and project management. Companies that succeed value this and they don’t compromise on finding and retaining their best marketing talent.
Smart entrepreneurs understand that as marketing has become increasingly digital they must invest in the technology to run campaigns and measure response.
Their focus on building a sophisticated infrastructure that collect user interaction data and perform smart analytics is nearly obsessive.
For example, T-Mobile uses data to reduce their customer turnover rate. By analyzing user data, they find the main causes for customers leaving, and then implement effective retention campaigns to keep those customers.
HortonWorks, a leader in distributed computing, used marketing automation and data analytics tools to capture prospects’ attention when they come to the site, engage them with personalized content, and convert more of them.
The result is more data about their customers, faster, more accurate lead routing, and the ability to attract people with the right content.
These startups become sustainable businesses not by throwing marketing dollars at every problem. Instead they practice smart marketing that aims to deliver revenue on every dollar spent. That is a massive difference.
Most importantly the ‘Top 10%’ successful startup unicorns are obsessed with a growth mindset over a fixed mindset. With a growth mindset, entrepreneurs accept that there is no such thing as perfect marketing.
And there is no magic formula to be successful.
Instead they pick a decisive strategy, measure everything around its execution, and learn from what went well and what went wrong. Data drives decision-making. Real feedback from users captures emotional implications.
Smallest of changes in user behavior leads to change in the overall strategy. And with every cycle of learning, performance improves.
Starbucks, for example, use location data, traffic data, demographics, and customer behavior to estimate the general success of each new outlet minimizing the risk of the store failing.
Amazon, is famous for using user data, location preferences, category response and customer behavior to speed up their delivery times, provide competitive prices and offer superb customer service. It also uses advanced predictive analytics to know what the users will buy next.
Growing into a startup unicorn is not easy. And it is definitely not just luck. To build a great product is important. But even more important is to adopt habits that improve your chances of escaping the startup graveyard.
b2b marketing, marketing operations, Startup Growth, Startup Marketing
February 28, 2021