Market Research Will Never Find The Gaps

Don't use market research to find gaps

The one essential that every startup must have is product market fit. You must have a product that is solving a problem, a pain point, that people will pay money for. It must be a painkiller not a vitamin. It must be a must have. If it’s just nice to have it will fail. If there’s a gap in the market but no market in the gap, i.e. people will not pay money for it, then it will fail. The world is full of startups looking for a solution. That is why there is a 95% failure rate in the first five years. So, what’s going wrong? How can we improve the success rate and identify products that solve problem that people will pay money for? How can we ensure we don’t build vitamins which are nice to have but people will stop with when times are tough but instead build painkillers which people will always find money for.

The short answer is stop using market research to do market research. It won’t work. Just to be clear here I’ve worked in market research for over 25 years and have spent much of the last 20 years founding two market research businesses and building them up to successful exits, so I am a huge advocate of the benefits of market research. So, what’s the issue? The issue is one of definition and understanding the nature of market research and the nature of what is required to identify a painkiller. If it was as easy as just going to market and asking potential clients where the gap was and what they needed, then every market researcher would be busy launching a startup and very few startups would fail. The reason we have a 95% fail rate sits at the heart of this.

Market research operates within a framework. While there is a huge amount of breadth and depth within the framework, the process set is within known parameters. The role of market research is to qualify ( qualitative research) or quantify ( quantitative research) certain ideas or concepts within the set and known parameters using psychological tools, data analytical techniques, experience, knowledge and statistical modelling. To do this well requires a high degree of skill and when done well it can unearth and produce startling and incredibly insightful and valuable results. There is however another type of research that does not sit within a known framework that is often referred to as observational or journalistic research. This does not seek to qualify or quantify and there are known set parameters.

The aim of this is to observe, listen to and understand the nuance and context of the conversations, especially focusing on what is not being said. In order to do this well it requires a longitudinal viewpoint i.e. you need to speak to the same people a number of times over a sustained period, focusing not any on any specific topic but allowing the conversations to free flow. Each interaction unveils more insight into their true behaviours and needs and adds more meaning to your observations. The ideal number of interviews/ meetings with each individual person is usually five before you can be sure that you have arrived at any sense of a true understanding. It takes this number of sessions to peel back the layers and get to the essence. When you’re bootstrapping you hope to do it in less than five, but the nature of the process means it cannot be swift and this is why when you start you should take on bespoke projects to put food on the table while you try and find the product.

So how do you do observational research? There is no doubt that if you are neurodiverse and have ADHD then you have a head start. I am not sure if there is any academic research to back up this claim but, in my opinion, having spoken to many founders it is an advantage. ADHD is much misunderstood but the ability to hyper focus in areas that interest you, coupled with pattern recognition from divergent thinking, both of which are typical examples of ADHD help enormously. Victoria Mellor (Crumby) , a successful multiple founder, investor and adviser, calls it the ability to recognise weak signals.

These are not obvious or even stated and it frequently takes a number of meetings with the same individual to spot them but by recognising the weak signals and identifying the pattern across multiple clients you can start to arrive at a solution – at a painkiller. One good litmus test is that when you go back to clients with your proposed solution, they will often admit that they hadn’t even realised that it was a problem or that it was a problem that could be fixed or that they could benefit by fixing, until you uncovered it.

Do you need to be neurodiverse to do this? Absolutely not. It just gives you a slight head start. Like any skill it can be learnt and when practised enough it can be developed to the point where most successful founders become very, very good at it. But like any skill it takes lots of effort and practice. This is why founders should try and seek mentors who are ex founders. Building a start up into a scale up means that you don’t just do this once but you do it again and again and again as you grow and scale. You have to become very good at it in order to succeed so all successful founders by definition can do this and do it well. Tap into that. 

You often don’t need to pay them or give them equity or have them sit on the board but frequently in return for as little as a flat white and a croissant you can lean  into this much needed skill set. While finding painkiller doesn’t guarantee success when you’re founding a business, as there is a lot more to building a successful business than just a must have product, but it is an essential foundation and without one you will fail. So, find an ex-founder and tap into their experience in this or learn yourself or even better do both. Whatever you do don’t do ‘market research’ as that will inevitably end up with a solution looking for a problem. Your startup will fail or if you already have a business then your attempts to grow by creating new products will fail.