A Checklist for Startup Failure

A Checklist for Startup Failure

Building a company is such a rare thing, almost all things must go well across all parts of the business. Because by assumption:
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Your market is bad, your product sucks, your business plan is a flawed and you’re the wrong person to run this business. If you can disprove this, then you just may have a good business
 
See where your product stack’s up. UNCHECK this list as you find evidence that these statements don’t apply to your company.
 
If you’re just starting our or would like to improve the structure of your business, follow the
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Not A Genius Playbook
to systemically test all of these four components of a business.

1. There is no good market for your idea

 
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Market: A group of Users, accessible via a set of Acquisition Channels
 
1. Business idea: “certain people Z, need X, to help them do Y, under conditions W”. 2. No one does Y 3. The people doing Y are not easily described or found. Therefore Z is not definable. 4. The reason for them doing Y is unknown as well as the conditions W under which they do it. Consequently We cannot put the task Y in context with the other activities and behaviors of people Z.
 
• There is no emotional pull of your product. The emotional job to be done doesn't resonate with anyone.

2. No one cares about your product

• There's no clear value metric for your product • You cannot measure your value metric: or your either a functional value metric or an outcome based value metric
5. Although people need to do Y, no one is currently doing it, no solutions exist. 6. Y cannot be broken down into subtasks. 7. Yeah attributes that people Z use to evaluate the quality of task Y are not known or measurable. 8. The current solutions fully satisfy the needs of users under all conditions needed. 9. It is too expensive to reach feature parity with the existing solutions 10. Creating solutions to the known unmet needs is too costly.
• The features in your product are not valuable to your customers • You cannot actually complete the job that people are willing to pay for.
 

3. Your business model is flawed

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1. there is no way to create sufficient pull to draw users into the top of funnel 2. The unmet needs of the users are not important enough for them to seek an alternative solution. The heuristic here is that uses of a tool will overvalue it's effectiveness by 9x. An additional corollary is users are also aware of their problem. Educating users about their problem is a luxury of VC backed company. 3. The switching cost and customer acquisition costs are too great. A good heuristic is that you should break even on a client within 4 to 6 months. 4. Expansion revenue / upsell requirement: there is no task y prime for which all of the above constraints are met for which a product x prime could be created and sold. 5. Recurring use (optional recurring rev) requirement. There is no way to instill a habit or regular use of this product. To uncover evidence you need to be an anthropologist or an archaeologist, and unearth evidence that is plainly available. • Your customer acquisition cost is too high • The fixed cost of running your business is too high • The marginal cost of running your business exceeds your customers willingness to pay for your product
• Your churn rate is higher than your upgrade rate. Therefore you do not have exponential growth
 

4. You are not the person to run this business

  • ❎ You are a key man risk to the company
  • ❎ There is “tribal knowledge” on how to run key aspects of your business that hasn’t been codified into a process.
  • ❎ Your personal brand is too tied to the success of this business
  • ❎ You haven’t found people better than yourself to run key aspects of the business
  • ❎ The company isn’t a safe and rewarding place to work
  • ❎ You are unable to set firm wide principles and priorities
  • ❎ Your company has no meaningful culture or principles
  • ❎ Your product decisions leave your customers unhappy or worse off in the long run
  • ❎ You are unable to scale the business either through use of capital or personnel
 
If you can get this far and fail don’t worry, just sell the business and move on. Use a service like

So your business doesn’t suck, now what?

Congratulations! Seriously what an incredible achievement. You are not only in the 10% of start-ups that don’t fail, have profits and a product that is delivering tremendous value to your clients and the world.
 
There is a specific, actionable and urgent “Job to be Done”
That job is emotionally charged
There are enough people in motion trying to solve that problem the job solves
We can roughly identify through these people are, where they hang out to share ideas and discuss how they are trying to solve this problem.
We can determine the conditions under which people want to solve this problem
What they able to do once they solve this problem
How they measure success in accomplishing/solving is problem
We understand the current solutions, pricing models, what people like and don't like it about that products
We understand how users typically position
Think about April Dunford's product positioning work
We are able to break this problem down into sub tasks and understand dependencies between the steps.
We understand higher order goals and objectives which could be social emotional in addition to functional
We understand what the user expectations are for a tool to solve this problem.
Are there related jobs to be done in the space, that are not directly dependent on this task
We understand what people are willing to pay for, what are the table stakes features, what are some niche features, what are the high value features.
 

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