Dec 1, 2022
Episode 4: How to Make Sure Your Business Solves a Problem
If you want to build a business…..a REAL business, you’ve got to have customers who are willing to pay for your product or service and I don’t mean just friends and family. On this episode of Build The Damn Thing, learn what you need to know to make sure that your business is solving a problem that people are willing to pay for.
Guests:
Tessa Flippin | Capitalized VC
Citi Medina | Equal Space
Denise Hamilton | Watch Her Work
Elisa Camahort Page | Author
Ellie Bahrmasel | Further Faster Ventures
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Kathryn Finney
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Genius Guild
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Credits:
Produced by Genius Guild Content Studios
Executive Producers: Kathryn Finney and Darlene Gillard Jones
Post-Production Company: Prosper Digital TV
Post-Production Manager: Joanes Prosper
Post-Production Supervisor: Jason Pierre
Post-Production Sound Editor: EJ Markland
Co-Music Supervisors: Jason Pierre and Darlene Gillard Jones
Show Music: provided by Prosper Digital TV
Main Show Theme Music: "Self Motivated" Written & Performed by Tamara Bubble
Full Transcript
Tessa Flippin (00:00):
Value proposition is extremely important for an early
stage company, and it can change over time. But I think within
technology, if you have a solution that is solving a real problem,
you're going to have competitors. And so you need to understand
what is it about your company that will make people choose you. And
so I, you know, what comes to mind is social media. So when you
think about Facebook versus Instagram versus TikTok, for us as
users, all of those are free. And we're choosing to spend our time
on one or more of these platforms. And so you need to think about
what makes you different. Could, it could be the user experience,
it could be the features that you've included in your platform. It
could be the network effect when you think about Instagram versus
Facebook, maybe all of your friends are on Instagram. And that
becomes a value proposition because you're gonna choose to be where
your friends are versus be on some other platform somewhere else
where nobody, you know is using and you can't easily share things,
et cetera.
Kathryn Finney (01:26):
If you wanna build a business, a real business, you've
gotta have customers who are willing to pay for your product or
service. And I don't mean just friends and family on this episode
of Build a Damn thing. Learn what you need to know to make sure
your business is out in the problem, that people are willing to pay
for it.
(02:03):
How do you know if what you're building is really something people
will buy and pay for? And it's really four key sort of things to
look for. One, ask yourself, is this a problem looking for a
solution? Or is this a solution looking for a problem? Meaning is
this something that is a real pain point for people? Like, sure,
you know, we all may wanna decorate our crocs if you know the
plastic shoes, but like, do I really wanna invest my life in like
those little like croc little jewelry things? Maybe, maybe not.
That might not be a pain point for enough people.
Citi Medina (02:44):
Equal space was built on a pain point. I think many
people of color create out of obstacles. And so equal space was
really the space I wish I had when I started my first company. What
I did was find that there were no spaces built for us that
celebrated our culture, our identity, and also created the
resources and access that we needed, uh, to really battle systemic
oppression that we've, we've had generations for. My name is
Medina. I am the proud founder of Equal Space and I am a digital
advocate for equity space for people of color. So it was myself and
my co-founder came together, started as a popup to build a space
that once the doors opened, you felt affirmed and you felt
validated and valued. Um, and it's been a six year journey now on
building that kind of space for our people.
Kathryn Finney (03:40):
The other thing to think about is, is this a problem
everyone has or just me? And so it might be a pain point for me.
Uh, this might be something that I hate, but that doesn't mean that
everybody hates it. Like for example, I don't eat cook orange
foods. I I don't eat cook orange foods. Don't ask me why I don't,
but I don't. But that's the problem everyone has. There's a lot of
people that love cooked orange foods. I'm just weird like that. So
you're asking yourself, is this scalable next? How is this
currently solved and do people already pay for the solution? One of
the things that this really irks me as an investor is when I meet
with a founder who is creating a solution that someone has already
solved quite well and they're like, well, I'm different. And I'm
like, okay, so tell me how you're different. And they didn't go in
to tell me the same thing that the person who solved it excellently
is doing. And I'm like, but so why would I choose you over them?
They're already established, they're already in the market. They're
already a business
Tessa Flippin (04:44):
Ultimately, at the end of the day, revenue comes from
people paying for your product or service. And so identifying who
that is, how much they'll pay, how often they'll buy it, is this
something that is a need for them versus a want? These are all like
questions that we help our companies think through. I am Tessa
Flippin, the founder and managing partner of Capitalized vc, as
well as a venture partner at Genius Guilded Greenhouse Fund. You
know, when I think about value proposition, that is the question.
