Here is the Powerpoint Deck with Audio from my presentation at the University of Minnesota’s Carlson School of Management Entrepreneur Club on November 2nd, 2011. I produced this video specifically for youtube to fit the allowed time, so although this video will give you a feel for what I presented, the full 50 minute presentation will not be available. Saying this, some of the stories that accompany the teaching points are not in this presentation… I guess you’ll just have to come out for my next presentation, but in the meantime, let me know how this impacts your startup or current business!
In 2003 I started my first business out of a college dorm room and it all started with a simple idea. Ryan and I were two normal college guys that were both Business Administration Majors at North Central University who saw starting a business as a great opportunity to apply what we were learning in the classroom to real-life situations. Now, 8 years later I realize that starting a business is much different than what Ryan and I thought it to be when we were back in the dorm room and I am on track to start my 2nd business that has unbelievable potential.
The Twin Cities has become well-known for the long list of Fortune 500 companies, but amidst all of the “big businesses,” there is also a growing list of small businesses and startups that have shaped the ever-growing business landscape of the Greater Metro. For years the owners of these small businesses and startups have been left to look for opportunities to learn startup skills and network with other small business owners, but North Central University’s Business Department has recognized this need and has built a Free monthly conference to help equip these owners (and potential owners) with the tools for success… Startup Twin Cities! (Something I wish I had back in 2003!)
Check out this 30 second promo video…
Startup Twin Cities is a FREE event on the First Thursday of each month from 6:30-8:50pm at North Central University in Minneapolis. Each event consists of:
- A Keynote Speaker to discuss one topic relating to the Small Business/Startup Community.
– Breakout Sessions related to various aspects of business (you choose 2 sessions to attend out of 3-4 offered).
– Opportunity to network with other current/potential owners.
This is not a typical small business networking event though… you will never feel pressured to buy anything and the strongly discourage business card passing to earn sales. StartupTC’s goal is for you to grow as an owner, not be sold to.
I spoke at last months conference about the Crush Club concept as it has played out in my online t-shirt company (coedmonkey.com) and my new business venture, but the next meeting is Thursday, November 3rd at 6:30pm and will feature a great keynote speaker from Crowdcut.com (a great Twin Cities startup success story) and many interesting breakout sessions following… there is something for everyone and hopefully you will find your place in the this community. Feel free to check out StartupTC.com for more info (the site is under construction right now, so it will take you to the facebook fan page).
See ya at Startup Twin Cities!
I was recently on a conference call with the two other co-founders for my new startup when something hit me. After spending 20 minutes discussing everything that had been going on and what our next steps were, the same two words kept coming up: “I Think… I Think… I Think…”
Although we have spent nearly a year forming our Crush Club, getting in front of potential customers and learning what our Minimum Viable Product should be, apparently we’ve now reached a new place in the process where there are new questions that need to be answered… otherwise the two words “I Think” would have been replaced with something like “I know that xyz potential customers actually want…”
The goal of Forming a Crush Club for your Startup (or current business) is to get you out of your office and in front of potential customers to test your ideas and assumptions (fancy word for guesses), and replace them with facts and a business model… so basically replacing the “I Think” statements with “I Know” statements.
Don’t get me wrong… you need to begin with an “I Think” statement, but this “fact finding process” will give you continual Customer Feedback that will replace your own “I Think” ideas with customer based “I Know” facts that will help you know where you are going (building the actual business, product or service). Just because you have met with a handful of people and learned a few things does not constitute that your search is over. You need to continue to Assume. You need to continue to Test those Assumptions. And most importantly, you need to learn how to build something amazing.
Here are 3 Steps that will help you as you replace the “I Think” with the “I Know” statements:
1. Write down all of your assumptions (the “I Think” statements) about the following:
- What is the actual problem or need that you are addressing?
- Do people know that they have this problem or need?
- What is the profile of these people? (Age, Sex, Location, etc.)
- If you could create a solution, would people actually want to buy it from you?
- Can you build this type of solution needed?
2. Start forming your Crush Club that will help you test those assumptions. Identify the people within your network that fit the profile of the person above that might want this type of solution. If you cannot think of anyone within your network that fits these criteria, don’t worry. You’ll just need to do a little more digging to search for someone to schedule your first Crush Club meeting with (you can do this in the Yellow Pages, google searching, facebook, linkedin, etc.).
3. Test your assumptions (the “I Think” statements) on a real person to find out if they are true. Follow the 10 Steps for a Crush Club meeting. By the end of each meeting, if the person has a “Crush” on your idea, then you can ask them if they know anyone else that might have the same problem and who can also offer advice… then sit back and watch your Crush Club grow based on their referral!
