Is nine years of research and data a sunk cost? It sure doesn’t feel like it.
For those who do not live with an economist like I do, and have not spent many hours arguing over the accuracy of the textbook definition of “sunk cost,” allow me to share the definition in economic terms.
A sunk cost is a cost that has happened that you cannot recover or get back. This may be the cost of a college degree. Sunk cost. Done. Never going to get that back. Concert tickets you bought for friends, but they had a death in the family at the last minute and can’t go. Tickets are a sunk cost. No real loss. In the world of sunk cost, let it go.
But do people actually live that way? Do they feel carefree about the unused concert tickets? I argue it is more likely they do feel some emotional attachment to the investment as seemingly illogical as it may be.
Likewise, entrepreneurial scientists and engineers who have spent years developing a novel solution are hard-pressed to believe that no one is willing to use or buy the solution they created. No one in that situation smiles and says, “Well, the people in the market said they won’t buy my product, so it’s time to move on to new things!” (Emphasis on the word smile.)
Logically, it’s a cost savings to stop the train, get off and get on a new track. You now know there is no market for the product you so passionately created and believed in, it’s time to pivot.
Emotionally, however, the path forward can be fraught with waves of grief, loss, feelings of failure and fear and disbelief. Lots of disbelief. Questions abound that beg for accurate and meaning-making answers of what feels like an impossible outcome.
“How could our team be wrong? This solution is so much better than what is available today?!”
“We have been working on this for years and we know more than the customers. They don’t get the value.”
At RAMP, we are helping companies lower their risk and craft business strategies that include data they hear directly from people in the market. It enables them to aim in the right direction.
Here is the bottom line in data-based entrepreneurship: listen to the people that will use the product. Listen to the people who make the buying decisions – who are often not the end users at all.
At RAMP, we seek entrepreneurs who are ready and excited to dig into the sleuthing nature of this data-gathering and analysis. And, as it happens, we end up working with founders that largely fit that archetype – they are lifelong learners, seekers of accuracy and facts to support the strategies and business models they craft.
RAMP opens its application process for the fall cohort soon. We are looking for health and life science startup companies. The selection process is competitive and open to Virginia companies and founders who aim to uncover unknown market data that can accelerate and drive their business models. Stay tuned for more details soon!