It's like, why do people choose you? And if it's, if it's a B2C
platform, it's free for users. The question is, why do people
choose you? If it's not a free platform, it's why do people pay for
you? And so thinking about the things within your company that make
people choose you or make people pay for you is kind of the
definition of your value proposition.
Kathryn Finney (05:52):
Again, ask yourself, can you sell it? Is this something
that people are going to give you money for? And then lastly, ask
yourself, how often do they pay for the solution? Can I get repeat
customers? If it's the sort of thing where people are like, I buy
it once and that's it and I don't wanna do it again, then it's
gonna be hard to really grow the business. It's hard, it's gonna be
hard to make it scalable, it's gonna be hard to do all those
things. So you wanna look for something that people are gonna keep
coming back to or that you can entice them to come back to over and
over again.
Denise Hamilton (06:25):
Well, I built this business and targeted women. How can I
support women? How can I take what I had learned and build women up
and make them more competitive in the workplace? Cause I wanna see
more women succeeding and excelling. But I had to pivot because the
problem wasn't the women. I realized that I'm going into these
organizations and I'm telling these women, you know, do this, do
that, do better. Navigate the toxicity that you're working in.
Instead of addressing the toxicity, I realized I was cleaning out
webs instead of talking to the spider. And so I broadened my
business and really started focusing on talking to men. I'm Denise
Hamilton and I'm CEO of Watch Her Work. And so I do tons of
presentations and training and development around women and women's
issues and women's spaces. But I have found the greatest
fulfillment and the greatest opportunity into going into these male
dominated spaces, the boardrooms, the leadership meetings, to talk
about the ways that they need to be creating space and equity in
work environments instead of punting that responsibility to the
people that were impacted by that. So it's weird because my company
is still called Watch Her Work, but really it has expanded to
really tackling all issues of equity within organizations and
focusing on shaping leaders,
- Commercial Break -
Kathryn Finney (08:33):
Build Measure Learn is really a concept that comes from
the Lean Startup methodology. It's a great book, um, by an author
named Eric Rees. And I suggest every founder read that book because
it really helps you to understand the process of starting something
in particular and figuring out what it is you should be building.
And the concept is simply you build something, you build the
simplest product you can possibly build in order to get feedback
from potential customers. And you measure that feedback, you record
it, you find out what they're saying. You can do it both
quantitatively by looking at numbers, how many people are buying,
what are they buying, how much time are they spending in your site,
how many clicks you get through your ad, all of that sort of thing.
It can also look at it qualitatively, what is the feedback you're
getting when people sort of say things to you personally, I love
quantitative better because actually seeing what people do, like
how many people are actually buying a product versus people who say
they would like to, but you haven't, you don't actually have any
data on whether or not they'll actually do it.
(09:38):
Um, it's really not really helpful for you at the
beginning. And then you take all that data and you learn from it.
What did I learn from looking at what people are clicking
on?
(09:50):
I saw that they like the blue so much better than the purple and
the blue is gonna sell it three times the rate as a purple. So
maybe I just offer blue instead of purple. Or they seem to like the
larger button versus the smaller button. Or these words draw people
in and these words turn people off and you take those lessons, the
things you've learned and you put 'em back into your product and
build it again. And it's a whole feedback loop and you don't go
through it just once. You go through it many, many, many times. And
the idea is the more you go through it, the better your company
becomes, the better your product becomes and the closer to perfect
for your customers your product gets. It is a process that you will
do for the life of your company. It is not a one sort of thing. And
the companies that do really well are constantly doing this build
measure, learn loop, and all the big companies do it.
Elisa Camahort Page (10:45):
Being in the media business, especially in the time that
we were from the mid oughts to um, you know, over the next nine
years, things were so rapidly changing and the, particularly in the
online media business because you were dealing with technological
development. So when we started blog her, there was no social media
I'll, you know, it was pre Twitter, it was pre-Facebook being open
to people outside college, pre Insta, certainly pre Snapchat,
TikTok, anything. It was pre the smartphone. It was pre people
using their mobile phone to do almost anything. It was pre online
video being a thing. I think YouTube was started at the end of the
same year. We were in February of 2005, we got started and they
were towards the end of that year they were founded.
This is a Elisa Camahort page author and entrepreneur.
(11:38):
So what there was was blogs and which were like little
mini websites, basically a blog was a website so well understood
and the technology had been around for a long time. There were some
better tools for creating it. Some wie wig, as they say, what you
see is what you get was starting to be a thing to help more people
have access to the technology. So over time you had to really
refresh how you were doing your business because you had to bring
in new technologies, new platforms, new channels, and you had to
start to be able to manage all of the content from that and manage
the results. Coming out of that with a million different
APIs,
Kathryn Finney (12:22):
Your Apple, your Microsoft, you always have these updates
that happen or in the App store, you see how they fix a bug and
they release a new version. All of that's still part of the build
measure learn process where they found the bug or or customer found
the bug or they found something that wasn't working right. They
took that information, they rebuilt the product, they released it,
they kind of saw how people respond and they learned from
that.
