I Laugh At Your Due Diligence and Market Research.

[sle3pyguii]

A while ago, I got into a pretty heated argument with someone I knew.

This person had several failed startups/businesses (none made any profit), ranging from marketing agency to ecommerce to web application. Fortunately, he has a day job to fund himself. His past ventures have helped him gain more knowledge about a lot of things, like marketing and design and things like that.

I, on the other hand, am still working on putting together my first ecommerce store, still learning the ropes.

The conversation basically went like this:

Him: I'm going to start a new startup! I'm going to make a new service for women!
Me: Cool! Is there a market for it?
Him: Sure there is. Why wouldn't there be? Who wouldn't want this?
Me: Did you research it? Did you at least talk to some women about this?
Him: No. I don't have to. Why WOULDNT women want this?

What this conversation came down to was me insisting on researching (even reminding him that he once said in retrospect, he should've researched those ventures. REALLY.) while he kept saying that there definitely had to be a market.

In the end, he told me that I didn't know how startups and businesses worked because while I'm still working on one, he's had several in the past.

So ladies and gentlemen, if you are ever met with the question "have you tested the market?" or "is there a need?" or any variation, just tout your past credentials and laugh at their comical "due diligence" mindset. Who needs due diligence when you can create a fast kick-a$$ MVP, which will later lead to your billion dollar exit?! BUILD FAST, FAIL FAST.

 

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[Mbiz79]

I totaly agree!!
do you know a book on systems to do market researches and tests the right way?
thanks

 

[tafy]

Some things are a no brainer that you dont need market research, depends what his business is

Take Asos, they offer no quibble free return policy for their clothes and they are the Amazon of the clothing industry, kind of obvious that women would want a free return policy dont you think?

 

[leveragehacker]

Lol had a little chuckle with this one. Definitely a common problem of the over-confident entrepreneur, I make the same mistake often myself. This was a nice little wake up call.

So that you don't make the same mistake, what research have you so far conducted to remove the risk from your ecommerce venture?

 

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[sle3pyguii]

Some things are a no brainer that you dont need market research, depends what his business is

Take Asos, they offer no quibble free return policy for their clothes and they are the Amazon of the clothing industry, kind of obvious that women would want a free return policy dont you think?

I feel like even with things like that, research wouldn't hurt...especially when you're bootstrapping.

@Mbiz79: I don't really have a book on researching I read.

@leveragehacker I wouldn't say I removed the risk. There's definitely still a lot of risk for me since this is my first venture. I could have missed something huge that someone with more experience wouldn't have. But the research I've done has been both online and offline.

I went to the physical locations of my online competitors as well as the smaller b&m stores in my niche. I observed the customers, what they thought of the products, how the service was, who bought what, etc etc. I basically did everything I could to learn about both the b&m consumer and stores. (Semesters of field research for my uni major paid off!) Online, I looked for the same things using Google.

I pretty much did what I could to find out about my competition, consumer, and most importantly, where I could add value. I really like data and researching things, so even as I'm calling suppliers and am close to launch...I'm still doing research.

Again, I'm still new to this, so my research might be totally useless and might be telling me the wrong things. But I'd rather take a somewhat calculated shot than a shot in the dark.

 

[leveragehacker]

How many of your target customers have you had a real conversation with regards to the product you are trying to sell them? Your other research sounds good but it's conversations with real target customers which will teach you the most. Perhaps even more importantly it's the conversations where you ask for the sale which will reveal the best data.

 

[sle3pyguii]

How many of your target customers have you had a real conversation with regards to the product you are trying to sell them? Your other research sounds good but it's conversations with real target customers which will teach you the most. Perhaps even more importantly it's the conversations where you ask for the sale which will reveal the best data.

Definitely. For the large competitors, I stopped a few of them outside of the stores and talked with them about the purchase. In total, I'd say I talked to about 30? It's not the best sample, but it did help me a bit in getting more information on consumer decisions. Online forums and sites helped a bunch here, like Reddit.

 

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[leveragehacker]

Awesome. The main thing is that you're having those conversations to get the insights that will help you make better decisions and not assumptions like the person you referenced.

 

[ZCP]

Why don't you two get together?? He is taking action while you are in what could be paralysis by analysis...... You understand you need to test the market, and he is full speed ahead in possibly the wrong direction.....

Sound like a few beers and asking the question 'if we started a company together, what would it look like?' Would be a worthwhile use of a few pints...... Focus on process, not the product, while talking it through and you may come out with a winner.......

