Posted by & filed under Customer development, Entrepreneurship, innovating, Product development, Startups.

How to be a successful entrepreneur? How to create the next Airbnb/Uber/Dropbox/startup unicorn? Hands up, who hasn’t googled something like that even once? Or at least clicked once on those millions and millions of articles about creating the ‘next big thing’.

But if that’s what you are asking you won’t succeed. Might sound harsh but it’s true. Hey, I do understand; who wouldn’t want to be the founder of the next SpaceX. But the thing is that if you just want to have a successful startup for the sake of having a successful startup, you are focusing one the wrong things. You are focusing on the fame, money or whatever fancy thing you are imagining, not on what can get you there. And that is having a startup that is actually worth it.

All successful startups give people something they are dying to get. They are solving a problem, a crucial need people have. The more people your startup can help, the more desperate they are to get that problem solved, and the better you solve it the bigger your success will be.

So, how do you create a successful startup then?

Didn’t I just tell you to stop thinking about it!?!? …juuust kidding. In all seriousness:

 

Have an idea (well, duh)

Often what happens is that the founder(s) sees a need. That something could be done better and figure out a solution for it. They start thinking ”why is it like this. Why can’t it be like that.” Boom: an idea is born! (in a very very simplified form).

 

Validate that idea

Ideas are an essential part of founding a startup. But we all have ideas and only a few of us are successful entrepreneurs because of them. That’s because not all brilliant ideas really are brilliant. You need to validate your idea. Is it something that would make only your life better? Is it crucial enough and for enough people? Or just ’nice to have’?

Is the need big & crucial enough?

I.e. are people actually willing to pay for you solution and are they enough of them. If they want your solution but not to pay for it (=the need isn’t crucial enough for them), you won’t make any money and your business will die. Or if only a few want your solution (=the need isn’t big enough), you won’t make enough money and again: your business will die.

 

”But everyone needs my solution…”

 

Stop you fool!

 

If that’s what you think, stop! Stop, sit down and think again. You might still be able to save your startup.

Unless you have found a way to capitalize air, there is nothing everyone needs. ”Everyone” is the easy answer many go for, and the answer that will ruin their all chances of success. When you think that everyone will be your customers, you try to please everyone. And that doesn’t work. You will end up doing compromise after compromise and then your solution fits no-one. Or you just don’t even try and create a solution that only solves your problem and nobody else’s.

Bad validation is one of the most common reasons startups fail. They get so blinded by their ’brilliant solution that everyone in this world will buy’ that they forget to check the facts. Don’t be like them. Validate, and do it properly. Here’s an excellent post from Startupgrind to help you with that.

The best case is when your product is not just a ’nice to have’, but a must to have.

 

Execute it awesomely

”Ideas don’t matter, only execution does.” – pretty much every successful entrepreneur.

No matter how brilliant your idea is, the idea that is executed the best will win. After all brilliant idea is just an idea, still a long way from becoming reality. And rarely there are any truly unique ideas (there have been search engines before Google, social networks before Facebook and so on). We now ’google’ things because Google had the best execution of the idea, same with Facebook and many many other businesses.

No-one will see the brilliance of your idea if the reality of it just screams bad execution.

And a key thing to remember is that execution is 100% up to your team. It’s about their skills, experience, connections, everything. Many entrepreneurs just hire their relatives, friends, old acquaintances who need a job. That’s very noble of them but only works if they have the qualities needed to make that brilliant idea into reality. And if you ever dream of getting investments, you better have the kind of team that gets them. After all, investors usually look at the team even more than the idea itself. More about that here.

Learn from the unicorns – real-life examples

Let’s look at Airbnb. The economy was (and unfortunately is) tough, and many were looking for extra income. They also had empty space in their homes. Unused rooms, or whole apartments due to traveling. At the same time, people wanted to travel but not spend that much money on their accommodation. There was a demand and then there was a solution: Airbnb.

Or Uber. Again tough times. People need an extra income and they have an idle car. At the same time, others need convenient transportation, like taxis but without the price tag. Again: big need many really want to get solved.

In short: they had a great idea, an idea crucial for many and they knew how to execute it well. And now Airbnb is worth 31 billion dollars. Uber 62,5 billion dollars (as of March & April of 2017).

