3 Business Strategies You Think Are Good for Growing Your Startup That Actually Aren’t


During World War II, the bomber fleets of the Allied forces were getting decimated by German defenses, and they needed to know how to improve the armor on their planes. For help, they turned to a statistician named Abraham Wald. Wald compiled a deep analysis of bullet damage done to all the bombers that safely returned, and then he made his suggestion. He advised the Allies to add additional armor to all the places on the returning planes that did not have bullet holes.

Seems counterintuitive, right? Wouldn’t you want to better protect the parts of the planes that were getting hit?

Actually… no. Wald knew he only had data related to the surviving planes, meaning his data showed where planes could take damage and return safely. What he didn’t have was the data for all the planes that didn’t survive. He reasoned that those planes likely received damage in the most vulnerable places, which is why they never returned.

The phenomenon from Wald’s analysis is known as survivorship bias. It’s a form of selection bias that causes people to make errant conclusions about something that navigated a difficult selection process… like… for example… creating successful startups.

As anyone reading this surely knows, the vast majority of startups fail. Because of this large failure rate, entrepreneurs often decide what’s good and bad for their startups based on a biased dataset. In other words, as entrepreneurs, we see enormous companies like Amazon and Google and Uber thriving, and we think we should be copying those companies. But that’s a terrible strategy for building startups.

Companies like Amazon and Google and Uber didn’t begin their corporate lives by operating as enormous businesses. They began as small, scrappy startups that grew into enormous businesses over time. As they grew, they changed the ways they operated. In fact, the ways they changed were, in part, designed to specifically help protect themselves against small, scrappy startups like the one you might be trying to build.

Don’t be fooled by what you’re seeing from “successful” startups. A lot of the business strategies you think are good based on how you see other companies operating are actually bad and likely to kill your startup.

To help convince you of my point, here are three common examples:

1. Target the largest market possible

When entrepreneurs look at companies with millions of customers and global brand recognition, it’s for them to assume they, too, should target enormous markets.

Nothing could be further from the truth. When you’re a small, young startup, targeting large markets is one of the worst decisions you can make. That’s because appealing to a large and diverse market requires broad and nebulous brand messaging, otherwise you risk alienating potential customers who won’t understand what your product/service does and why they should buy it.

That’s fine for a company like Google. Yes, they’re a search engine, and they’re also a GPS service, a phone manufacturer, a browser, a laptop operating system, and dozens of other things. Heck, if Google started selling toasters, I’d probably buy one of those, too. But remember, Google didn’t begin that way.

In its earliest days, Google was just a search engine. If Google had tried to also sell phones when it was first launching, we probably wouldn’t be talking about them today. They would have spread themselves too thin, their brand messaging would have been messy, and the company would have failed.

The same is true for your startup. Don’t try to be everything to everyone. Find one thing and do it really well. Once you start to develop a brand and a loyal following, then you can slowly expand into larger markets.

2. A “no” from a potential customer is bad

Most entrepreneurs assume people rejecting their products is bad. It means they’re not going to be your customer. Since the world’s most successful companies have lots of customers, surely they don’t get rejected.


With very few exceptions (often exceptions created by laws and regulations), companies don’t own all of a market. Even Apple and its seemingly ubiquitous iPhone only (“only”) has 27% of the global smartphone market.

That means, for whatever reasons, nearly three quarters of all smartphone users have directly or indirectly rejected iPhones.

This stat is a great reminder that a “no” isn’t a bad thing. In fact, for any product you ever try selling, you’re statistically much more likely to get a “no” than a “yes.”

Because of this, people saying “no” to your product isn’t a bad outcome. There’s actually an outcome that’s much worse: a “maybe.”

When potential customers clearly tell you “no,” you can quickly move on to all the other potential customers (there should be lots!). In contrast, when someone tells you “maybe,” you have to spend more time trying to convince them to buy your product. If they ultimately don’t buy, you’ve wasted extra time, and there’s nothing worse for an entrepreneur than wasted time. You can always get more money, but you can never get more time.

Always remember that a quick “no” is a gift. It saves you time.

3. Take every customer you can get

Even though most people will ultimately tell you “no,” some will say “yes” and become your customers. Surely that’s a great thing, right? After all, having lots of customers is what makes companies successful.

But all customers aren’t equal because customers aren’t just a source of revenue. Customers also have costs. Because your customers are going to cost you money, time, and other resources, you don’t want to focus only on finding people willing to pay. You have to find people willing to pay more than they’ll cost.

Customer costs come in plenty of different forms, many of which entrepreneurs never consider until it’s too late. One obvious example is customer support. When you sell a product to someone whose use case for the product doesn’t match how you’ve built it, that customer is going to need lots of help. Your job, as the company creating the product, is to provide that help, and it’s going to cost you time and money.

A less obvious but more problematic example of how bad customers can ruin a startup is when unsatisfied users are vocal about their displeasure. Rather than just being annoyed, canceling, or asking for refunds, they tell other people how terrible your company is.

Sure, for them, maybe your product wasn’t a good fit, but that might not be true of the people they’re complaining to.

You don’t want bad customers poisoning your product in the minds of good customers, do you? Of course not! So don’t just take anyone’s money. Instead, create a screening process that allows you to target high quality potential customers and weed out any potential customers who might cause long term problems.

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