What is the best way to describe a “Problem Statement” in your pitch deck?

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Pitching isn’t only for raising money—it’s for reaching an agreement, and agreement can yield many good outcomes including sales, partnerships, and new hires.

A great pitch has two goals: establishing that the opportunity is big and showing that you can pull it off.

A good pitch deck tells a compelling story that follows a logical sequence and shows strong business model validation from experiments and research data.

Why is describing “problem” important?

Ten is the optimal number of slides in a PowerPoint presentation because a normal human being cannot comprehend more than ten concepts in a meeting. One of these 10 slides is one slide about pain point.

This is probably one of the most important slides in your deck. The reason why Dave McClure advocates, “pitch the problem, not the solution,” is because too many entrepreneurs try too hard to sell their solutions without educating their potential investors on what the problem is.

In this slide, you will need to address the following questions as simple and concise as you can be:

What is the problem?

How do you know if it’s a problem?

Who are you solving this problem for?

How are they trying to solve the pain currently?

You need to understand the way your company solves the problem – by focusing on the emerging of the problem through identification of the reasons behind its emerging or by focusing on the existing inadequate solutions to the problem.

What are the challenges?

The problem, however, comes with the presentation of the Problem-Solution equation. One of the biggest mistakes that entrepreneurs make in regards to this topic comes from the fact that they tend to focus on the solution before they explain the problem. This is a critical mistake and can ruin your pitch.

Explaining a solution to a problem that is not clearly identified and not completely understood by the investors and the audience makes absolutely no sense. Even if you have the most effective solution, nobody will understand the need of it, if the problem that it solves is not explicitly defined.

If the investors don’t understand the problem, its scale and the group of potential customers that face this problem, they will not understand why solving this problem is that important and why anyone will pay for it.

 What goes in “pain point” slide?

Think of a problem statement as a proof marking.

Try a story about a person who has a specific example of the problem. Be concise but not bland.

One of the key things to talk about in your problem statement….is why the issue is a problem in the first place? For the person reading it to completely understand why the solution is necessary.

Lead with the need

In order to grab the attention of your audience from the outset, immediately identify the business need you are trying to address.

Talk about the problem & current solutions – What need do you fill? For whom? What are the other solutions? Who else is already doing this, and how are they going about it and what are they not getting right or doing wrong?

The message that you want to give to your investors is that you have not only identified a real “pain” that is worth solving but also are passionate about it and that you have got a lot of insights about it through your conversations with the prospects.

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The 3 Things This Week: 5th April, 2018

Hey,

Happy Thursday! How are you doing this week?

Before we get into this week’s three things, I must tell you that starting from this edition, there are some changes in the structure and format of 3Things This Week. One noticeable change Is an absence of images. Yes, we are back to simple list format, because I believe, if there is a value in the content that comes to you, the absence of images should not matter.  Deeper than this, from this edition, the theme that we start with would stick with us for several weeks or months till many aspects of the theme are covered in the newsletter.

So, the theme of today’s (and also for the next few weeks) 3Things This Week is traction for startups.

Traction is a measure of your product’s engagement with its market, a.k.a. product/market fit. Traction is a general term and acquires a different parameter depending on your business building stage.  In order of importance, it is demonstrated through profit, revenue, customers, pilot customers, non-paying users, and verified hypotheses about customer problems. And their rates of change.

Thing # 1: The 19 Channels You Can Use to Get Traction

In all probabilities, this article – “The 19 Channels You Can Use to Get Traction” must have been read by many of you by now. Its an article by Gabriel Weinberg, CEO & Founder, DuckDuckGo and Co-author, Traction. This article gives a snapshot of 19 traction channels that one can work on and is quite a useful resource to quickly check anytime if you are missing on any potentially good channel option in your marketing.  In Traction (the book), there is one chapter on each of the 19 customer acquisition channels you can use to get traction, and if you haven’t yet acquired this book copy, is high time to go for it.

Things #2:  Zero to Hockey Stick Growth: How to Get Startup Traction

In a free-flowing conversation, Scott Britton spends time with Justin Mares, the other Co-author of Traction, touches a lot many aspects related traction in a specific context. If you want to have a clarity on things like what is a traction, whether should you go for product development or channel building, this is a conversation that you must listen to. You also get some insights on some specific strategies for some specific channels.

Thing #3: How do you pick a lead generation channel?

Gabriel Weinberg and Justin Mares, in the book Traction, recommends working on 3 or 4 traction channels at any point of time and through some days or weeks, you figure out which channels are working for you at this point of time and based on the learning you go for a quick change if needed. In a short video, Alex Berman answers this question in a different way.  Should you use SEO to grow? Social media? Cold email? Webinars? In this video, he tells you a simple framework you can use to pick marketing channels that you want to work with. I am not spoiling this for you by describing it here.  Check this yourself, you will not regret!

That’s all folks for this week of 3Things This Week.

From the next week, we will focus on each of these 19 channels in more details. If you are looking for some insights for any specific channels, do write back and I will try to put that channel in a priority position.

