If you're a technical startup founder, one of the painful lessons is that it's not enough just to build a great product. You must also understand the value the product provides customers (along with the rest of your business model).
And going for crowdfunding before you do customer discovery with customers can lock you into the wrong idea too early.
These topics were the focus of interviews with the latest guests on Entrepreneurs are Everywhere, my radio show on SiriusXM Channel 111 (airing weekly Thursdays at 1 pm Pacific, 4 pm Eastern). The show follows the journeys of founders who share what it takes to build a startup - from restaurants to rocket scientists, to online gifts to online groceries and more. The program examines the DNA of entrepreneurs: what makes them tick, how they came up with their ideas; and explores the habits that make them successful, and the highs and lows that pushed them forward.
Clips from their interviews are below.
Tiffani Bell is the co-founder and Executive Director of the Detroit Water Project, a platform that connects donors to people in Detroit and Baltimore in need of assistance paying their water bills. Since its founding in 2014, more than 10,000 people have given to turn the water back on for over 1,000 families. Tiffani was also a 2014 Code for America Fellow working with the City of Atlanta.
Her first startup, Pencil You In, grew from a personal need to schedule hair appointments. It ultimately failed because she was focused on engineering the product, but didn't validate the rest of her business model (product/market fit, distribution channel, customer acquisition, etc.):
I should have realized earlier that I was building a marketplace... I could have built what now is like, Thumbtack or ServiceMagic or something like that. Instead, I went the Software as a Service route and tried to charge for what was a commodity product. There was nothing special about it; you could just book appointments on it. I tried to charge for that and nobody wanted to pay for it.
(Instead) I could have given it away and then done something around a marketplace sort of thing and charged for it.
... A marketplace would have worked (like this:) if you book a house cleaner through Pencil You In, we could have taken a percentage of that fee. ... We could have let you have the software for free, basically.
... I didn't (know that was possible) at the time but later I read things and just saw what was happening with competitors. ...
It was like, "Duh, we should have done that!"
Clay Hebert is the founder of Crowdfunding Hacks, which helps startups fund their dreams using crowdfunding platforms like Kickstarter and Indiegogo. He also is an advisor to corporations and startups, having spent a decade at the consulting firm Accenture.
Clay stressed that crowdfunding should not replace Customer Discovery:
... Customer Development and Customer Discovery need to be moved earlier - before you launch. I always say crowdfunding projects get funded before they launch, not while they're live... meaning conceptually you need to launch to a tribe of people that you've already have identified. Yore launching to the customers you've already discovered and validated your ideas.
... you need to do the customer discovery and validation ahead of time, and then crowdfunded can come in at the point in the process where, it's not a replacement for it, but it can be a great validation of the idea.
Steve: I run into a lot of students who say, "Hey, why do I need to get out of the building, I just started something on Kickstarter?"
Clay: And they're almost never successful.
Steve: Or worse... some are successful, and now they're forced to either fail very publicly and messily, or have to deliver something that they no longer are passionate about.
Clay: That's a very, very good point. ... In an ideal world, by the time you click publish on Kickstarter or IndieGoGo, you've been iterating, working on this thing for a year or more, and collecting emails and building permissions.
To hear the clip, click here.
The Detroit Water Project began after Tiffani read about problems Detroit families were having paying their water bills. So far, the startup has been able to help more than 1,000 families. Talking with those people gave Tiffani and her team a deeper understanding of their needs, as well as ideas for other ways they might help:
The idea that people can't pay their water bills was foreign originally, but just digging deeper into people's situations (we've learned so much more). ... For example, in Detroit and Baltimore you can lose your kids over not having water in your house. ... They can be taken away from you through Child Protective Services. The house can be declared condemned because it doesn't have running water.
... We didn't know these things (initially).
