Tag Archives: founder

Dear Founders: Are You Listening?

Since my last post, “Distribution is 80% of your problem,” I have had the opportunity to speak in-depth with several terrific start-up founders about some of the incredible things they are doing and why things are not going so well. Several of their stories remind me of another big lesson I have learned over the years: We entrepreneurs often mistake “listening” as “waiting to talk,” until it’s too late.

A Little Knowledge (About Your Users) Is a Dangerous Thing

All the stories have a similar theme: We launched our product, and we got 10,000-plus users (or 100-plus small paying customers) using unscalable ways. Now, we are not sure of what to do next.

One founder I communicated with had talked to hundreds of her paying users and managed to convince herself that her market was women who want to make sure their kids don’t get too much unsupervised screen time. We talked to the company’s users and discovered that, in fact, the core group that loved the app were working women who want to keep track of their kids and know they are safe after school. Whenever this start-up had spoken to its user, it heard the answer it wanted to hear, not what the users were saying. The lesson learned here was about waiting to tell users what they “should” be doing with the app.

Another app — one that got to 20,000 users quickly with a small amount of seed money — found, once we dug deep, that fewer than 150 of their users were active weekly. The start-up had no idea who these 150 users were or what, specifically, they were doing with the product. After 20 user interviews, we discovered the start-up’s core use case was far from what the company thought it was and that the product was too hard to use. For far too long, the start-up was convinced its technology would change the world, especially because 20,000 users seemed to be using the product.

A third, B2B-focused start-up I recently spent time with has more than 100 paying users but has stalled growth and usage numbers. When I asked the company to tell me who its users were and what pain point it was solving, I kept getting back a laundry list of features and user personas instead. When the company dug deeper and spoke to users, it found that, of the 27 features, users are using two and that no one had discovered the three the company thinks are the real killer benefits. We realized the company’s model needs to shift away from “my users are using the wrong features and should have discovered the ‘right ones.'” As a start-up, you don’t get to tell users what scenarios and which features they should use your product for; consumers will tell you by using whatever they find useful.

Apple May Not Need to Talk to Users, But the Rest of Us Do

As a founder, you start with a hypothesis. You have all these incredible suppositions on how you will change the world with your product. You may think you can get away with: “My users do not know what they are doing. I will tell them what they should do. It works for Apple (or so goes the myth) so it will work for me — let’s just ignore users.” Believe me, those kinds of companies are black swans. For the rest of us, our users matter—who they are, what they use our products for and what they ignore.

This is for two basic reasons:

  1. Product/Market Fit: Unless we know and understand our users (or potential users), our incoming hypothesis of the value our product provides is literally that —a hypothesis. Sure, some people may not get it, and some may just dismiss it. But without a group of people who buy into the value we hypothesize that we can provide and who agree to become ecstatic users of our product, we probably did not have a real hypothesis to begin with, just a supposition that is wrong.
  2. Go-to-market: The more detail we can find out about users, the more we can figure out how to go after them in a tight, focused way. Going after moms who want to limit unsupervised screen time is very different from attracting busy working moms who really want to know where their kids are after school. The two are different products, have different features and have a different go-to-market.

One potential red herring during the early days comes when you manage to attract a chunk of users quickly. You can easily get deluded by the numbers — they’re like inventory, they hide a lot of problems. You convince yourself that what you’re doing can’t be wrong if 20,000 users think you’re right. The fact is that these 20,000 people do not think you are right ;  you somehow managed to “get” them, and they experimented with your product hoping to find something of use. 200 of those users might think you are onto something, but you don’t know who those 200 are. If you understood what those 200 really like about your product, you might be able to find the next 20,000 users who are really right for you.

What to Avoid When You Do Decide to Talk to Users

  1. Don’t defend what you have built and try to convince them you are right;
  2. Don’t keep coming back to your vision and what will come later or focus on product features they should be using;
  3. Don’t make a sales pitch about your company and yourself, make it about them and their real reaction to your product—even if it means you have to throw everything away and start over again.

If you do not do these things, you have not really listened to your users—you have just waited for your turn to talk and convinced yourself you understand your users.

A FRAMEWORK FOR WHEN TO LISTEN TO USERS–AND HOW 

Here’s a framework I have developed over the years about when and how to listen to users:

The First 500 Users

Those first 500 users are the most important people in your journey. You need to do more than just talk to them, you need to build a solid relationship with them — they are the foundation of your product.

In my previous start-up, a career marketplace, I personally introduced my early adopters to friendly hiring managers at many companies and helped them land a job. A lot of those early customers are now my Facebook friends. Some of them even became our ambassadors and had equity in the company.

