It’s true. In ALL the companies I have worked and WITH all of the companies I have consulted, I’ve never created a market.
I’ve had one big success and many modest successes. Outside of those successes, most often the findings from rigorous contact with prospective customers, partners, and competitors’ customers reveal that the demand for our solution to solve an existing problem is not investor worthy. In other words, it’s not going to go IPO or be purchased by Google or Facebook. It may be a nice, profitable business, but not a VC-backed rocket ship…which is important to know in order to manage expectations and resources.
Which leads me to my claim that No One Can Create A Market.
As a result of seeing scores of products and thousands of customer contacts, I make this claim. Let’s take the classic Pet Rock as an example. When Gary Dahl created Pet Rocks in the 1970s, many were flabbergasted that there would be such a high demand for a rock in a box. However, those that were surprised were those that were focused on the product and not the problem it solved or the cost of not solving the problem.
The existing problem that the Pet Rocks solved was, of course, the annual problem of gifting in a clever way. The Pet Rock, in its nest, with its instruction manual and nicely packaged was the solution to the problem of what to purchase to show that you care to try to delight and know how to delight. And think of the accessories to buy!
So if I’m not willing to claim that market validation/customer discover helps create a market, why bother doing customer discovery and market validation at all?
The best answer I have is that the process allows you to determine the current product-market fit with which you are working and use that clarity to maneuver with some product changes and changes to market focus to maximize your opportunity. What’s more, you can take this journey much quicker and with more certainty if you follow the discipline of meeting with prospective customers while you are developing the product.
So, on the upside, if the opportunity is huge, you can move quickly with confidence in the right direction. You can demonstrate demand, understand the scale to meet demand, know who to hire and how many to hire, and get the best valuation for financial resources to fuel your quick moves.
On the downside, if little or no demand can be identified, you can stop the presses and regroup before spending anymore resources on a lost cause. You can keep your good name intact to leverage for a bigger, surer opportunity. Or, you can not completely quit but be very careful of the consumption of resources knowing that revenues will be very slow to develop.
Frankly, most of the time, market validation does appear to uncover some sort of opportunity because the original inventor was likely not just imagining a problem, but observed or experienced a problem thought to be important. When early clues and evidence suggest that the market is neither clearly big nor definitely tiny, then the team gets thinking, “Now, perhaps if we try this or maybe start doing that, we’ll get more interest”. The big markets and the dinky markets are the easiest to determine. It’s the in between gray where everything is complicated.The value of market validation/customer discovery is to find this out in month 2 or 3 or 4 rather than month 7 or 8 or 18.
It’s hard work discovering a market and building a business. So, for those who have a choice of where and with whom to spend their time, realize that you are going to work just as hard chasing a small market opportunity — experiencing fewer moments of joy — as you would chasing a large market opportunity with many moments of joy.
Market validation/customer discovery is an efficient, reliable, repeatable methodology for understanding a business opportunity and what it takes to develop it. It is not a guarantor of an opportunity.
One can also get clarity on the size of the opportunity and the likely trajectory so that expectations and resources are properly managed such that a profitable business can be created even if the market is not substantial.
Call to Action:
Do NOT get fooled into thinking “getting out of the building” means you will find a business. Market Validation/Customer Discovery is not designed to create a market. It’s designed to provide greater clarity on the product-market fit. This clarity and other go-to-market information which prospective customers can provide is then used to improve the product-market fit or suggest a dramatic change in plans. It’s what you do to react to the facts on the ground that give Market Validation its value.