Founders Beware of “Michigan J Frog”

If you don’t remember the Warner Bros. frog from the Merrie Melodies series, you may want to check out the 1955 cartoon “One Froggy Evening” and then return for the remainder of this article. It’s worth the watch even if you don’t return. Here is a link to his wiki page: https://en.wikipedia.org/wiki/Michigan_J._Frog

Founders must be optimistic to succeed, but they must also be aware of how the rest of the world perceives their offering. One of the first rules of Marketing is Never Project Your Feelings Onto the General Marketplace. Just because your product “sings” for you like Michigan sings for Hapless Harry, that doesn’t mean that it will sing for the rest of the marketplace. It is always better to “test” the market before investing in commercializing a product or service. Had Harry attempted to show even one other person how entertaining his frog was, Harry would have learned that Michigan only would perform for one person at a time. Harry could have saved the money he spent on renting a theatre and offering free beer to attract an audience.

Even more dangerous is an offering that “sings” loudly for some people, but not for most. Your offering could be so great that it develops a small but devoted fan base. Everyone who uses it loves it, relies on it, and evangelizes it, but their proselytizing falls on deaf ears and your customer base stagnates. The entrepreneur “just knows” that if only people had a chance to use it, they would love it, too, and the offering would be wildly successful. “It’s just an awareness problem.” If the founder works hard enough pounding the pavement, the phone lines, social media, and email and gets people to try it out, the new customers will soon be members of the fan club and repeat customers.

Unfortunately, despite the superiority of the offering, there is never enough momentum for any kind of groundswell of support and, like Hapless Harry, the founder exhausts all of their resources and relationships desperately trying to share a phenomenal offering with the world. Understanding the importance of flexibility, the founder pivots here and tweaks there trying to find a product/market fit, and may even gain a bit of traction that fuels the founder’s hope enough to stick it out a while longer.

I have seen this story play out first-hand with a product that evolved over decades into a full line of industrial, commercial and consumer applications. I am in the fan club for this product line, and I have witnessed the founders’ quest to make it a success. Unfortunately, I am not optimistic that it will survive. It is a shame because there really is no substitute that matches its quality and efficacy. That’s not enough, though. Another one of the first rules of marketing is that it doesn’t matter how good your offering is if nobody is aware of it, or, in this case, too few are aware.

The industry this startup tried to penetrate is well-established and the competitors have copious resources. Creating awareness is daunting in any situation, but it is even more challenging when existing competitors can easily drown out your frog’s song with a cacophony of instruments like sporting event sponsorships and stadium naming rights. That reminds me of another of the first rules of marketing: Consider the Competitive Response to Everything You Do. Competitors will try to bury you early before you have grown strong enough to fight and win, and they will fight dirty. After all, you are threatening their livelihood, so you should expect a vigorous defense. They will throw everything at you. This can be difficult for a newcomer to anticipate. Experience in the market you intend to participate in is essential. If you don’t have it, find someone who does before you invest your resources into promoting something new, even if it’s the best thing since sliced bread.

I recently provided consulting services to a founder who had developed a killer application that his target audience loved only to learn that that particular target market had insufficient budgets to afford the offering. Fortunately, my client took my suggestion to perform some basic market intelligence by calling some colleagues in the field to ask about their experience in that market. The founders had hired me to help with their pitch to investors, but after learning that their target market couldn’t support the startup’s business, the founders quickly decided to put their efforts on hold. The founders had invested cash and four months of effort, so calling a halt wasn’t trivial. In my observations, the longer a startup survives, the harder it is for the founders to call it quits even if things never take off, and the more likely it is that the founders end up like Hapless Harry.

Like a house that has been on the market too long, the longer a startup goes without gaining traction, the more wary investors will be. Investors know the business equivalent of Michigan J Frog. In this situation, if investors love the product, they will attribute the lack of traction in the market to the management. Further, most investors would prefer to invest in a strong team with a mediocre product than in a mediocre team with a strong product. If a startup’s product languishes too long, investors will blame the founders. In this case, if they love the product enough, investors may offer to purchase the company with the intention of replacing the founders. Before they do that, investors will do their own market research to try and understand why the founders never generated the success they anticipated. This is often the same market research that the founder should have done in the first place.

Founding a company is one of the toughest jobs in the world. That is why most fail, and that’s why it isn’t easy to get the experience and learn what it takes to build a successful startup. The rewards from success can certainly be worth the risk of failure, but if you don’t want to end up like Hapless Harry, set time goals and develop an exit strategy if you haven’t achieved some measure of success. Be realistic, and if you must abandon ship, do it before exhausting all of your resources.

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Published by Alex Galatic

Advisor to tech startups trying to commercialize technology as new products, services and companies. Electrical Engineer, MBA and entrepreneur.

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