Finding Your Venture

But your time on earth is finite so you have to make choices about where to invest your time. Your career might last fifty years and if it takes ten years to build a company then you’re not getting too many chances. But if you don’t go for it sometimes then you’ll never really start anything. It’s tough. All of the hardest decisions I’ve ever made have been about whether to dig in or give up. Choosing badly can cost you time, money, relationships, and your health.

What happens sometimes is that you get excited and dive into a startup idea that has a lot going for it, grind it out for a long time, and then at some point you look back and wish you would have been more deliberate and selective about the opportunity up front.

Brian Kelly is going to tell you how he and Dave Corcoran evaluated potential business ideas, passed on one that sounded promising, and picked the one that turned into Censys, a successful early stage technology company.

Brian has been a founder or early employee at a series of technology companies including Duo Security, TrustBearer Labs, Nutshell, and Censys. He has been a host for A2NewTech and a generous contributor to the Ann Arbor tech community.

Let’s start by hearing about what Brian and Dave were trying to do back in 2016.

So it will probably be disappointing when I tell you that If you don’t sell, then your startup will fail. And really this is true for any ambitious person in any profession – even if you work in a big company, government, non-profits – to have an impact anywhere you have to sell yourself and your ideas.

The good news is that sales can be fun. And you can do it in a way that feels authentic and honest. To me it’s just a big scavenger hunt, where you’re looking for clues and trying to find the person who wants to buy your product. And the skills to get very good at this are available to anyone.

Ted is best known as the CEO who helped Ann Arbor-based HealthMedia exit for $185M. He is the founder of Arbor Dakota, and the Director of the Blue Ocean Pitch Competition.

Ted has been very influential in helping me think about my career as a founder and startup CEO. We met to record these stories at Ann Arbor SPARK, where he teaches and mentors. I hope you enjoy Ted’s stories as much as I do.

Well not completely – I just read that Kylie Jenner’s phone is the entire marketing department for her billion dollar cosmetics company. But that’s not normal. All of the other startups out there can make better investments in marketing by testing and tracking and adjusting along the way. Marketing is a giant math problem. You can map a customer’s journey from the time they learn about you until they become a customer. When you know the number of customers at each stage, then you can test the best ways to coax them through the journey faster. Good marketing does this efficiently, bad marketing doesn’t.

In class we will learn about a sales funnel, marketing channels, and media ratio. Together these form a foundational language for startups to make informed decisions about how to spend their time and money acquiring customers. The numbers can be really basic when you start and then grow in complexity as the business grows.

Rishi is best known as owner of Underground Printing, a custom apparel printing company with headquarters in Ann Arbor. He makes t-shirts – lots of them. Rishi also teaches e-commerce at the University of Michigan’s Center for Entrepreneurship and is an active Angel investor. As you’ll hear in the story he also owns the local professional soccer team: AFC Ann Arbor.

Here’s a link to learn more about Casey’s Head.

I know that sounds really obvious but startups forget all the time. There’s so much to do you just get turned around. In class we talk a lot about customer discovery and we introduce the concept of user experience design because these are the best tools we have to navigate this chicken and egg problem. Real companies use these tools. In this episode you’ll hear Matt MacQueen talk about how Coursera, Uber, and AirBNB create great products by staying committed to this process that anyone can do. As Matt’s stories illustrate, great user story mapping and design sprints are an essential step in launching your new venture.

Matt was the first Director of Product Design at Coursera. He held similar roles at Google, Motorola, and was a member of the Kleiner Perkins Design Advisory Council. Today he is the VP of Product Design and Customer Experience at ITHAKA. You can see Matt and other contemporary design leaders discuss the role of design in tech in, “Design Disruptors“, a documentary film by InVision.

Matt is a legit leader in this space, which makes his stories really powerful. Not only does what he’s talking work for companies like Coursera and Uber, but it’s also very doable for your startup.

Read “Sprint” by Jake Knapp.

“Whether you’re a designer or just a smart businessperson or creative person, it’s a really great book and it is literally THE guidebook that is I think now our industry standard for design sprints .”

– Matt MacQueen

When you’re starting your company you’re going to be excited. You’re going to have a vision for what the company will do and what will make it special. You’ll start pitching the idea and becoming more and more invested in that vision. Startup mythology will encourage you to believe even when others don’t.

Before you commit to the business with all of your heart and soul, it’s a good idea to hit pause. Take a step back and look at the problem you’re going to solve, and brainstorm all of the ways you could solve that problem. You have nothing to lose. But I’ve never encountered a problem that had only one solution and frequently the first one that jumped into your mind isn’t the best one.

Consider a variety of business models, test them, and be intentional about the one you pick.

Hien is Co-Founder of Huck Finch, a digital branding agency. He hosts the “Life on Brand” podcast, and he’s one of those people with a million ideas for new companies and new products.

I asked Hien to talk about the problem they are solving and how they picked their business model over all the others they could have pursued.

That’s a tough question to answer because it doesn’t matter what anyone thinks except your customer. If they like it enough to buy from you at a price where you can make money, then it’s a great idea. If they aren’t, then it’s not.

