How A Weak Value Proposition Failed My Start-Up

How A Weak Value Proposition Failed My Start-Up

With about 90% start-ups failing, it’s hard going for founders. Nevertheless, understanding the key showstoppers can help circumvent and ride out challenges. Well, the biggest start-up killer, according to a CB Insights poll of 101 founders of failed start-ups is “lack of market need for their product.” That means offering something people don’t see use for. Here, founders of failed start-ups narrate why their ideas never gained the market acceptance they were expecting, and what they learned from the experience.

1. Vaguely defined services

Treading into a wide market without a well-defined plan is suicidal for a start-up. “But that can happen all too easily when you try to do something you don’t know enough about,” says Vikalp Srivastava, co-founder of the failed start-up Blueumbrella Technosolutions, a software company.

Blueumbrella Technosolutions got off the ground in 2013 and folded up a year later. Essentially, its creation happened too fast. “My friends and I were inspired to start up. One of us had some software development experience. So that’s what we decided to do. Clearly it wasn’t enough,” shares Srivastava.

Learning:

Services must be well defined for the start-up’s value proposition to be strong enough to compel potential buyers to bite. Offering vaguely defined services doesn’t work.

Srivastava recommends starting up in an area of your expertise only after acquiring at least five years of working experience because by then you will be better placed to know if you can really add value to the market.

Luckily for him, while Blueumbrella Technosolutions was overall a flop, one of its units, dedicated to digital media marketing showed promise. “I found my niche in failure,” Srivastava says. Ripple DME, his second start-up, is a successful digital media marketing agency.

2. Lack of market research

In 2009, Akash Shukla started up indianmedicoz.com, a doctor consultation portal. It was a unique idea at the time; still it failed. Why? “I rushed in without thinking things through, especially the legal aspects,” shares Shukla.

So while Shukla was offering a much needed service, the fact that it didn’t take cognisance of the possibility of medical malpractice brought it down. “It was an incomplete offering,” he says.

Learning:

Several years later, Shukla made sure he did plenty of research before launching Outgrowth Digital, a media and digital solutions company, which is doing well.

3. Poorly designed product

Many start-ups fail because their product design falls short. Usually, design lags behind when the founders develop the idea for themselves instead of the real market. Understand this well. To succeed, a business must acquire sufficient clientele. It is easier to acquire customers if the potential client base is large and the product clearly solves a pain point they are facing. Some of the world’s most used products solve problems huge numbers of people face.

Think Google. It’s so popular because almost everyone who uses the internet needs a search engine to look up stuff. It’s also an appealing product—simple in design and easy to use.

Learning:

Products for mass markets have greater chances of succeeding. A best practice is to define the product’s potential users at the outset. Then, involve a small subset of the potential customer base in product development from very early on, as test users, and incorporate their feedback in the product design.
 

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