 

I  would love to hear your feedback on 3 Things This Week.

Hope you enjoy, and thanks again for the privilege of emailing you!

Wishing you lots of happy reading,

 

Shashank

 

 

 

P.S. –

1. The 3 Things This Week” is a free, short, curated list of useful articles, tools and other resources for building startup businesses. These 3 things would deal, in a random way, with different aspects of startup building – validation, traction, growth, funding, team, founders.

2. If you think of anyone who might enjoy this email, you can share this with a friend or co-worker or share this link to sign up for https://climb-lean.ontrapages.com

 

Web – Climb Lean School of Starting Up

Facebook – Climb Lean Facebook page

The 3 Things This Week: 8th March, 2018

Hey,

Happy Thursday!

How are you doing this week?

Here are this week’s 3 things!

This week’s theme is about some of the nuances in lean startup methodologies.

Thing # 1:  Find Better Problems Worth Solving with the Customer Forces Canvas

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Asking a prospect to describe his or her top pain points are subjective and more important, customers don’t often understand their own problems well enough to rank them in the first place. This is where Ash Maurya’s new customer forces canvas helps in framing around problems. During the problem interview, where discovery is the goal, a better framing is around triggers and desired outcomes. The customer forces canvas is the most useful tool to dig a problem that is worth engaging with. If you are in a phase of customer discovery, check this out and you get to download the canvas from there too.

 

Thing # 2:  Great Innovators Start with Customer Struggles (Not Customer Needs)

8-2-n

If you were to build a product for my friends around their “vacation need”, you’d probably start developing ways to make that vacation happen. Your make-vacation-product could be fruitful, but you’d be missing out on innovation opportunities. Because a need is almost always framed in the world that exists today.
Our brains naturally go to what we’ve wanted and used in the past. If in the past I’ve used a vacation to deal with stress and burnout, my brain will go with what it knows.  This is why it’s better to think in terms of struggles, instead of the customer need. Instead of I need a vacation, base your innovation efforts on the struggle that caused someone to choose a vacation.  Read on to get interesting insights as to how it is easier to innovate from current perceived needs than from a foundation of struggles and how you can unleash your growth opportunities when you think in terms of struggles — and use models like the Opportunity Tree.

Thing # 3:  HOW TO CONDUCT GREAT CUSTOMER INTERVIEWS FOR YOUR APP IDEA

1

Though this article is about APP, the content is equally true for any business idea.  Conducting effective customer interviews before you start building the product is vital. The article is a great resource for answers to questions like – who to talk to? what to ask? how to go about conducting customer interviews.

Conducting customer interviews are mandatory for fully understanding your users and refining your ideas during the early stages of your app startup. So get to researching, know what questions to ask.

I  would love to hear your feedback on 3 Things This Week.

Hope you enjoy, and thanks again for the privilege of emailing you!

Wishing you lots of happy reading,

 

Shashank

 

 

 

P.S. –

 

1. The 3 Things This Week” is a free, short, curated list of useful articles, tools and other resources for building startup businesses. These 3 things would deal, in a random way, with different aspects of startup building – validation, traction, growth, funding, team, founders.

2. If you think of anyone who might enjoy this email, you can share this with a friend or co-worker.

 

Web – Climb Lean School of Starting Up

Facebook – Climb Lean Facebook page

7 Close cousins of value proposition

val prop - close cousins.jpg

Essentially, the value proposition is the #1 thing that determines whether people will bother to invest more time and energy to know more about your product or hit the back button. In the early stage of a start-up when you are not yet known popularly, it becomes even more critical that you have a better value proposition.

If you are familiar with lean business model canvas by Ash Maurya, the value proposition is one of the 9 blocks of a business model that you sketch when you get started to put your idea onto a paper.  It is one of the most important elements of the business model and therefore critical for start-ups to get it right. One of the reasons as to why most start-ups fail to define their value proposition well before they launch their products is that founders tend to give too much credence to the ‘idea’ they have and run with it as opposed to exploring how this idea would actually perform in the market.

“Unique Value Proposition: A single, clear compelling message that states why you are different and worth buying.”

– Steve Blank, The Four Steps to the Epiphany

In other words, a value proposition is a clear statement of the tangible results a customer gets from using your products or services. It is outcome focused and stresses the value of your offering.

How people do it wrong?

On the surface, value propositions seem incredibly straightforward.  A lot of founders tend to mistake it for what it is not.  There are 7 commonly wrong ways of understanding and using value proposition and they are:

Slogan

DefinitionA brief attention-getting phrase used in advertising or promotion.

Use Slogans are used with the brand name and logo of a product or service. Though name and logo are often recognizable, they usually don’t have an embedded germ of a communicable idea. Since slogans do carry ideas, they are received, remembered and then played back, complete with all the associated emotions and claims a given slogan evokes. This repeatability makes well-written slogans powerful and far-reaching.

Examples  – Save Money, Live Better (Wal-Mart); I’m lovin’ it (McDonald’s);  Just Do It (Nike)

Structure Because slogans are meant to be remembered and repeated, effective taglines employ elements known to increase retention like rhymes, puns, hyperbole, and simile.

