Last month, I discussed some of the “bleeding-edge” tech featured at this year’s Consumer Electronics Show—cool electronics and everything AI. For many companies, this event, which showcases new trends in tech and the latest startups from around the world, is supposed to be the road to validation.
Many startups bet their existences on results from the CES, where investors, distributors, customers and partners are all looking for that new-product magic. Incredible moments can occur here for founders and investors—moments that validate all of the hard work and sleepless nights. That validation can take a business from pre-revenue to revenue, and from revenue to growth.
I always tell early-stage founders: “No idea for a product or service company is a bad one, as long as you can get someone to buy it twice.” Why twice? Because the first purchase could be a mistake. We’ve all bought something that turned out not to be of value. The second buy is a vote of confidence.
Suppose your new product is a one-time buy, such as a new AI vacuum cleaner like the ones previewed at CES. How do you get the second buy for validation? It happens when your first buyer tells their best friend, or when your first B2B customer tells their vendor to contact you. As a founder, you always remember your first customer—and likely the second, too, because after that point, everything usually changes.
In my January column, I focused on trade show tips, tricks and hacks. The trade show is where your customers will be. The problem for many of the companies at CES, however, is that they don’t know who the customer really is. They won’t, can’t and don’t know how to take leads, prioritize them and then follow up appropriately. Only around 6% of U.S. companies end up believing they got their money’s worth at trade shows.
For most early-stage companies, the road to validation is long and hard. The trade show is an expensive gambit if you’ve had no sales yet. This is because you don’t know if you’ve identified your ideal customers. Even if you have, is your message right? Will it attract these customers? Do you adequately express why they should do business with you instead of the competition? These concepts are huge in starting a new biz.
I’m often contacted to help bail out a founder who has buried themself in a rabbit hole, having built a product or service that nobody wants. They often haven’t talked to any customers, partners, experts or distributors before being hypnotized by the prospect of being the next big thing. First-time founders tend to get drunk on their own visons and jump ahead into a dreamworld of a prosperous future, without reality. Reality is gaining early validation. They often spin ahead to building their “solution” before gaining critical, independent, objective analysis from various parties. My companies have been formed in many sectors—custom paperclips, software, landscape design/build, and international market consulting. All of my companies over the last 35 years have been built in concert with customers and partners as early as possible. When we came up with the custom paperclip idea, it was crazy—and potentially expensive, because we had to manufacture and ship the products from China before we ever sold anything.
So, what did we do before spending money on the wrong stuff? We gathered a bunch of professional reps from the promotional-products industry and showed them a bunch of mockups. We showed them one of the most recognized logos in the world—a red Coke bottle, but as a paperclip mockup. We beckoned them to tell us the truth and not blow smoke up our asses. We didn’t mind getting our feelings hurt, because that’s a lot cheaper than going to market on the false premise that the market will embrace us and our cool new product.
What did we find out in those early meetings in 2006? We found out that it was a great idea. We found out that they had never seen anything like our custom paperclips. We learned an important truth—in the promotional products industry, the sweet spot is less than $5. That tidbit from the experts was gold for us. It was likely one reason the company took off and grew for the next several years, until the recession. (That story is for a different column!)
As soon as we launched, we were a hit. Repeat customers kept placing orders, and the referrals kept coming in, too. There is no easier sale in business than the repeat customer or the referral sale. This foundational premise is the essence of a sustainable business: Get customers to keep on coming back.
It all begins with truly finding the real value of your product or service, at the right price for the right customer, before you spend all of the time and money to build something that no one wants. Market change, political change, environmental change and competitive change can all affect a business and its relevance. But to launch, you need to engage early and often, listening honestly to what the experts and the customers are telling you.
Don’t let your ego piss your life savings into an abyss of business failure. Build what they want, not what you think they want. In business, anytime we say, “Well, maybe …” or, “I think …” it means we don’t know, and we need to find out—with verification—before we make a move. These tips work in any business, in any sector.
Good luck building your company in 2025!