D I A N A K A N D E R O U R A P P R O A C H T O I N N O VAT I O N I S D E A D W R O N G

F R A N C I S M A D O J E M U

D I A N A K A N D E R

• Diana Kander is a young entrepreneur and a Senior Fellow at the Kauffman Foundation with a lot of personal experience in startup companies and an evangelist of customer-based innovation.

• I’ve seen people lose their life savings, their relationships, and their health struggling to “make it” as an entrepreneur.

• To some extent, I’ve experienced each of these stresses myself through my entrepreneurial journey.

• It’s just hard to see when you are in a pot where the water is getting hotter and hotter, where the amount of risk you are getting yourself into is growing and growing.

– D I A N E K A N D E R

“The most important of these counterintuitive principles is that people buy solutions to their

problems, not products and services. ”

– D I A N E K A N D E R

The more serious the pain you can solve, the more it means you can charge for your

product. ”

• You can bank better margins, enjoy much shorter sale cycles, and spend a lot less on sales and marketing because your customers will be evangelizing the product on your behalf through powerful word of mouth testimonials

S O U N D S P R E T T Y G O O D , R I G H T ?

• But unfortunately, 95% of entrepreneurs don’t follow this simple rule.

• That number is probably even higher than 95%, but I want you to keep reading and not get hung up on it.

S O U N D S P R E T T Y G O O D , R I G H T ?

• It’s not that most entrepreneurs deny that solving problems is important.

• It’s that they go out of business because they build solutions for problems that don’t actually exist

H E R E ’ S W H AT U S U A L LY H A P P E N S :

• 1. An entrepreneur will get an idea and start thinking of all the possibilities of what it could turn into, the impact it could have on the world, and all the money it could generate.

H E R E ’ S W H AT U S U A L LY H A P P E N S :

• 2. Next, they will build the product.

• They spends a lot of time and money trying to build the most comprehensive version of it, rarely showing it to anyone because they want it to be perfect before potential customers see it.

• First impressions are everything!

H E R E ’ S W H AT U S U A L LY H A P P E N S :

• 3. Then, they brand the idea.

• They spend time and money developing a catchy name and a logo, purchasing a domain, building a website, creating marketing materials, etc.

• This has to look professional!

H E R E ’ S W H AT U S U A L LY H A P P E N S :

• 4. Finally, they go out looking for customers and, more often than not, strike out big time, causing them to realize that something is wrong with the initial idea.

• They revisit the idea and start brainstorming how to make it better.

H E R E ’ S W H AT U S U A L LY H A P P E N S :

• And then they repeat step one through four all over again, spending a lot of time and money, without making any forward progress

L O O P O F D E S PA I R

• This is the startup loop of despair. It can last anywhere from a few months to a few years, and it usually ends when the entrepreneur finally runs out of money.

• When they are fully cooked!

AV O I D I N G T H E L O O P O F D E S PA I R

• But successful entrepreneurs know that the startup loop of despair is completely avoidable.

• They know that once you come up with a great idea, the very next step should be to find potential customers and determine if your product is even worth building.

– D I A N E K A N D E R

“There is only one way to diagnose whether your idea solves a real problem. You

have to conduct a Problem/Solution Fit Test. ”

W H AT E X A C T LY A R E W E T E S T I N G ?

• Two things.

• 1. The Problem – Does a specific group of customers have a migraine problem?

• 2. The Solution – Does my solution solve the problem?

H O W A R E W E T E S T I N G T H E S E T W O T H I N G S ?

• 1. Diagnosing migraine problems is most effectively done through customer interviews.

• Believe it or not, customer interviews are extremely tricky because both you and the customers are coming into the conversation with a number of biases, so we have to conduct them in a very specific way to make sure we are getting honest feedback that we can use.

H O W A R E W E T E S T I N G T H E S E T W O T H I N G S ?

• 2. Solution testing is best done through objective experimentation.

• Humans are terrible at predicting the future. So we can’t really interview our customers to understand if the solution will work.

• We have to find a way to simulate the future and objectively test how customers will actually behave

• Conducting the Problem/Solution Fit Test before building your product will guarantee that you will build a product people actually want by figuring out which features and benefits are the most valuable.

• Above all, this means your startup will actually generate revenue.

– J I M R O H N

“We must all suffer from one of two pains: the pain of discipline

or the pain of regret. The difference is discipline weighs

ounces while regret weighs tons.”

E X P E R I M E N TAT I O N & R O O S E V E LT

• Franklin Delano Roosevelt ushered in an era of hope and progress when he proposed the New Deal.

• And at the time, his reforms were considered radical. But he once said,

E X P E R I M E N TAT I O N & R O O S E V E LT

• "This country demands bold, persistent experimentation. It is common sense to take a method and try it. And if it fails, admit it frankly and try another. But above all, try something."

E X P E R I M E N TAT I O N & R O O S E V E LT

• Roosevelt would have understood better than anyone the necessity for trying something different.

• The New Deal succeeded for many years, but we must now try something newer before it fails us*.

M I N I M I Z I N G R I S K

• The best way to de-risk an idea is to make sure people want it before you spend too much time and money creating it.

• If you aren’t solving a migraine problem, you’ll need to spend a lot of time and money educating people about your existence and and convincing them that they can benefit from your product.

• It’s very expensive to convince people that they need or want something that they really don’t.

• Startups are about finding customers, not building products.

• It is important for you to find the problem your product would address to, and find the customers willing to pay for it!

• People don’t buy products or services; they buy solutions to their problems.

• A service/product should always answer to a “pain” related to a specif segment of the market or akin to a possible (foreseeable!) clientele. You do not build something without do your math, your survey and your research to see, if actually, there is a market!

• Entrepreneurs are detectives, not fortunetellers.

• As a founder or entrepreneur (or as a designer of a possible future of your tomorrow self!), you do not gamble.

• You employ specif and carefully deliberating strategies to achieve your goals. You do not guest, what might exist or happen. You try to find what’s going on on your market!

• Successful entrepreneurs are luck makers, not risk takers.

• As an entrepreneur you need exactly the knowledge and skills that would permit you to understand the why’s of a business opportunity, as well as the skills and the mindset to grasp the opportunity and exploit it to your favor!

• In such mental framework, you should always, be prepared to relay more on your careful planning and implemented strategy, rather than luck!

• Luck, of course, plays an important role in the equation, but when you have prepare well, meticulously and have a vision, you develop your own confidence and luck, along the way of building your vision!