In the world of entrepreneurship, startups often find themselves at a crossroads when it comes to product development. While building something a customer explicitly asks for is an essential step, staying in this phase for too long can hinder a company’s growth. In fact, many early-stage companies (e.g. pre-seed and seed stage startups) sit and get stuck in this phase, eventually wasting time and resources that can be better spent elsewhere.
Building something that a customer “asks for” should just be an initial layer of need and an important directional step in building a product and your company. As a result, there is a crucial difference between building something a customer asks for versus something they want to buy that all companies should be aware of. So, let’s take a look at the challenges early-stage companies face and the significance of transitioning from necessity to desire.
The Initial Layer of Need
When a customer asks for a specific product or feature, it marks the initial layer of need. This interaction is a crucial step for startups, essentially guiding them in the right direction as they seek to address real problems faced by their target audience. Many pre-seed and seed stage startups find themselves in this phase, diligently working to fulfill customer requests. So, a common example that illustrates the concept of this difference between want versus need can be something as commonplace as working out and going to the gym. While the initial “need” for someone who works out is likely to get healthy, the true “want” may be that they would like to look like their favorite athlete or celebrity, setting that as a concrete end goal to work towards.
Stuck in the Loop:
However, a significant challenge arises when companies get stuck in this phase. While addressing immediate needs is important, dwelling exclusively on building what customers ask for can create a loop, preventing companies from reaching their full potential. This loop can become a trap for early-stage companies, hindering their ability to evolve and adapt to the changing market demands.
Furthermore, do customers actually even know what they want? This question is even more meaningful for products and services in new emerging technologies and innovations. And, if you give customers what they want, will they still necessarily want it in a month or a year? Looking into the past, there are many case studies of products that companies developed taking into account what customers have “wanted”, only for the actual demand to be less than expected or last for a short period of time before these same customers moved onto something else.
A relevant example of a product that did not meet expectations despite high initial customer interest is Google Glass. Introduced as a revolutionary wearable technology, Google Glass was a highly anticipated product that specifically offered augmented reality features in a wearable format. However, despite the significant hype and interest generated from the announcement, it failed to gain widespread consumer adoption, largely due to concerns regarding privacy, usability, and social acceptance. While the initial explosion of interest seemed to align with the idea that customers “wanted” a product like Google Glass, the actual demand for the product lasted a very short period of time until Google eventually stopped selling the product to consumers altogether.
Why Can’t We Get Out? Why Is This a Problem?
The primary reason startups struggle to move beyond building what customers ask for is a fear of deviating from the familiar. Founders may be reluctant to step out of their comfort zones, fearing that addressing a broader, more latent need might alienate their existing customer base. This reluctance to explore uncharted territories can lead to stagnation, inhibiting a company’s ability to innovate and grow.
Moreover, many startups take on the common belief that “the customer is king”. If you don’t give them what they want, then they will switch to someone or something else who can. As a result, this can intimidate many startups into simply trying to cater to the customer’s desires when they should really be determining what their customers need above all else.
From Need to Want: The Importance of Willingness to Pay
The transition from building what customers ask for to creating something they want to buy hinges on the concept of “willingness to pay.” Wanting to buy implies a deeper connection and a higher level of need—a product or service that customers not only find useful but are also willing to invest in financially. This transition is crucial for the survival, growth, and success of a company. Founders can get stuck in the phase working towards that initial layer of need based on what the customers “ask for” when they should really be building towards a higher level of need based instead on “willingness to pay”. Focusing instead on this higher level of need allows founders to set their companies up for more sustained success, necessary for their startups to survive, grow, and ultimately win.
For example, the Segway Personal Transporter was hyped as a revolutionary way to travel short distances. However, despite the enormous fanfare that it met when introduced, the Segway ultimately failed with production eventually halting in 2020 because the makers did not think about “willingness to pay”. More specifically, though it was an exciting piece of technology, it offered very little real-world utility and eventually failed due to its relatively high price, safety concerns, and limited practicality. Because consumers were unwilling to pay for a product that offered very little in terms of utility, it resulted in very little sustained success for the product beyond the initial excitement.
Why Is Wanting to Buy Important?
Willingness to pay is a clear indicator of value. When customers are not just asking for a solution but expressing a genuine desire to invest in it, it demonstrates a product-market fit that goes beyond mere necessity. Companies that focus on building what customers want to buy are more likely to establish a sustainable business model, ensuring not only survival but also long-term success in the competitive market.
Final thoughts
While building something a customer asks for is an essential step in product development, it’s crucial for startups to recognize the limitations of this approach. Transitioning from fulfilling immediate needs to creating products customers want to buy is a strategic move that sets the stage for sustained growth and success. By understanding the concept of willingness to pay, founders can break free from the loop of building to need and unlock the full potential of their products and companies.
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