“After closely watching several hundred companies that have failed, I observed that a very large number of these had solved the product/market fit problem, but still failed because they had not found a way to acquire customers at a low enough cost…”
David Skok, five times serial entrepreneur turned venture capitalist.
A growth engine is a beautiful thing. But as any other engine, it needs fuel to run. Every step has a cost. And with every step, you lose some prospects.
Let’s look at an example. Warning: if you don’t particularly like numbers, I still urge you to keep watching. You simply cannot build a viable growth engine without this basic understanding.
You should listen to your customers. No, you shouldn’t, because “if I asked my customers what they wanted, they would have said: faster horses” (Henry Ford).
So, what is it?
Here’s the deal.With an innovation, you are trying to discover, build and tune the fine mechanics of a business model.
Business model is a machine that will repeatably acquire customers, and delight them enough to part with their hard earn money.
And at the center of this discovery process is a very human customer. And a very human activity: talking to them.
Yet, Mr. Ford was right: you cannot outsource your innovation to your customers. You cannot just go out and ask: what product should I build?
Here’s how to – and how not to – do it.
#1 Don’t Sell, Convince or (God Forbid!), Argue. Listen
This is as obvious as it is easily forgotten.
In our eagerness to convince, we may ruin the opportunity to learn.
We need the customer to feel encouraged to give us their honest opinion and feedback, rather than defend themselves or argue.
We’ve all heard this one: build a pain killer, not a vitamin. A must have, not a nice to have. Solving the right problem for the right customer – if you do it right – will get you rich.
It’s (almost) as simple as that.
But somehow it slips through the cracks. So, here are 5 good reasons why you should care. Read More
This is one of the most difficult challenges your business will face. Standing out in the sea of messages bombarding your customer, and grabbing their attention.
And then, showing them you have just what they need, and building enough trust so they are ready to hear your offer.
And if you are building a scalable business, you need to find a way to do that en masse. You know that walking around your neighborhood and randomly knocking on doors is not going to work. But what will?
What is at the heart of the scalable business you are developing? A new product or a service? Indeed, that is essential. A logical next step would be to start designing that product, right?
Just hold on for a bit more.
A scalable business is well, a business. And business is much more than the service or the product alone. There’s the customer—without him or her, there is no business. Hmm, so we’ll need the way to reach our customers. And yes, surely, at the end of the day, a business is there to make money. In fact, all of these work together, as fine mechanics of a well oiled machine.
Co-Founding a business is a lot like entering a marriage with children
You don’t have to do all this alone. You can share this exciting road with a smart and committed partner with complementary skills.
A successful partnership can increase your chance of success, make you go faster, and make the whole journey more enjoyable.
But if you turn a blind eye to one of these deadly mistakes, your business can run into a sputtering stop. And leave you with a bitter taste in your mouth and a bunch of hurt feelings.
So here are the most common mistakes entrepreneurs make when co-founding their business (and how to avoid them). Read More
How do you know which idea has the most potential?
Developing a new business is filled with uncertainty and risk.
Sir Richard Branson is probably one of the most prolific business scalers out there. He has started more billion dollar companies than anyone. One of the principles he espouses in his book Like a Virgin is that you always have to protect the downside. It is like wearing a helmet when you go skiing. Knowing that the precious melon on your shoulders will be at least somewhat protected enables you to ski like a hero. At least a hero in your own mind.
Minimizing the risk starts by analyzing ideas, and choosing the right one to focus on. Especially if your goal is to develop a more scalable business. Some ideas simply don’t even have the potential to scale.
But how can you know that up-front? How do you analyze your ideas in practice? This post walks you through 18 questions that will help you evaluate or tweak your ideas so they stand a better chance. Read More
Look around you. Everything man-made you see started as an idea. How will you change this world? Because with a scalable business, you will impact many lives, and will make your dent in the Universe.
Many rightfully say: “ideas are dime a dozen”, and “it’s all in the execution”. But your initial idea will frame and guide much of what’s coming. And even more importantly:
Market choice impacts everything. Is it a real market inhabited by buyers, a hype frequented by the-next-big-thing sniffers, or a dead-end infested by freeloaders? Will you drown in a sea of competition or burn out by trying to create a market that simply isn’t there? Does it offer enough room to grow? Will you be able to attract external investment?
Yes, it impacts everything.
Market choice is made early, and determines your likelihood of success. It makes a difference between a hobby and a business. Between having a fun experience and getting stinking rich.
But how do you answer all these questions? How can you make such an important decision so early on? Here are a couple of concrete steps you can take, none of which involves reaching out for your crystal ball.
Today, you work, and then you get paid. With little or no delay. So as long as you want to get paid, you have to work. If you want to get paid more, you have to work more.
You are here because you want to break out of this cycle.
You want to be smart. To work more up front and get a delayed, but bigger reward. That is the key mechanism of a scalable business.
Unfortunately, this upfront work can take some time. So you need time, and still need to eat and pay your rent. So how do you fund this phase before the delayed reward start kicking in?
