In May of this year, Silicon Valley startup Quixey closed its doors after eight years of fund-raising and product development. The company positioned itself as the ‘Search Engine For Apps,’ creating a natural language processor that they called ‘Functional Search.’ The technology clearly captured the imagination of investors, with $164.9 million raised in four funding rounds, giving Quixey a valuation north of $600 million.
Quixey’s grand plan fell apart almost as quickly as it gained traction, though, thanks to a comparable lack of funds and a brand value incomparable against some of the fiercest competition in tech. Google and Apple were both developing similar virtual assistants, for example, and Quixey was simply blown out of the water.
Before developing and launching any product or service, it’s important that entrepreneurs consider a number of factors that could determine the success or failure of their venture. Here are five key considerations to take into account:
Does your product/service actually serve a purpose?
The tech community – particularly the one that exists within the bubble of Silicon Valley – has a problem with development for development’s sake. As a result, far too many products that either solve non-problems, or have no realistic audience at scale, are pushed onto market only to ultimately fail.
Take Washboard as an example. The startup offered to solve the issue of never having enough quarters for the laundromat by delivering $20 worth every month, for the price of $26.99. Only the very laziest and disorganized among us would view this as a worthwhile way to spend their money, and Washboard has been widely ridiculed for its lack of actual purpose. There are a host of companies that will pick up your laundry and do it for you, rendering Washboard all but redundant in the face of competition.
Before launching any product or service, it’s crucial that developers consider if the problem they are trying to solve is a valid one. Mailing customers the ingredients for a grilled cheese, neatly packaged and expensively priced, may seem like a solution to going to the store, but ultimately it’s one that has no long-term traction. People will go to the store because it’s cheaper. If your product serves no purpose, or solves only a non-problem, it will be rejected as such and startups need to develop self-awareness to stop this from happening.
Do you have the funding to see the project through?
This point could not be more pertinent in the age of crowdfunding and venture capital investment. There are countless examples of promising young startups burning through cash, bleeding investors dry, and ultimately collapsing once the honey pot runs out. In many ways, nothing is more synonymous with the startup community than a comical lack of budgeting skill.
A good example is Silicon Valley startup Skully. The tech-focused motorcycle helmet featured everything from GPS-tracking to a rear-view camera, and planned to sell for upwards of $1,500. Fast forward just a number of months and Skully’s founders are being accused of burning company money on expensive vacations, luxury cars, and other vices. The company eventually ran out of capital in August of last year and was forced to close, standing as a parable for the dangers of Silicon Valley excess.
It may seem obvious, but no startup can bring a new product or service to market without stringent budgeting. Overambitious product development and frivolous spending can turn a promising product into a disaster, and poor budgeting is one of the primary reasons so many young companies are forced into closure.
Are there (very) similar products or services already on the market?
Everyone wants to found the next Facebook, that billion-dollar idea that fills a need customers didn’t even know they had. The problem with this is that the market becomes incredibly saturated and innumerable companies are often competing for the same, often limited, markets. Before getting started with any product or service, companies should thoroughly assess the market and see if any competitors are offering something similar.
It’s ok not to reinvent the wheel, but customers will see through a product that offers them nothing they can’t find elsewhere. Brands should particularly avoid services or products being offered by major players like Google or Apple – even if their incarnation is in its embryonic stage, these behemoths have the resources to blow any young competitor out of the water. Find a niche, do it well, and get there before any competition can.
Do you have a target audience in mind?
Another of Silicon Valley’s key issues is that companies often make products for the community they recognize, rather than considering what the population at large is asking for. Tech innovation for innovation’s sake will often yield products that are hollow at even the most surface-level inspection.
Take Juicero, a Bay Area startup that solved the ‘worldwide problem’ of not being able to squeeze juice packets by hand. Its $400 machine functioned only to squeeze the $5 juice packets delivered by the company, and the wheels fell off when Bloomberg reported that users could squeeze the packets themselves, often with better of equal results. At that price, it’s difficult to imagine who Juicero thought they were making the product for. Silicon Valley tech enthusiasts may be interested in automating their juice consumption, but outside of the bubble the idea was broadly reviled.
User-centricity has become something of a buzzword in the tech community and for good reason. When developing products, the process should always be performed with the target audience in mind. Define exactly who your product is for, and avoid creating products or services for yourself and those like you.
Have you been transparent with your audience?
When developing new products, very rarely will a project go exactly according to plan, and smaller companies in particular are often forced to think on the fly. This is natural and not a problem in of itself, but it can become disastrous when communication with the products intended audience isn’t up to scratch.
An example is high-profile Kickstarter flop Coolest – a cooler that promised to do everything from playing music to blending cocktails, as well as holding 55 quarts-worth of beverages. The project hit a number of snags, and in an effort to ‘keep the lights on’, the company began selling the coolers on Amazon before they shipped to original backers. Customers were furious, and the product was hit by a swathe of negative reviews and ultimately became a failure. The company did explain the reason behind the move to their backers, but the dialogue was not consistent enough to satisfy the audience in its entirety.
When bringing a product to market, or asking for backers during the development stage, it’s imperative that companies are prepared to be entirely transparent. Regular updates on the products progress, acknowledgements of its potential deficiencies, and an honest rendering of what the final product will look and feel like are all invaluable. In 2017, the public is receptive to paying for a product before it’s been completed, but the trust is predicated on an open dialogue coming from the product’s manufacturers. Be open, limit the number of shocks for the audience, and people will be far more patient if and when your project hits difficulties.