Frownies and smilies

Customer feedback is what makes the whole venture real for an entrepreneur.  Sure, validation is the number of users, the number of units sold, the amount of revenue received - but the quantitative stuff is never enough.  You want to know what the users think, how much they like what you're doing and why.

So you actively seek customer feedback, especially in the early stages as that is going to inform your product and marketing strategies.  And when you get the 'wow!', 'cool', you're thrilled.

Then you run across the first customer who is not a fan of whatever you're doing and let's you know that in definitive terms with feedback itemizing the many different ways your product fails to impress.  Your initial reaction is most likely a sinking feeling, tinged with a little 'what if nobody likes it?'.  The next one is that the customer doesn't really get it and you're not going to pay any attention to the feed.  Luckily your business sense kicks in and you start looking at what the feedback is about.  You put yourself in the shoes of the customer and try to see what could have happened and what you can do about it.  And if you're super customer-centric (as you should be) you reach out to the customer with a reasoned response and maybe notch a win.  Negative feedback can bring positive results.

Handling feedback in business is pretty much like how you would do it in other areas of your life.  Enjoy the kudos, but don't disregard the criticism and don't let it crush you by taking it personally.  Take a few steps back (and a few deep breaths!) and try to find value in the feedback.  Your product - and you - will be the better for it. 

As they say, a frown is just an upside down smile.  


 

How you do it matters

There's a big brouhaha over Netflix raising the price of its DVD+streaming option almost 60% a couple of days ago (read one view here).  From a business perspective, a lot of people actually believe that it is a smart, and possibly necessary, action for Netflix if it wants to remain as uber-successful as it is now.   But the customer reaction is mostly due to how the price hike went down - it was steep and there was no evidence that the higher price offered any customer value, which in turn caused customers to believe that the action was purely for financial gain, 'greed'.  Many feel that a couple of more modest price increases tied in to some service improvements and spread out over time would have caused barely a ripple in the Netflix base.

Once again it is all about the customer.  I've written before about 'knowing your customer' and how a company that was adamantly true to its mission of customer satisfaction could be super successful, but the reverse is true.  Companies that lose their customer focus stumble and it takes a lot to recover.  I'm personally a long-time customer and big Netflix fan, mostly due to how well they delivered on the customer experience, even through occasional problems.  But Netflix insisting that customers shouldn't complain about the price increase because it is only the cost of a latte (and hence not a big deal) seems surprisingly insensitive.  I'm sure there are many customers like me who'd happily pay twice that if they felt they were getting something more for the premium.  All that Netflix needed to do was think about the customer - in advance - and ensure the price increase was done right and, more importantly, presented right.  Or, if the reaction caught them by surprise, Netflix could/should quickly do some damage control and smooth those ruffled feathers.

Many Netflix customers were also fans of the company so this is an uncomfortable time for them.  For entrepreneurs, Netflix, with its most impressive founder/CEO Reed Hastings, is a shining example of how a company should be built.  Here's hoping it will make its customers happy real soon and wipe the smudge off its halo.

Real and fun

I just read James Altucher's '100 Rules for Being an Entrepreneur' and heartily recommend it for any entrepreneur or wannabe.

I don't agree with all of it though.  For example, Altucher's rule #1: it's not fun.  In my view, if it's not fun, don't do it - but I'm not suggesting you expect a non-stop joy ride either.

There are some personal faves in the list too:
-  Try not to hire people
-  Get a customer
-  If you have an idea worth pursuing, then just make it.
(The 'just do it' approach is probably universally cheered on by most entrepreneurs.)

Check out Altucher's list here, it's long, but a quick, amusing and meaningful read - even with the many reminders to follow him on Twitter ;)

Knowing your customer

It is Super Bowl Sunday with less than 90 minutes to go to kickoff and what I've found most exciting is, no not the team match-up, but the VW ad which will air during the game but has already become a must-see in the past couple of days.

If you haven't already seen it, it is worth a look - it is heartwarming, geeky and funny and very well done, with the car having a subtle but powerful placement. You may wonder why I'm writing about a Super Bowl ad from a big auto company in an entrepreneurial blog. It is not a big stretch - this ad speaks volumes for thinking different and having a fresh approach which are de rigeuer for entrepreneurs. But, most importantly it shows that they truly know their customer. It is clear that the car is aimed towards young families where the parents grew up with Star Wars and are now excited about introducing their own kids to it. The kind of family that would have more than a little fun with the idea and would find the commercial both pleasing as well as memorable. And they released the ad early in order to build online buzz - again guessing, correctly, that making an impact through social media can only add to the TV viewing and not dilute it in any way, especially with their core audience.

