What is it about?
Approximately 42% of startups fail because there is no demand for their product. How can founders avoid this trap without investing enormous amounts of time, energy, and money? For tech startups, the answer may lie in UX research and UX design. This article explores UX methods that can provide cost-effective and quick insights for tech startups and other companies.
The IT sector is a booming area for startup creation. A significant portion of tech startups focuses on developing mobile or web-based applications. According to Shortlister, around 32% of global startups in 2023 were in the software industry.
70% of Tech Startups Fail
Operating in a growing market, however, is no guarantee of success. The IT startup sector is rapidly evolving, and competition is fierce. Around 70% of tech startups fail within 20 months of their first funding round. The primary reason, according to CB Insights, is that 42% of all startups cannot establish themselves in the market because there is no demand for their product. An article from the Harvard Business Review emphasizes this point, noting that many founders fall into the trap of developing solutions for non-existent problems.
UX Research UX Design
How can app and software startups avoid this pitfall? The answer lies in User Experience (UX). UX research and UX design can significantly improve the success rates of tech startups. According to a McKinsey report, companies with strong design practices grow nearly twice as fast as industry benchmarks.
Many startups are under time pressure and rush into software development without first having a clear vision or understanding market demand. They often cut corners on UX research and design, which ultimately harms their product and chances of success. However, there are many UX methods that can provide quick and valuable insights.
Why are UX Methods Crucial for Startups?
Research helps define the problem faced by the target audience. The following UX methods offer initial insights at relatively low costs:
User Interviews
Potential users are asked about their problems, goals, and experiences, providing valuable initial insights into the target audience.
Competitive Analysis
Competing products are evaluated for their strengths and weaknesses, offering pointers for your own product development.
Surveys
Online surveys allow for cost-effective engagement with many participants. The resulting data is structured and measurable, making it easy to analyze quickly.
These methods, along with others, help validate assumptions about the target audience before you invest time, energy, and money into solutions. Once the need is confirmed, the design process can start with creating solution proposals. Rapid prototyping and storyboarding are especially quick and cost-effective ways to explore different solutions.
UX UI Design (Prototyping)
The actual design of the solution should not be created during the software development process but within a design prototype. Prototypes ensure not only a visually appealing and consistent design but can also be tested by users to gain early insights without the need for expensive software development.
Design prototypes provide an early visualization of your final product and can be made interactive. You can practically navigate through your software and test its functions before development even begins.
Our Experience
We have accompanied several startups on their journey. From their experiences and our years of industry expertise, three things have become clear to us:
Early Development Costs More in the Long Run
Those who start software development as quickly as possible in order to save time and money end up paying the biggest price. Without a shared vision and without a validated need for the product, the priorities in the development process are constantly changing. The end result is a complex and expensive process that produces a product with an unclear market need.
Quality in Research and Design is Essential
The research and design process must meet certain quality standards and should not be dominated by deep-seated biases. Shallow and biased insights are hardly more valuable than no insights at all.
Collaboration with Design Professionals
In our experience, companies that work with design professionals from the beginning and adjust their plans to meet the real needs of their target audience have the best chances of success with the least risk.
