There is only one indispensable success factor for a startup: the certain knowledge of a market.
Your startup can succeed even without a unique breakthrough idea, as we saw in Step #1.
Zappo’s doesn’t sell better shoes, they sell shoes better.
It’s also challenging but possible to succeed without having a store/factory/office/brewery/campus, jaw-dropping name, logo, patented process, secret sauce – or any number of other “essentials.”
Yes, they are all important, but no one of them is absolutely crucial. We can all think of examples of successful firms soaring despite “lacking” one or more conventional wisdom elements.
A substantial, findable market segment for your product or service is the one essential that you cannot escape. If “the dogs won’t eat it,” your antibacterial toothbrush is doomed, despite how dazzling you, your investors or your mom believe it is.
This is not to say that the category has to exist already. You may be introducing something so new it creates a new category, the way FedEx or Pinterest or American Idol did. The best way to dominate a category, to “own” a category, is to invent it. You can’t get to that exalted level, however, unless you can confidently point to, say, Hispanic women age 25-49 who will go nuts for your product/service as soon as they learn about it. That will light the candle.
It is, in other words, a disaster to create a nobody-ever-did-this-before category (rent-a-giraffe? water soluble boots? habañero baby food?) without an audience waiting in the wings. Who are they? What do they have in common? Can I reach them easily?
Your startup is a dicey until research (or Steve-Jobs-like instinct) tells you you’re going to fill a real need of a real group of people. Say hello to your prospects or goodbye to your investment.