Watching the ad was a lot of fun, but it also reminded me how important it is, whether you're a startup or big company, to know your customer. Early stage companies cannot dream of Super Bowl ads, but they can make sure that their one-pagers, presentations, websites, even FAQs, status updates and email messages are crafted so they speak to their customer - which means knowing what is important to them, what touches their hearts as well as engages their minds. It is much harder when you're a small startup and probably don't have dedicated staff for this - most likely the founder/entrepreneur is doing the bulk of the 'messaging' - but it is all the more critical to remember to maintain the customer focus.

I plan to watch the game with friends and while I'll be enjoying the general Super Bowl hoopla, I'm sure some of the enjoyment will come from viewing the commercials with an entrepreneur's eye - maybe there'll be more inspirations to be found there. And, here's the VW ad - enjoy!

Staying true to your mission - continued

I while ago I'd written about Zappo's change to stay true to their mission of customer service (you can read it here). While that is certainly true for the big stuff, like business models, for an early stage entrepreneur it is also important to keep the focus on the day to day happenings that define the company. Unfortunately it is harder to do when you're being the Swiss army knife of your venture and switching from strategist to tactician constantly.

For example, we believe that customer focus is necessary in all aspects of business and the team supposedly has that down. But recently I was reviewing an overview document for a customer pilot - a document that I'd read and given feedback on at least a couple of times before - and since it was ready to go to the customer, I decided to look at it from the viewpoint of one. That's when I realized that while the main content was fine, the header had an internal focus, not a customer one. Instead of being titled something like 'Hot Stuff Program Pilot' where the customer could relate to and get excited by the 'hot stuff', the header was 'Pilot for XYZ Organizations' referring to the type of orgs that would do the pilot. Presumably it was not obvious as three different people, other than me, had reviewed it with the express intent of maximizing customer impact, and not one had caught the fact that all the header was doing was notifying the customer that this document was for them. Until I looked at it the way the customer would, I didn't see that we should draw attention to the program instead so we could have the customer at 'hello' (alright, the header). Maybe time pressures had something to do with it - but startups cannot use that as an excuse unfortunately. True, a larger company would have this kind of stuff covered under rules and guidelines developed by experienced staff who have time for building processes, but startups should, and can, get similar results by remembering the focus that they believe in.

Small things have a big impact, and when it comes to customers/users, the entrepreneur probably has to do some micro-managing (including of one's self!) until customer focus becomes second nature to everyone. The good news about having a small slip-up like this is that it makes for an excellent cautionary tale that everyone can relate to and makes it so much easier to do the right thing. That's another thing for the founder/entrepreneur to do: collect and tell stories!

Staying true to your mission

Most startups have to do course corrections and redefine - or 'find' - themselves before they are set on the path to success (sometimes even after, as their business environments may change). In a previous post ('adaptive startup') I'd written that while change is necessary, it is non-trivial and serious attention needs to be paid to the original vision of the venture and how it fits in.

I ran across this story about how a 'little' company called Zappos dealt with having to change their business model right after the dot-com crash. Their CEO Tony Hsieh made the decision to walk away from 25% of their revenue in an unarguably bad economy in favor of a business model that enabled their core mission: exceptional customer service. Zappos is differentiated and hugely successful because of their customer service (I'm a customer and I'll attest to the good-vibes shopping experience) - but it takes guts, dedication and clarity of vision to do what Tony did. Also, it is cool to see a shoe retailer, who came somewhat late to the online market, knocking it out of the park based not on disruptive proprietary technology but on the decidedly low-tech people-dependent customer service. Read the story here - it's a good reminder that business is always about the customer.

Opportunities from obstacles

Continuing the musings on dealing with economic turmoil, there's a another worldview - this is just business as usual in emerging markets like Asia, Eastern Europe, Latin America etc. Having just returned from a quick trip to India where everyone I met talked to me about the US downturn , I agree there's something to be learned from countries where economic stability is not taken for granted.