Catchphrase

Definition A catchphrase is a phrase or expression recognized by its repeated utterance. Such phrases often originate in popular culture and in the arts and typically spread through word of mouth and a variety of mass media

UseCatch attention for your brand

Examples  – “Beer, now cheaper than gas. Drink, don’t drive”; “It’s lonely at the top, but you eat better”; “We repair what your husband fixed” (From a plumber’s truck); “7 days without pizza makes one weak” (From a pizza shop)

Structure Principles of a good catchphrase are – it must be short and simple (usually around 10 words or less), must be memorable and pleasant to the ear and must evoke some kind of emotion or agreement. A catchphrase is meant to stick in the head of the audience so that when they see it, they can mentally repeat it to themselves.

Positioning statement

DefinitionA positioning statement is a one- or two-sentence statement that articulates your product or service’s unique value to your customers in relation to your chief competition.

Use Positioning is the process of identifying an appropriate market niche for a product (or service or brand) and getting it established in that area. It clearly defines your company’s place in the market and helps you get your marketing in order for higher profits.

Examples –  Volvo: For upscale American families, Volvo is the family automobile that offers maximum safety.

StructureCombine the responses to these 3 questions in a sentence – who is your target market?  what unique value do you provide them? why Should They Believe You?

Mission statement

Definition – It is a formal summary of the aims and values of a company. A written declaration of an organization’s core purpose and focus that normally remains unchanged over time.

UseThe mission statement can serve as a guidebook for the organization, representing lofty goals and aspirations while serving as a barometer against which leaders can measure actions. It is a useful piece of public relations, an attempt to paint a rosy picture of an organization. The process of brainstorming and writing reinforces the purpose of the organization.

Examples –  “We strive to be the global leader in the sporting goods industry with brands built on a passion for sports and a sporting lifestyle!” -Adidas; “We seek to be Earth’s most customer-centric company for four primary customer sets: consumers, sellers, enterprises, and content creators.” –Amazon; “To connect people with their world, everywhere they live and work, and do it better than anyone else.” -AT&T

 StructureA mission statement describes the company’s goals in three ways – it defines what the company does for its customers, it defines what the company does for its employees, it defines what the company does for its owners.

High pitch

DefinitionA high concept pitch distills a startup’s vision into a single sentence.

Use – First, the pitch is the perfect tool for fans who are spreading the word about your company. Investors use the pitch when they tell their partners about your startup. Customers use the pitch when they rave about your product. The press uses the pitch when they cover the company.

Examples“Friendster for dogs.” (Dogster); “Flickr for video.” (YouTube); “We network networks.” (Cisco)

StructureFirst, the pitch should be brief: one short sentence is perfect. The pitch combines the building blocks by using analogy, synthesis, juxtaposition, combination.

Elevator pitch

Definition An elevator pitch is a brief, persuasive speech that you see in use to spark interest in what your organization does.

Use Some people think that this kind of thing is only useful for salespeople who need to pitch their products and services or startup founders who are looking for an attention from investors. But you can also use them in other situations. For example, you can use one to introduce your organization to potential clients or customers.

Examples

 esla-pitch-elon-musk

 Structure –  Your elevator speech should be brief. Restrict the speech to 30 to 60 seconds — that’s the time it takes to ride an elevator. Even though it’s a short pitch, your elevator speech should be persuasive enough to spark the listener’s interest in your idea or organization. Your elevator pitch should explain who you are and what qualifications and skills you have.

Tagline

Definition –  It is a short text which serves to clarify a thought for, or is designed with a form of, dramatic effect. Many tagline slogans are reiterated phrases associated with an individual, social group, or product. As a variant of a branding slogan, taglines can be used in marketing materials and advertising.

Uses The idea behind the concept is to create a memorable dramatic phrase that will sum up the tone and premise of an audio/visual product, or to reinforce and strengthen the audience’s memory of a literary product.

Example – “Tools to Grow Your Website’s Traffic.”  SumoMe

Structure – The #1 best way to create a tagline for your business is to describe what you do in the shortest space possible. This process is like trying to cram a large thought into a single Tweet.

Summing up

Value propositions play an integral role in defining your startup’s purpose and validating ideas among your target audience. Directly correlating with the business plan, they quantify the intended market position of your startup and demonstrate the fundamental value of your product offerings in the mind of your target audience.

The inability to communicate your purpose and value to your target audience, in a clear and concise manner, is a death sentence for even the best ideas. Often times, it is one of the root causes in the failure startups.

Ensure you are not one of them.

The 3 Things This Week : 1st March, 2018

Hey,

Happy Thursday!

How are you doing this week?

Here are this week’s 3 things!

This week’s theme is apps or mobile apps. A mobile app is a computer program designed to run on a mobile device such as a phone/tablet or watch. Mobile applications often stand in contrast to desktop applications that run on desktop computers, and with web applications which run in mobile web browsers rather than directly on the mobile device. The term “app” is a shortening of the term “software application”.  With a phenomenal growth of smartphones, apps are one of the highly attractive businesses many pursue today.

