Someone I know well sent me this picture over the weekend. She was going to the farmers market in her neighborhood. It is an enchanting walk in a beautiful setting, and my mind started reeling. Two days prior I was addressing our newest group of entrepreneurs about the market, what it is and what you can expect from it. I was talking about a different market – although not completely. The parallels and contrasts are striking, as I wonder if our Startup NOW Accelerator participants have what it takes to go to it.
Truly left to themselves, markets make adjustments in real time, as billions of buyers and sellers react to each other based on their needs and what they see around them. This interaction is organic, precisely like the market to which this street leads. Organic in the sense that nobody coordinates it, it grows in efficiency on its own. Only random environmental variables affect it, much like the vegetables and fruits in the organic market at the end of the street. If you are an entrepreneur – in this case a seller – all the insight, knowledge and information resulting from all of these interactions are way too hard to compile and understand. You rely on the one signal – prices – that communicate all the knowledge of the market, and with that one piece of information you decide whether to go to market or not with your product.
This is all fine and simple, but in the fast paced technologically evolving world in which we live in, with products that are complex and wildly unalike, what can we learn from how prices for squashes and tomatoes, or corn and soybeans are fixed by the market? What we learn is that decisions regarding going to market with commodities is relatively easy, and going to market with anything else is hard. The less of a commodity your product is, the more disperse and complicated information of its market is. It feels like there is not a simple signal communicated by a price that can tell you what action to take, to go or not to go, because so many things are in play.
As we teach our entrepreneurs at the Innovation Hub at Broward College, all dealing with innovative products and services, be doubtful about what you know and what you think. Be brutal with yourself. Don’t assume anything. Be skeptical, in a healthy way, of what you claim as your own expertise. I’ve heard angel investors comment positively on the good entrepreneurs that they have invested in with words like “she knows what she knows, and knows what she doesn’t know” or “we invested in the company because the entrepreneur is very coachable”.
Take your product or service and think about all the assumptions of why would customers want it and how much they would be willing to pay for it, and validate these assumptions. Do this intensely and thoroughly BEFORE you go to market. Be smart about your validating method and don’t be paralyzed by analysis, devise a strategy. Once satisfied, go to market with it, but still be on the lookout for turns and twists on the road. You will not always find that the road is, like in the picture, beautiful, bright, straight and paved with green.