Archive for category Entrepreneurship
Maybe you are staring at the blank screen and don’t know where to start. Or it could be when you are looking at your phone and don’t know who to call next. How about when your beta customer tells you something isn’t working and you don’t have the skills to fix it. Or maybe you see an article and you learn that someone is “in your space”.
All of these and thousands of other scenarios are examples of when an entrepreneur must look in the mirror and recommit themselves to the mission that they have committed themselves to. Just like anything the entrepreneurial journey is one with peaks and valleys. But because the entrepreneur tends to personalize everything associated with their business these peaks tend to be higher and the valleys lower and they come at you fast and furious. It can be quite a roller coaster ride.
Sometimes it hits you 3 days before your closing, when you have already committed the money to new projects and the Venture Capitalist calls you to tell you that they are pulling out of the deal. Or it could be when your distribution partner decides to end your key distribution deal. These are the times that the entrepreneur has to dig deep and decide how committed they are to their mission.
Each of the 5 C’s (Conscious, Curious, Creative, Customer Focused, and Committed) are important. However, there are examples of entrepreneurs who have been successful who lacked one or two of the first four. Maybe they created a new technology and hired someone who was customer focused. Maybe they had a vision and was able to find someone creative to figure out how to make the business model work. But to reach their goal everyone has had to be committed to their cause. They have had to overcome obstacles to achieve their vision. These obstacles may have been small ones like having a key recruit back out of a job or they may have been big ones like having a major competitor enter your arena.
It’s ironic that this has been the hardest blog post to write in 3 years. Some work stuff came up, it’s summer which means I am taking time away from the lake and I haven’t seen any other “Update” posts in a while so I wonder if anyone is out there. These things cause you to ask yourself, why should I keep going? That’s what happens to the entrepreneur. They begin to question all of their basic assumptions. Are we really building something my customers want? Do my employees believe in our mission? Is my family really supportive? These doubts are normal and exactly when the committed entrepreneur breaks through.
However, there is a fine line between committed and stupid. We all hear romantic stories about Fred Smith and how he spent his family’s money without their permission to prop up FedEx in the early days. But we don’t hear about the guy who squandered his wife’s trust fund on bad investments and a Porsche dealership. The woman who was supposed to be set for life is now 76 and working as a nurses aide.
No matter how committed you are you have to know when to throw in the towel. There are three constituencies to look at when evaluating this decision. First, are my customers (not just one group, but all of your different customer bases) supportive and willing to pay for what I am delivering? Are my investors fully informed and willing to keep supporting me? Do my employees continue to support the mission and what we are trying to accomplish? If all three of these are true then you aren’t crazy. If you lose one group for an extended period of time, maybe it’s time to throw in the towel.
Did you see the Warriors/Cav’s game? Can you believe this weather? What did you get on problem number 4? Any plans for the weekend? What’s your major? Or the Granddaddy of them all, What’s your sign?
Long ago when we were trying to date, we learned that you had to try to engage your date in conversation. Get him or her to talk about themselves. Some people suggest that you apply the same advice to business. That if you can get your customer to talk about themselves you will learn everything that you need to know. It’s good advice for dating, but terrible advice for running a business.
For the last 4 months I have written about the 5 C’s of entrepreneurship. The first 3 were: Conscious, Curious and Creative. Today, we will talk about being customer focused.
Many people think of being customer focused as giving the customer lots of ways of interacting with you. Returning emails, holding focus groups, talking to them in your stores or call centers, doing surveys…. In essence listening to your customer.
It’s not that those things aren’t important, it’s that those things are a small part of the answer. They are only one input into the decision making process.
Being customer focused as an entrepreneur means “being the customer”. Literally understanding exactly what the customer is going through. It’s listening, empathy, caring and passion all rolled into one. The passion to solve the customer problems because you have the same problems.
The best way to describe this is with an example. The first company that I was part of the founding team was Streamline. Steamline was a consumer direct company that delivered a whole range of goods and services directly into the home; Groceries, dry cleaning, video rentals, prepared meals, pet food and lots of other stuff on a weekly scheduled basis. We focused our business on what we called “Busy Suburban Families.” We had one key a rule. If you were a director or above, you had to be a customer. Every other employee was also encouraged to be a customer but at the director level it was required. But unlike most companies, you didn’t get any special pricing or discounts. You paid exactly what our customers paid.
The reason for all of this was that we wanted you to understand exactly what it was like to be a customer. What it was like at 10:00 at night to place your order. What happened when you came home from work and opened your bins and god forbid your dinner wasn’t there. What happened when you looked at your bills at the end of the month. You had to understand at the personal level if we were delivering on the value promise that we made and how critical every thing we did was to satisfying that customer. We went so far that when we hired a new web development firm that was outside of our trade area we set up a new delivery route just for them so that they could experience the service that they were building the website for. We were customer focused because we were all customers.
Above my desk in Needham sits a 4” section of a carpenter’s ruler. It is mounted on a black piece of cardboard. It was given to me to remind me of the 4” rule. You see a friend went to the grand opening of a bike superstore that he had invested in. The place was amazing. Indoor riding track, shelves stocked with all of the best merchandise and not a thing out of place. Nirvana for the bike enthusiast. Everyone was anticipating the grand opening the next day. After the tour they were told that they could shop so he decided to buy a basket for his granddaughters bike. He tried and tried but couldn’t figure out what he needed. Pricing was confusing, and trying to figure out if it would fit the bike was impossible. At 4 feet away the store looked great. When he became a customer and got to within 4” the store was a disaster. It closed within 6 months. They weren’t customer focused. You have to view everything that you do from the viewpoint of the customer – from 4”.