Thing # 1:  THE SECRET TO MOBILE APP STICKINESS

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Making your app sticky is an art. It requires a deep understanding of the end user and the way they interact with the app. Stickiness is hard to achieve. This article describes six elements that keep users coming back for more.

If you are in the process of designing or launching your app, this could give you some perspective.

Thing # 2:  App launch checklist

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Launching an app is a work of art. There are so many things to think about! When should you start working on your press kit? What is the best way to track your acquisition channels? How can you get featured on Product Hunt?

This checklist tool draws from best practices seen work in the real world.

Thing # 3:  How to make money from a free

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Recent estimations project that global gross app revenue will double to reach $102 billion by 2020. As the mobile app ecosystem undergoes rapid expansion, app publishers will find it more and more challenging to stand out in a crowded marketplace.

To capture a slice of the market, you’ll need to implement monetization tactics that

evolve as quickly as the ever-changing preferences and demands of your users. In this article, you get insights about 6 widely used and emerging monetisation strategies for driving in-app revenue.

 

I  would love to hear your feedback on 3 Things This Week.

Hope you enjoy, and thanks again for the privilege of emailing you!

Wishing you lots of happy reading,

 

Shashank

 

 

 

P.S. –

 

1. The 3 Things This Week” is a free, short, curated list of useful articles, tools and other resources for building startup businesses. These 3 things would deal, in a random way, with different aspects of startup building – validation, traction, growth, funding, team, founders.

2. If you think of anyone who might enjoy this email, you can share this with a friend or co-worker.

 

Web – Climb Lean School of Starting Up

Facebook – Climb Lean Facebook page

Do you need a passion for your business idea?

-music expresseswhat i simply cannot-

When you startup, which path should you choose?

Do what you know, or do what you love?

Some people advise us that you should follow your heart, and start a business based around something you’re truly passionate about.

Others will suggest that you look to the things you do well, and build a business based around your skills.

So, which one is a good advice?

First, the basics – what’s passion?

There is a lot of confusion about understanding what passion is.

In 10 Things You Should Know About Passion (And How To Find Yours)  Singyin Lee says ‘Passion’ is a word so excessively used and almost always blindingly paired with work, that if you actually ask around you may find that not everyone really gets what passion is.  For example, some equate a passion (for something) to a hobby or a dream, but just because you love to sing (in the shower), that doesn’t necessarily mean that your passion is the act of singing.  She describes passion through 10 things which can perhaps help one find real passion and some of the interesting things include – it’s not a hobby or a dream; you might not be seeing it; you are willing to rough it out for it and being passionate is being invested in terms of your energy.

Webster’s Dictionary defines passion as “an intense, driving or overmastering feeling of conviction” or “a strong desire for or devotion to some activity or concept”.

In other words, passion is an act of full attention and full force that you give to some stuff that you are doing.

“It is obvious that we can no more explain a passion to a person who has never experienced it than we can explain light to the blind.” – T.S. Elliot

Passion is good

We have always liked the idea, when someone tells us to follow our passion.

Paul Graham, Founder of Y-Combinator, in How to Do What You Love says, the very idea is foreign to what most of us learn as kids. “When I was a kid, it seemed as if work and fun were opposites by definition. Life had two states: some of the time adults were making you do things, and that was called work; the rest of the time you could do what you wanted, and that was called playing. Occasionally the things adults made you do were fun, just as, occasionally, playing wasn’t—for example, if you fell and hurt yourself. But except for these few anomalous cases, work was pretty much defined as not-fun.  Although doing great work takes less discipline than people think—because the way to do great work is to find something you like so much that you don’t have to force yourself to do it—finding work you love does usually require discipline. “

Dae Smith’s  10 Rules for Developing a Great Startup Idea   gives a checklist created by the Founder Institute, which is the world’s largest entrepreneur training and startup launch program. The first rule in this checklist is “Start With Passion”.  It says, “Without passion, your startup is bound to flop. Like raising a child, there is a long-term commitment involved. There is a very good chance you will be working on your startup for several years to come. Make sure you like what you’re doing! Additionally, if you aren’t passionate about what you’re doing, potential investors, customers, press, and other contacts will see right through you.

In The Top 4 Reasons Passion Drives Startup Success,  George Deeb describes passion as one of those intangibles that drives an entrepreneur, gets them through the good times and the bad times, and ultimately dictates the success of any startup.  He says, passion needs to ooze from every pore of a startup entrepreneur. This passion is usually instilled by some core knowledge of the product or service that is being built, which translates into clear domain expertise and first-hand knowledge and confidence that you are heading in the right direction. This passion also translates into infectious enthusiasm that ultimately feeds the energy and drive of every employee in your office. And, most importantly, this passion is the glue that holds the company together and gets it through its most difficult times.

Ekaterina Walter, author of the book “Think Like Zuck: The Five Business Secrets of Facebook’s Improbably Brilliant CEO Mark Zuckerberg”, in  PASSION, PURPOSE AND LEADERSHIP    says all great achievements start with passion. Passion is what fuels everything. Passion is what motivates you.

