The Startup Killer Nearly Every Founder Ignores

For many companies, the battle for success is often lost in the margins. And quiet.

A company can quickly go under because of a decision that seemed less than critical, almost innocent at the time it was made. This is the law of unintended consequences, and it’s a nightmare for startups and mature businesses alike. It can strike in sales, technology, finance, hiring, just about anywhere.

The more mature the company, the greater the chance that it can absorb the damage if the unforeseen occurs. On the other hand, I’ve seen the law of unintended consequences knock out startups in a disproportionate proportion.

I believe I know why. And I think I narrowed down the root of the problem.

The case of market share FOMO

Recently, I got a question from an entrepreneur who already crossed the $1 million mark in trailing revenue with a B2C product. His problem was that while he believed he could expand his market share, and probably quite quickly, he had a lot of trouble defining his ideal customer profile.

In other words, he knew just enough about his customers to know that he didn’t know enough about them to go out and find more of them.

So he was going to do what any of us could do in that situation, start talking to them. He and I went through what his strategy should be, what questions to ask, and how we could both narrow down and tabulate the results. But I also briefly warned him to be careful in interpreting and acting on those results.

Because of the law of unintended consequences.

The law manifests itself in two ways.

  • The first is when a company creates something totally unnecessary.
  • The second is when a company fixes something that isn’t broken.

Both are based on an interpretation of data that is anecdotal and not statistically significant.

Let’s zoom in on each.

Acting on stories is a problem disguised as strategy

I can’t figure out if it was Henry Ford who actually said this or if the quote is correct, but you’re probably familiar with this:

“If I had asked people what they wanted, they would have said faster horses.”

Regardless of the oft-discussed origin, we get it. The customer is always right, unless they are wrong.

The first reason why the law of unintended consequences hits startups more often and harder than mature companies can be narrowed down to two reasons.

First, while startups are constantly being knocked over to talk and listen to their customers, this advice usually conveniently skips the fact that early startups barely have a customer base to start with, let alone a which they confidently identified – what was the problem my CEO friend was trying to solve.

The truth is that the vast majority of startups don’t have a customer base but an echo chamber of early adopters.

And then read that quote again. If that is indeed Henry Ford, he’s not talking about his question… customers what they wanted. Yes, the quote is brilliant in its simplicity, but in the real world Henry Ford’s customers already drive cars. Without a doubt, they would immediately reply that they wanted faster cars.

Either way, a customer feedback exercise so early in the startup lifecycle is like the blind asking the blind to lead the blind.

Don’t be blind. There’s a reason you’re the leader of your startup, and it has more to do with being able to tell people what to do. You have a vision. Listen to your customers, that’s a good thing, but don’t get caught up in the unintended consequences of being usurped your vision for your startup and your product.

Problems without data aren’t really problems

The other way unintended consequences cause problems is the well-intentioned act of solving a big problem.

But define big. Before you fix what’s wrong with your company or your product, define the size of the problem in a number.

We’ve all experienced it. Either a customer or a team member or even an investor will bring up a huge problem with your product – or a feature, or a service, or customer service, or any other way your business works. They will declare that the problem is huge, maybe even the problem that will bring the whole company down.

Always ask these two questions before entering the free repair mode:

  1. How often does it happen?

  2. How much will it cost us if it happens?

Usually the immediate answer is: I don’t know. So do some digging. I’m not saying you ignore every problem that isn’t catastrophic, I’m just saying you have limited resources and limited time. Make sure you don’t have the unintended consequence of losing sight of your organization’s critical and profitable functions while chasing “crises” that happen rarely and don’t do much damage when they do occur.

Interpretation is critical in avoiding unintended consequences

Not every problem or opportunity comes at you neatly with quantifiable data to support a clear decision with a guaranteed positive outcome. But you always have experience and, for lack of a better word, your feeling.

When people who talk about leadership talk about the X factor of leadership, that’s what they’re talking about. You will never be able to predict every possible outcome from every decision you have to make, but take the time to think about what could go wrong.

Because the law of unintended consequences says so shall go wrong.

The opinions expressed here by columnists are their own, not’s.