The Wall Street Journal recently had an article on Surviving the Downturn: Lessons from Emerging Markets which is interesting reading. The primary lesson here is that while we in the US, and presumably other developed countries, have a tendency to shrink, retrench, hunker down and other 'fall back' actions, there's a case to be made for seeking growth, as they do in other places. While the article is focused on larger companies, the ideas apply to small startups just as well. For example, the one about increasing product and service visibility - that can be done with a team of one (yourself, the entrepreneur) if need be, and is a great investment as I'd mentioned in a previous post 'time to build'.

The other idea on rethinking customer value is a call for flexibility - and really paying attention to what your customer wants, especially during this time. It helps to understand that value may not always be just about cutting prices. I shop frequently at a Trader Joe's close to my home and used to worry about the survival of a little independent produce store right next to it - it had too little produce and too few customers and I thought it would go under, especially as the economy tightened. But, the management decided to pump it up, put up huge banners stressing 'neighborhood', 'independent', ' farm fresh', all guaranteed to appeal to the kind of people who go to TJ's, and it is now literally overflowing with produce and bustling with customers. They did a little bit of both - increased visibility and paid attention to what the customers value - and are reaping the profits.

Finally, the article ends by emphasizing the underlying theme: stay optimistic. It is not easy, particularly with the daily dose of doom around you, but it is a choice you can make - and a forward-thinking approach will get you focusing on growth, instead of just survival, which vastly increases your chances of being around when the upswing happens. Not to mention, when you stop panicking, you'll have more fun and be more fun too. In a networked world, good ideas flow in all directions.

Time to build

It's two weeks into the new year, and many are still refining (if not defining) their resolutions, regardless of what the gym ads say. Maybe it's because those resolutions made in the hopeful haze of the holidays don't hold up as January briskly marches on.

Well, this blog is about the startup ethos, and I don't do resolutions - but I do plan. And as the year ended, I, like many others, had to review the financials, the marketing and development plans, yada yada. Planning at year end is pretty much a given for any entrepreneur. But last year was not just any old year, and 2009 is starting from the ashes of what was simultaneously the bleakest year for the global economy but also the most hopeful year in American politics, and needless to say, the two are intertwined.

There have been many writings about how startups can survive the year ahead. There was the famous Sequoia presentation that started the belt-tightening in the VC and startup communities of Silicon Valley, and a flurry of how-to-survive posts from CEOs - you can read one here or here. All very useful, but also all oriented to those that have some level of funding or an established revenue stream. What about the entrepreneur who has just started out? How do you grow when everyone's pulling back?

I believe that now's the time to build. That doesn't mean that we sit back and wait for the government to infuse funds and start projects. We need that of course, but what we do at the personal level will have a ripple effect at the global level - if enough of us do it. And for an entrepreneur, in any area, just sitting around wringing hands and bemoaning fates/financiers/politicians is not an option. It's not in our DNA. We've got to be making something happen or we...er, move on.

So how do you build your business with little on no money? Very simply, you need to invest. You need to make an investment of time, energy and mind-share, if not money. Here are some ways you can build:

1. Invest in customers.

• Get to know your current and future customers/users. Build relationships that you can leverage when they have money to spend or you have the money to deliver. This works for every level, from large enterprises to individual consumers. Even when you're cutting back on spending, or specially then, the promise of new ideas and innovation on the horizon is always sexy.
• Do stuff for free for your users/customers. What you give away now will help you get revenue later.
  

2. Invest in domain expertise.

• Improve your expertise in your chosen area. Build skills and knowledge, do market research, do competitive analysis, talk to customers (see a pattern here?). Get better at what you do.
• Help your team members, if you have any, do the same.
  

3. Invest in your product/service and infrastructure.

• Build out your product or service. There are folks out there who're either stuck in paying, but boring, jobs or out looking for a job and willing to hone their skills 'donating' a few hours for you. If you're in the service business, take this opportunity to refine/streamline your offerings.
  
• Talk to customers/users (again!) to make sure you're positioning your product/service for the new environment we're facing.
• Improve your infrastructure and processes, stuff like file sharing, accounting or technical documentation.
  

4. Invest in connections.

• Meet people and establish genuine connections, not just the biz card swap. Customers and users (of course), advisors, tech and domain experts, and even funding sources. Even if they're not investing now, they could help later. Though personally I'm not a fan of doing the 'VC pitch' when there's no hope of funding, I think it helps just to get to know the people in the know.
  

