Entrepreneurship Begins with Finding Customers’ Real Needs

What matters most in entrepreneurship: business model, team, technology, product, or capital? At the beginning, what should be confirmed first? I believe it is whether the market or customer needs the product or service. Only once demand is established should founders assemble a team, develop technology and products, grow revenue, and pursue profits. Without demand, none of those other apparently important factors has a foundation. Is there a method that finds the exact need and complete solution in one attempt? No. No venture succeeds in a single leap. Repeated experiments and validation are the only way to approach the most effective solution to a real customer need. Mentoring university ventures, I have had to discuss this with professors and laboratory-based teams. They often work backward: commercialize technology developed over a decade or more, obtain government grants, appoint doctoral or master’s students as CEO and team members, seek investment, and launch a product. Weak sales then prompt consideration of more marketing and market education. The fundamental question remains whether customers genuinely need it. Entrepreneurship is not assuming wonderful technology developed behind closed doors will automatically sell. Demand validation, not technology or the product alone, is the key. University ventures may fail not because the technology, product, or team is inadequate, but because they never identified the right need. A nice-to-have rather than a must-have may sound good without solving an urgent problem. The pain point may not hurt very much. Define target customers and establish their real needs before investing in the team, technology, funding, and product. Needs also have priorities. Customers do not need you to solve numerous problems ranked below their top three or five. Solve the single most urgent one, and little market education may be necessary. One problem is also simple to explain. Many founders blame difficult sales on education when demand is absent or the problem ranks far below the customer’s current priorities. Beyond urgency, a product can become compelling by dramatically improving one of three things: customer efficiency, costs, or experience. A tenfold improvement is a reference point. An iPhone that a three-year-old quickly learns illustrates user experience. But modest improvement across all three—5% more efficiency, 10% lower costs, and a slightly better interface—may not create a must-have or persuade customers to pay. For a small startup, define the customer profile as clearly as possible and solve a small, specific problem, usually in a niche. Broad problems for broad customer groups are the work of companies such as Microsoft and Google. A small problem that hurts enough can make customers eager to pay even before the product is optimized. Large companies often lack time for these niche customers’ critical little problems, creating opportunities. Win initial paying customers, improve the offering, then consider fundraising and scaling.