From podcast Idea to Startup
Today, we’re going to talk about the question that founders ask me the most. Well, maybe the second most.
The most is definitely something like, do you have any other ideas for how I could possibly find some freaking customers?
I get that one daily. Finding customers is the hardest thing you’re going to do. You should probably make sure you’ve got a secret that lets you do that better than anyone else before you do just about anything else. But that was last week’s episode. This week’s episode is on the question I get the second most, and it goes something like this.
Another idea popped up as I was working on the core business. I think it might have more potential. What do I do?
Today, we’ll help you build a system to handle all of the side ideas that are inevitably going to pop up as you build your startup. We’ll help you identify which ones are a waste of time, which ones are worth paying attention to, how to test those, and then when to jump over, if it makes sense.
This episode is spurred on by two things. First, my love for procrastination, which leads to my love of side ideas, which led to the system for dealing with them. And second, a pretty tempting example of a side idea that popped up while I’ve been working on the chronic pain startup idea. Also, by the end of the episode, I’m going to teach you how to win any baking competition you enter. Bit of a double whammy today. We’ll do the baking competition towards the end though. There’s got to be a little tension here.
So, how to focus and what to chase first, how to win a baking competition second. Hopefully it all ties together nicely. It’d definitely be a bit random if it didn’t. This episode comes from a pretty special place in my heart because as I said, I am an absolute world-class procrastinator. All of the systems we talk about building on the show to keep you on track exist because I’ve had to build them for myself because I absolutely love distractions. If left to my own devices right now, I’d probably be deep down a rabbit hole learning about fusion energy or Moorish architecture, whether Ross and Rachel ended up together at the end of Friends or rabbit holes themselves instead of making this podcast.
The system I’ve built to keep focus and momentum has taken years and needs a ton of upkeep and monitoring like a Tamagotchi, which I now want to Google to see if they’re still around. When I tell our founders about my love for procrastination, they get excited. You procrastinate too, they say. That’s my biggest fear. I thought all of the best entrepreneurs were these world-class executors that could get razor focused and obsessed with one thing and tune out the rest of the world. I can’t do that. My mind wanders.
But the dirty little secret about entrepreneurship is that this is the only way to be a good entrepreneur in the first place. Any entrepreneur worth their salt is a procrastinator. And by procrastination, I don’t mean texting or social media or playing video games and avoiding work. I mean being interested in lots of things and always wanting to learn about them. Anything new is just a combination of old things put together in a way someone hasn’t thought of yet, solving a problem for a customer everyone else has overlooked or undervalued.
So the most interested people have the most diverse inputs to cram together, which means they make the most diverse stuff. This is why focusing is so hard for entrepreneurs. We wouldn’t be entrepreneurs in the first place if we could focus. It’s like Spider-Man or a terrible answer in a job interview. Our biggest strength is also our biggest weakness. So there are two challenges.
First, how to keep yourself focused once you find the thing that demands and deserves your full attention and will only work if you do give it your full attention while still being curious and adding in the new circles and inputs that will make your business’s Venn diagram unique.
And second, what to do when you inevitably stumble on other interesting things. How do you choose what to take and what to leave? So many successful startups are results of opportunistic pivots of the founder chasing down something different from what they set out to do initially. Alternatively, I’ve lost track of the number of startups and tackle box that failed because they couldn’t stop chasing shiny objects, switching ideas like they were impatiently switching lines at the grocery store.
In short, when is curiosity good? And when is it a waste of your time? How do you stay open yet focused? It is the challenge for entrepreneurs.
And I ran into it last week. On the side, I’ve been exploring an idea in the chronic pain space. Far too many people suffer from chronic pain that I believe is treatable. So I’ve been running interviews and everyone I interview has someone else they’d like to connect me with. I’m getting deep and the network is growing. I’ve also been talking about the idea here on the pod, which helps too. And over the past two weeks, something funny happened. Inbound emails and LinkedIn messages started to pour in from investors. An angel investor in four VCs, to be exact, are frenemies from the other side of the tracks. Each said they were interested in investing in companies tackling one of two buckets, the future of work and mental health in the workplace. And each investor told me the same thing. Something along the lines of, quote, If you want to help people with chronic pain, best of luck. Keep us in the loop. Editors note, that’s VC speak for definitely do not keep us in the loop. But if you’re going to build a B2B solution, you sell the companies to help their employees with chronic pain, specifically carpal tunnel or other types of chronic pain that help employees with ergonomic setups or programs. Let us know.
