In the world of startups, there’s a category of product that’s unusually challenging: does solve a problem, more important than a nice-to-have but nowhere near a must-have, and only valuable enough to build a small business. I call these types of solutions the green vegetables of startupland.
Why green vegetables? We all know that we should eat more green vegetables, yet most of us don’t do it — that burger and fries sure tastes good. Green vegetables are clearly one of the healthiest choices, only we go for what has more dramatic flavors (sweet or salty or fried!). The cravings and urges just aren’t there for this type of food. Now, this isn’t commentary on the value of green vegetables, this is focused on human wants and desires. We want something that’s tasty. We want something that satiates our hunger quickly. We want something that triggers the pleasure receptors in our brain.
These green vegetable products are better than nice-to-have solutions. There’s clearly nutritional value and we should consume them. Only, they aren’t the main course. They aren’t what gets people excited when sitting down to dinner. People buy enough of them to build a business, but the share of wallet and willingness to spend isn’t great enough to build a big business.
When a startup with a green vegetable product raises money from institutional investors, another problem occurs. There’s some momentum, otherwise the startup wouldn’t be able to raise money. Only, for whatever reason, it was hard for the investors to see this wasn’t a must-have product in the path of revenue or truly mission critical. Then, as cash is burned in an effort to grow faster, the rapid market adoption just isn’t there. Modest growth is attained, but hypergrowth isn’t achieved. This often results in a zombie startup that’s big enough to survive indefinitely while being too small to raise more money on reasonable terms or have a decent exit.
Green vegetable startup products are more common than you think. Entrepreneurs would do well to stay as close to the customer as possible and focus on products that are mission critical or clearly help make more money. If there’s any doubt on either of those criteria, go back to the drawing board or dive deeper with the customer to figure out what needs to change. Eat your green vegetables and know how to identify them in startupland.