Issue #2: When Signals Lie
Why seemingly strong demand signals often fail under scrutiny?
The previous issue concluded with a warning: identifying demand signals does not guarantee accuracy or success as even strong signals can be misinterpreted. Enthusiasm, pilots, sponsorship, and alignment can create the illusion of traction, leading to false positives that waste time, capital, and credibility.
This issue examines the critical gap between demand signals and their interpretation.
A True Failure
Rarely do teams skip validation. New venture founders and teams conduct customer interviews, they pilot solutions, they collect feedback and encouragement.
Despite following best practices, many early ventures still stall, rarely due to a lack of effort but from misjudgement. Teams misread signals or mistake early interest for validation, progressing through presentations, workshops and even pilots. However, they eventually fail when tested against actual behaviour.
To recap The First Test is not only a method for validating solutions; it serves as a filter to determine whether a problem is worth pursuing. A problem without a real demand signal, no actual behaviour should be avoided.
The problems to avoid.
Three types of problems often emerge and should be avoided.
Problems that are theoretical. They exist in strategy documents and future-state narratives, align with trends, and make sense intellectually. But they do not appear in workflows, budgets, or daily behaviour. If a problem exists only in abstraction, there is no demand signal to address.
Problems that are aesthetic. They sound reasonable, such as “It would be nice if…” or “I wish we had a cleaner way to…”. While they may feel modern, they rarely prompt action. Aesthetics create preference, not pull, and pull drives adoption.
Problems that are low velocity. Even if real, they occur too infrequently to create urgency. Low frequency leads to low recall and low priority, causing ventures to stall before execution.
The most successful ventures address problems that are frequent, costly, and difficult to ignore. They have found urgency and repeated impact when evaluating opportunities.A quick reminder on innovation
When a venture stalls or even fails, many teams are often given a familiar explanation.
“Maybe it is just too new. Maybe demand has not formed yet.”This explanation is rarely accurate.
Innovation succeeds by solving existing problems more effectively, not by inventing new ones. When there is no existing behaviour, workaround, compensation, effort, or cost, then urgency has not been established, indicating a weak signal of demand.
Novel solutions succeed. Novel problems rarely do.
Recognising patterns in failed ventures helps prevent future mistakes. Accurate signal interpretation protects against wasting resources on weak problems.
Beware the false positives.
Finding a strong demand signal is encouraging, but some signals collapse under scrutiny. These traps create the illusion of demand that founders, corporations, and professionals misread.
Interest is not intent. A stakeholder may say, “Yes, we would use this,” yet nothing changes: workflow stays the same, no contract is signed. People often love new ideas in conversation. They enjoy sounding supportive. However, a verbal endorsement is not a commitment.
Enthusiasm is not urgency. A pilot meeting may be energetic, and the demo well received, but if no budget is allocated, no deadlines shifted, and no risk is accepted, there is no urgency. Urgency always involves a cost, even for unproven solutions. Energy is not evidence.
Imagination is not truth. In interviews, people may describe what they would do, but in practice, they continue to use spreadsheets, manual checks, and long-standing workarounds. Often, this is driven by the interviewer, who asks leading questions about future behaviour. The questions often sound like
“If this existed, would you …”“In theory, could this help you … ““Would you use a tool that … “As a result, they imagine rather than report reality. They talk about hypotheticals project where as real demand needs to exist in the present.
Persona pain is not real pain. A presentation may claim the CFO struggles, but analysts absorb the burden. The system suffers, but the persona is unaffected. Personas point to pain but do not prove its existence.
Corporate sponsorship is not adoption. An innovation lead may champion an idea, and leadership may align with it. But if procurement stalls, legal hesitates, or operations deprioritises it, the organisation supports change without enacting it.
Socially convincing demand signals may seem strong, but only those that withstand testing result in real action. Always look for practical proof, not appearances.
A necessary clarification on pilots
Pilots exist at the boundary between genuine signals and illusion.
Pilots can be valuable and often represent the first serious engagement with a new idea or capability. However, they are typically low cost, low commitment, and low risk, making them easier to approve. This is especially true when dealing with large organisations.
However, a pilot does not prove demand; it demonstrates permission to explore. Pilots can be misleading if they lack clear success criteria, a defined path to scale, a pre-allocated budget, or an accountable business owner. In these cases, pilots generate learning rather than commitment.
Pilots are meaningful when they are designed to inform a clear buy-or-not-buy decision, address a specific operational problem, are sponsored by someone directly affected, and are linked to an existing cost line.
The intent behind a pilot matters more than the pilot itself. True demand is revealed by commitment, not just participation.
When Demand Hides
Even good tests can mislead if you do not know where to look.
These are situations in which demand exists, but the signals are more complex to discern. Not because the problem is not real, but because the behaviour that expresses it is obscured, fragmented, or absorbed into other parts of the system.
Some signals are invisible at first. Teams often hide their hacks in workarounds, shadow systems, manual checks, and “temporary” fixes that persist. If you ask only how the process should work, you will miss how it does. Real demand lies between policy and practice.
Sometimes the pain is carried by someone else. Executives feel nothing while front line teams compensate daily. If a downstream operator quietly compensates for a broken process, the problem may appear small from above, even when it is structurally significant. This is common in corporates and regulated environments. You may not find the signals in the boardroom. You may find them where the work happens.
Sometimes behaviour is fragmented across roles. One team wastes time; another absorbs cost; a third manages risk; a fourth cleans errors. Individually, the signal looks weak. Collectively, the behaviour is loud. The First Test still applies but must be performed at the system level.