 

Related post: Startup mistakes to avoid

 

Posted by & filed under Banking, Customer development, Customers, Fintech, innovating, Startups.

The digital revolution has happened. And now it’s banking’s turn. Fintech are here and banks can lose up to 60% of their retail profits in the next decade. But will they? And why would they? What is going to happen in banking and fintech?

About a week ago I attended MoneyFintech-seminar and got to listen to the brightest minds of fintech and banking. Here are the four big things that are hot now and in the future of fintech and banking.

New regulations

When talking about banking and fintech, regulations are a topic you just cannot ignore. The hot potatoes of the industry: PSD2, open banking, and many others are wreaking havoc in banking.

PSD2, open banking – new regulations level they playing field for fintechs

One key goal of the new regulations is to level the playing field between fintechs and banks. It means more opportunities for more new fintechs. And that means new opportunities, new companies, new jobs and so on. The industry has been booming and the new regulations don’t seem to make it any slower, the opposite.

 

Bad news for banks: half of consumers are open to 3rd party providers

Source: Kevin Poe, CGI

Consumers don’t feel connected to their banks and half of consumers are already ready to try 3rd party service providers. While consumers still prefer their current bank to provide new services it is greatly declining. All this is great news for fintechs but not so good for banks. Banks can no longer just sit on their asses and wait to see what happens.

 

It’s up to banks to decide the role of fintechs in the ecosystem

An interesting point in the speeches was that in the end, it is up to the old masters of the industry, banks, to decide what kind of role fintechs will take. Will banks refuse to change with the industry and let fintechs take over? Will they re-invent themselves and fight back? Or maybe the most beneficial for all: will they learn to collaborate with the other players in the ecosystem?

Not everyone can nor should do everything. Instead of wasting time on trying to win everyone on every battleground, banks should collaborate with the ones that would give complementary value to your offering.

“Fintech will bring lots of opportunities for everyone. But it is true only IF collaboration happens.” -Annukka Paloheimo

Like Lars Markull said: “PSD2 is not THE solution for banks, but something that pushes them to the right directions.” It forces them to act instead of just watching passively in their ivory towers till they have become completely obsolete.

 

Customer focus

The regulations are changing and fintechs have the opportunity of a lifetime. But the biggest winners will be the customers. They are the ones who will have all new kinds of financial products, their old services will be much simpler, and for every product and service they have been forced to get from one provider, now they will have an excess of options. And as we know, options is never bad for the customers. But for banks and fintechs it means fiery competition.

“Thanks to fintechs and technology houses customers are aware of their options, that there even are options. That has shifted the power from the banks to the customers. Now customers are in the driver’s seat.” – Kirsi Larkiala

The winners will be the ones who serve the customers the best. The ones who don’t just focus on the customer but what the customer is focusing on. If you can bring something great to the things matter most to the customers, that’s the recipe for success. Or like Jarle Holm put it: “If it’s going to increase your customer’s equity, it’s going to grow your equity.” And the key to that is to stop thinking about customers as customers and start thinking about them as humans.

 

Illogical, obsessed with social relationships, i.e. your customers 

The biggest winners will be the companies that understand what customers essentially are – humans. Beings who think they are rational, but in reality are far from it. Beings to whom social relationships are more important than almost anything else. That’s why customers’ losing the feeling of personal connection to their banks is such a big deal. And that’s why the companies who also serve the social relationship needs of their customers will succeed. Companies need to understand how their customers make their decisions (not as rationally as you’d think), and how to build strong relationships with their customers. And to think about their future customers already today. For example by 2025 millennials will make 75% of the workforce. The ones who will start building relationships with them then are way too late.

Collaboration

The future is not ‘ready’. It needs to be innovated together with the whole ecosystem.” – Kirsi Larkiala

In fintech, one as often mentioned topic as the new regulations is collaboration. In fact, 82% of financial institutions expect to work with startups in 3-5 years.

 

82% of financial institutions expect to to work with startups in the next three to five years.

Source: PwC

1 in 2 banks expects to partner with fintechs later than in two years, which is pretty slow (even too slow?). They see the benefits, but at the same time they have a huge responsibility. Banks spend on regulation and compliance 321Bn (inc fines). Having customers’ trust is more important than pretty much any other industry. And if something happens because of the 3rd party, the bank’s partner, that trust is lost. The customers see that the bank is responsible of their partners. But regardless banks know they can’t not collaborate with startups. Why? They need the innovations & to learn.