The academic term for talking to people is ‘Customer Discovery’.

As you’re going to hear in this episode, there are always groups of people who’s needs aren’t being met. If you can understand their needs in a way others do not, then you’ve opened up a tiny little advantage for your business. Your capacity to create value is directly related to how well you understand your customer. And the good news is, you live in an amazing time where it’s easier than ever to connect with people and see these opportunities.

The best companies build this into their DNA right from the start. Before deciding on a business model or a product to sell, we have to learn about our customer, because it’s what they want to buy – not what we want to sell – that matters most.

As Founder and CEO of Engage, Brooke specializes in connecting individuals with opportunity by introducing them to people they wouldn’t have otherwise met. Her career started with a degree in Psychology. She went on to sell women’s clothing, sold business leadership programs to executives, ran operations for her father’s executive search firm, then took time off to gain life experience as the mother of an infant child who survived leukemia.

After moving to Ann Arbor four years ago, Brooke’s work focused on community and employee engagement within the tech sector. She realized that her unique knack for human connection could be leveraged in a way that’s causing a paradigm shift in networking, recruiting, and the economic impact that can be driven by a social enterprise.

The way Brooke started Engage is a case study in customer discovery. Let’s listen to her talk about how she did it.

Do you agree that this statement is true? I hope by the end of this episode that you’ll feel liberated and empowered by this mental model. As you’re going to hear in this episode, I believe cost of customer acquisition is the thing that sinks most startups. That’s why we force you acquire a customer first. You do the hardest thing first, and everything else feels easier.

Most people don’t do this and some of them succeed anyway. But have you ever met somebody that keeps pitching a good idea but the business isn’t going anywhere? I have. I’ve been that person and it feels terrible. At some point the business starts feeling like a burden that you’re carrying around. Determination is good, but sometimes your allegiance to your idea makes you rigid and becomes a disadvantage.

So liberate yourself from the tyranny of a good idea and start with the customer, instead! Doesn’t that sound kind of obvious? I first learned this approach from my teacher at Babson College – a guy named Bob Caspe. Bob’s advice liberated me from the oppressive mythology that entrepreneurs had to be visionaries. It took the pressure off of my vision – something I either have or don’t have – and put the emphasis on what I could find out by talking to people – which is something I can do something about.

Bob Capse is an electrical engineer who became the founder and CEO at several successful technology firms, including Leaf Systems, CDA, and Sound Vision. He taught entrepreneurial marketing at Babson College for seven years starting in 2005, which is where we met. Without Bob we could have never started HeatSpring, and his influence on my life is a big reason I decided to teach.

Listen carefully to Bob’s examples and try to see the genius in the subtlety of what he’s saying.

Consumers (you and me) have very complex and sometimes irrational buying behavior, but companies are motivated by just two things: 1) Increase revenue, and 2) Cut costs

The fact that they have these straightforward goals makes it easier to understand how they make decisions. Unlike consumers, they make very rational decisions about what they buy.

If you solve a big problem for them, they can pay a lot of money for the solution. And their problems aren’t always obvious to the casual observer – you have to really get in there and learn about the business, which means there can be less competition for some of these big opportunities. That’s why we focus mostly on business-to-business opportunities in this class.

There are infinite approaches to increasing revenue and lowering cost – which what makes business fun and creates opportunity for innovative startups like yours. It’s OK for your solution to be new and innovative, but it needs to be grounded in those two fundamental business objectives.

Never forget what you’re trying to do for your business and for your customer: increase revenue and lower cost.

Mike McFall is Co-Founder and Co-CEO of BIGGBY Coffee. His new book, “Grind” is a practical guide to starting a new business and he is the new co-instructor for the extremely popular course offered through the University of Michigan Center for Entrepreneurship: “Finding Your Venture”.

Mike’s success as a franchisor requires fanatical attention to detail and an obsessive focus on revenue and costs. The story he tells is a great reminder about not getting lost in the weeds and forgetting the big picture objectives.

You’re plenty smart and there are enough opportunities out there. The more pressing question is whether you want to do it. Everybody likes the idea of doing a startup, but it’s a lot of hard work. 90% of startups fail, the outcomes are highly variable, it can take longer than you expect, plus there’s an opportunity cost to skipping an internship or leaving your job to do it.

So before you commit to doing a startup it’s important to articulate why you’re doing it. What do you hope for? What are you afraid of? What would happen if the company failed? Is there a less risky way you could pursue this thing you’re so excited about?

I acknowledge he title of this episode is the same as Simon Sinek’s famous TED Talk, but the guy totally nailed it when he said: You’ve got to start with why.

Mike McFall is Co-Founder and Co-CEO of BIGGBY Coffee. There are more than 250 BIGGBY locations around the world and they are growing like crazy. He just wrote a new book, called “Grind”, which is a practical guide to starting a new business that skips past the MBA and goes right to the nuts and bolts of building a successful, self-sustaining company.

Most importantly, Mike is the new co-instructor for this course. He and I will be teaching “Finding Your Venture” together on Thursday afternoons this Fall. Mike told this story sitting in my living room right before we walked to get poke bowls for lunch.