And sometimes long-standing pain disappears into tolerance. People adapt. They stop complaining. Resignation replaces expectation. But overall tolerance is not satisfaction.
How the operator can distort the signals
When The First Test appears to fail, it is rarely because the test is flawed. It is because assumptions distort what is being observed.
One distortion is being too broad. “Improve efficiency” is not a problem. Real problems are concrete enough to be recognised in context.
Another distortion is smuggling the solution into the problem. When language shifts to solutions, observation gives way to justification.
The First Test only works when problems are expressed in human terms: what breaks, who compensates, and what it costs.
Interpreting signals depends on your perspective.
The First Test is universal. However, how signals are misread depends on your role and incentives. Though the failure is shared, the blind spots are not.
Founders often mistake encouragement for inevitability. Early interest feels like momentum, but without workflow, budget, or priority change, the signal is social, not economic.
Investors can confuse activity for evidence. Busy pipelines and strong pilots feel reassuring. But capital amplifies clarity; it does not create it. When signals are weak, funding extends false momentum.
Corporate innovation leaders most often confuse alignment with adoption. If stakeholders agree and governance is satisfied, it feels like progress. But alignment is permission, not demand. Adoption begins when a business unit owns the problem and absorbs the cost.
Advisors and operators are in a challenging position. Their primary risk is assuming clarity exists when it does not. The operator’s role is not to create confidence, but to ensure consequences are addressed.
In essence, actions that demonstrate behaviour, cost, and decisive choices are the most reliable indicators of real demand. Use these as your guideposts.
Finding Real Demand Signals Matter
The First Test exists to prevent a specific, expensive mistake by building on belief rather than behaviour. Passing it does not guarantee success, but misreading it almost guarantees waste.
Most teams do not fail because they did not test. They failed because:
They trusted the wrong signals.
They mistook politeness for pull.
They mistook activity for urgency.
They mistook permission for commitment.
Identifying demand signals through the First Test does not protect you from failure; it helps to protect yourself from self-deception.
Let’s Execute
Pressure test the signal, not the story.
In Issue 01, you executed the First Test. This time lets challenge early demand signals before committing resources beyond what is necessary.
Let’s apply the First Test discipline immediately without waiting for a solution, a product, or adoption. This matters most in early ventures, where demand must be inferred before workflows change or budgets move.
1. Pick the signal you are currently relying on and downgrade it
Choose one signal you have been treating as traction, a pilot approval, a supportive conversation, a warm intro, positive feedback, or an investor interest.
Now ask a harder question:
What cost is someone already paying because this problem exists?If the answer is no time wasted, no risk absorbed, no workaround created, then you are not looking at demand. You may be looking at politeness. In early ventures, cost precedes solutions. If no one is paying a price today, they will not pay for relief tomorrow.
2. Translate “workflow change” into early-stage reality
Early ventures often get stuck because they interpret “no workflow change” as failure. Before a solution exists, the workflow change shows up as:
unofficial workarounds
spreadsheets next to systems
manual checks
duplicated effort
fragile processes people babysit
Ask:
What are people already doing despite not having a solution?Those compensations are the early signal. No workaround usually means no urgency.
3. Translate “budget movement” into early-stage cost
Before money moves, time and effort move.
Ask:
Who is spending hours fixing this?Who is double-checking outputs?Who is absorbing the risk when it breaks?Who is cleaning up the downstream impact?Time is the first currency people spend on real problems. If no one spends time today, the budget will not move later.
4. Force a decision, even without a product
Early founders often default to “more discovery” when signals are weak.
Instead, force clarity:
If this problem were removed tomorrow, whose job would materially change?
If the answer is vague, distributed, or hypothetical, the signal is weak.
You are not looking for agreement; you are looking for a consequence.
5. Pause if the signal never strengthens, even if the idea is good
Most wasted effort does not come from bad ideas.
It comes from continuing when the same conversations repeat, the same enthusiasm shows up, but no additional cost or urgency appears.
Stopping is not failure. Continuing without strengthening signals is.
A closing thought
Demand signals can be misread and then defended.
Encouragement was treated as inevitability.
Activity was mistaken for urgency.
Permission was confused with commitment.
The First Test was passed but not interpreted.
Before solutions exist, demand does not announce itself politely. It shows up as compensation, friction, risk, and workarounds. It costs something, even when no one is paying yet.
Your job is not to prove the idea deserves to exist. It is to decide whether the signal is strong enough to earn execution.
Reflection: When demand never strengthened
One of the earliest mistakes I made as a founder was not building too soon.
It was waiting for a signal to strengthen that never did. I had a prototype and early users engaged with it. Corporate innovation teams were supportive and happy to stay involved.
Interest never disappeared and conversations kept happening, but feedback became repetitive and consistent. What never happened was effort. I noticed no one stayed late to make it work. No one chased it internally. No one felt exposed if it failed. Every conversation sounded like progress, but each one reset back to the same place.
At the time, I told myself this was what “early” looked like. In hindsight, it was repetition without urgency.
The mistake was not building a prototype. It was mistaking recognition and politeness for demand.
That experience is why I now watch for behaviour before belief, not because ideas are fragile, but because founder time is.
What’s coming next? The next issue will focus on signals that do not need defending, those that compound, force decisions, and make momentum inevitable rather than hoped for. Execution does not reward belief. It rewards judgment.
This series reflects patterns observed across startups, corporates, and research-led ventures, not a checklist to be blindly followed.