The popular wisdom tells us that entrepreneurs need to love and have passion for whatever they’re doing. While that’s certainly a great and essential underpinning for any startup, there are a couple of other ingredients needed when trying to become the next great thing.
For the past week I’ve been talking to lots of startups that applied to our Nestholma startup program and made it to the interview round. Really interesting stuff and I can’t wait to get started working with them. Anyway, when talking with them, I thought about a lot about the qualities and aspirations of the candidates and what would make them successful. In the interviews we asked, among other things, why they want to be entrepreneurs and why the product they’re working on is so exciting. Building and running a startup is filled with so much uncertainty, so many nay-sayers combined with scarce resources (funding, people, time, etc.) that you absolutely need to have a passion for it to. However, that’s not enough.
Some time ago there was an excellent post by Michael Fertik in LinkedIn about finding your startup’s sweet spot from your personal point of view. He makes a good point about the need to find something you love and something you’re good at. Fertik advises that aspiring entrepreneurs should look for the overlapping area of the two and think about building the business around that. Excellent advice in the beginning, but to me it would seem that very soon the entrepreneur should start thinking about a third ingredient that’s actually even more important than these two. That is, what customers find valuable, want to use and pay for. Here’s my take on the startup sweet spot.
When you combine your passion and expertise, but don’t have customers, you end up with a hobby
First, think about the situation where you have a passion for something and you’re really good at something that is needed. For example, you have a passion for stamps and you are good at building ecommerce sites. Your idea could be to build the Amazon for stamps. Maybe there’s a great unmet need that you have discovered and can fulfill with your site? If not, it will turn into a hobby that may be fun for you, but there’s really no business to be build. Actually, when thinking about this, I finally understood why Steve Jobs and Apple have been talking about the Apple TV as their “hobby“: they can do it well, they love entertainment and TV, but they don’t know yet what is the product they should build ie. what the customers want.
When have a passion for something that others would like to use or buy, but don’t have any relevant expertise, you may be better off by becoming someone else’s customer
What about if you have a passion for something and you are certain that lots of others people have the same passion and need? The problem is that you don’t have any relevant expertise. For example, you have great passion for electric cars and think that there will be a great business around them in the future. However, without any engineering skills or in depth understanding about electric cars, the uphill battle may be too steep for you in such an industry. You may try to find the expertise, and buy your way into the new business. Still, you may be better off just to save up the money for the car done by someone else and enjoy it as a customer. Elon Musk has made the unthinkable and penetrated the fierce car industry with his Tesla Motors, but then again, he seems to poses phenomenal engineering and business skills.
When you’re good at something that customer like, but you don’t have a particular passion for it, you’re doing a 9-to-5 -job.
What about if you’re really good at something, and customers love what you produce, but you don’t really have a passion for it? Most working people in the world fall into this category. For example, you may be really good at writing code for enterprise backend systems, and your customers get a lot of value out of your work. If the pay is good, you may even work late nights. Still, thinking about new ways to improve, for example, the SAP and legacy system integration doesn’t keep you up at night and consume your free time. You’re happy to exchange your free time for the pay check, but you want to fill your free time with other activities and interests.
Sweet spot where startups should aim.
Now, when you combine these three things, passion, expertise, and customer demand, you arrive at the startup sweet spot. Most likely you’d start thinking about an idea in an area that you feel passionately about and combine that with some skill set or expertise that you have. However, in order to get closer to any meaningful business, you need to spend most of your time by learning what the customers really want to use and pay for and align everything else with that. As many startup advocates have said, startups are about learning what your business should be about. To me that learning is what makes working at and with startups so exciting. You get to discover what is your startup’s sweet spot and what opportunities it entails for your future business. If the connection with your customers is strong enough, you may have an actual business that you dreamt of when you started.
— Topi Järvinen (twitter.com/topij)
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Every year billions of dollars are wasted on producing and marketing products and services that no one wants. And every year thousands of startups fail to find customers for a product that at first seemed unique and valuable.
Over the past 15 years I’ve had the opportunity to work on 100+ new products and services with a lot of brilliant people in many types of companies. For a long time I couldn’t figure out a consistent way to turn new ideas into successful services that customers actually value. In every industry there seems to be a few people like Steve Jobs and Richard Branson who seem to succeed just by relying on their vision and intuition. But what about the rest of us? Is there a way to achieve better results? I think there is. Here are some of my thoughts on it.
So many ideas, but what to do with them?
How do you decide what is important, what are the features, who is your customer? If you’re at a bigger company, there tends to be more emphasis on things like trend analysis, focus groups, portfolio management etc. In a smaller company, things are usually not as systematic. But the way they make decisions is strikingly similar.
Take a look at the image below that illustrates the kind of discussion that I’ve heard in product planning or decision meetings over the years. I’m pretty sure that everyone who has ever participated in such meetings have heard some of them.
In product meetings, there’s a plethora of ideas, opinions and even data. But what to do with them?
To me, it seems that the hardest part is not how to come up with the new ideas. It’s actually more difficult to turn all the ideas, opinions and data into something that the customers actually want to use. After all, Facebook wasn’t the first one with an idea about a social networking service.
Let’s look at two different approaches for attempting to find great products and services. First approach is what I call here the old way of doing things. Surprisingly it is still common both in big companies and startups. The second approach is the new way that has been advocated by people like Eric Ries and Steve Blank.
The old way:
“We know what to do”
In the old way decisions on what the user needs and what to do are done based on what the product owner, an executive or the decision board believes in. Whatever seems to be the most plausible alternative wins. This is a one-time decision and rest is just project management and execution based on the agreed timeline and budget. Customers may be involved in the final stages to check for usability problems, but the real – and only – test for the product is the commercial launch. Then the company can finally see if they made the right decisions months ago. They can only hope that everything turns out OK.
