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.
Tessa Flippin | Capitalized VC
Citi Medina | Equal Space
Denise Hamilton | Watch Her Work
Elisa Camahort Page | Author
Ellie Bahrmasel | Further Faster Ventures
Facebook: Kathryn Finney
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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
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.
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.
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?
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.
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.
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.
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.