Most founders are too deeply engrossed in their routine firefight i.e. micro-managing the operations, people, customers, channel partners, etc. As a result, they often overlook the prevailing gaps in their venture, which often result in disastrous consequences!
A gap refers to a area or aspect, in which the startup is particularly weak or susceptible to the competition. In fact, it's easy for a new entrant to assess such gaps prevailing in an existing product/market to quickly innovate with their own solution and eat away former's business as well as market share.
Predominantly, gaps are the primary reasons of "startup burn/failure".
We all know or must have read about the classic case study of Netscape-Microsoft Browser War. Netscape was the most popular (and paid) browser of 90s, an era when dial-up modems were the most common way to access the internet. Until, Microsoft smartly bundled "Internet Explorer" browser as a part its operating system, Windows 95. It meant that you no longer have to pay for the browser. Netscape died a slow and painful death.
In India too, we've seen how Reliance Jio completely disrupted the telecom industry by introducing the 4G technology accompanied with 6 months free subscription package. A value proposition, unthinkable of during that time. Today, Reliance Jio is the No.1 telecom service provider, while Vodafone-Idea, which (like Airtel) was caught off guard, is now fighting a near bankrupt situation!
Every Startup has 2 or more Gaps!
Let's look at the dismal statistics w.r.t Startups:
90% of Startups (world over) fail within first 5 years - Forbes, IBM & Oxford Study
If you study the top 20 reasons of why startups fail (by CB Insights), every single reason hints to an prevailing gap in each of these failed startup.
What is the end result of these gaps?
Well, Investors don't fund you, and the chances of your startup going bust, are very high!
How my simple query shocked the Founders, almost shattering their dreams?
A client (upcoming startup) had hired my services to create a compelling Pitch Deck for them. Usually I've an detailed discussion with the founders, on each aspect of the startup. Until we were on the "Business Model", the founders passionately spoke about their key competitive advantage against their well established large competitors in that market, and how it garnered them large BFSI accounts in the country.
Investors like to hear from startups about their key differentiation against both their established competitors and even the new or alternative service providers!
Note, our discussion was truly engaging till this time ... until I shared a small, yet an critical gap in their business model, which any new entrant or even eCommerce sites can easily take advantage of. I queried the founders about this potential gap, which could threaten their very existence, in the next 1-2 years?
It was as I had dropped a bomb, the founders saw each other's perspiring faces. Being an advisor, it's often hard to share or talk about your clients' weaknesses, but at the end of it, when you honestly share your opinions, they won't have to pay a huge or substantial price later on. So, they asked me for some time to really ponder on this.
Here's an brief insight on how your business could be sitting on a prevailing minefield, read "How Amazon will dominate any market"?
Next day, I messaged them explaining "how they should be reviewing their entire business model to assess and mitigate such gaps or voids", which could be critical for their own business and from the Investor's' standpoint.
Investors are seasoned professionals, who assess the startups from a birds eye view to the minute details, on each aspect of the startups, who are pitching them. Just by looking at your pitch deck, they can snoop out such gaps! And it's presumed that founders are either unaware of these gaps, or haven't figured it out, as yet.
In either case, the investors have already pass them over to look at another prospective startup!
So, when was the last time, you reviewed your startup, to see if there are any prevailing gaps?
Chat Live with us, if you want us to review and unearth all potential gaps prevailing in your startup, and suggest ways to resolve or mitigate them!