Chasing rabbits as a seed-stage business is damn seductive - each new market trend, or company pivot, we are told, can bring us closer to product/market fit. Diving down the right rabbit hole just might take us to start-up Wonderland. Behold the prancing unicorns and magical VC caterpillars barfing out billions to fuel your wildest dreams!
But the reality is far different from that. Seventy percent (70%) of seed-stage founders report issues with resource misallocation that damage their business and rob them of runway. Rather than finding their way to Wonderland, these rabbit holes take them closer to an early grave.
So what is happening here?
First, there are too many possibilities an early-stage enterprise can chase. Early-stage businesses are in the “becoming” stage, still creating an identity, and still understanding what they stand for. This means there is less of a guiding light, a true north, or a road map to follow. Without a road map, these businesses risk becoming directionless. Each potential pivot is subjected to randomness, and randomness is risky.
Second, customers tend to focus on improving what they already know, rather than envisioning what could transform their lives. This means leaving product/market fit entirely to customer feedback is unlikely to break you out of the current market dynamics. And those dynamics heavily favor the category Kings and Queens, leaving early-stage companies to fight it out over scraps.
Overcoming resource misallocation requires a perspective that is different and more visionary than the current market. And that, once again, means overcoming Market Myopia - the inability to see future market potential because of the current market realities.
Finding Problem Market Fit and then Product/Market Fit
The most successful companies in the world aren’t the ones who find incrementally better solutions to existing problems. They’re the ones who can see the problems no one else does, and create new categories of products and services that - for the first time - solve them.
The most successful companies are experts at defining the problem, its costs, and the innovative solutions required to meet them.
As it turns out, there is a proven method for doing this called Category Design. In our new eBook, the Play Bigger Founders Workbook, we walk through not only the issues most early-stage founders face, but also the step-by-step solution they can take to address these issues.
Next, we’ll take these learnings and apply them to the investor and fundraising landscape. It turns out, that when you take aim at an unsolved and costly problem, investors take notice. As one of them told us, new problems are infinitely more valuable than new solutions that solve the old ones.
Until then, onwards!
