Entrepreneurs are just the best.
Most are some combination of industrious, visionary, compelling, well-intended and heck just fun to talk to. It has been a rare occurrence for me to connect with one even through random networking where it has been a regrettable experience. I tend to like almost everyone I encounter while I routinely walk away energized from a mutual exchange of passion and learning.
Over the past, say, 18 months I have participated in a number of exchanges with founders from a number of angles. Because of my passions and interests, I have most times jumped in to help or somehow otherwise engage on a pro-bono basis, even for the sake of building my network. I will continue to do this on occasion.
I have had to recently, though, remind myself that I’m building my career through this interaction, which has caused me to pause and think a little harder about what kind of return I’m generating on my investment in time. I mean, I got bills to pay (although I realize it can’t be all about that; the moment I make it all about me is the beginning of my career heading into the toilet). What I have concluded from this reflection is that I need to be less completely guided by my own passions and emotions over the fun I’m having. Going forward, I have to layer in more critical thinking in terms of which companies and founders I invest more heavily in and which ones I let go. Thinking this way, I will be able to build more lasting (and maybe lucrative) relationships with startups that have genuine potential and the right leadership.
After pooling and collating my catalogue of observations, I have arrived at the three things I want to know about a startup and its founder(s) that inspire me to want to connect with them in some way at a deeper level:
- Did you start with an idea or an opportunity?
Although neither is really a bad thing, the latter tends to be more promising. I think the ability to survey the broader landscape of the marketplace to find openings is a thought process that can be monetized over the longer term. If you start there, you can find the biggest and best problems to solve…and then the solution or product falls out of this equation naturally. I go into greater depth on this thought process in an earlier post about the beautiful mind of an entrepreneur. I just absolutely need to see a strong business mind at play.
The dangers with starting with a product idea are many. The first one is that often times the idea is born out of a personal passion. This is one big reason why restaurants fail – not just because they are inherently risky (though that’s true to a degree) but because people open them because that’s what they feel they can do. In my hood there are two huge sushi restaurants. Two years ago, a third one opened two doors down from the biggest one, which was rarely full as it was. #WTF?? Eight months later, it’s a breakfast place…um…one of four within a five minute walk. I’m now getting my mailbox stuffed with coupons and loyalty program offers from the joint. Seriously, is there like any thought at play here? I just shake my head.
The tech equivalent is social platforms. On the surface, doesn’t seem to require much product knowledge and insight development, so all it takes to get started is a friend who codes. And, socializing is something the kids like and know. Fast forward half a decade and we see a market saturated with the next great social networks. This in turn makes the bar super high to break through, which is why investors are finally seeing markedly fewer proposals in this space. Thank you.
The other main problem with starting with product first is there may or may not be a need to go with it. Sometimes, founders are lucky (and/or smart) enough to reverse-engineer product/market fit but not always. Ever notice that some founders start up a very successful company and then their next two products fail? Well one explanation is this very phenomenon, where the law of averages allows for one success among multiple failures of product ideas not born out of marketplace insight.
The third troublesome issue is that some founders fall in love either with their product itself or with the (potentially) self-serving mission behind the product idea. This is a fairly big deal because it stops founders from pivoting, which is often a requirement. They’ll go down with the ship before they will compromise on a solution for a number of reasons that might be related to ego or personal branding. Seen this a lot and beat my head against the wall….a lot.
One of the symptoms of this problem is a founder seeking help, and the conversation goes something like “So I have this product/site/app. How do I get people to use it??” to which I reply, “Well why did you create it (this way)?” and what I get back is, “Dunno..I just thought that….”
I now have a canned speech on the basics of product/market fit that could probably have patented by now aha. I think a number of us out there have been there.
- How obsessed are you with your customer?
No, not ‘interested’…but outright obsessed. Obsessed about knowing them. Obsessed with serving them. Obsessed with satisfying them.
Forget about primary metrics like installs or acquisition, a company’s ability to make some coin depends on an intimate understanding of the user. Starts with demo profiling but goes way deeper. Marketing is about understanding people’s lives, their problems, their needs and how they interact with solutions. Most importantly, it’s a game of emotion. You have real earning potential if the customer is emotionally invested in their needs because that’s what gets them to activate.