5. Invest in marketing.

• No, this doesn't require much money, or even a marketing person on your team. You can spiff up your website (at least update the content), spiff up your presentations and fact sheets, set up blogs and user communities, and generally polish and spread the word.

Assuming you're already taking care of the 'making a living' part, there's still plenty you can do to build your business now so you're poised to take off when things improve, as they will. So build now and you can fly later.

Savor the moment!

Sometime after you launch your venture, if all goes well and you haven't given up already, you reach a point where you're not just 'preparing', 'getting ready', 'developing', working on' your product or service, but actually have something that your customer/user can use. It may not be ready for prime time, but you have enough for previews with live audiences (mixing metaphors).

So you do your pilot run, get your first client, release to a 'by-invitation-only' group of users, whatever. No matter how small the customer/user base, this is big. This is the real deal, the first time your idea takes concrete shape and achieves its objective - be used by real customers.

This in itself is a huge thrill. Your startup has made something happen, and the creative urge is a big driver for entrepreneurs. And then, the icing on the cake, the cherry on top - you get great reviews. Your pilot customer is excited by your product, your client sends a glowing email, your users send feedback with smiley faces. OK, you haven't got a million-dollar check or cracked a million users a day mark or any such thing, but still, this is a milestone worth savoring and the excitement is worth spreading.

Here's what you should do:

• Jump up and down, cheer, dance a jig - at a minimum, break out a giant smile.
• High-five your team. They deserve to know their hard work is paying off - and this makes it easier to continue doing more of the same.
• Share the details with your advisors, investors, board members. Everyone loves hearing good news about ventures they have a stake in, even if the news is not about the big money deals. The small wins portend better things to come.
• If appropriate, share it with other customers/users. The halo effect is real.
• Send a quick thank you note to the customer who gave you the kudos. Basic customer relations management.

Of course, in the back of your mind you're thinking about how to get more customers, where you're going to get funding, wondering if this is just a one-off, flash in the pan or a true measure of the worth of your offering. And yes, you should consider those things. But for now, remember you have earned this sweet rush. Savor it. Enjoy. And believe there's more of it to come.

The downside

There's been a lot of blogtalk about a couple of startups that have recently pulled the plug on their failing ventures, some after many millions of dollars of spending and years of effort. There are two that I found interesting because they contemplated the possibility of failure and how it could become reality - the downside of startups.

The first was about the recent closure of Edgeio and what appears to the similar fate facing Podtech. Both companies had high profile guys - the kind that were sought after to opine about tech trends at big-ticket conferences - at the helm, both raised decent VC funds, but that didn't guarantee success. According to the blogger (here's the post) it all boils down to too much hype and too little focus on the business.

The second one is by a founder of the company that shutdown, Zingdom. His post details how the company went through 5 years and three rounds of funding, built a product with a supportive customer base and still couldn't stay in business. It is extremely interesting to see how things can appear to be moving forward on the surface while unraveling below. A most cautionary tale. The lessons learned span everything from development methodology to keeping up with the Valley happenings, but one of particular note is that 'having too much money' can be dangerous.

Focus on the customer/user. It's a very simple and powerful mantra whether you're opening a Cali-French bistro or creating a website for folks hot-footing it to global-warming travel sites. But however well-intentioned you are, and even if you think that's exactly what you're doing, it is easy to get your sights blurry. For instance, our team made a technology decision in the interests of getting the product out to the user quickly. User-focused right? Maybe, but not comprehensively so, as they missed the requirement that users would want adds and changes and the tools used should easily support that - which unfortunately the bleeding-edge choice wouldn't be able to without much bandaiding. Lucky for us we saw this before we got too far, and it has made us hyper-aware about double-checking our decision-making at all levels. And it makes us more sympathetic and less know-it-all-y. The companies mentioned above didn't seek to fail and they had sharp people leading them. And yet they strayed off the path, stumbled and couldn't get up. And as conjectured in the blogs, it could be that all the money they got muffled the 'stay on target' message in their ear. Money - too much can deliver too little.