Many times product and services are not validated until the commercial launch.
In other words, the old way relies on the assumptions that are based on insight and foresight from “wise men and women”. These are used to make an executive decision on the user need.
The new way:
“We don’t know, but we’ll learn from the customers”
Every product and service is based on certain assumptions like: who is the customer? What is their need or problem? What is the appropriate solution? How much the identified customers are willing to pay for it? What if we actually involved the potential customers through-out the process? Tried to validate our assumptions as we are building the product?
For example, we may have an assumption that people would like to get better pictures of their children when they are playing sports. And that they’d like to pay for such a service. These are pretty simple assumptions that you can easily validate by talking to real potential customers. That means not just your roommate, wife/husband, neighbor etc. At the same time, you actually get some really important insights on the real-life use cases. In which situation they have this need and how often? Are there ways/services/products that help them to do it now? What are the problems they have with the existing ways? This is not same as asking from customers what kind of product they’d need. Figuring out the solution to a validated customer problem is your job as a product developer. So, less guessing, more validated information you can use to build better products.
It’s important to note that talking to potential customers is not a one-time thing you do early in the development process. Also, it’s not something that you outsource entirely to an outside agency. You as the product developer need to hear it from the customer. Otherwise, it’s too easy to dismiss the data if you only see a dry summary of the user responses.
You should continuously validate your assumptions and deliverables with the real customers that you are targeting.
Talk, learn & create your first advocates
All this should be a continuous dialogue where the product developer tries to learn as much as possible about the need, the suitability, and usefulness of the planned solution. This is nicely illustrated by the continuous Lean Startup “Build-Measure-Learn” -loop in figure 3. When you slice the work into short iteration, you can easily make product and business decision based on validated data, not just on the best guess of the decision maker. This way also pivots are easier without wasting much time and money.
As an added bonus, the customers you talk to will be your first advocates. When you launch your product, getting the word out will be much simpler, because you already have people that trust you, like your product, and think your product solves a real need. That is if you listen to them carefully.
Of course, this is not a simple recipe for success. You still have to have great ideas, make great design and usability, figure out a business model that carries the business etc. But this new way of developing products enables you to use your time, money, and expertise on things that actually matter to your customers.
— Topi Järvinen (twitter.com/topij)
Instagram, Vine, Makerbot, Google Glasses. These are some of the most interesting and talked about companies and products to appear in recent years. All these draw heavily on the new opportunities and great interest in imaging technologies and services. As most everyone has a good camera all the time in their pocket in their cell phone, taking pictures or videos has never been easier.
Since sharing and communicating with images is so fun, easy and efficient, everyone’s Facebook timeline seems to be filled with images. This was probably a big reason why Facebook acquired Instagram for approximately one billion dollars a year ago. Also, other companies are making big bets on imaging. For example, Nokia seems to have made imaging the cornerstone of their future as a company – just look at their recent Lumia 1020 launch.
Taking and sharing photos and videos is only the beginning: there are many really interesting opportunities, such as affordable 3D printing or augmented reality with wearable devices, such as Google Glasses, that are just waiting for the innovators and startups to make them valuable parts of our lives.
We at Nestholma believe that imaging is next big thing that is already here. This is why we founded an accelerator that specializes in the imaging vertical. At Nestholma we want to help aspiring entrepreneurs, startups and innovators to realize the full potential of their idea. There are many great general accelerators around the world, such as Y Combinator (for ex. Reddit, Airbnb, Dropbox), TechStars, Seedcamp, NestGSV or FounderFuel. Certainly lot of the basic things are the same for all kinds of startups. For example, every startup should, in Steve Blanks words, get out of the building and meet the customers to find out what they really need. Still, we see a clear place and need for a more specialized accelerator model that combines imaging-specific understanding and networks of companies and people into one place. We are building a network of companies, investors, educational institutions and other accelerators with whom we are helping new startups to become international success stories.
Nestholma provides a full suite of services and support for startup from concept and business development to getting funding and protecting innovations. We have a lean startup -driven model for helping startups to build customer-focused imaging innovations and businesses (see more about the way we work). Nestholma also has a strategic partnership with Eirikuva which is the most trusted consumer photo product brand in Finland. Eirikuva wants to be in the forefront of new imaging innovations by growing and partnering with a network of new companies. If a Nestholma startup wants to include physical photo products into their offering, it’s really easy to get started with Eirikuva and take advantage of their imaging business understanding, customer base, production, and logistics for new photo product innovations.
We work with startups all the time and help them to iterate and move ahead faster. However, Nestholma’s most visible initiative is the Nestholma Startup Imaging Program (NISP). It is an intensive, three month long program for selected startups.
At NISP we help startups to find, validate and build products that customers and investors actually care about.
NISP is combination of workshops and one-on-one mentoring sessions tailored to meet the startups’ needs. The startups will have access to our great lineup of mentors that will help the startups with the tens of years of experience on – well – everything a startup needs to know. We will also help the startups to find potential partners and channels for their product. The selected startups will be offered seed funding, and in the end of the program, startups will have the opportunity to pitch their validated early product to investors and media.
In the program pages you can find more about Nestholma Imaging Startup Program and what we look in the startups. If you think you have what it takes, apply today.
PS. Take a look at Dropbox’s application to Y Combinator from 2007. It gives some very interesting info on how it all began for one of the hottest growth companies today.
— Topi Järvinen (twitter.com/topij)