Signs You Need to Kill Your Startup Idea Now
“The most important thing you can do with your brilliant idea is to try to kill it.”
– Brad Keywell, Co-Founder Groupon
Every startup begins as a great idea waiting to materialize. As an entrepreneur, you’ve worked on the idea diligently for weeks and months and perhaps even seen some traction as far as customer interest and revenue.
You’ve poured your time and energy into an idea that you have a great passion for and it’s been an exhilarating journey with many highs and lows. There’s nothing quite like seeing an imagined idea come to life and become reality. That’s what the entrepreneurial spirit is all about.
Now fast forward six months or a year or more. The stark reality may look closer like you’ve worked endless hours, perhaps neglected your family, friends, and health, and perhaps invested a substantial amount of money. With all the work and sacrifices you’ve made, you’re not seeing the traction grow as fast as you would hope or anticipate. This may be the time to consider and decide: Should I kill my idea or stick with it?
The Problem with Keeping a “Bad Idea” Alive
Kill early and often. You’ve probably heard that saying and it revolves around the idea to quickly determine which ideas are worthy to continue to pursue and which ones to stop investing valuable resources in completely.
One of the biggest mistakes a founder can make is spending too much time on a ‘bad idea’, ignoring potential warning signals and weaknesses to make that pivotal decision to shift. An entrepreneur’s time, money, and creative energy are resources too valuable to waste. Lost opportunity is costly especially when these resources could be allocated to other ideas. A startup idea is your baby and sometimes it can be hard to call your startup baby ugly. It’s hard to see the flaws in an idea you’ve grown attached to. Instead, look at the scenario from a different angle. What if the idea is an ugly product/service not in your eyes but in the eyes of the market? That’s the lens entrepreneurs need to take. Instead of allowing emotions to lead your decision, logic should be used to validate or kill a startup idea.
How to Determine If You Should Kill your Startup Idea
Your startup idea is meant to solve a real customer problem in a way that no one else already does and in an environment where there is significant market demand for this type of innovation. Asking some tough questions to dive deep into your product/service may be necessary to declare an idea as “bad” and justify if it’s time to kill your startup idea and shift towards the next great idea on your list.
1. Does your idea solve a problem that people not only actually have demand for but are willing to pay for? If there is no proof of real customer demand through talking with target customers, gauging interest through a prototype landing page test, or other proof then it may be an indication to rethink your idea.
2. Is it possible for you to actually build the solution better than anyone else? If your idea is providing only marginal customer value to an already existing competitor’s product, it may be time to decide if you can still find a niche in the market or if it’s better off to move on. Marginal improvements are not sufficient. If you cannot create a 10x better experience you may want to move on.
3. Is the market opportunity large enough to justify the necessary investment? The investment need of launching a startup idea is one thing and the cost of growing a startup business is substantially different. If there is not a big enough market opportunity to take an idea to a sustainable business, it may be worth reconsidering your options. Of course, many small businesses thrive, but your funding options in this scenario may be limited.
4. Is there a reasonable revenue model and path to profitability? A business is in the business of providing customer value, which should result in making money. Typically if you’ve developed a solution for a real customer problem with a large market opportunity, the answer is yes. If you haven’t, then it may be time to dive deeper into the numbers to determine the next step to take.
5. Is the cost of acquiring customers lower than the profit you expect you will ultimately make? This question relates to volume and scale. If you haven’t determined how to acquire enough customers, profitably, to grow your business to scale; it may be time to relook at if your idea can actually make a profit in the long-term.
In Numbers, The Death of Startup Ideas
It’s been said that 90% of startups fail. On the flip side, that means 10% of startups succeed. They didn’t get there by holding onto “bad” ideas. They’ve found “good” ideas that have product-market fit.
Pioneer Square Labs- a Venture Builder out of Seattle, WA- keeps a running tally of successful and unsuccessful ventures. To date, they’ve only moved forward with 12% of their ideas. The reason why? They wanted to stop wasting resources on ideas that don’t have potential. Plain and simple.
According to CBInsights, the number one reason why startups fail is due to misreading market demand; this is found in 42% of cases. The second largest reason why startups fail (29% of cases) is due to running out of funding and personal money. These statistics aren’t meant to scare entrepreneurs, they’re meant to bring light to the competitive landscape and help provide insights on your decision whether or not to kill your startup idea.
The concept of pivoting out of a bad startup idea may be overrated, and that often it’s better to just let a bad idea die. As Fred Wilson from Union Square Ventures said,
“There is nothing I dislike more than carrying on with something when I’ve lost interest, and worse, the founders have lost interest. So my view is if you’ve failed, accept it, announce it, and deal with it. Shut the business down, give back the cash, and rip up the cap table. Then do whatever you want to do next. If it is another startup, do it from scratch and keep as much of it as you can. If it is something else, well then do that too.”
Want to validate your startup idea faster? Check out our Moonlighter Lab.