The startup dead zone and how to avoid it

The ‘dead zone’… This is the purgatory where startups are either cleansed of their inability to serve the needs of their respective markets or they, like most startups, die a painful death. This is a familiar and very dangerous place to be in because it could literally make or break your venture.

Based purely on my limited experience in the startup realm, the dead zone can be defined as any prolonged period of time where your early-stage startup makes money but experiences little to no growth. What makes this zone exceptionally dangerous for startups is that you get fooled into believing that your startup is doing okay — it is, after all making money. The problem is by ignoring the growth problem you are actively choosing to focus on the wrong goal.

A startup by definition is a temporary business entity carrying out a series of business experiments based on a set of assumptions with the objective of growing into a big business. If you are not growing for a prolonged period of time, your startup is in crisis as it cannot, without user growth, become a big business.

Why?

There are a number of reasons a startup may find itself in the dead-zone. Firstly, it is possible that you misread trends in your market.

Here is a prime example… You launch an ‘anything goes freelance marketplace’, absolutely ignoring; i.) the fact that the freelance space is oversaturated with businesses doing the exact same thing, ii.) South African companies have a general distrust for freelancers – they would at most, be willing to work with freelancers with a proven track record on Upwork or someone they have worked with in the past and iii.) that talented developers do not want to be given silly tasks by clients who are clearly trying to exploit them by offering below market rates (and refusing to pay once the project is complete).

The startup in this example may, if it is lucky, experience some growth. However, unless it changes its approach by building a solution that factors in the three problems stated in previous sentence, the startup is unlikely to experience any further growth simply because the founders have misread market trends.

In order to prevent the aforementioned situation from happening you need to stay abreast with your market happenings and its drivers. Ask industry related questions on Hacker News or to industry experts on Quora if you must, have constant discussions about your market in order to keep in touch with the trends that are continuously defining your market space. This may not get your startup out of the dead zone but it will give you greater insight on your market.

There are numerous other reasons you may find your startup stuck in the dead zone including, but not limited to; not solving a pertinent problem and not changing your product, or marketing approach to accommodate changing user needs. Finding the reason requires some introspection from your part. You understand your startup and your metrics well enough to figure out why it is not growing.

What can you do?

I will not pretend to be an expert in entrepreneurship as I have a clear understanding of the limitations of my knowledge, but I will propose a few solutions that I believe are worth trying. Since a startup is by definition a series of experiments, you can start off by re-evaluating the assumptions your experiments are based on.

If you were for example to build a Slackbot that charges companies to send a summary of their analytics to a Slack channel of their choosing, you may, if you are not growing for a prolonged period, want to reconsider the assumption that people would want to subscribe to the services offered by your Slackbot. Maybe you ought to shift from a subscription model to once-off payments and upsell your clients.

Alternatively, the problem could lie in the fact that the solution offered by your startup has not been communicated clearly enough to attract more users. Save for a few early adopters, people are generally too conservative to use a service that doesn’t have a very clear purpose. This is not a bad space to be in as it gives you quite a lot of leeway to experiment and/or pivot in order to figure out what problem you should be trying to solve, how to communicate your solution clearer and which market you need to target. Do not remain stagnant for too long, try different things and try them as quickly as possible. Trade perfection for speed, but do not do things haphazardly, there has to be a balance.

These are but a few suggestions that may or may not work for your startup. The fact, however, remains the same, if your startup is in the dead zone you have to do something to act as quickly as you can to get yourself out of that position. It may happen that your startup is simply a small business that cannot scale into a big business by virtue of the market you are targeting, if that is the case then this article probably does not apply to you.

Feature image: U.S. Department of Agriculture via Flickr.