Whenever you find yourself saying “I Think,” (no matter if you have an existing business or a sustainable business), it’s time to get out of the office and replace those assumptions with facts. In my case, we’ve come a long way since we first started this new venture, but each new step raises new questions that need to be answered, so we’ll keep having Crush Club meetings… but that’s what a Startup is really all about: Searching for a Sustainable and Scalable Business Model. How is your search going?
I think that people commonly think of the founders of a startup working late into the night in a garage somewhere while eating ramen noodles, but needless to say, after 9 months of working on this new venture there have been no late-night “garage sessions” and we have not done any ramen-noodle runs to the grocery store.
Overall, the entire startup process for this new business feels rather ordinary… although it has pushed us out of our comfort zones by requiring us to meet with a lot of people to hear what they think of our idea, and stomaching it when they do not like it. The good news is that over the past 9 months my two co-founders and I have conducted many CRUSH CLUB meetings and we feel as if we are nearly solidified what our Minimum Viable Product will be at launch date.
Fast forward from the beginning of this new startup to last Thursday with my latest blog post about the “big meeting.” I wanted to update you on how that went and outline the last week so that you can see what a week in the life a a start-up co-founder looks like (because it’s not actually all that crazy, haha):
Tuesday, October 11th- (Various times from 12pm to 10pm)
- Cramming to finalize our Powerpoint Slide Deck for the lunch meeting in two days with the attorney that can introduce us to one of the biggest players in our target market. There was a lot of Photoshop and Powerpoint work being done!
Wednesday, October 12th- (7am-8:15am)
- Early morning breakfast at Cuzzy’s (in Minneapolis’ warehouse district) with another co-founder to discuss the Powerpoint Slide Deck that we were going to present the next day. (I had two eggs, hashbrowns, rye toast, ham and a couple glasses of water… in case you care to know)
- Finalize the last details on the Powerpoint Slide Deck with anything that was mentioned over breakfast.
Thursday, October 13th- (12pm-1:30pm)
- Lunch meeting at Wasabi (in Minneapolis on Washington for their lunch sushi/habachi special). By the end of this meeting, the attorney liked the progress that we had made since we had last talked in August and offered to introduce us to one of the biggest players in our target market.
- Following lunch my co-founder and I got into my car and were pumped… I told him that in Silicon Valley they would be popping bottles of champagne right now, but since we are here in Minnesota, I’ll just drop him off at work again and we’ll hold the excitement inside.
Friday-Monday, October, 14th-17th
- Waiting to hear back from our attorney to hear if he was able to set up an introduction and meeting for us.
- Approx. 10:15 am- Receive news that the introduction had occurred and accepted… it was now in our court to provide availability… we began lining up our availability for next week.
- Approx. 2pm- Receive news that the attorney’s contact is too busy to meet with us right now because of current work load but wanted us to send info and then we can set up a meeting once his schedule clears… so we go into idea mode and realized that if this guy is as busy as he sounds, then he probably doesn’t have time to read a long email describing our concept… so we decided to make a short youtube video that described the concept (we are not releasing it publicly). By 10pm last night we had completed the video and sent the direct link to our attorney to pass to his contact. The picture above is one of my co-founders and I from the 1 minute, 20 second long video that we made.
Tuesday, October 18th:
From here hopefully the appointment will get lined up but I guarantee you… no one has ever made a video to get in front of this person before, so it is going to get his attention!
That’s what a week in a startup looks like and although we all have day jobs I think that it’s pretty manageable. How have you spent your last week?
I don’t know if you’ve ever been a part of a startup before, but for the last 8 months I’ve been working on my 2nd one with 2 other guys. It’s been a lot of work but today is the biggest day in the history of our startup. Nearly 2 months ago I had an early breakfast meeting with an attorney who works for the target market of our new business. (For anyone that has never been in a startup before, here’s a word of advice… get used to 6:30am meetings!) He knows the industry well and hears their complaints, so it made sense to pull him into our CRUSH CLUB to give us feedback as we develop this new startup.
After showing him the concept that we had been working on for the past 6 months, he was very impressed and gave us a few pointers on things that we should continue working on, but he concluded by saying, “Guys, if you build this, every person in your target market will use this software.” We had spent the previous 6 months developing the concept in coffee shop meetings with our Crush Club, so this was not breaking news to us, but this attorney went on to say, “In fact, if you can make these few tweeks and show me the changes, I’ll personally line you up with some of the biggest players in this field that I work with so that you can show them the idea. They’ll love it.”