“Innovative companies seeking aggressive growth are the future of Finland and Europe.” – Eeva Grannenfelt

Working with startups to get innovations

There are many reasons corporations aren’t the kind of innovation powerhouses startups are. One of those is the fear of failure or losing their reputation by putting out something that is not ’perfect’. That is why the startup-like use of MVPs might sound absolutely horrifying. And they do have a point. Like Pekka Puustinen from insurer Ilmarinen said, corporations have a whole different kind of reputation to keep than startups. Putting out ‘almost ready’ products is not as easy for big corporations like it is for startups. ”Porsche can’t put out a car that almost works”, he said.

As banks have their constraints they go for startups for innovations. And it makes sense. Startups are innovation powerhouses without the constraints they have. They don’t have such a big reputation to upkeep, and they are the masters of using failing as an innovation tool. Eeva Grannenfelt even said large companies have outsourced the R&D partly to growth companies. Startups definitely can be a tool for banks to meet the new expectations of their customers and do so without risking their reputation.

 

Working with startups to learn

But none of the above means the banks can just sit around. While startups can be an amazing way to find the much-needed innovations, they themselves need to change for the future. While Porche can’t necessarily put out ‘almost ready’ cars, there are multiple ways more ‘startup like’ approach would work wonders for corporations. That’s why they should learn from startups. Learn to be faster, agiler, more innovative. And even fail. Like Topi Järvinen said: “Failing isn’t necessarily bad. You can learn a lot from it and thus do better the next time.” Failing (the right way) is an essential part of innovating and by no means automatically means PR disasters.

Based on the talks banks gave that’s exactly what they are looking for. Most of them talked about how they need to reinvent themselves and learn from the startups. That’s why banks should use accelerators and startups just for innovations, but as something to change their entire organization. The ideal situation would be getting innovations from outside the house (startups) but also being able to innovate in-house. And at the same time be more agile, fast, more startup-like and less stiff like corporations usually are.

 

Accelerators shouldn’t be just tools to get innovations, but tools to change the whole organization

Source: Topi Järvinen, Nestholma

 

China: the promised land of fintech

An old Chinese professor of mine joked that in China copyright actually means the right to copy. China definitely has been an excellent copier of all innovations big and small. But now China has gotten far from that: they have changed from copycats to copy tigers. In China, fintech is booming.

China is a great breeding ground for fintech. The country is going through rapid urbanization, they have regulations that support the growth of inland fintech innovations, a massive and underserved SME market, rapidly growing of e-commerce and also explosive growth in online and mobile penetration (read more here). Technology is changing so rapidly that they are skipping many of the unnecessary steps like landlines, dial-up internet and so on, and going straight to mobile payments innovations like that. And the people are more than willing to do so. For example, 40% of Chinese consumers have adopted mobile payments, which is massive. China truly is the perfect breeding ground for fintech innovations.

“Fintech in China is delivering the promise of fintech – making changes of unimaginable size” – Ronit Ghose

China is coming and the West better listen

China’s policy has been to forbid Western services like Google, Facebook, Youtube, and many more to have their own versions instead. There are multiple reasons why, one of them being giving the business opportunities to Chinese companies. The Chinese not only copied the service but also evolved them further (e.g. mobile wallet in their social media services like WeChat). Before you could just think ”oh well, the Chinese have their own versions, so?” and move on with your day (unless, of course, the Chinese market was important to your business). But now that is not possible anymore.

The Chinese consumers are the fastest growing segment in the world. Now there are 300 million Chinese consumers and by 2022 there will be 600 million. And it’s not just the massive amount of them, but also their great purchasing power. McKinsey estimates that by 2022 the upper middle class will account for even 54% of urban households.

 

The upper middle class will account for even 54% of urban Chinese households

Source: McKinsey & company

In short, there is an ever growing amount of wealthy Chinese who want to spend. And they don’t just want to spend it all at home. They want to travel and spend it on foreign (premium) goods.