Those first users add immense value. They  validate your hypothesis, refine your ideas, recruit more users and test new features, on top of a whole lot more. And they are also very forgiving to defects, crashes, bad user experience (UX), everything.

I used to schedule as many phone calls with them as I could. In every conversation, I would first show what we were working on (in detail) and get their feedback. I would then open up  and  ask about what they were doing with the product, why they chose it over others, how they found it added value, what related issues they had that we could help with, among other questions. I logged every conversation.

Listening Is Hard to Do—For Founders in Particular

Most of the time when we think we’re listening, we are actually just waiting for our turn to talk. Here are three reasons why:

  1. We are always busy talking — to ourselves. Even when we are obviously talking to someone else, we are also internally talking to ourselves. So listening genuinely — muting your internal conversation and giving someone your full attention — is hard.
  2. For founders, listening genuinely is harder. Most entrepreneurs have their product, features, ideas and vision so deeply ingrained that, when they talk to users, entrepreneurs are always defending things they find users having problems with . (“But you didn’t see the profile page; the settings let you change this,” “There are so many cool things you can do, didn’t you see this feature?,” “We’ll get to that in Version 3,” “Wait, no, you don’t understand, that’s where the puck is going,” etc.)
  3. It is not easy for people to articulate what they are thinking. To really understand what users are saying, you have to read between the lines. Even if you lead with your world view, you really have to listen to users’ views carefully — both what is said and what is not.

Talking to users requires real effort . Be aware of that and start focusing on your first 500 users. Treat your early adopters with special respect — make them feel special and take care of them beyond just the product.

Beyond the First 500 Users

Moving forward with your customer base requires using other techniques (in addition to real conversations) that are still important. One such tactic is talking through the product,  provoking conversations with product experiments.

An example of this would be radically changing your on-boarding — drop everything and get them in — for a small set of users and seeing what happens. Remove a feature you think is not useful and wait for users to complain. Removing things temporarily is the best way to test if they are really valuable.

It also helps to create ancillary products  ( quick prototypes )  to test value outside your core product. As you learn more about your users, you will start to see more value propositions, some that align with your vision and some that don’t.

Until you are truly convinced you have product-market fit, do not be shy about running small experiments on the side to keep testing different ideas. Use conversations to create hypotheses, and experiment quickly.

Another technique is to always ask, “What else would you want this product to do for you?” in every support email. My start-up once introduced a critical defect in our iPhone app that led to hundreds of support emails. Adding that one question uncovered several hundred feature requests, including a lot we had not thought about.

Talking to users as you scale is more than just about having conversations. Lead with a hypothesis, measure, iterate, run side experiments continuously to test.

Dear founder, do not wait to talk to your users until it’s too late.

And when you do, listen. Don’t just wait to talk.

Top 10 InsurTech Predictions for 2016

2015 was the year that InsurTech emerged from the shadow of Fintech. This story has been told through my last 40 research notes published on DailyFintech.com over the past eight months. Including 28 interviews with the CEOs and founders of InsurTechs, this story spans the globe from the U.S. to China, from South Africa to Estonia, and a few stops in between.

So, what does this tell us about the next chapter of this story? Here, I give you my Top 10 InsurTech predictions for 2016.

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In no particular order…

Prediction #1

Insurers will create lifestyle apps that provide additional consumer value on a continuing basis. Continuous consumer engagement will start to replace price as the key buying criterion. The result will be sticky insurance with strong brand loyalty.

Prediction #2

The person-to-person (P2P) insurance business model will struggle to reach scale in its current form. This will drive the P2P insurers to find new ways to replace the traditional carrier model, and we will see signs of a completely new business model for insurance. That will scale.

Prediction #3

Much greater levels of personalized rating will become widely available using new sources of data from technology such as wearables, the Internet of Things and smartphone apps. This will lead to variable premiums over the policy term to encourage better behavior (although insurers will hold back and not introduce corresponding punishments in 2016).

Prediction #4

“All in one policy” cover (aka, all-risks insurance) will emerge for consumer protection. Policyholders will be able to insure their lifestyle (their home, motor, dog, holidays, iPhone, treasures, travel) in a single policy based on highly personalized risk assessment through a digital platform.

Prediction #5

“All in one place” platforms (aka a concierge service) will replace traditional intermediaries with a digital broker. These services will consolidate multiple policies, converge with financial planning tools and provide robo-advice on gaps and duplication in cover.

Prediction #6

New entrants will come into the market with highly sophisticated data modeling and predictive analytics solutions. They will exploit mass-scale technologies, high-performance computing and techniques developed in high-frequency trading.

Prediction #7

Convenience and the ability to digitally turn insurance cover on and off as needed will be steadily accepted and adopted. As will microinsurance, sharing insurance and pay-per-mile. Unit premiums will be higher, but this will be outweighed by Millennial attitudes toward insurance cover and paying a price for convenience.

