The Biggest Risk

Marty Cagan argues that the biggest risk facing most startups and new products is not market risk or business-model risk but solution risk: whether the team can find an approach customers actually choose to buy and use. He observes that founders, especially those with business backgrounds, tend to focus on risks they feel more comfortable with, such as pricing and channels, while leaving the solution to developers. Most teams today are solving long-standing problems with new technology, and demand-validation techniques are cheap, so there is little excuse to skip them. Cagan concludes that product discovery should be treated as a core competency, and that the team should resolve solution risk first before investing in monetization and scale. His update clarifies that validating value, including willingness to pay, is part of discovery.

01Key takeaways

• Identify and resolve solution risk first, since a compelling solution is the foundation for everything else.
• Resist the urge to spend time on pricing, marketing and cost work for risks you feel more comfortable managing before the product is validated.
• Treat product discovery as a core team competency rather than delegating the solution to engineering.
• Use cheap, fast demand-validation techniques before committing significant money or time, especially for new markets.
• Test four questions during discovery: will customers buy it, can they use it, can we build it, and can stakeholders support it.
• Avoid locking into a single approach too early; keep solutions open long enough to learn what customers will choose.

02Key sections

Misplaced focus on secondary risks

Founders with business training often concentrate on value proposition, pricing, channels and costs, which Cagan sees as academic at the early stage. People naturally gravitate toward risks they feel they can control.

Market risk versus solution risk

Cagan notes that market risk is real but usually not the most significant. Most teams address known problems, so the critical uncertainty is whether their particular solution will be compelling.

Why the canvas understates the solution

Lean Canvas gives little space to the solution to avoid teams falling in love with an approach too early. This leaves the solution underexamined and delegated to developers.

Product discovery as the core competency

Cagan argues product teams should embrace discovery as their most important skill, resolving solution risk before tackling monetization and scale, since the rest of the work is wasted without a valuable solution.

Clarification on validating value

The update explains that figuring out the product includes validating value, and that discovery must answer whether customers will buy, can use, the team can build, and stakeholders can support it, before optimizing pricing, sales or marketing.

03From the post

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04Frameworks mentioned

Summary and takeaways written by PM Atlas; quotes are short excerpts. © the original author.