Is The Era of Startup Customer Coercion Over?

In today’s startup culture, we venerate hard driving tech titans such as Mark Zuckerberg and Elon Musk because of their ability to disrupt industries by pushing individuals to do new and unexpected things. While the analysis of this “pushing” is mainly on startup employees, little attention has been paid to the “pushing” of end users. 

While such an oversight isn’t surprising, as building in the startup world is the most difficult element considering the shortage of qualified personnel, the reality is that the startup community overlooks the mood of the end user to its peril. Indeed, a happy end user community is just as important if not more important than finding qualified personnel. Without the revenues or the numbers that end user communities provide, there is no future profitability.

Many would argue that startups do indeed focus on the end user much more than traditional corporations. With the prevalence of dedicated user research (UX) groups within startups focused on providing detailed understanding of end user behavior, startups state they focus exclusively on ensuring their end users are satisfied. But do they really?

Recently, there has been a spate of negative press concerning how many rapidly growing startups are failing to provide basic customer service to their end users. This is particularly acute when the situation is outside of the normal processes. Whether it is Coinbase or Robinhood, startups have been accused of failing to address in a timely manner the customer service issues that their end users expect. Indeed, one could argue that startups are particularly prone to relying on automation which inherently fails in outlier cases.

While startup customer service is a topic to be discussed at another point in time, it is a tangential to the primary focus which is the amount of coercion that startups impose on their end users and whether end users are starting to finally push back. If end users are indeed pushing back then what are startups supposed to do?

The topic of end user startup coercion hasn’t flared until recently thanks in part to the rise of concerns over social media and the potential negative mental health side effects that may arise. Again, the focus is not on the unconscious guidance that startups maybe exerting on end users but the conscious ones. Indeed, the topic of unconscious guidance is still an ever evolving one and one that needs to be covered separately.

What is conscious guidance on the part of startups? In many respects, it is the specific design of processes and frameworks by startups towards the majority its profitable use cases with little regard towards the edge cases. 

One cannot fault startups for focusing on its most profitable use cases. With limited resources due to limited funding runway, it is no surprise that startups focus on profitable use cases. Without those profits, startups would not be able to fund the resources necessary to continue to grow. While the focus on profitable use cases is critical to ultimate startup success, startups nowadays cannot afford to ignore edge cases. Indeed, they ignore these edge cases at their peril.

Thanks to social media, customers who happen to fall into edge cases, have a channel that is extremely strong and viral in nature to voice their complaints. For many startups, this has lead to negative press, damaged brand reputation and, from a backend perspective, a scramble to address customer complaints. If not addressing edge cases is so problematic why does it happen?

The simple reality is that for all the advances humanity has made when it comes to technology and business processes, we are nowhere close to being able to individualize experiences 100% for every use case. While humanity is making strides towards that individualization, we still have a long way to go.

There is no doubt that business models are slowly moving towards meeting the needs of smaller segments of the market. More agile and nimble startups have managed to develop streamlined processes and technologies to address smaller segments of the market profitably. However, while streamlined processes and technologies have enabled startups to address smaller market segments, there are still significant limits.

Indeed, it is still one of the struggles of the startup ecosystem today. While certain aspects of the economy have moved towards a post-modern era, such as the distribution of information via the Internet, there are still a significant number of aspects the economy that remain in the manufacturing era. It is these antiquated aspects that hold startups back from further serving smaller market segments.

One only needs to look at the antiquated way we manage human capital as a demonstration of how far we much we still need to revise. While we are slowly starting to make strides in moving human capital towards a just in time model (i.e. gig economy), it is still in its infancy. Indeed, many would argue that it is critical that we move past the gig economy model towards a more sustainable employment model.

It is not only how we manage human capital that remains antiquated but even the technologies startup use are still in their relative infancy. For all the talk about Big Data or artifical intelligence, its implementation is very much in its nascent stages. Nearly every founder and customer has stories they can tell concerning how Big Data and artificial intelligence have provided recommendations that weren’t individualized.

While strides have been made in terms of business models and technology that has allowed startups to serve smaller market segments, there is still a long way to go. This, unfortunately, means that we continue to have both startups and corporations push the majority of its consumers toward profitable uses cases while intentionally ignoring edge cases. The question then becomes how long does this last and can it last?

At present, it seems like it increasingly can’t last any longer. One could argue that in many respects it is due to the fact that the innovators may have pushed too many changes onto an increasingly resistant population. A population that perhaps is tired of change and is wondering if change is in its best interests or the interests of a select few. 

What does this mean for innovation? Nothing good over both the short term and the long term. If individuals believe that change is not in their best interests, they will decline to try new innovations and will prefer to look inward versus outward. In other words, startups may have a harder time to convince enough potential customers to try their products and services to reach profitability. Something of significant detriment to the startup ecosystem as a whole.