Every single one of these investors was searching for someone solving pain caused by sitting at a computer all day for big companies. I was curious, why was this a bigger opportunity than going direct to consumer, aside from the obvious larger contract size with corporations? Oh, one VC said productivity. There are all sorts of studies that show carpal tunnel or other types of pain while working pulls you out of the zone. It allows you to work fewer hours and those hours are less productive. So let’s say you added an hour of productivity back per employee per day without actually asking the employee to be at their desk any longer. What is that worth to Google, Amazon, Stripe?They’re paying engineers a couple hundred dollars an hour. Let’s say a hundred dollars an hour just to keep the math easy. That would be an extra hundred dollars of productivity per day. That’s five hundred per week. Twenty five thousand per year per employee. If you say that 10 percent of employees at Google have bad chronic pain, which is a wildly low estimate, that’s more than 10,000 employees. That’s five million dollars of extra hours per year. You’ll just find not to mention the increase in happiness from not being in pain all the time. And that is just one company and we rounded everything down.
Say what you will about VCs, but their back of the napkin math is on point helping people get rid of chronic pain, hand, wrist and back pain. He said is a billion dollar B2B business. And if you do that, I am very interested. Well, it looks like we got ourselves a rabbit hole and we’ll go down it after a little smooth jazz. Ads
Back to it. All babies are cute. I don’t remember when I first heard this saying it’s possible I made it up or 160 episodes and nine years of content in on this stuff. It’s pretty much impossible to know for sure. But it’s one of the things I repeat to our founders the most. And it is universally true. All babies are cute. That is until you spend the weekend with them. Then you get the reality a bit more. When you’ve been hacking away at something for weeks or months or years, you know the reality of the situation. You’ve got data points. You know how hard it is to find customers and get them to talk to you. You know that they’re irrational and non responsive and unwilling to pay and a million other things. And then you have a new idea and you don’t have any of those data points yet. And all babies are cute.
Any idea you think up while you’re in the slog of a different business will be artificially attractive because you haven’t spent the weekend with it yet. There are no data points. Just the story you tell yourself about how the thing could go. It’s a lot like raising money pre product. We often tell our founders to do that if they can before they have too many hard data points. Because when you pitch a story, investors can get aligned with it. They can see the potential. You say something like, “we help X customer do Y and we think we can get 100 customers on board in the next 12 months”. They can kind of talk their way into that. But as soon as you say we’ve had a product out for two months and we’ve got two customers and one of those already churned, your story is suddenly grounded in those crappy metrics. The potential investor can extrapolate. You only got two customers. How the heck are you going to get 50 X that in the next six months? Data makes the baby ugly.
So when there’s an idea that pulls you away, we need to see the ugly baby as fast as possible. We need to get closer to reality. And the first step is a fork in the idea road. We can answer with a question. Is this idea being driven by internal signal or external signal?
Is this idea being driven by internal signal or external signal?
Humans are extraordinarily good at self sabotage. As I do more of the chronic pain interviews, I’ve been amazed that like 90 percent of the people I interview grudgingly admit the same thing. Here is a direct quote.
If I do my exercises each day, I feel good, but they take 20 minutes and they’re boring and I hate that I have to do them. And I wish I didn’t have to do them and I didn’t used to have to do them. So I won’t do them for a while and my pain will get really bad. Then I’ll start doing them again and I’ll feel better. But then I always stop.
The vast majority of people I’ve interviewed choose to feel bad 24 hours a day because it’d take them 20 minutes to feel good for 23 hours and 40 minutes a day. I also interviewed people who said they were pretty sure an acupuncturist or a chiropractor or a change in diet would really help. When I asked if they tried it, they said no. When I asked how long they’d have the pain, they’d usually tell me years, not months. Humans are irrational.
I see a similar behavior with founders. When they start getting close to something interesting, their tendency is to pull back rather than charge forward. Most people are scared to succeed (!). More likely, they’re scared to fail with something that had a higher probability of working because that makes it more painful or public or embarrassing if it doesn’t. I can’t put my finger on exactly why, but an extraordinary number of founders I work with get 85% of the way to something interesting and then quit. Keep an eye out for this in your life.