Prediction #8

The poorest in our world are the ones who need insurance the most. In 2016, the insurance industry will (finally) start to better serve the massively underinsured populations in developing countries. This will be driven by a combination of the massive market opportunity that exists for insurance, global economic forces and a socio-political agenda.

Prediction #9

There will be widespread deployment by traditional insurers of new digital solutions to reduce cost of claims and loss handling. Serving both ends of the insurance workflow, these tech solutions will enable better collection of data and evidence to improve risk rating at the front end and the claims handling processes, especially at first notice of loss (FNOL), at the back.

Prediction #10

2017 will be the year of block chain and insurance. No list of predictions would be complete without reference to block chain, but IMHO it is going to take all of 2016 for the insurance industry to get to grips with what block chain is, what it can really do for insurance and (most important) why we should use block chain as opposed to any other database or enabling technology.

Don’t get me wrong, for I am squarely in the camp that believes “block chain is the next Internet.” And we will continue to see a lot of block chain insurance activity throughout the year. But adoption in insurance won’t take hold until we’ve seen 2016 out.

Strategy: Now Is Not a Good Time…

  • The founder and CEO of an early-stage company that has just closed a solid seed round tells me that what has benefited his business most in the past year, and allowed him to pivot toward a promising future, can be expressed in one word: focus.
  • The CEO of a late-stage startup who spent more than 100 days closing a recent round with an important new investor tells me how he was thoroughly “beaten up” during due diligence because of what was perceived to be a lack of clarity in the company’s market positioning. This added weeks to the process, diverting resources away from sales and daily operations.
  • The CEO of a B2B content start-up tells me that he and his team are doing too many things and essentially careening from one new idea to the next, acknowledges the need to prioritize but indicates he has to get through his short-term list first.

Each of these conversations is recent and real – they all occurred in the past two weeks. And while they happen to be about young, relatively small companies, each of these situations scales to big, mature companies, as well. If the issue isn’t about closing a round of funding, it’s about getting funding in the annual budget. If it’s not about investor feedback, it’s about reacting to the latest round of input from the CFO or the board. And who among us hasn’t bemoaned the quarter-to-quarter focus of publicly held companies of every size and sector?

Each of these stories points to the need every business has for strategy. And even if you think you don’t have one, or can coast along without one, guess again – you just have strategy by default.

What is strategy? Better yet, what isn’t it?

Strategy is NOT:

  • The domain of high-priced (or any price) consultants who create fancy documents – although some outside perspective or facilitation can be a big help
  • The catch-all for anything your team comes up with that survives the budget review process even though it cannot be precisely quantified (I have witnessed respected members of the finance function inside a Fortune 100 company be fully comfortable with this characterization)
  • The department in which geeky, analytic introverts perceived as unable to execute (hence they create more of those strategy documents) build their careers
  • Optional, something to be dealt with later, maybe when you have more time (tell me when, honestly, that will be?)
  • A list of strategic initiatives…or a set of PowerPoint slides full of cool visuals

So, then, what is strategy?

  • Strategy, quite frankly, is what leaders do to identify and allocate resources to help them get their businesses where they want them to go.
  • Strategy is mostly about execution.
  • Strategy is less about what you must do, than what you should not be doing.

Or, my favorite definition:

  • Strategy is about knowing (1) where are you? — (2) where do you want to be? — (3) how are you going to get there?

There are both direct and opportunity costs of deferring answers to these three questions, and ultimately taking the actions that ensure every employee and partner can buy into and play their roles in ways that reflect the answers.

Where to start:

  • Write down what you envision at your “point of arrival.” What is it going to look like and feel like? What will respected colleagues and members of the sector be saying about your company when you reach your destination? What will your products, customer or client experience and customer service be like? What will your brand represent?
  • Then write the story of where you are today, answering these same sorts of questions in the present.
  • Spend most of your effort breaking apart the answer to “how” into three to five headlines.
  • Now here is the toughest part: The temptation will be to build laundry lists of activities under each headline, or even just rearrange (and add to!) what you are already doing today. The successful outcome of this thought process is to surface things you would like to do (including things that are already underway) that you have to admit play at best a limited role in getting you where you want to be. And to cross them off the list and actually stop doing them.

What I am suggesting is not a one-and-done exercise. It’s not a solo activity. And while it may begin at an offsite or work session, it’s not a meeting. This is a process to reflect in your daily leadership, management and the culture of your company. This is how strategy becomes meaningful to creating sustainable and persistent growth.

This article also appears in Amy Radin’s column in Huffington Post and her LinkedIn blog.