[akula]

I've done like 6 or so startups since I was 18. I've had a lot failures and plenty of successes. Looking forward, there is a hell of a lot of I still need to achieve, but to get there, these are the top three mistakes I will never make again.

1) No primary market research. I will never, ever again make a product prior to having done at least 100 in depth interviews with potential customers.

2) Working with B players. Working with somebody just because they are convenient, is a terrible mistake I will never repeat again. For my next startup, I will spend a lot of time identifying and recruiting A players.

3) Undercapitalisation. I've always underestimated how much it costs to market a startup. I've won't ever underestimate it again.

[CP Mr Ofevaw]

Your points are excellent, but I have a problem with number one. That problem is this: If you are breaking into a relatively knew market, you'll likely find little support for it. Sure you'll find a few who really believe in your idea, but most will dismiss by saying "no market" or "if it's so good, how come someone else didn't think of it?".

Example: eBay had almost no support in the beginning. The internet was expected to be a pit of fraudsters, with nobody trusting anyone. Retail, especially consumer to consumer retail, wasn't something for the internet - it was something for garage sales and flea markets.

What you need to do in a situation like that is:

1) Do conduct research and interview lots of people - even if they don't know what you're talking about

2) Do what I like to call "forward research", which is where you analyze technology and business to see what's converging and diverging. For example, the phone and the internet were clearly on a convergence path. The internet and video/TV is clearly on a convergence path. Mobile devices have the ability to bring the internet everywhere... They will be converging with almost everything.

3) Analyze existing businesses that you feel your new service might interrupt. For example, eBay (in the beginning) should have analyzed garage sales, flea markets, classifieds, etc.. Vonage would have done research on existing phone services and estimate the number of people they could get to switch, etc..

Don't just interview 100 people... Interview EVERYTHING.

[dre]

3) Undercapitalisation. I've always underestimated how much it costs to market a startup. I've won't ever underestimate it again.

That is a mistake I will learn from as well. I made that mistake during my first legal startup.

[nado]

I've read/heard somewhere that consumers don't really know what they want/are after until you give it to them and convince them they need it.

How do you decide whether what they say in a short survey actually reveals what they would and wouldn't spend money on?

[akula]

Originally Posted by CP Mr Ofevaw

Your points are excellent, but I have a problem with number one. That problem is this: If you are breaking into a relatively knew market, you'll likely find little support for it. Sure you'll find a few who really believe in your idea, but most will dismiss by saying "no market" or "if it's so good, how come someone else didn't think of it?".

Example: eBay had almost no support in the beginning. The internet was expected to be a pit of fraudsters, with nobody trusting anyone. Retail, especially consumer to consumer retail, wasn't something for the internet - it was something for garage sales and flea markets.

What you need to do in a situation like that is:

1) Do conduct research and interview lots of people - even if they don't know what you're talking about

2) Do what I like to call "forward research", which is where you analyze technology and business to see what's converging and diverging. For example, the phone and the internet were clearly on a convergence path. The internet and video/TV is clearly on a convergence path. Mobile devices have the ability to bring the internet everywhere... They will be converging with almost everything.

3) Analyze existing businesses that you feel your new service might interrupt. For example, eBay (in the beginning) should have analyzed garage sales, flea markets, classifieds, etc.. Vonage would have done research on existing phone services and estimate the number of people they could get to switch, etc..

Don't just interview 100 people... Interview EVERYTHING.

That's some good points buddy. Bessmer's anti-portfolio is littered with missed opprtunities, in what turned out to be pretty good ideas:

Cowan’s college friend rented her garage to Sergey and Larry for their first year. In 1999 and 2000 she tried to introduce Cowan to “these two really smart Stanford students writing a search engine”. Students? A new search engine? In the most important moment ever for Bessemer’s anti-portfolio, Cowan asked her, “How can I get out of this house without going anywhere near your garage?”

eBay "Stamps? Coins? Comic books? You've GOT to be kidding," thought Cowan. "No-brainer pass."

http://www.bvp.com/port/anti.asp
David Cowan: http://whohastimeforthis.blogspot.com/

But, I am old fashioned. There's no way I am gonna touch a startup unless I get strong, written signals from customers that they want the damn thing.

[akula]

Originally Posted by nado

I've read/heard somewhere that consumers don't really know what they want/are after until you give it to them and convince them they need it.

How do you decide whether what they say in a short survey actually reveals what they would and wouldn't spend money on?

Yeah, people keep saying that, so it must be true.

The way that I decide isn't by asking; "Do you want me to build widget xyz", but rather, by questioning people about the reasons why they might need widget xyz. If these reasons exist, and they are compelling enough, I'll (cautiously) make the bet that there is a market for widget xyz.

But I am just slow, dumb and risk averse. I'll leave it to all of you gun touting cowboys to put me out of business.

yeeha

[Ashur]

Originally Posted by nado

I've read/heard somewhere that consumers don't really know what they want/are after until you give it to them and convince them they need it.

How do you decide whether what they say in a short survey actually reveals what they would and wouldn't spend money on?

That is a fairly short sighted business philosophy. The businesses that will survive in the 21st century are the ones that can create a product and develop it exactly to the customers need. Not just make a product and then find a market.

[jpmorgan13]

The important thing is to strike a balance in the development of a product. Part gut feeling, and part consumer survey/tests. There must be both. Without a product it is very difficult for someone to wrap themselves around an idea because they can't quite see it the way a founder does. To get the best result you must show them at least a barebones structure of what you mean.

Take this for what it is worth, as it is just my own theory on how things work. Maybe I should do a consumer survey on my theory, then again i would like to be known as a gun-toting cowboy.

[nado]

Originally Posted by Ashur

That is a fairly short sighted business philosophy. The businesses that will survive in the 21st century are the ones that can create a product and develop it exactly to the customers need. Not just make a product and then find a market.

But in many cases this is how it has been working for many decades.

For example, cosmetics...

If you think about it, people don't actually need cosmetics. And yet every year the cosmetics companies keep coming out with new products that do many different things.

Lipstick. Why do women need lipstick? ... they don't. Someone has simply created the product and managed to convince women that it will make them look beautiful and younger (which I think goes back to what Daniel was saying about appealing to the consumers' reasons for wanting such a product).

[toptemp]

Originally Posted by akula

I've done like 6 or so startups since I was 18. I've had a lot failures and plenty of successes. Looking forward, there is a hell of a lot of I still need to achieve, but to get there, these are the top three mistakes I will never make again.

1) No primary market research. I will never, ever again make a product prior to having done at least 100 in depth interviews with potential customers.

2) Working with B players. Working with somebody just because they are convenient, is a terrible mistake I will never repeat again. For my next startup, I will spend a lot of time identifying and recruiting A players.

3) Undercapitalisation. I've always underestimated how much it costs to market a startup. I've won't ever underestimate it again.

I was especially drawn to the second point. I've read a million books and I don't think I've ever failed to see this one in there. I think the first time I read it I was like, "yeah, ok, makes sense." But then you see it again and again and again. Ok, so I know one mistake I'm not going to make. phew!