The fun part

We recently took the alpha version, just as soon as we thought it had passed our testing, to a bunch of users, real ones, the ones who we're building this for. First off, as an early stage startup, we don't have the luxury of dedicated testers. All team members, full-time, part-time, hey-I-just-like-you-guys-and-I'll-help, all pitch in to 'check' it out. We don't have a plan for our testing yet - just a schedule. So we knew when we took it to the users that they'd be seeing it quirks and all, but we thought it would be worth it, as they'd be doing a real test and, most importantly, we'd find out very quickly if this product had value.

It was the most fun I've had in a long time. Of course there were the minor stumbles and mis-reads and consequently lots of input on what should be fixed/improved. But, the users seemed to genuinely enjoy testing the product and we had to ask them to stop and talk to us about their experiences instead. It is a huge rush to create something and find that people like it and think it useful. Of course, there was the predictable dour voice of prudence in the background cautioning us to not read too much into this as it was only a small sample set after all, but one has to live in the moment. This is one of the great highs of entrepreneurship, and it was worth wallowing in - at least for a little while, as there are all those fixes to take care of before doing it all over again.

The first test

This week was a very exciting one. We just had the first group of users test our product (a small working model of our product actually) and it was a huge rush. I think it is the sweetest thrill for an entrepreneur, even more so than getting funding, because the raison d'etre for your startup is building something that your customers will want and use.

There's a world of difference between theorizing about how the customer will use the product and actually watching someone use it. We did the usual, starting with initial observations, known best practices (aka what others have done), some leaps of imagination and plain old common sense and built a prototype/model/demo (not quite ready to be the alpha version). We had lined up a bunch of users to give it a go and give us feedback, and we thought the date was far enough out to make sure everything was the way it should be.

But there we were, three days before the test, and our small team didn't feel confident that we should put the demo in front of users. It was functional, but it didn't have the look and feel of our product vision, and there was concern that it would turn off the users. But I didn't want to postpone, not only because of logistical issues, but because I knew that if we wait until our demo is 100% ready we've waited too long. And I had faith that the users will view it with goodwill and be able to differentiate problems from potential.

So, we got everything lined up as well as we could and charged ahead - and turned out to be a most satisfying experience. There were no disasters, and the expected problems were only viewed as features they'd suggested we improve. It was gratifying to see the proto being used the way we intended - and in ways we could have never imagined. And the many new ideas they generated are invaluable, the stuff that will make the product truly fit their needs. And best of all, at the end of it, we'd got rock solid validation that we're on the right track with the product. No surprise, I'm pumped!

Customer Focus

The Facebook fracas of last week is a cautionary tale on customer relations. On the surface, Facebook is successful with a loyal user base, with many millions of users, primarily students, preferring its network to other options. And, it had the ostensibly unbeatable benefit of a founder CEO who is a user too - he built something that he knew he and his friends could use when in college.

A sketchy recap on the issue. On the face of it (sorry!), it seems likely and logical that a user would want to know about updates to profiles of friends on his network automatically without having to seek them, and that the said friends wouldn't mind. But vast numbers of users got agitated, they didn't like their updates triggering auto feeds and felt it was a violation of privacy, much to Facebook's surprise. Techcrunch had a post supporting the usefulness of the new feature, noting all that people had to do if they didn't want the updates distributed was to set the privacy controls appropriately. That didn't soften the user response. The CEO, Mark Zuckerberg, put out a plea for calm, the users' concerns were being heard, but that didn't lessen the noise - nothing made a difference until the message went out that privacy controls will be enhanced and the feature tweaked to let the user determine what should be shared or not. Facebook received many kudos for having listened to the users, and being a role model for startups.

It is not surprising that Facebook listened to its users - in this kind of business, there is no alternative (though that could arguably be true for all businesses). The cautionary part is how easy it is to think you know your customer/user and be totally wrong. This is particularly true when you think you know how a user will react because hey, you're one yourself. The reality is that you (and your design staff) are not typical users. You are informed (ok, tainted) by the business you're building and the roles you're playing in building it, and will not have the same perspective or experiences of 'real' users. And somehow 'logical' assumptions on user behavior seem singularly fragile.

In the early stages of a startup, extrapolating user behavior is standard ops as there's not enough bandwidth to run every feature by a focus group. Making assumptions is unavoidable, but they must be acted upon with caution. Internal tests are good for bug testing, not for gauging customer response. Embrace the beta release instead and actively solicit feedback. And if something slips past your vigilance and kindles user outrage, don't try to explain your position - publish a fast mea culpa and retreat. You are not the customer, and the customer is always right.