 

Chinese outbound tourism growing strongly

Source: Johan Andrén, Handelsbanken

It may sound like the Chinese are taking over the world (and maybe they are), but in our current interconnected world, all that spending is going to mean more jobs all over the world. And that’s great (if you are not an avid tinfoil wearer ;))! But that also means the so-called Chinese versions of everything are now also relevant here. Or they should be. Like Ronit Ghose said: “When the mass of wealthy Chinese tourists come, Western companies have to accept Chinese payment methods or they get nothing.” On the streets of my home city Helsinki, there are more and more signs in Chinese. Talking about the Chinese payment methods the shops now accept, wishing happy Chinese new year and so on. The Chinese are coming and you should be ready.

…or should I say Asia is coming instead? China definitely is ahead, but other countries like India are catching up fast. You should keep your eyes peeled.

 

Antti Kosunen ended his portion with the following quote, and it seems like the perfect quote to end this post: “If the rate of change outside your organization exceeds the rate of change inside, the end is near.” – Jack Welch

 

Posted by & filed under Customer development, Customers.

Guest post by Kasper Souren of B2B Pay.

MICE –  is the industry acronym for huge conferences and trade fairs. Travel, Auto, IT conferences attract hundreds of thousands of participants and industry leaders. But are you ready to get the most out of them?

There is nothing like getting out of the building to get a buzz going: get the team excited about the fantastic life of a startup, build on that sales strategy and getting out there and talking to potential customers and partners. MICE (Meeting, Incentives, Conferences and Exhibitions) events are a must for a startup as you will get a lot more customer feedback and partners in 1-2 days that would have normally taken you months. People are there to do business, and you need a strategy to make it happen for you.

We recently attended the ITB conference in Berlin. The ITB conference is the largest and most important Travel conference in the world. Our aim was simple: We believe travel agencies are a good customer segment for us, so let’s get out there and sign up as many as possible. We will be closing deals with about 10 with another 20-30 potentials. This is a great outcome as that’s 5 times more that what we had previously, but if we knew what we know now we would have been able to close more deals and with 1/10th the effort.

Now it is time to plan your approach. In this blog, I assume you are going as a foot soldier with your army tagging along instead of having a booth. I also assume you and your team will be splitting its time between pre-booked meetings and freestyle meet & greets.

 

1) Plan meetings in advance:

The pros at these events organize meeting months in advance. We definitely noticed a huge difference in the response between people we just chatted up on the spot compared to the people we had contacted before the event.

  1. Talk to partners and friends that will also be attending and try to build a referral book. With it, network your value proposition and see if you find any synergy.
  2. Identify – from the attendee list – your core customers and book meetings with each with the correct team members assigned
  3. Add everyone that you have a meeting booked with on LinkedIn.
  4. Have a list of names ready and of course, arrive early.
  5. Try to set up meetings with the best-ranked decision maker in the firm.
  6. Book meeting with 30-minute slots: 15 minutes for the actual meeting and 15 for moving around the conference.

 

2) When walking around and talking to owners:

You are going to spend a lot of time walking around and approaching people who don’t know you at their booths. We did a lot of this as we didn’t do enough of step 1 :) Here is what you need to remember.

  1. Always go in twos. I don’t know why but they tend to listen to you more and spend more time with you. It’s easy to dismiss one person.
  2. Be polite and ask if they have time. If they don’t ask for an appointment or walk away. There are hundreds of people out there, don’t waste time on one.
  3. Understand what “mental mode” they are in. if they just want to sell they won’t be interested in you and it’s better if you walk away rather than pushing them. You need them to be responsive.
  4. Change your story. Some of the best results I got was when I asked them about their product, build a rapport, then after 5-10 minutes, they asked me what I did. And when I told them about our startup and they went “ahh, that sounds awesome, can I have a card as I am interested in this service”. 
  5. Collect cards. If they are busy, tell them you will drop them an email, and remind them in the email that you met them in person.
  6. Always ask to talk to a supervisor, 4 out of 5 times they will go get them.

 

3) During the face to face:

  1. Do not waste people’s time: pitch in a few minutes and gauge the level of interest. Ideally, let them talk more than yourself.
  2. Do not waste your time. When the time comes, make sure you are on your way with a sincere request to your lead.
  3. Take notes; what every client said and your reactions as well. If you don’t have the time, use the voice recorder on your phone.
  4. Brochures are a waste of time, people get a 100 and most of them end in the bin.

 

4) Keep yourself fit, healthy and motivated during the event:

It’s exhausting. Make sure you are mentally and physically up for it.