We had several families who didn't have electricity or water. We've had folks where they are in between jobs or their hours have been cut. We didn't know any of these things, so it's been interesting to dig into situations and do Customer Development ... take time to talk to people, whenever they apply, just to figure out what's (their) situation.
...People originally said this could be a Band-Aid, but we're thinking more in the future now about how to help people according to what their specific situations are.
Having developed a passion for coding when she was very young, entrepreneurship seemed a natural leap for Tiffani:
I started reading Wired (magazine) around probably eighth grade. ... I was totally a nerd. That was probably around '99, which was the first dot.com boom, so I read about all those people doing all those things, and I figured out that, "They're doing the same thing I am."
(She told herself) "They're building more complicated stuff, but they're the skills are the same, so why couldn't I do the same thing?"
I didn't know the first thing about how to start a company, but I kept reading Wired and learning about all the different venture capital firms and what people were getting funded for and that sort of thing.
Like a lot of founders, she has no interest in a traditional job:
I don't have the personality to be an employee. I ask a lot of questions and (keep) ... weird hours.... I could never work for someone else. I need to be my own boss.
... I have a personality where I just like to do things. I don't like to be in meetings. I like to make stuff happen ... (as in) we have an idea, let's go build it and try it out.
In companies that's not, sometimes, welcome and accepted. ... I have a bias for action and ... if I see a problem, I want to solve it. Sometimes it doesn't work well in companies. You need to respect authority and hierarchy and things of that nature. I've had, mostly, jobs where I've had the ability to ... do my own thing. ... I've been lucky that way.
To hear the clip, click here.
Clay's father founded a furniture business that ultimately failed. Watching his father struggle had a strong influence on Clay and his brothers:
Me and (my brothers) saw my dad as this very smart, very hardworking guy. And before he was an entrepreneur, when he was at a foundry, things were going really well, and he was promoted to foreman.
For many years I sort of got it wrong, I thought: here's this guy who's really smart and really hardworking, and yet the entrepreneurship thing isn't working. I think (we) rejected the path of entrepreneurship because our one big data point was that even if you're smart and hardworking it may not work. ...
Steve: Is that what drove you to corporate consulting?
Clay: It is, absolutely. ...
Steve: You said anything but entrepreneurship?
Before starting Crowdfunding Hacks, Clay worked as an intrapreneur:
I tried for 5 years to bring (Lean Startup-style) thinking inside of Accenture (with) very limited success.
... Because Accenture as an organization ... works much better as a machine with interchangeable people. If they can unplug me from the project in Boston, and plug me into the project in Chicago with no training and no time lost, that's great.
What was frustrating to me was the tagline for the entire company at the time was "Innovation Delivered" and here I felt like I'd found some of the secret scrolls of bringing some of this creative thinking and innovation inside, and yet it was much more a cookie-cutter process making everybody the same so that they were sustainable in any other project and quickly changeable.
Would-be startup founders working in day jobs shouldn't put off their startup dreams, Clay said:
Start a blog, throw up a landing page for an idea that you have, do it nights and weekends.
When we talk about places to hide (from your dreams), one way to hide is convincing yourself that: I have a corporate job, I have a spouse and kids, and I don't have time to do this other thing.
You and I know lots of people who made the time - sometimes from 9 pm to 2 am - to get started working on their dream. Because Lean Startup methods, Crowdfunding, Amazon Web Services and the Internet that connects us all, is bringing the cost of failure to zero.
You don't need money; you just need to carve out a little bit of time. Chase that idea, stop hiding, carve out the time you need. ... I always tell people ... "99.9% of people don't care at all about what you're building, that's great news, not bad news, because all you have to do is go find that .1% and that's actually plenty."
Tune in Thursday at 1 pm PT, 4 pm ET on Sirius XM Channel 111.
Want to be a guest on the show? Entrepreneurship stretches from Main Street to Silicon Valley, from startups to big companies. Send an email to email@example.com describing your entrepreneurial journey.
Steve Blank's blog: www.steveblank.com