It manifests in all sorts of ways. I notice it with myself when I write these podcasts. Sometimes when I get on a roll and really like what I’m doing, my tendency is to jump up and get a glass of water. I don’t know why. Maybe I’m scared that I’m about to do my best work. And if I do my best work, that means people might not like my best work. And what then?
The best way to tell if you’re self-sabotaging is to diagnose where the signal driving the idea is coming from. If it’s you having doubts, it might be worth ignoring. But if the signal is external, data you get from customer interviews or customer actions or expert interviews or the results of tests or people just keep on telling you the same thing, that is different.
The internal versus external tests will allow you to quickly brush off a bunch of ideas that are driven by insecurity rather than opportunity. If you’re still excited about the potential idea, we need to get back to the organizing principle for early stage startups, speed. We need to know as soon as possible whether this idea is worth incorporating or pivoting for. We need to see the ugly baby or we need to waste no more time on it. The decision is to either take two weeks and sprint as fast as you can at this opportunity or store it on a document called Icebox and never waste another second thinking about it. Founders get caught when they’re half in one place and half in the other. Don’t be in between.
For the B2B approach on chronic pain, I’m interested enough to see the warts on that baby. So I need to organize a two week sprint to get some metrics fast. Here is how I’m going to do it. And to start, we’ve got to talk about lawns, inertia, envy and first principles.
Do you know where lawns come from? Like why we have them? I do, because as I said, I love procrastinating. In 17th century England, wealthy landowners started to have giant grass lawns in the front of their manors. These weren’t for sheep or other livestock. They were decorative. Back in 17th century England, this was preposterous. The amount of human labor needed to keep a tight lawn was enormous and it served absolutely no purpose. Except to say that you were so rich, you could afford to pay people to keep your giant lawn trimmed and beautiful. You had so much money, you could waste it on this trivial but visible thing. I googled lawns because I now have a lawn at our new house and I’m realizing what a pain in the ass it is. And I wanted to see why I was doing all this work. And the answer is a bunch of insecure lords from 17th century England made it a sign of wealth, which meant that signal tumbled down to the middle class, crossed the ocean to America. Now I’m stuck with it in Connecticut. The reason I’m talking about this is that people have lawns for two reasons, envy and inertia.
People make decisions based on envy, not greed.
And the lawn to your left and right are clear, visible context. You want your lawn to look as good or better than your neighbors. The other reason is inertia. If you’re getting a house with a lawn, it’s easier to just keep that lawn. You could certainly rip up the lawn and put a Japanese rock garden in, but you’d be bucking inertia. It’d be expensive and different. And maybe most importantly, you wouldn’t be able to benefit from all the things we’ve adapted to lawns, playing catch, a swing set on and on. The infrastructure and inertia and system and envy are pushing people towards a lawn. So even though the reason we have lawns is silly, a system pushes us towards them.
Most systems run on envy and inertia.
So when you’re thinking about an idea, it’s important to strip it down to those first principles as quickly as possible, to understand which way things are moving and why, to find the inertia and find the envy. And maybe most importantly, to see if there’s anything that’s changed recently that could throw a wrench in that system and give you an opportunity.
In LA, there are a lot of rock gardens where five years ago there were lawns. The social pressure to not have a lawn because of the drought has chipped away at the inertia and the envy. Not having a lawn now means something. That is an opportunity. For startups, you can never create waves, but you can learn to surf. So for the B2B Chronic Pain idea, I want to figure out inputs for the system. I want to see inertia and envy to see how companies saw and solve the problem now, to see the metrics they tracked.
When I test out one of these side ideas, I start with a document that’s got six variables on it. I am trying to learn more on each so that I can understand the opportunity and put it in context. I need to get the baby a little bit dirty. Here they are:
First, inertia. I am looking for companies that have already shown they want to solve this problem and maybe more importantly, could easily implement a solution without having to break or change a whole bunch of other things. Who is actively looking for a nice coffee and who has no systemic barriers to drinking one?
Second, envy. I am searching for trackable metrics the customer associates with the problem now and clear metrics that would show what solving this problem would help them do. Ideally, it helps them compete or pass up here. Also, B2B, I am trying to find the person who is going to get promoted if I help them successfully solve the problem.
Third, the leap. If this problem is solved, what’s the status level jump this company will make? Is this a leap they’ll pay a big margin for? Is this something they’re trying to pay for already or are already paying for?
