To me the lesson of this challenge is that the longer you work on your plan in a vacuum, the more likely you are to fail.
I can actually attest to this from personal experience. For all the nice things Mike said about me in the introduction, he did not mention my colossal failure. I had a grand vision for a software product. I raised nearly half a million dollars in outside capital. I cashed in every favor I ever had. All because, I was so confident in my business plan. Took me months to write it.
And when we finally launched the product, customers just didn’t behave the way we thought that they would. We executed perfectly on a flawed plan and we spent more time planning and building than we did interacting with our customers to figure out if they were actually interested in buying and using our product.
Let me tell you failure hurts. But not nearly as much as regret. And what I wouldn’t give to have just a few more chances of launching that product.
So what if instead of teaching people who have a new idea for a product that they should spend the next three to six months of their lives writing this comprehensive plan, to convince everyone including themselves that they’re right.
What if instead, we taught them how to spend a month experimenting like those kindergarteners and testing some of their core beliefs about how their customers are going to behave.
Because human behavior is actually quite difficult to predict. More difficult than predicting how a marshmallow is going to behave, for sure. Some people disagree they think there are ‘no brainers’ in the world, that of course customers are going to want to buy this or use this product.
And for those people I’ve developed a really fun experiment with my students. So I asked them to go to a public place and give away five $1 bills, that’s right. They’ve got five chances to hand out free cash.
But first they have to write a short plan. So who’s their target customer? What are they going to say to get their attention? And out of five chances how many dollar bills will they give away?
Of course everyone thinks they’re going to give away 5 out of 5. It’s a no-brainer, right, everybody wants free cash. In almost every single time they’re wrong. Everyone learns, that it’s not a no-brainer. But giving away free cash is actually a lot harder than they thought. Some people are busy. Some people are skeptical.
So they learn that certain groups of people are actually more interested in their idea than others. That certain lines work better than others. And most importantly that their plan is just a starting place. That as soon as they encounter the real world they’re going to start making adjustments. So they understand the value of having those real world interactions, as soon as possible.
If we have any chance of reversing these macro trends, we have to stop teaching innovators that they have to be fortune tellers, who can see the future. That’s not realistic.
Instead we have to teach them how to be detectives — people who use facts and evidence to back up their assertions about how customers are going to behave.
Think that people are going to rush to buy your product when it’s complete? Then let’s pre-cell 20 of them before we even start production.
Think they’re going to pay 49.95? Then let’s set up a simple landing page where we see how many people click the Buy button at that price point.
If we want to create real companies, ones that survive more than just business plan tournaments, we need more than hope that they’re going to be successful. We need proof and a reason to believe that the assertions they’re making about their customers are more fact than fiction.