Sounds like a sound rationale – if you do what you love, you will not feel the labour involved in the work.

Hang on; let’s hear from the other side.

“You have to be burning with an idea, or a problem, or a wrong that you want to right. If you’re not passionate enough from the start, you’ll never stick it out.” ~ Steve Jobs

 

Passion is not good

Terri Trespicio, a branding strategist believes, you don’t need to start with what you love. In Stop searching for your passion | Terri Trespicio | TEDxKC   he tells that success fuels passion rather than passion fuels success and you don’t follow your passion, your passion follows you.

Benjamin Todd advises that the advice “follow our passion” is dead wrong. Benjamin is the co-founder and Executive Director of 80,000 Hours, an Oxford-based charity dedicated to helping people find fulfilling careers that make a real difference. In To find work you love, don’t follow your passion | Benjamin Todd | TEDxYouth@Tallinn,  he explains, “Research shows that people who take this approach are ultimately no more likely to enjoy or excel at their jobs. Instead, if you’re looking for a fulfilling career, here’s a new slogan to live by: Do what’s valuable.”

In The Passion Fallacy (or, Why You Need More Than “Passion” to be Successful), David Darmanin, Founder & CEO at Hotjar warns passion doesn’t always (or often) translate into automatic success in the startup world. And, in many cases, following your passion can lead you straight into a failed business. He advises, you need to stop thinking about what you enjoy, and instead – start thinking about your strengths and the opportunities around you. Rationale behind this is, passion doesn’t drive you; it blinds you. It makes you arrogant and it stops you from seeing what users really want and where the real opportunities in the market really were.

So, doing what you love too has two big issues – your passion dies down, your passion might not resonate with any pain point in the market.

 

 

“Following your passion is a very “me”-centered view of the world. When you go through life, what you’ll find is what you take out of the world over time — be it money, cars, stuff, accolades — is much less important than what you’ve put into the world. So my recommendation would be – find the thing that you’re great at, put that into the world, contribute to others, help the world be better and that is the thing to follow.”   ~Ben Horowitz

Pain point is the king

In Struggling to decide what kind of business to start? Beware of the passion project syndrome… Andreas discusses pros and cons of using passion for a startup idea. He lists  2 core advantages of following your passion – it gives you the drive to persevere through setbacks and roadblocks and it makes your workdays more fun and enjoyable. On the other hand, he lists 3 key flaws behind this mantra – money often will not follow, it’s not a prerequisite for doing great work you’ll end up loving and passions change with time. Summing up, he advises to do it the Aristotle way.

“Where the needs of the world and your talents cross there lies your vocation.” Aristotle

Pradeep Goyal says, Everything you heard about ‘Passion in startup’ is wrong .  He believes, your passion alone can’t make or destroy your startup, but wonders can happen when you become passionate about solving a problem. Your passion will help you taking your first step into the startup world. You should then become flexible to passionately love everything around you.

Lean startup methodologies too tell us pain point is the starting point.

Triangular contest – pain point, passion or skills

The contest becomes triangular. What do you start with?  Is it passion – something you love?  Or, is it your skills sets – what you bring on the table?  Or is it pain point – that gives us an opportunity for building a solution?

You are lucky if your starting point falls in a common zone for all three (hypothetically  overlapping areas).

 

 

If you are not lucky, then how do you decide?

Herzberg’s two factor theory of motivation

Herzberg’s two factor theory of motivation come in handy to give us some way to decode the situation.

This theory is based on two types of factors. These factors are satisfiers (motivational) and dissatisfy (maintenance or hygiene).

The first groups of factors are called maintenance or hygiene factors. Their presence will not motivate people, yet they must be present. In fact, they may provide an almost neutral feeling among the people, but their withdrawal or absence creates a big problem.  “Pain point” is what could fall in “hygiene factors”, when it comes to starting up.

The second groups, or the job content factors or satisfiers, are found to be the real motivators; because they have the potential of yielding a sense of satisfaction.  “Passion” could fall in this group.

So, passion is back in business?

The answer is, YES and NO.

Back to passion 

Having a passion about a domain can provide you motivation to pull through your long efforts, but if your starting up efforts lack “hygiene factor” i.e. pain point.

So, passion, as understood traditionally – passion for domain, will have a limited utility for you. But if you have a passion – not about domain, but about starting up, then YES, it makes a hell lot of difference.

Benjamin Todd in To find work you love, don’t follow your passion | Benjamin Todd | TEDxYouth@Tallinn, says, “I also found that once I started getting into the whole process of building a business, I realized that my “passion” was the process of building businesses. I loved the thrill of it… The ups and downs that come with it… That feeling of “fuck yes, I did it!” that washes over you when you figure something out that’s been stumping you… However, I wouldn’t have discovered that unless we had just started the business….passion or no passion!”

