The Red Flag Glossary
If you hear yourself saying one of these, slow down. Each entry has a plain definition and what to do about it.
23 of 23 terms
Better product wins
The assumption that quality alone beats competitors. In mature categories, buyers often prefer good enough and cheaper.
What to do about it: Name the specific buyers who care about what you do better, and confirm they will pay the difference.
Build it and they will come
The belief that a good product will attract customers on its own. It almost never does. Most products fail quietly because nobody hears about them.
What to do about it: Name where your first 100 buyers are before you build. If you cannot, find them first.
Disrupting an industry
A phrase that usually means the founder has not studied why the industry works the way it does. Established industries often have good reasons for their habits, such as regulation, trust, or thin margins.
What to do about it: Interview five people who work in the industry and ask why things are done the current way before claiming you will change them.
Everyone is our customer
A buyer description so broad that it cannot guide marketing, pricing, or product decisions. When you speak to everyone, nobody feels addressed.
What to do about it: Pick the smallest specific group who has the worst version of the problem and build for them first.
Feature creep
Adding feature after feature before anyone has paid. Each addition delays the real test and rarely improves the odds.
What to do about it: Find the smallest version someone will pay for and sell that first.
If we get just 1 percent of the market
A calculation that starts with a huge market and assumes a small slice is easy. Winning even 1 percent of a large market is extremely hard and expensive.
What to do about it: Build your numbers from the bottom up: how many specific buyers you can reach and convert each month.
Launch and pray
Releasing a product with no plan for the first customers and hoping the announcement does the work.
What to do about it: Line up your first ten buyers personally before launch day.
My friends said they'd buy it
Friends and family are kind, and kindness is not demand. Their encouragement is the least reliable evidence an idea can have.
What to do about it: Ask strangers who have the problem what they did about it last time. Then ask for a deposit.
No competitors means no market
When nobody offers a solution, the most common reason is that nobody pays for one. A true gap is possible, but rarer than founders hope.
What to do about it: Find out what people currently do about the problem. If the answer is nothing, treat that as a warning, not a green light.
Passion is enough
The belief that caring deeply guarantees success. Passion helps you persist, but it does not create buyers or fix unit economics.
What to do about it: Keep the passion, and test the market, problem, money, and distribution as coldly as you would for someone else's idea.
Pre-orders prove demand
Pre-orders are strong evidence, but only when they come from strangers at your real price. Pre-orders from your network at a discount prove loyalty, not a market.
What to do about it: Count how many pre-orders came from people who did not already know you, and at what price.
Price to beat the competition
Setting a low price to win customers. It often attracts the most price-sensitive buyers and leaves no room to pay for marketing.
What to do about it: Price on the value to your buyer, and expect some people to say no.
Solution looking for a problem
A product built because the founder could build it, not because buyers were struggling. Often starts with a technology the founder finds exciting.
What to do about it: Write the customer's problem in their words, and confirm ten people describe it the same way, before going further.
Sunk cost
Continuing an idea because of what you have already spent, rather than what it is likely to return. Past spending is gone either way.
What to do about it: Ask whether you would start this idea today, knowing what you now know. If not, stop.
Survivorship bias
Studying only the businesses that succeeded and copying what they did, while ignoring the many that did the same things and failed.
What to do about it: Study failures in your category as closely as successes. The Teardown Files exist for this reason.
The cold-start problem
The challenge facing any business that needs two groups to show up at once, such as buyers and sellers. Neither side comes without the other.
What to do about it: Start in one tiny niche and recruit the first group by hand, or become one side of the trade yourself.
Thin margins
Too little profit per sale to absorb returns, damage, marketing, or mistakes. Common with physical products and low-priced offers.
What to do about it: Aim for a gross margin that leaves room for acquisition costs and errors, and test a higher price.
Underestimating your own time
Leaving the founder's hours out of the cost of each sale. It makes a business look profitable while paying its owner very little.
What to do about it: Count your hours at the rate you would pay someone else to do the work.
Vanity metrics
Numbers that feel good but do not predict revenue: followers, page views, waitlist signups, likes.
What to do about it: Track the numbers that cost buyers something: deposits, paid orders, renewals, referrals.
Vitamin, not a painkiller
An idea that offers a nice improvement rather than removing a problem people are actively suffering from. Vitamins are much harder to sell.
What to do about it: Find the group with the most severe version of the problem, where the vitamin becomes a painkiller.
Waitlist as validation
A list of emails from people who clicked a free button. Signing up costs nothing, so it proves curiosity at most.
What to do about it: Ask the waitlist for a small deposit. The conversion rate tells you how real the interest is.
We'll figure out monetization later
Postponing the question of who pays. It often means nobody will, or that the eventual price will not cover the cost of serving users.
What to do about it: Decide who pays, how much, and how often before you build. Test it with a real price.
Want to see these red flags in context? Read The Teardown Files.