  1. Take a break every 2 hours to meet the team and exchange notes and get some general feedback.
  2. Try tackling a series of booths as a team: each person taking sequential booths of similar business types and do some instant note comparison.
  3. Get food. There could be long lines. If you’d like a beer, have it and relax.
  4. Have snacks ready.
  5. Keep the team motivated: a bottle of good wine for whoever gets the most cards.
  6. Try to get the most important meeting in the morning. Everyone is exhausted by late afternoon.

 

5) Plan:

  1. Assign somebody with the task of organizing this whole thing. It is much harder to make this happen without someone taking the lead on proper preparation.
  2. Conferences are big. Allocate time to a section. Most important in the morning as you will get tired and less convincing as the day goes on.
  3. Clear message and questions: make sure you have a clear message and 2-3 key questions to get the information you are looking for.
  4. Ideally, you will do some practice within the team to get your questions and pitch correctly.
  5. Use some of the not so important chats in the conferences as testing for your pitch and questions strategy.

 

Other tips:

  1. Your phone will ring. So, put it on silent, please.
  2. Have business cards! Ideally a card with your own name for each of your team members.
  3. Folders are good, for sure. The more the better.
  4. Know who not to talk to. We have experienced for example, that certain cultures do not like impromptu meetings at all, or at least require a person with a certain level of cultural familiarity.
  5. It is best to avoid more than 2 people per meeting.
  6. Dress up. Especially if you’re at a conference with a mixed business/consumer audience, it’ll be much easier to get people’s attention if you dress properly.
  7. Remember where you parked your car. It is a silly exercise to realize that because of the excitement of entering a conference for the first time, you run around like a crazy monkey for 30 minutes looking for a black car in a sea of black cars. Fortunately, since then Google has added a feature for this in Maps

 

Afterwards:

After the event, you need to follow up. Ideally, you have a CRM ready to handle the many emails you are going to send and receive.

 

Finally:

Whatever business you’re building, there are always great events to go to and test your assumptions. The above should give you a good head start with this. And if you manage to build up your business thanks to the above and you’re in need for a good international payment solution we’ll be happy to help with that!

 

Other posts you might be interested in: Should you be afraid to talk about your idea?

 

Posted by & filed under Customer development, Customers, General, Product development, Startups.

Your startup can only succeed if it can provide real value for your customers. Stop guessing what are your customers’ problems or needs and what they consider valuable. Here’s a framework to help you to really listen to your customer and learn what are the problems your product should solve.

Steve Jobs famously said, “A lot of times, people don’t know what they want until you show it to them.” It’s true that

your customers usually don’t know what is the solution or product they need, but they can tell you what is their problem. Tweet this

Let your customer tell you what is the problem. Don't guess.Take a look at the person missing the bus in the image. What is the product or solution he needs? An alarm clock, timetable app, marriage counseling or what? We can guess, but he can probably tell us in detail what are the problems that make him miss his bus. In other words, just talk with your customer. Once you understand the problems and needs, then it’s your job to be the visionary entrepreneur that comes up with the ingenious solution that the customer could have never envisioned.

If you make sure that you are developing products that someone actually needs, you will eliminate one the biggest reason for which startups fail. But every time we tell our startups to – as Steve Blank says – get out of the building and talk with the customers, they say that it’s hard to do. Based on our experience on working with hundreds of entrepreneurs, we’ve come up with a framework for the customer interviews. Use these five areas as your checklist for discussion topics when you are validating the customers’ problems:

  1. Needs and problems that your customers have
  2. Context for the problems
  3. Substitutes for solving the problems
  4. Value of the problems (time, money etc.)
  5. Other people that have the same problem

What is the most important question to ask from a customer?

My life's work remembered by my Mom (copyright Topi Jarvinen)As Rob Fitzpatrick said in his excellent book “The Mom Test” never ask for opinions from your customers. Ask for specific things that they know about – how they are currently doing things or have done in the past. These are things they know about, and most people like to talk about themselves.

Never try to sell your idea to your potential customers and get them to agree with you when you’re still learning about the problem. It’s really hard to get any reliable information this way, because they probably just don’t want to hurt your feelings. Just like talking to your Mom, right?

When talking with the customers, always let them to do the talking. Your job is to listen and learn. Never ask yes or no questions. Instead ask open questions that let them to describe the problems in their own words and tell you things you’ve never thought of.