Crush Club 101… if you are truly solving a need and the person that you are meeting with is somewhat experiencing the same need (or knows people that do), then it will not be hard for them to set you up with the type of person that will help you refine your idea and eventually buy your product.
That was 2 months ago. No Fast Forward to today. Paul, Geoff and I have been working for the past 2 months to refine our idea based on the feedback of our Crush Club and this attorney. Right now I’m sitting in a Dunn Bros coffee shop typing this blog post as I’m getting ready for our second meeting with this very busy attorney. The plan is to take him out for sushi, show him the progress that we’ve made off of his ideas, then ask what he thinks (open ended… we’re not selling him)… then by our last bite of sushi, we’ll know if the 8 months of hard work have been worth it… or if we still need to use our Crush Club to search for the correct business to build.
I can’t wait… but this is what it feels like to be in a startup.
Get out of your Office & In Front of Customers (The Case for a Crush Club- Why 9 out of 10 Startups Fail)
The fact is simple: Nine out of Ten businesses fail in the first 2 years… this is not from a lack of business training or not having a great product. It seems crazy to think, but popular business teaching and common sense thinking actually lead down a road towards failure (don’t believe me?… keep reading). One of my favorite business influences, Steve Blank puts it kind of like this: The sad reality is that most start-ups fail because they don’t have enough customers, not because they don’t have the best systems in place or their product/service is not good enough. The reality is that most business owners put all of their time into product development only to find out later that there is no customer demand for what they have been busy building.
So how do we go about building a business based on customer demand instead of the owners assumptions?
Here are the 2 roads that business owners can take… which one do you find yourself walking down:
1. The Wide Road beginning with Product Development (Building your start-up based on assumptions that people will buy from you someday)
2. The Narrow Road beginning with Customer Development (Building your start-up knowing that people will buy from you on the first day)
I’ll illustrate the both below:
Click on the Image for Larger View
1. The Wide Road: (9 out of 10 times this road is traveled and the business fails) The Entrepreneur gets an idea, creates a plan, raises money and starts developing the start-up with the hopes that someday there will be enough customers to actually make a profit. This scenario hinges on the owner’s assumptions in the Business Plan (“Assumption” is really just a fancy word for “guesses”), because in this scenario the owner hopes that Marketing will bring in enough customers to meet the growth projections in the business plan. Everything is predicated on the Launch Date, because that is the day that the investors (if there are any) and owner(s) hope to start getting their money back. Without a defined customer base that demands the product/service, many companies will Alpha/Beta Test the product to make sure it works and launch a Free or Reduced Cost version to gain “customers” in hopes that someday they can charge full price for the product. “Hopefully” is a common word in the marketing and sales meetings, while “someday” is a realm of reality that the company continually lives in.
The problem with this type of Start-Up: Once they burn through the cash and launch the product, they often find themselves asking the tough question, “But where are the Customers?” without enough money to rebuild the company to meet what people actually want.
Now let’s take a look at the Road less traveled that begins with Customer Development instead of Product Development:
Click on the Image for Larger View
2. The Narrow Road Less Traveled: (Only 1 out of 10 times this road is traveled and the business succeeds) The Entrepreneur gets an idea, forms a Crush Club of potential customers to replace their assumptions with facts, creates a Minimum Requirements Document, Crush Club “ok’s” plan and then First Draft Business Plan is Written. In this situation the start-up takes the time to find out the actual needs of a targeted group of people that actually have money to pay for the solution. In this model, the Potential Customer dictates the type of business that is created and this is accomplished by having Crush Club Meetings where, by the end of the meeting, the person either has a Crush on your Business Idea or let’s you know that your assumptions are not correct.
With this process you don’t need to offer a “perfect” or “whole” product on your launch date… you only need one that meets their “Minimum Requirements,” or in the words of Eric Ries, a “Lean Startup.” You will be able to add more features or services to your business as you grow and continue to have Crush Club meetings and if at any point in this process the Crush Club stops approving of the plan, the owner can go back to Step 1 and proceed from there to build a business based on customer demand (See Diagram below). This 5 step process will save you a lot of money & stress because you will find out within the first month or two if you have a real business idea or just assumptions that should not be built on.
From there you can forecast growth and create the First Draft of your Business Plan and know that you can “Cash Flow” the start-up on the day you launch… how great would that feel?
The choice is yours which road to go down (or keep going down), but if you find yourself currently on the first road, the good news is that you can still get onto the second road because there is an off ramp right ahead. Just “take a break” from building your business, get out of your office and get in front of the customers… they’ll tell you how to finish building it.
How will you implement this in your business?