People who start a new business often make one “fatal mistake” that″ll likely doom their venture before it even starts, says Steve Blank.
The mistake: not researching your prospective customers or clients before deciding what kind of company you want to build, and the products or services you’ll offer. ”[I’ve] seen this a million times,” says Blank, an adjunct professor at Stanford University who has written four books on the subject of entrepreneurship and helped build eight different tech startups, of which he co-founded four.
Coming up with an idea for a business first, and then determining how to sell that product or service — before you’ve confirmed it’s something your prospective customers actually desire, is a recipe for failure, Blank says.
“The most important [question] is: ‘Well, who are my customers?’ And the second one is: ‘What do they want?’” adds Blank, who sold his final startup, business software company Epiphany, sold to SSA Global Technologies for $329 million in 2005. “It’s not: ‘Here’s what I’m building. Can I sell it to someone?’”
For years, Blank has told his students to “get the heck outside” of the office or classroom and hear from actual potential customers, he says. He’s not alone: Talking to customers as early as possible is necessary to ascertain the best product-market fit, putting founders on the path to building a successful business, according to the Small Business Administration.
Alberto Perlman, co-founder and CEO of Zumba Fitness, says the “biggest mistake” entrepreneurs make is thinking they “know more than their customer.”
“You have to always be listening, and listening between the lines, to your customer,”
Not listening to your customers “can make the difference between a business that thrives and one that fades,” investor and co-star of ABC’s “Shark Tank” Robert Herjavec wrote in a recent LinkedIn post. “It’s natural to get attached to your product or service, but success hinges on seeing its value through the customer’s eyes.”
Blank points toward his own entrepreneurial track record — specifically, one of his biggest failures — as an example. He co-founded a video game company called Rocket Science Games in 1993 and raised $35 million for it. The company made a cover of Wired magazine that dubbed them Silicon Valley’s next hot startup.
Rocket Science Games had talented engineers and its initial line of games created buzz with polished trailers, but Blank found out too late that customers thought the games “sucked,” and sales never materialized, he told Fast Company in 2014.
The company shuttered in 1997, becoming a high-profile tech industry flop. Blank probably would never have started it, or “definitely changed its trajectory,” if he’d followed his current advice and sought out customer feedback before it was too late, he says.
“The biggest killer for me, and the biggest failure, was hubris,” says Blank, bluntly adding: “Don’t believe your own bulls—. It’s really easy to get convinced about your passion and your vision.”