The perfect question in most situations is

“Interesting, can you tell me more about it?” Tweet this

Here are some more examples of the kinds of questions we’ve found to be effective customer interviews.

Ask the customer to tell you what are their problems

A large part of business is focused on solving problems—real problems for real people. Grasp the real nature of the problem, and it can be simple to solve. You can do so by asking a few simple questions:

  • What are the difficulties you are experiencing?
  • What is the problem with [x]?
  • How often do you have this problem?

When you start talking with people, you have to teach yourself to hear the important message in their problem statements.   Try to understand:

  • What problems does the customer want us to solve?
  • What is the customer behavior or preferences today?

Remember that it’s not always the most visible and biggest problem that you must solve for your customer. In fact, all the seemingly smaller problems can lead you to areas that specific enough for you to solve. Listen to your customers carefully.

Understand the context in which problems occur

To do this you need to see customer feedback that spans beyond the basic.  You need to understand the context in which the problems occur. Questions such as these can help grow your product and your relationship with your customers.

  • Are there certain things that happen before or after the problem occurs?
  • Does the problem happen often or does it take a long time?

These should help you to understand if there are specific circumstances when the problem occurs. Also, your potential customers may have some real or self-inflicted limitations: common examples are be laws or industry regulations, language, personal preferences etc.

Try to understand how people are solving the problems today

The simplest way to place yourself ahead of the competition is by understanding customers’ needs and problems as well as by understanding what is your competition.  And your competition is not always another company. You may be also looking to improve upon an existing habit, custom or use of a product.

For example, an Indian entrepreneur just invented “edible spoons”. They work perfectly fine as spoons, and you can eat them with the food. The problem with conventional spoons was that they were a big hassle when it came to packing. He needed a substitute solution.

If there’s a real problem, people probably are doing something or using something to solve the problem already. Try to understand this by asking:

  • How do you solve this problem?
  • Is there current way good enough?
  • Do you wish there was something else available?

Then used this feedback to start to think about:

  • Who are the real competitors?
  • What are the current products not doing right?

Determine the value of your product based on their current and past actions and experiences

Nine out of ten startups fail. Most of these failures are not because of insufficient capital or poor marketing, but because they were selling something that nobody wanted to buy.

According to Fortune, most startups fail because “they make products no one wants”.  The solution to this is to focus on what your customers consider valuable. After all,

customer will pay for the value you provide, not for your vision. Tweet this

Asking your potential customer “how much would you pay for this” is not a good way to determine the value. How would they know? You’re asking them to predict the future. Instead ask about things they know about:

  • How much do you currently spend on a product for this type of need?
  • Is it a big problem for you?
  • How much time or money you waste because of this problem?

Remember, not every problem is worth solving with a new product. Sometimes the time savings, cost efficiency, new revenue opportunity, enjoyment or some other benefit of the new solution just doesn’t provide enough value to make your new product interesting. You need to understand this before you waste your time and money on a product no-one wants.

Ultimately, you need to reflect on the answers to your potential customers’ questions by asking yourself:

  • How do my customers spend money in these types of situations?
  • How do my customers spend money for similar needs?
  • What do my customers see as valuable?
  • Is it a real problem or just a small annoyance?

Meet other people—never assume everyone has the same problem

Make sure your startup is offering solution for a problem faced by a sufficiently large number of people. Simply ask your prospective customers, “Does someone else have this same problem?  Would you please introduce me to her?”

Never start building something if it doesn’t have a big enough market. And you have to figure out what is big enough for you. Usually, the best bet is to aim to dominate a niche market and grow from there, as Silicon Valley VC Peter Thiel said in his excellent book Zero to One. Just make sure that there is a market where you can provide enough value.

Make talking with customers your everyday habit

Tweet this
The bottom line is very simple.  Talking with customers before developing new products will help you to build something that actually provides value that they are willing to pay for.  When you understand what is the problem that needs to be solved, you’re well on your way to becoming a successful startup.

And don’t stop there! You need to talk to your customers all the time – even when you’re running a billion-dollar business. As entrepreneur and VC Mark Cuban said:

It is so much easier to be nice, to be respectful, to put yourself in your customers’ shoes and try to understand how you might help them before they ask for help, than it is to try to mend a broken customer relationship

Topi Järvinen @topij