Too Early Is the Same as Wrong

Being too early can be the same as being wrong, and it’s nearly the worst position to be in—second only to being too late. If you’re a large corporation with a 10-year time horizon, being early may make sense, but startups that are early to a market are playing a much more dangerous game.

I’ve experienced both being too early and too late as a start-up founder, and they both hurt. I’ve started an ad-supported Web 2.0 website with user-generated content far beyond the point that something like that would be sticky and scalable enough to survive (ouch). I’ve also started an HR tech company that focused on skills intelligence when the HR world was still largely focused on roles and job descriptions (yikes). I took an L on the former, and then eked out a victory with the latter just in the nick of time.

While there’s little you can do about being too late aside from realizing it ASAP to avoid wasting precious time, there are things you can do to improve your chances of success if you suspect that you’re merely too early for the market. Here are a few of those things that I’ve come up with based on my own experience:

• Figure out if you’re onto something at all. Hearing “no” or “not now” isn’t sufficient proof that you’re solving tomorrow’s problems. Talk to experts in the field who know where a market is headed. Talk to each “no” and probe for what they’ll solve for in the future without biasing them toward your solution. Talk to the “not nows” and verify that what you’re solving for is actually represented in their roadmap. Essentially, the opportunity needs to be real, and your business has to exist at the same time. Understanding the likelihood of this overlap requires talking to the right people, asking them the right questions, and listening to them attentively to know where you and your venture stand. Don’t be afraid of being wrong; it will bruise your ego in the short term, but uncovering the unvarnished truth will help you avoid even more pain in the long run.
• Double down on a valuable niche where you have a competitive advantage. If you’re onto something but there’s no market right now for what you’re building, you have to zero in on a valuable area where you have a unique advantage. Maybe you have algorithms, datasets, an AI engine, or other technical assets that set you apart. Forget about creating a full-fledged platform, software suite, or comprehensive service offering. No one is buying that right now. Instead, think about what the key pieces of a winning solution will be in the future and leverage your existing resources and know-how to build toward that future. This level of focus may help to cut costs and extend the runway of your startup so you can survive long enough to capitalize on a market opportunity. Also, by focusing on a smaller piece of the solution, you’re likely to excel in that specific area. If you focus on the right thing, you will create a valuable piece of the puzzle that a larger company would have to spend a lot of time and money to create. You may not have a book of business to sell, but you can help someone achieve lower costs and/or quicker time to market–or give them a competitive advantage if you’ve built something well. Any one of these things could mean huge value if the eventual market is big enough.
• Talk to anyone who would make better use of what you’ve built than you ever could. These are your customers, your partners, or your potential acquirers. Maybe your business shouldn’t operate as a standalone solution, or even as a standalone business at all. Perhaps your technology could expand on or improve a more comprehensive and mature offering from a well-entrenched company. Even if you’re early to a market, there could be companies out there open to testing your product if it’s of little to no cost to them (and this is a big if). The sales process alone is not only a cost to you, but also a cost to your potential client that doesn’t feel a burning need to work with you if you’re early to a market with an unproven solution. Unfortunately, to make an enterprise sale you’re often caught up in various approval processes, not the least of which is an intense security/DevOps process where many deals go to die. These processes cost you time and money, but they also cost the client the same or more. However, if you can sneak in your concept by testing it through a larger tech company that already serves your ideal customer, you can start to develop your market with a real-live customer. Ultimately, if you can demonstrate value to someone else’s customers you could be on your way to a revenue opportunity or an acquisition, both of which would never have been possible if you had flown solo.

These pointers are a direct result of the exciting but unnecessarily painful 18-month process that our team went through at Encube.ai (acquired by Hitch, which is now a part of ServiceNow) to arrive at a winning strategy. While the outcome was good, I realize that things could have gone very differently without the right self-reflection, the right advisors, and a few strokes of luck. Even though you can make something out of a too-early concept, the odds are stacked against you in most cases. The risk-reward profile can be dire if you build and commercialize a solution before there’s a market for it, and at Encube.ai we would’ve been much better served if we had understood the market dynamics better at the beginning, which would have empowered us to make the right investments earlier on. This would have likely made the process much less risky, and the outcome even more attractive.

Conclusion

With startups, where your opportunities to pivot are limited by the frantic race against insolvency, prevention is the best medicine. The first point I made about “figuring out if you’re onto something at all” is advice startups would do well to follow before they start building a product. I’ve learned this the hard way a few times, which is why I’ve been a huge proponent of a customer discovery process that relies heavily on customer interviews, which are structured conversations with your ideal customers that give you a deep understanding of the problem area to help you validate or invalidate your assumptions and hypotheses about the market you aim to enter. People rarely get it right the first time, so why would you bet years of your life on an unproven concept if you could instead spend some time up front to mitigate a lot of that risk? Also, perhaps paradoxically, a significant commitment to customer interviews could actually help you get to market quicker, because launching a new product where there is no market isn’t going to market at all.