“I have no special talents. I am only passionately curious.”  ~ Albert Einstein

In Every Company Needs a Head of Experimentation,  M. Zaheer elaborates the importance of experimentations from a startup perspective. The job of a startup is to search for a repeatable and scalable business model and the starting point is about searching for value. Experimentation is that distinct phase in the pursuit of an authentic search of the right customers, right problems, and right value. In other words, you cannot have search without experimentation. However, running the right experiments is hard, because it requires a mindset change, living and embracing uncertainty over forced narratives, and making yourself vulnerable.

Its no surprizing then that your passion for experimentation is the most critical to make or break your startup business.

Conclusions

When  you startup, you need not give too much weightage to your passion for a specific domain. It actually blinds you and stops you from seeing the pain point in the market that is worth solving.

But you do need a passion for experimenting – a perhaps single  most element that would determine the fate of your startup.

 

 

Startup idea: are you building a Cathedral?

case study - slideshare

What business idea is your startup working on?

Is it a world changing idea?  Will it have a huge impact on some part of the world?

Startups founders, particularly first time founders, do have this urge,  an urge to change the world. The way their business ideas are analyzed by investors too, at times, puts an emphasis on this aspect of a business idea.

A world changing idea sounds like a big opportunity. It has an added advantage – it gives a great sense of purpose too.  A sense of purpose does play a role in motivating you in an uncertain, at times worrisome environment when you build your startup.

Drive : The Surprising Truth About What Motivates Us , a book written by Daniel H. Pink, delves  into the role of  “purpose” in motivation.  Drawing on four decades of scientific research on human motivation, Pink exposes the mismatch between what science knows and what business does – and how that affects every aspect of our lives.  In DRIVE, he reveals the three elements of true motivation: AUTONOMY – the desire to direct our own lives; MASTERY – the urge to get better and better at something that matters; PURPOSE – the yearning to do what we do in the service of something larger than ourselves.

We all have read the story – “I am building a Cathedral”. Bill von Achen, in his blog “I’m Building a Cathedral!”–The Role of Purpose in Motivation illustrates the importance of purpose in motivation using this story.

“A man came across three masons who were working at chipping chunks of granite from large blocks. The first seemed unhappy at his job, chipping away and frequently looking at his watch. When the man asked what it was that he was doing, the first mason responded, rather curtly, “I’m hammering this stupid rock, and I can’t wait ’til 5 when I can go home.”

”A second mason, seemingly more interested in his work, was hammering diligently and when asked what it was that he was doing, answered, “Well, I’m molding this block of rock so that it can be used with others to construct a wall. It’s not bad work, but I’ll sure be glad when it’s done.”

”A third mason was hammering at his block fervently, taking time to stand back and admire his work. He chipped off small pieces until he was satisfied that it was the best he could do. When he was questioned about his work he stopped, gazed skyward and proudly proclaimed, “I…am building a cathedral!”

With startling clarity, this simple story illustrates that purpose has the power to transform not only our attitude about the work that we do but the quality of our work as well.

So, do the startup founders need start building cathedrals?

Well, there are lots of people who say NO.

In The Big Idea Myth, Geoff McDonald asks us, why you need a big idea. Most people talk about a big idea as something that changes the world.  Some ideas are big at their conception because they have profound implications.  And, some ideas are merely big because of their popularity. Instead, of trying to change THE world, start with an idea that simply changes your world. If it doesn’t change your world, then it’s not that significant and you probably won’t do anything with it anyway. This is the starting point.  The Myth of the Big Idea is that it has to change THE entire world.

In The Myth of Good Ideas, Jonathan Courtney, Co-Founder of AJ&Smart, a Digital Product Design agency states that being a creative genius is not the only way to have world-changing ideas.  Ideas can be generated and in huge quantities. Good ideas simply come from having lots of ideas. The famous inventor Thomas Edison said that his “real measure of success” was “the number of experiments” he could crowd into one day.  Rather than focus on coming up with the “perfect idea” or invention, he produced and produced. Failed and iterated. Failure was baked into his process.  Waiting for inspiration can be the death of a projects’ momentum. Start with quantity, then curate.

The Myth of ‘The Visionary Founder’ by  Seyi Fabode doesn’t support the belief that you need a huge world-changing vision before you can start your business.   He gives two examples to support his views. The first one is from Nick Bilton’s Hatching Twitter,  according to which Twitter came out of the remnants of a podcasting platform called Odeo.  Twitter was not  born from some grand vision about how they could change the world and fuel revolutions.  In another story from Shoe Dog by Phil Knight, he decided to travel the world with his buddy and ended up finding his calling. Phil Knight did not even sell his own shoes for the first few years of running the Blue Ribbon Company, a company that would later become Nike. For the first 10 or so years of Nike, the company was tethering on the edge. Phil Knight was always hopeful but, this was less about a grand vision during the daily grind and more about just his force of will and cunning to keep the company alive.

According to a blog How to uncover a world-changing idea by Dinushi Dias; Sam Altman, from his work as the President of Y Combinator, has an advise for the start-up founders, “You will never uncover a world-changing idea unless you start working on something now.”

