The Four Steps to the Epiphany

10. Unrealistic Expectations 

I’ve argued that the product development model leads to fundamental and often fatal errors in the 

first year or two of a startup’s life. We can sum up these errors in terms of three unrealistic 

expectations: 

•  That the product development diagram can be relied upon to guide activities that have 

nothing to do with product development—namely, finding customers, a market, and a viable 

business model.  

•  That Customer Development will move on the same schedule as product development.  

•  That all types of startups and all new products will achieve acceptance and deployment at 

the same rate, namely starting at First Customer Ship. 

In addition to these three errors, there is one more.  Startups face enormous pressure from their 

investors to become profitable.  Sometimes, to get funded, these new ventures make unrealistic 

financial assumptions – about market size, growth or simply ignoring the consequences of the 

Market Type they have chosen. These optimistic expectations become the plan of record, forcing 

execution towards unrealistic and unachievable goals. 

Webvan made all of these mistakes, visibly and publicly. Yet most observers wrote off its failure 

as just one of the many “dot-com busts,” attributing the venture’s demise to something related to the 

Internet. The reality is more profound and germane. Webvan and the entire dot-com collapse were 

the result of falling victim to the three expectations I’ve just described; “build it and the customers 

will come,” (regardless of the number of dollars raised) is not a successful strategy. 

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Chapter 1: The Path to Disaster   

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