And your job as a founder is to understand all of this and relate to them in a way that reflects this understanding comprehensively. I only do a certain amount of A/B testing. It definitely has its place but I do some efficient research before I start building content of any kind because I force myself to talk about my product in the way the consumer thinks about it. This is difficult thing to glean from A/B testing since tone is a huge driver of engagement as much as word choice.
And don’t even get me started on U/X. These days we can no longer afford to fall into the trap of launching a clearly inferior product and hope to test our way to greatness or convince ourselves that we can ‘market’ our way to growth. Nuh-uh. The bar is high now such that the MVP only works in select circumstances; it should be used in specific cases. If you do choose to go the MVP route, make sure you have a clear plan to accumulate learning from both usage and offline research data, that you can quickly turn to new code. Or, you’ll go nowhere.
Also remember that the consumer doesn’t care about your constraints, so be mindful about sacrificing their service to make life easier on yourself. These days – especially in crowded spaces – we need to work 100x as hard to make to make it 20x easier for users to accomplish what they need to with your product or service. Anything less than this mindset can cause almost immediate disengagement.
I recently interacted with a startup founded by someone known and liked in the startup scene with a good track record. He couldn’t figure out why his sharing-economy / community based platform wasn’t getting market traction. He stood up on a panel and asked people to download and use it. I thought it sounded cool and tried to install. Not on google play. Only iOS. Again, #WTF. To me this is really fundamental but I see it a lot. Do I really need to explain why this is actually a bad strategy to start a community-based app that is only exposed to a third of the market or is it me who has a learning gap? I’m actually starting to wonder…
- Are you self aware?
This is the one that was least obvious going in but has become a bigger factor over time for me.
The short story here is that one founder rarely has all the skills and rarely knows all there is to know. I’m looking for a sick balance between confidence and humility that opens the door to learning and partnering. Having a clear sense of your limitations and needs results in the right types of collaboration and an acceleration of growth and development.
Acquiring the right pieces to close the necessary gaps usually comes at a price. I have met a number of founders who hold most of the shares but in fact don’t have vision. They aren’t even sure what versions 2.0, 3.0 etc are for their immediate platform. What’s worse, they have much more fear over surrendering shares than they do about having a product that fails. I have ways to test quickly for this kind of thinking in addition to other traps that prevent objective thinking.
As a founder you must first and foremost not only know why the product will succeed today but must also project how consumers will interact with it in 3, 5 and 10 years. If your head doesn’t go there easily, bring someone in who does. And, make them a partner. Once that’s done you move on to the go-to-market competencies in marketing, IT, sales, finance, etc. Make sure you have all the bases covered with the leadership and ownership team. Or, at least by the time I get to you, know what you need!
BONUS: Do you know what it will take?
This is sort of an intersection with the second one but is bigger picture and goes beyond matters that involve your user directly.
The road is long and the competitive bar is high. Not long ago I read a blog post headline that went something like The road to becoming an overnight success is about ten years long. I’m butchering the title, but I think you get the point. Loved that.
I listen intently to how founders describe their critical success factors while I also test for the temptation to find short cuts. All too often, companies throw an inferior product out there, calling it an MVP to somehow legitimize in their mind what may in fact be a bad strategy. Many are convinced that making a half-hearted effort will at least spin off some cash to fund greater things; or, worse yet, they just feel the urgency (desperation) to monetize, and become purely guided by that. These sorts of mindsets are not uncommon, yet they represent the inciting factor of why startups implode or in some way cease to be sustainable enterprises.
There’s very little room for thinking half way anymore. You have to be confident, know the marketplace, know what it takes to win…and then go for it, starting with attacking the tough stuff first.
Of course there’s other stuff I want to know but it starts here. Most of these items reveal themselves fairly quickly but sometimes a little digging is required. If I can give a thumbs up after surveying these three areas I’m apt to jump in feet first to help and see where it goes. If there are flags then my new routine is to impart a few nuggets of unsolicited advice while I seamlessly move to direct my time and focus toward more promising opportunities.
As for you, the founder, I hope this serves as a quick guide for primary self-evaluation, so that you can start off on the right foot.
Best article I ever read on Medium from May 2016. It’s about the reverse marketing funnel. Forget paying to acquire more customers to dissatisfy and instead maximize satisfaction with the ones you have and THEY become your free marketing. Re: my point 2 in this post.