Walker & Co’s founder and CEO, Tristan Walker has another take on the world-changing Idea, from his own personal experience. In a video chat about World-Changing Idea, he explains his journey before starting to build a health and beauty products company that makes health and beauty simple for people of color.  After his stint in Andreessen Horowitz as an entrepreneur- in- residence, he says, “I was like, man, I got to make these guys proud. I want to build the most ambitious thing that I can build. First seven months, I spent some time thinking about how I was going to fix childhood obesity in this country.  I spent some time thinking about whether or not I should build a bank. I think I spent four months working on an idea to fix freight and trucking in this country.  Only to think, shit, what do I know about freight and trucking? And I felt like if I was going to dedicate the next 20 plus years of my life to anything, I wanted to fundamentally feel like I was the best person in the world to solve that problem. Fortunately, seven months later, I figured that out. And Walker and Company was born”.

In What makes for a great entrepreneur?,     Andy Rachleff, Founder of Weslthfront, discusses a question about what separates the exceptional entrepreneurs from the rest of the pack. He explains great entrepreneurs’ greatness comes from the quality of their insights – in other words, their ability to recognize how an inflection point in technology can solve an important problem. That insight emerges from as authenticity to a particular problem. The great entrepreneurs have a deep command of the problem they are trying to solve. They achieve that deep command, in turn, by following their passions.

In an article How do you generate innovation?,  Mark Zuckerberg, founder of Facebook, says the secret to innovation isn’t to have a great idea. It’s about moving quickly–and trying everything. According to Catherine Clifford,    Mark Zuckerberg’s best advice to young people during the commencement address at Harvard’s 366th commencement exercises in Cambridge, Massachusetts was ‘Finding your purpose isn’t enough’.   He said, “I know, you’re probably thinking: I don’t know how to build a dam or get a million people involved in anything. But let me tell you a secret: no one does when they begin. Ideas don’t come out fully formed. They only become clear as you work on them. You just have to get started. If I had to understand everything about connecting people before I began, I never would have started Facebook.”

All these views resonate with lean startup building.

Lean startup building believes, start-up is a stage in the process of turning a business idea into an established real company and a ‘start-up’ is a company that is confused about – what its product is? Who its customers are? How to make money?  We start with assumptions about everything, to begin with. More early you start to get a sense for theories against reality, the safer you are. Unlike in earlier times, today’s founders start small and make smart micro-experiments, besides customer interviews to test the assumptions.

The whole concept that a business idea has to be absolutely unique and world changing is quite irrelevant. And questions like ‘what is your competitive advantage and where will you be in 5 years?’ don’t have any meaning, because, in the early days, there is very little certainty about where a startup is going.

While we shouldn’t focus on the grand vision (or lack of) in the daily existential crises of the early days of a startup, what we need to focus on is what we as founders go ahead and put our hands to the grind towards building their businesses. Time and time again, what is clear is that one does not get anywhere without doing the very next thing in front of you as a founder.

Hopefully, some of us will get an opportunity to build a Cathedral, along the way.

Do share your stories, If you started with a business idea that was not a world-changing one and yet, it led you to an opportunity to build a Cathedral.

Why surveys are not good for customer discovery?

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Customer discovery is not a research.

Some time ago (and many a times even now), when a new business idea is worked on, founders would quickly do some research, based on some primary set of information and some secondary.  Based on these initial findings, a product development would happen, and when the product is launched in the market, the founders might be in for a rude shock, to find there are no buyers for the product.   The whole efforts of making the new product go waste.

Why?

Because, there had been a huge gap between the time when some data was collected and time product is launched. There was no dialogue with prospects that continued through and contributed to the product building phase.

This is one of the core principles of lean startups.

In lean starup building, you continue a dialogue with the prospects and their ongoing feedbacks goes actively into new product building. The whole process is like small experiments, rather than getting the full product out, done rapidly, that seek active feedback from prospects by way of either discussions or an action or both.

We all know now, lean startup methodology does have a value. In this, there is a greater chance that we don’t end up putting in wasteful efforts, there is a greater chance that we will know much early what works and what doesn’t.  And, more importantly, there is a greater chance that we will build a product that customers want to buy.

Despites all this, how many of us do customer discovery in real sense?

Many founders feel organizing and conducting one-on-one interviews is  unproductive.  They feel, the whole process is time consuming and it takes focus away from product development, design and sales.

They instead settle for easy choices – “surveys” and “focussed group”.

Gathering a list of what features customers want by talking to them, surveying them, or running focus groups seem to be an easy option.  Surveys are good only when you know what questions to ask and what answers to suggest.  They’re great at validating a direction between a limited set of options (A vs. B) or at collecting factual information on a target population (age, gender, job income, etc).

Surveys have a limitation, when It comes to customer discovery.  Prospective customers are not good at expressing their needs, problems and opinions out of context. And, surveys don’t create context.  They aren’t very good for follow-through with prospects. You cant build a relationship with potential customers. In surveys, you are missing the opportunity for dialogue and relationship building. Surveys restrict you to a fixed set of questions. Interviews allow you to explore a potential customer’s answers and gain far greater insight.

