As most StartUps fail, there must be something wrong with how we define or think about a StartUp.
As soon as someone has an idea, it quickly becomes a 'StartUp'. This rush to become self-identified, or externally labelled as a StartUp, way too prematurely, is one of the unspoken reasons for such high failure rates with StartUps. Dig deeper, and you will find that most first-time founders struggle to do two fundamentally different jobs, that of search and build, at the same time. As ideas become StartUps overnight, prematurely staffed with founders, the emphasis immediately shifts to building the 'Minimum Viable Product'. It is hard to fight against this human bias of building first, which is driven in part by our inner desire to show progress to others.
Having learned from the failures and success of other interventions, we have learned that more often than not, StartUps are failing because they jumped to the build stage before true, authentic search. This may seem like an academic point, or being pedantic about semantics. However, we feel it’s important to recognise the life stage before a StartUp. It’s not yet another process within the StartUp stage, but a separate life-stage that is trying to achieve different things. For the want of a better term, we are calling it SearchUp.
The job of SearchUp is not focused on “finding a repeatable and scalable business model” (Steven Blank) but on finding an important and urgent need or problem worth addressing. Whilst searching does happen in StartUps today, it happens without rigour, structure and kudos.
Now, let’s focus on five key differences between SearchUps vs StartUps:
· 1. SearchUp is a distinct life-stage
· 2. SearchUp’s job is to test 70% desirability, 20% feasibility, and 10% viability
· 3. Role: Experimenters, not Founders
· 4. People over ideas
· 5. Searching not only for the first customers, but also the first co-founders
1. First, SearchUp is a distinct life-stage
A SearchUp exists to search for new value, by running experiments, with the goal of establishing a PROBLEM-MARKET fit. In short, the most important part of a SearchUp is not to deploy code or software, but to search, and run experiments on each of the different building blocks of any canvas, in order to find a problem that is big enough and worth solving.
A StartUp is in pursuit of building new value to achieve PRODUCT-MARKET fit. The goals are to find first customers, first funding, first product, first team, and first business model. We say first because most StartUps will go through a number of strategic changes (pivots).
A ScaleUp is the pursuit of systemising new value to achieve a COMPANY-MARKET fit. This involves codifying the problem, purpose, progress and people to deliver on a promise to a large group of customers. This is the subject of a separate post or two, or see Reid Hoffman’s thought-leadership on ScaleUps.
Here’s a summary of these life-stages:
Of course, there is no cookie-cutter guidance on how long each stage lasts. The key is to give legitimacy to the experimenting stage.
2. SearchUp’s job is to test 70% desirability, 20% feasibility, and 10% viability. According to CBInsights, the biggest cause of StartUp failure is a lack of market need or desirability.
Customer problem, need or opportunity - can and should be experimented on (searched) long before a product or service is developed. It’s very rare to find founders who can build and search at the same time. A SearchUp prioritises learning without building.
This learning, through experimentation, needs to be done with rigour and empathy. The experimenter’s mindset should be to stay as a SearchUp for as long as possible. It’s not a case of having run ONE experiment in one of the building blocks, seen some mirage of success and then automatically moving into the StartUp stage. It’s about staying in this SearchUp life-stage for as long as necessary until you have tested all of the different fundamental building blocks of customer, value, problem, etc. – in order to minimise risk and maximise evidence that the world needs yet another StartUp.
As a SearchUp you're different to a typical R&D, which is focused more on feasibility questions. The obvious struggle, particularly for those who self-label themselves as 'disruptive', is that "our existing potential customers don't or won't understand what we're building". At the end of the day, even disruptive SearchUps need an early-adopter customer - someone who desires the problem to be solved and who is willing to take a risk with you.
The hard part is never building a product, it's finding a customer for it.
The other struggle for SearchUps is that "I may create a disruptive idea, but history has proven that the first to market, the true disruptors, those who often create the foundations for others, rarely go to scale with billion-dollar valuations". In order to change the status quo, to have more individuals working on truly disruptive ideas, we need to provide a structure for SearchUps to move fast from an experiment to a ScaleUp.
3. Experimenters, not Founders. Just as the title of Founder has become coveted by many, we need to create similar aspirations, respect and acknowledgment of the role of Experimenters.
Take the example of diabetes as a problem. There are multitudes of people (roles) involved – researchers, patients, doctors, entrepreneurs, etc. Some of these people see their role limited to being patients. Yet, another group takes it upon themselves to be “hackers”, managing their own condition with workarounds that are not formalised. And, yet another, smaller group, experimenters, want to take their successes to a wider context.
The pipeline from the top universities to startup is well established. The pipeline from those facing problems, those researching the problem, those diagnosing the problem – is a huge untapped potential. We need to provide interventions of support to these people to transition from one role to first being experimenters, then founders, then entrepreneurs.
We all underestimate the time it takes to find the right problem for the right customer/user. Thus, SearchUp is a vehicle that helps you transition from a role that you played before (patient, doctor, researcher) to one of being an Experimenter.
4. People over ideas: As Entrepreneur-First has demonstrated, there is success to be found in backing people over StartUps, in part because StartUp ideas will most likely change radically. If people can demonstrate their deep expertise, commitment, their understanding and empathy towards the problem they seek to solve - they’ll find a way. Yes, we know most judging panels and criteria say they award based on ‘people+idea+market’, but in reality, you really don’t know the people based on a three-minute pitch. You’re really just backing your hypothesis on their idea and the market.
In 99% (guesstimate) of the big corporate programs we’ve seen, the focus is all on the investment in StartUps and beyond. There is certainly a market for that, but it’s disproportionately skewed. There is a bigger and, as yet, untapped potential to open your corporate in strategic ways to allow SearchUps to validate the problem-market fit. SearchUps should be able to search for, and run experiments on, a corporate’s problems to identify that potential (this deserves its own post). Most SearchUps struggle to access the right people in the corporates. Make them available in a structured form, then there is true co-creation from the beginning, rather than retrofitting StartUps when they’re further down the line.
5. Searching not only for the first customers, but also the first co-founders. The third common cause of failure of StartUps is not having the right team. If you dig deeper into this you will find that most co-founders wear 'rose-tinted glasses' when they begin their StartUp. The problems more often than not come up when they have to pivot to a different customer, a different problem, or even a different vision. As a SearchUp, your job is to run experiments with other co-founders to see how well you work with each other and how each of you embrace the changes that come thick and fast. As a SearchUp you’re not having artificial conversations about equity stakes. You’re validating who is the best person(s) we need to a) run the experiments and b) who can help each other to take the successful experiments to the next stage?
In summary, by inviting experimenters to search for new business models, new systems and new relationships, we at Area 2071 exist to create a self-sustaining ecosystem, which has a healthy mix of SearchUps, StartUps and ScaleUps.
Our focus is not on exits and valuations, but ensuring that the brightest hearts, minds and hands reap the rewards for their risks of trying to experiment on, with and for systems-level change.
This article first was published on Linkedin.