Next, swap. Where would the money for this come from? What would they have to stop doing willingly if I could solve this problem for them better?
Fifth, outcome. What does it look like if I help them succeed? Can I describe success for them? Can I help them reach that plateau?
And finally, wedge. How can I work with them to solve a problem or get more data now? What can I do immediately to get some traction and data and momentum? When
I reach out to find some of the above, I love to ask what I call anti-questions. Since I’m usually testing out a specific idea, it’s a combination of customer interview and specific idea testing questions. So when I chat with people, I’ll ask about problems and story, but then I’ll ask a few specific anti-questions after I tell them what I’m up to.
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Things like why are the systems set up so that this won’t work?
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Why won’t people see the value?
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Why can’t the budget be pulled for this?
To start testing out the B2B ergonomics idea, I reached out to a few HR folks in my network at pretty big tech companies. My hypothesis was that companies with flexible hours and work from home, along with lots of higher priced engineers who were at computers all day, might be a good first customer. I also looked for companies that already prioritized an ergonomic setup. A few advertised things like Herman Miller chairs and standing desks.
The baby got pretty ugly pretty quick. The inertia was towards working fewer hours. The companies I spoke with were thinking about how to give employees a four day work week. It was also towards mental health support and other health benefits. When I asked how these sorts of things were tracked, it was all about hiring retention and corporate wide goals. That was the metric.
It’d be hard to isolate whether a chronic pain or ergonomic program helped get people or keep them. None of the companies I spoke with already had chronic pain on their radar. However, when I asked if I could send a survey to a subset of engineers, two companies said yes. So they’re sending an email to a few hundred employees asking about how much pain they’re in each day, if it impacts their work, if they’d be more likely to stay with the company if they had personalized care, and a few other questions like that.
Now, I do think there are other interesting customers here. I’m going to spend another week or two pulling on this thread because I did get some decent data. But overall, it was good to get my hands dirty and see some lumps so that I can contextualize the new idea with the old.
How to win a baking competition. We got there. It’s finally time. Let’s teach you how to win a baking competition. A good friend of mine has a story she loves to tell about business school. During her first year there, every student was required to take a bunch of basic classes, including Marketing 101. At the first session on the first Monday of school, students filed into class to find a huge table in the middle of the room with a ton of baking ingredients on it. As they took their seats, the professor told them to choose whatever ingredients they wanted from the table. They’d be baking something and selling it, so choose wisely. He would take whatever was left over.
The students and the professor would then have until the following class the next Monday to come up with the recipe, bake and sell whatever they made. If anyone made more money than the professor with their baked goods by Monday, they get an A for the class. The students painstakingly chose their ingredients, leaving the professor the worst stuff, barely enough to make basic corn muffins. They spent the rest of the week thinking up and testing their recipes. They thought up names and slogans. They made websites and swag. Then they went into parks, into friends’ houses, into their neighbors and set up tables and sold. Most of them did fine. When they got to class on Monday, they shared how much they’d sold.
The professor smiled and wrote his number on the board. His corn muffins had made twice as much as the next best student. How the heck did you sell that many corn muffins once you asked, what was your recipe? Well, he said, the elementary school across the street used the auditorium for the fifth grade classes rendition of The Wizard of Oz. There were a few hundred parents there. The show is painfully long, but there is an intermission. Unfortunately, there’s no food. So I set up a stand and sold ten dollar corn muffins. I sold out with about 15 people still waiting in line.
The key to selling food isn’t the food or the branding of the marketing. It’s finding hungry customers. I think about that story whenever I’m testing out these side ideas. Every time there’s something promising, I give myself two weeks to find a hungry customer. Someone who wants a solution so bad they don’t care what it costs to understand the motivations and inertia and envy and everything that sets up a system that support a new business. The more I do this, the better I get at it and the faster I can get past the cute baby stage and stick or go.
An entrepreneur’s superpower is noticing things and combining things that other people don’t. Developing a system to dig in and test that stuff fast so that you can benefit from it and not be weighed down by it. That lets you use your superpower, chase stuff down, test it out, stay or go, procrastinate, never settle for nything less than a hungry customer. And if anyone knows some affordable landscapers in Connecticut, please let me know. This lawn is a disaster. Damn 17th century English lords.