Focussed group too have limitations. When you’re getting prospects give you feedback on their situation or your products, you should be talking with just one prospect at a time.  This helps you avoid “group think” and enables you to probe more deeply into the particular experiences of one client.  You cant derive actionable information from focus groups and the marginal return for every additional group interview decreases as you approach 10 groups vs. 10 participants.

Focus groups and surveys are often used to ask people what they might do in the future. In customer discovery, focus is on current preferences.

Interviews let you explore.  They help you understand a person individually and explore alternatives. With interviews, the depth of the understanding of the person and his/ her situation is more important.

Customer interviewing is the critical part of customer development process.

It will not only tell you if you’re going in the right direction, it will give you a map if you’re not.

 

Why is customer discovery in B2B harder?

1. Introduction

B2B customer discovery appears to be even harder and some of the reasons for this include :

  • Complex products – Typically, in B2B markets products are more complicated. Customers have higher expectations in terms of customization, integration, security, etc. from the products. In an enterprise, there are a lot of things that must be put in place just so you can be considered a valid vendor by your prospect.
  • More people to deal with – Invariably, the B2B buying process in a single enterprise involves more than one decision-makers – researchers, users, influencers, decision makers, gatekeepers. Unless you know what is important to the prospect at an enterprise level and also at the individual levels for all the relevant individuals in the buying process; there is a far lesser chance that you would be let in.
  • Personal relations – Personal relationships are more important In B2B markets. It’s crucial to learn how to build relationships. In B2B, clients will feel they have a relationship with you only when they believe that you understand their needs, their situation, their aspirations, their limitations, their goals, both at company and personal levels.
  • Decision making – B2B markets have a more complex decision making process. B2B customers have their own resources, agenda, culture and approval processes. It is critical that you demonstrates a high level of expertise in all of its interactions with the target audience.
  • Less numbers – There is a limited number of prospects for a B2B business and an even smaller number of early adopters. If you don’t establish real mutually beneficial relationships with prospects, you run the risk of losing customers and reputation. And, if you don’t satisfy their expectation, someone else will!
  • Reaching out to prospects – If you are not a part of industry that your target audience belong to;  reaching out to prospects is tough. You might need to find someone to point you to the places where your potential customers are hanging out.
  • Return of investment – B2B buyers are more “rational“ A typical B2C buyer buys what he/ she wants, not what is needed. However, an individual involved in a B2B buying process for his or her company will not risk his or her livelihood or reputation buying an unreliable product and service. This makes emotional issues such as trust and security
  • Long sales cycles – In B2B markets, sales cycles are longer. The bigger the ticket size, the longer will be the sales cycle. Founders who are not used to B2B sales cycle, just need to find ways to reduce the perception of length of your sales cycle.
  • Industry context – If you don’t know how companies do business, what matters to them in their own business, what they fear, how they perceive themselves, what their road map looks like, who their competition is, what priorities do they have, what technology platforms they use; you could face trouble.
  • Invisible problems – In B2B, problems worth solving are typically invisible from the outside. Your task will be to get inside the enterprise, understand how the company thinks and find the real problems.
  • Be in clients team – To succeed in B2B, you have to don a hat of a consultant. It is the customers who drive the process of product development and you just need to focus on their business needs. You need to be in the team of client team working on solving problem before making the product.

If you use the right techniques for B2B customer development, you can avoid common challenges faced by founders in speeding up product-market validation.

Why is customer discovery hard?

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In customer discovery, you don’t need to conduct a complicated, detailed and perfect research. You don’t need to use sophisticated statistical tools. All you need to do is to collect reliable feedback and clues.

Yet, for many of us, this is one of the hardest part in a new startup building process. Why? There are several reasons for this and some of them are:

  • Many a times, we fall into love for the product we build and that makes anything else not so important any more.
  • It is very hard to resist the temptation to pitch or sell our product and in the process, we tend to forget “learning” as the core objective of customer discovery.
  • There is a hard work involved in locating prospects to be approached for customer discovery and at times it is hard to reach out to them and convince them to spare time for us.
  • We feel shy to approach an unknown prospect.
  • We don’t know what to talk and how to talk to a prospect. You may find some interview scripts on the internet, but its best not to follow any script in a customer discovery. So, you need someone to handhold you to clarify your thoughts and approaches needed for this, besides the required framework.
  • The whole process is time consuming.
  • It would take focus away from product development, design and sales.
  • Prospective customers are not good at expressing their needs, problems and opinions out of context. So, easy option such as surveys doesn’t work.   Further, surveys cant build a relationship with potential customers.
  • When you’re getting prospects give you feedback on their situation or your products, you should be talking with just one prospect at a time. Focussed group discussion, yet another easy option for market research, suffers from a tendency of ‘group think’.
  • Its hard to articulate and curate an MVP, based on our specific situation, so we may end up spending resources in an effort that is not needed.
  • Even if we manage to conduct customer discovery interviews, we don’t know how to make sense of them and draw meaningful inferences from them.

Do any of these reasons resonate with you?