Ellie Bahrmasel (12:49):
We love the build measure, learn framework and we've
iterated on that at further faster. We know that we can spend a lot
of time building or building way more than we need at a certain
period. And our question that we sought to answer was, how do you
de-risk the deployment of capital so that you're building the right
thing, measuring and learning the right thing. So we start from a
place of minimum viable test. Um, we're big believers in this
notion of minimum viable tests leads to minimum viable features,
which leads to the minimum viable product and in turn leads to the
minimum viable company. My name is Ellie Bahrmasel and I am the CEO
and co-founder of Further Faster Ventures. So we have to be in this
constant virtuous cycle of building something and asking ourselves
what is the smallest thing that we can build in the lowest risk way
to get the insight that we need, measure the insights that we're
looking for, and then apply those learnings as quickly as
possible.
Kathryn Finney (14:01):
So the ugly baby concept is really, you don't know your
baby is ugly. Everyone thinks their baby is beautiful, right?
Everyone thinks they have the best baby in the world. And so you
don't know that your baby is ugly until someone kind of tells you,
you know, your baby's not cute. And let me preface it to say that
all human babies are beautiful and amazing. Not all business babies
are though. And so the ugly baby concept is a way for you to
quickly test whether or not people think your business baby is
cute. And, and the thing that I use is, um, creating a really
simple, quick, easy, um, landing page about the idea taking a
hundred dollars, no more than a hundred dollars and doing either
like Instagram ads, Facebook ads, Google ads. It really depends on
your business and where most of the customers that you're trying to
reach live and just using a couple of keywords that you see from
some close competitors and testing how many people click to your
landing page just from using that.
(15:13):
And that just helps you kind of get an idea of like how
many people are interested, what's the level of interest in what
you're doing, a very quick and dirty way to like sort of see
whether or not people are interested in your, your your BA business
baby. And it should be used in connection with build measure learn.
So the Ugly Baby is a way to do that sort of measure, part of the
BML loop. Um, and it's really, really effective and really quick
and easy way to get an idea of how much people are interested and
what it is that you're building.
Ellie Bahrmasel (15:48):
Too often we see people, even if they are doing the building and
measuring, not applying those learnings. So our question is how do
we get that product market fit flywheel spinning, because that's
essentially what build measure Learn is for a company. And for us
that means applying it for our own work as the studio and applying
it with all of the early stage companies that we work with. So
we've developed frameworks and sprints that really help us center
in on what's the most important thing we need to learn right now,
who do we need to learn it with and what is the smallest thing we
can build to get those learnings under our belt? Because that gives
us the ability to deploy our capital more efficiently and prevent
ourselves from building something that's bloated that no one wants
to use, because that's a much more painful learning than
not.
Kathryn Finney (16:46):
The traditional 30 page business plan is no more. No one
does that. I think the only people who ask for that are like banks
because they're still antiquated. And even then some of the newer
banks don't ask for this anymore. Business model Canvas is a
shortened way of doing a business plan. Um, it's a quick and dirty
business plan model and it's, it's an actual, it looks like a, a
graph almost and you can find them online for free. I think it's an
amazing process and it's different categories like your business
proposition, your customer segments, all the things that would
normally go into a traditional 30 page business plan is all in one
sheet. And it helps you to look at your business very clearly
across everything because a very clear picture of your business. It
also is a tool that helps you to figure out what businesses you
should pursue, and I highly recommend it for those who are in
business. It really helps you make decisions quite
quickly.
(17:55):
Bottom line is you are not your customer and if you truly
wanna build a business, you have to put in the work to ensure that
you're creating something that other people want and will pay for
it. This process won't be easy, but it's definitely worth it when
all is said and done and before anything else, you really gotta
determine whether or not your business idea is one that actually
solves a problem. And it's a solution that people will pay for. If
people don't want to pay for your solution, then it's a hobby and
not a real business, and that's okay. Hobbies are good. But if you
wanna create a business, something that could change the trajectory
of your life and the lives of your family, then take the lesson
shared in this episode and start to build. Now that you've nailed
down a solution that customers will pay for, you've gotta figure
out how to turn a profit. In the next episode of Build a Damn
Theme, you'll get the tools and techniques required to turn your
solution until money making business.