Business At The Speed Of People

Three years after the launch of Eric Ries’ book “The Lean Startup”, I see more and more startup entrepreneurs making the effort to “validate” their idea before shifting into coding mode.

Which would be good, except those same entrepreneurs make a fundamental error: instead of validation, they go looking for justification.

If you go around asking people in your target market if they want your idea, a certain number will answer yes. Most startups will ask twenty or fifty or a hundred potential customers, count the yesses, and extrapolate to a market share. They then happily go to the fun part and invest a couple of person-years and a bunch of precious dollars building a solution, only to find that nobody wants to buy it and they have to close shop.

But wait – do all these “yes” answers mean your market is ready to buy, or are they a “yes” that they are interested in knowing more, or merely a polite “yes” just to get you off their back?

When you have an idea, and you’re anxious to get to the fun part of building it, it is only natural to ignore all the data that shows that you’re off-track and focus only on what justifies your desire to move forward. The problem with following this urge is that you will build what you want to build, not what the market is ready to purchase.

Idea validation is an essential part of exploring the problem-solution fit, or “for what critical problem or urgent desire is your solution the answer?” To do this properly, you need to explore your target market’s problems, needs, wants and desires to find out what keeps your potential customer up at night, and if the solution you have in mind really solves that problem or satisfies that desire.

Because your first idea comes from a place where your solution answers a problem which is important to you, then of course you feel you can assume that everyone else who experiences the same problem as you do (or did) would want your solution just as much as you do.

This is a trap.

You need to fall in love with their problem, not your solution. Your initial solution idea becomes a path to explore the problem space, until you find the problem behind the problem that energizes and inspires you to want to solve it. Then you iterate back from the deeper problem to a new solution, which will most likely be different – and better – than your original idea. And, in doing so, you will also figure out for whom the problem you’ve identified is something important to solve, and, most importantly, what will trigger them to seek out your solution.

It’s like the old saying: “Under all this poop, there must be a pony in there somewhere!” Your first startup idea will be crap. The secret is to persevere until you’ve reached your figured out what really excites you and the people around you. This could take five, ten or even a dozen iterations of bouncing back and forth from solution to problem to solution to problem… until you find that magic combination of people who recognize the value of what you are offering and who are ready to commit.

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I was clicking absentmindedly when I came across this hilarious compilation of informercials, which reminded me of too many startup elevator pitches…

Yeah, you might have found a real problem, but is it worth solving?

Too many of the products pitched on those direct-response marketing ads are one-hit wonders. You can’t build a scaleable business on trivial needs.

Are you “really” Charlie?

When was the last time you spoke your truth, even though the people around you might not agree?

When was the last time you wrote your truth, even though others might push back or ridicule you?

When was the last time you acted on what you believed was right and in the highest and best interest of all concerned, even though others would want to sanction you or stop you for doing so?

It is easy to join the crowd and exclaim #JeSuisCharlie. However I see too many people doing so, while staying safe… saying, writing or doing things just to curry the favor of the boss, the client, the peers, the crowd… even though deep down they believe something different.

Heck, I’m more than guilty of that. On more than one occasion, my gut told me that something is wrong or is not in the highest and best interests of the stakeholders. I needed to speak up, but I didn’t, because I was afraid that others might not agree with me, or I could lose face, or I could be sanctioned.

Too often, when this happens and I don’t speak up, I end up in regret. Regrets about the outcome of the project, regrets about how it affects the people, regrets about how it affects me.

If you really want to honor the twelve victims whose speech was stolen, you must be willing to speak, write and act on your truth, no matter what the consequences. That takes courage. To quote Bill Maher: “It takes balls the size of the Eiffel Tower”.

To proclaim #JeSuisCharlie is a bold personal commitment: to live your mission, your vision, your values, your principles, your truth. About things little or big. No matter what anyone else may try to do to stop you. No compromises. No surrender.

To me, that’s the real meaning of #JeSuisCharlie.

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Originally published on my LinkedIn profile:
https://www.linkedin.com/pulse/je-suis-charlie-really-davender-gupta

Uber is an interesting story of how the startup world is evolving. Beyond the controversy it is creating with its aggressiveness (which I want to examine in another piece), the real lesson here is that what creates the disrupt is not the tech, it’s the business model.

When Uber started gaining visibility in the press, I thought the innovation was the creation of a virtual personal transport dispatch service. The tech behind being able to hail a driver and pay for your ride via smartphone, while impressive, is not revolutionary – it is merely evolutionary. It takes money and effort to build out their system, but not billions of dollars of VC money. So why is it attracting so much investor attention?

Disruptive as it is to the taxi industry, Uber’s real valuation engine is its “surge pricing” business model.

Adapting prices to changes in supply is something that some industries are good at. Take gasoline distribution. The price of gas goes up and down mainly based on the fluctuation of the cost of its inputs. When a barrel of sweet crude goes up, the price of gasoline goes up within hours.

Uber has been able to deploy a pricing model which responds almost instantaneously to demand, instead of supply. And, more importantly, they succeeded in gaining consumer acceptance (okay, grudgingly) of this pricing method.

Business model innovation is the key behind many of the tech moneymakers. Look at Apple and its App Store, which takes 30% of the top of a very fat distribution channel. The App Store revolutionized the utility of the smartphone and especially its economics, relegating the wireless carriers, who were previously the big winners in that market, to a distant second place. And the way Apple integrated its business model, and the success it has had with it, has not been equalled by any other company in that industry.

All too often, the startup entrepreneurs I meet, think that working on a business model means generating spreadsheets full of financial projections, a task they relish as much as a root canal. It’s a chore they will put up with in order to land a seed investment and go back to working on their tech.

I love Steve Blank’s definition of a business model: how you create value, deliver value and harvest value (he says “capture value”). You are not just building a gadget or an app, you are building a business. Innovative technology without a correspondingly innovative and disruptive business model, means your great idea is just going to gather dust on your shelf.

Your “hockey stick” projections need to be backed by bold thinking about your business model and your pricing strategy. If you dream about launching “the next big thing”, spend at least as much creativity exploring how you will deliver and harvest value as you do in creating it.

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The article which inspired this post:
“In Praise Of Efficient Price Gouging” by James Surowiecki in MIT Technology Review
http://www.technologyreview.com/review/529961/in-praise-of-efficient-price-gouging/

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