 

[RHL]

Read up:

https://www.thefastlaneforum.com/co...ence-between-a-sale-and-meeting-a-need.52972/

TL;DR-If you take the product to your target market and, after explaining what it does with no sales pitch involved, you need to do additional explaining to tell them why it meets their need, it doesn't meet their need. The thing about needs is that people who have them are constantly looking to have them filled, and when a solution comes, you don't have to tell them twice-they order right away. Look at the difference between products on Shark Tank that meet no need, like the "next big work-out routine" which really just rehashes what already exists, and ones that do meet a need, like the Cyclorama app for iPhone. The app guy didn't even need to explain why his product was worth money. He just showed them how it worked and pow, million dollar offer. That's when you know you met a need, when you just show, and it sells. Sorry to keep beating the Paint Brush Cover drum, but nobody needed to be told why that was a great idea. Have you painted? Boom. You're sold. Next time I paint, there's no question I'm buying one.

When you've met a need, all you have to do is show it to the person who needs it, and they become a customer. That's all the "market research" you need.

 

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[tafy]

That's when you know you met a need, when you just show, and it sells. That's all the "market research" you need.

Yes! Sometimes you cant listen to the customer, you have to show them what they want

 

[CarrieW]

I feel like even with things like that, research wouldn't hurt...especially when you're bootstrapping.

@Mbiz79: I don't really have a book on researching I read.

@leveragehacker I wouldn't say I removed the risk. There's definitely still a lot of risk for me since this is my first venture. I could have missed something huge that someone with more experience wouldn't have. But the research I've done has been both online and offline.

I went to the physical locations of my online competitors as well as the smaller b&m stores in my niche. I observed the customers, what they thought of the products, how the service was, who bought what, etc etc. I basically did everything I could to learn about both the b&m consumer and stores. (Semesters of field research for my uni major paid off!) Online, I looked for the same things using Google.

I pretty much did what I could to find out about my competition, consumer, and most importantly, where I could add value. I really like data and researching things, so even as I'm calling suppliers and am close to launch...I'm still doing research.

Again, I'm still new to this, so my research might be totally useless and might be telling me the wrong things. But I'd rather take a somewhat calculated shot than a shot in the dark.

not everyone does things in the same way... I will use myself for an example and my 2 ideas that are on the inside currently...

well I personally am a consumer of like products. I identified a need. therefore by sheer definition is a built in market. I do not have to do research. the research was done before the idea was born...

the second one. is well a novelty. theres no way to prove a need for that needs are met by the non novelty portion of the market. the idea is good and sound and definitely has a market. do I need to do market research. not in the case. either the manufacturers like it or not. if I decided to go into manufacturing I would tell a few more people the idea and verify that all the awesome feed back so far isn't just blowing sunshine up my a$$ but that's it... when you know something you know it... you have already gathered the info in your brain before you knew it... or you wouldn't know it.

people like you drive me crazy lol well how do you know? honestly no one knows shit until your stuff is for sale and people either pay cash for it or not. cash talks the rest is bullshit...

 

[Kak]

Noncommittal yes or no's mean nothing. Sometimes your best metric is your business. You will never truly know how it is going to preform until you introduce it to the real world and launch. I agree with your friend.

I promise you that he knows more about start ups than you.

 

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[sle3pyguii]

So if I'm understanding this correctly, research isn't as necessary for some things that already have a built-in need?


The reason I'm frustrated with my friend is because:

1. Although he executes quickly, which is definitely admirable, he tends to go too much into it without thinking. Instead of throwing up a quick page for cheap selling his services or whatever, he will spend what he's saved up for his projects and go full force. He'll pay to get the site developed and start marketing campaigns even before he's got a single sale. That's what I meant by research. It's not so much just getting to know the market...it's that I wanted him to at least try and get a quick sale using a simple method (my go-to for service or website app ideas when I worked at a startup was Landing Page + StumbleUpon Paid Discovery) before committing so much to the project.

2. It's definitely true that he knows more about startups. I don't doubt that. But his go-to response for a lot of my suggestions is the same "You dont understand. I do". I've overlooked it in the past, but why in the world would he even ask to bounce ideas around if he understands more than I do?


Maybe I'm looking at this the wrong way. It's nice to see both sides though.

 

[CarrieW]

its nice to bounce ideas off of people... hes not being cocky saying he knows everything. hes just letting you into his process. don't get upset with him. just observe

 

[eqttrdr]

I am living proof that asking people, doing marketing research before launching is a guessing game.

Everyone I spoke to said "WOW.. thats a great idea.. I would definitely buy that if it existed. There is definitely a need and I can't believe nobody thought of that yet.. let me know when I can get it"

So I launched... 6 months later.... well.... those same people are nowhere to be seen.

 

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[ZCP]

Observe what he does. Focus on getting YOUR company going. When he sees your results, the conversations will change.

 

[randomnumber314]

It's a double edged sword really.

Some will jump without looking, ever.

Some will get stuck looking and never jump.

Learn to look enough not to get killed, learn to jump, take the pain and keep going.