Bottom line is being customer focused is about truly understanding what the customer is going through. Getting into their shoes to understand how they want to interact with your business and what the challenges are. Although this is not the most important characteristic that an entrepreneur has, it is the single biggest reason that the entrepreneur can compete with the established big guy. The entrepreneur doesn’t have the policies, procedures, and systems that the big company does which keep them from behaving as the customer wants. The startup can build their company to exactly match what the customer wants.
It’s that focus that builds fortunes.
Your consciousness has put this little nagging idea in the back of your head. It’s your curiosity that gets you to the point of deciding if it’s a good idea and even more importantly if it is one worth pursuing.
This curiosity comes to life thru an endless stream of questions. Each question gets you a little more information and helps you add color to your idea and to define if and how you move forward.
Basic questions like:
- How did it get this way?
- Has it always been like this?
- Why do they do it that way?
Help you gather deep background information on the industry and possible competitors.
As you begin to develop an understanding more complex questions are asked. These might include:
- How much does that cost to do?
- What are the cost drivers?
- What are people paid?
- What are the margins?
- Where does that come from?
- What skills are required?
- How do they acquire customers?
- Who are their suppliers/partners?
- Who else does this?
- Who are competitors?
These questions give your target detail and help you decide if you should continue to invest your time. Many of the answers might be guesses which will be revised later sometimes many times. Answers might also not be readily available but they help raise the entrepreneurs consciousness for things to be on the lookout for in the future.
An example of this is a company that I am working on with some of my students. The company is called “nomo” and it is an app that gives college students a place to find out everything that is happening on and around campus. This includes sporting events, club meetings and even parties. All of the content is entirely user generated and kept away from administrative control.
The idea came from one student making the comment that the “administration needs to fix the website because you can’t find out when anything is happening.” This lead to question “how do you find out what is going on?” being asked informally of many students on many campuses. As the onion was peeled back and the question why was asked it became apparent that there was a wide spread problem that cut across every campus in the US. As a follow up some quick financial questions about how much this might cost to develop and run. And who would be interested in gaining access to these students gave answers that demanded that further work be done.
There are similarities between how this curiosity guides you and the six sigma process. Many doing the six sigma process advocate using the five why’s. This informal process involves asking the question Why do you do that? Or Why is it that way? and when you get an answer you ask Why? again. Each successive time you get deeper and deeper into the problem until you are theoretically at the root cause.
As an entrepreneur it is by peeling back these layers that you develop an understanding of the strengths and vulnerabilities of a company or industry and gives you the tools and knowledge to capitalize on your idea.
Next Month: Creative
For an old Rocket Guy (I used to work on the space shuttle), and an entrepreneur, this is very exciting.
Fantastic presentation by Sal Kahn about how they are changing education.
Bloomberg reports that onMarch 6, at the Conservative Political Action Conference (CPAC), NJ Governor Chris Christie had this to say: “We need to talk about the fact that we are for a free-market society that allows your effort and ingenuity to determine your success, not the cold, hard hand of the government.” Your effort and ingenuity determine your success, not the government. Sounds great, if only it were so.
In 2008, Tesla Motors began selling all electric cars to the public. Elon Musk, an early investor and current Chairman and CEO of the company dared to enter a market with a product that experienced senior car executives said was not possible. Through tenacity and perseverance (and a lot of government help – but I won’t go into that) he and his team created a new type of car and a new type of car company. Because the company was developed in the 21st century they realized that they didn’t need to be shackled by old ways of doing business andcould take advantage of how consumers are doing business today.
This clean sheet of paper would allow Tesla to sell cars directly to consumers, something that the incumbent auto companies would love to do. A Goldman Sachs report in 2000 estimated that such direct sales would save consumers $2,225 on a $26,000 car. One can only wonder what the savings on a $75,000 Tesla S would be.
But just like Charter Schools dramatically show the flaws in the public school system, this new distribution model shows the flaws in the existing dealer networks. In this case the dealer lobby has played the role of the NEA and fought this new system tooth in nail state by state.
We aren’t talking about putting existing dealers out of business (like Obama did with the Chrysler and GM restructurings). No we are just talking about competing with them side by side with a different model. It’s as ridiculous as if HP fought Apple Stores because computers are complicated and all computers should only be purchased at a Best Buy where the consumer can get the assistance that they need.
The dealers have won in Texas and Virginia, and last week they won in NJ when the NJ Motor Vehicle Commission declared that all cars needed to be purchasedthrough franchisees.
To be clear, I do not have a dog in this hunt. I am not anti Christie and I am not a Tesla fan boy. (Although, I had the privilege of driving a Model S once and it was the most amazing ride I have ever had.) I am opposed to all of the subsidies that Tesla and it’s buyers have gotten and as a NJ native I respect what Christie has been able to do as Governor. But once again, I am disappointed in Christie. He claims to be a new kind of Republican and then shows that he is just another politician.