Fostering Student Innovation

By Avery Faller

Speaker: Sean Glass
Company: Novak Biddle Venture Partners 

Occasionally when you are building your product, you will begin to question who exactly your market is.  Maybe the consumer base that you believed was your target doesn’t find your product that useful, or maybe there are two market segments equally interested in your product.  

Earlier this week, Sean Glass, a founder of Higher One and Employ Insight, came to speak to the YEI summer fellows.  Sean explained that in cases like this, when you have an idea that you know is good but you don’t know who it is best for, it is better to iterate through markets to find the most applicable customer base than to change your product or give up your idea entirely.  

Iterating Markets

Sean used Employ Insight as a case study in this process.  Employ Insight helps companies hire candidates who will find satisfaction in the work they do.  Sean explained that currently three very different types of companies were interested in trying out Employ Insight: Fortune 500 companies, because they hire so many people; professional services firms, because they have very extensive interview processes; and small companies, because every person they hire will have a significant impact on their work environment. 

Often when you are starting a company your instinct is to offer the service or product to every interested party and expand your business as quickly as possible.  Unfortunately this is often not feasible with limited staff, and with every market segment asking for small changes to be made so that your product is more specialized for their particular company.  Therefore, the best solution is to find the best market segment so that you can grow sustainably until you are ready to scale to other market areas.  

The best way to do this, Sean says, is to sit down with various companies and talk with them about what they want to use your product for (or if you are lucky, what they are already using your product for).  Sometimes you will find that you have created a product to solve one problem, and you will learn from your customers that it also solves another problem quite well.  Once you have talked to your potential customers, deciding on which market you want to enter won’t necessarily be an easy decision.  You must weigh each market’s size, competitive landscape and barriers to entry.  But once you have decided, stick with your decision and conquer that market in order to prove your product; you can grow from there. 

The Takeaway

When building a product, don’t be afraid to learn from your customers.  They know what they need better than you do unless you’ve worked in that industry before.  If multiple types of consumers are interested in your product, spend time to find the consumer that will be best for you and who will make the best use of your product.  That way you and your consumer both benefit.  If no one is interested in using your product, don’t despair; just think outside of the box to help you widen your search for potential customers.

By Avery Faller

Who: Sandy Jen
Company: Meebo.com

Buried deep beneath the shell of their public image, entrepreneurs often battle an all-consuming self-doubt.  This doubt can affect everything from their product to their marketing strategy.  And although doubt can sometimes be a force for good, ratcheting up your level of productivity and the quality of your output, in the face of constant failure and rejection, how do you know when you’ve hit on something big? 

Recently, Sandy Jen, cofounder of Meebo.com, spoke to the YEI Fellows about her career path and the choices that she made that led her to the world of entrepreneurship.  Beyond general advice on running a growing company, Sandy talked to the Fellows about when you know you’ve hit on the idea.

The Conception of an Idea

Sandy decided that she wanted a change of career while she was working as a programmer at a hardware company in the early 2000s.  Considering the tech bubble had just burst, Sandy was happy to have landed a job—but she soon realized that she didn’t want to spend the next twenty years of her life working on things that none of her friends could understand. 

Sandy, along with fellow programmer Elaine and business school student (and Yalie!) Seth, decided that they wanted to build a startup.  They met once a week for two and a half years, iterating through a number of ideas.  Their first attempt at a product was an online backup site.  Sandy and Elaine had coded a large portion of the site and they were nearing completion when they did a gut check and they realized that none of them were truly passionate about the product.

Their second attempt at a product was a downloadable file sharing application; however they recognized that more and more, computer applications were headed to the web.  Additionally, students and people at work were often unable to download new programs to their computers.

Their third product was an online social messaging “home base,” so to speak, where customers could login and chat with friends on any messaging platform (AIM, Facebook, Google, etc.), no download required.  Elaine and Sandy both quit their day jobs to work on the site, which would come to be known as Meebo.com.  As Sandy remembers, they forgot to tell Seth that they had quit their jobs for two weeks because they were working so hard on the site.  This was a product that they felt passionate about.  They wanted to work on it full time. 

The Takeaway

Sandy’s story is a healthy reminder that not all ideas are going to pan out—however it also showed that one failure need not mean the end for a team.  Although the gut check will not ensure that your product is commercially viable, it will ensure that you are passionate about your product. After all, if you’re not passionate about your product, who will be?

By Avery Faller

Who: Jordan Goldberg
Company: stickK.com

Have you ever wondered what goes on in the mind of a successful entrepreneur?  Jordan Goldberg, CEO of stickK.com, allowed the summer fellows to have just that opportunity as he recounted his experiences in entrepreneurship.  stickK.com is a self-empowerment site that allows users to achieve their goals through contracts, incentives and peer-monitoring.  During his talk last Friday Jordan enumerated the many mistakes that he has made along his path to success.  “I can’t tell you what to do, but I can tell you what not to do,” Jordan said.

Ten Products Are Not Always Better Than One

One point that Jordan emphasized was don’t try to have your company do ten different things, because ten other companies will come along and specialize in every one of those areas.  He pointed to the examples of Google.com (a search bar) and Twitter.com (140 characters) as companies that were models of the one-product approach.  Although they are now both branching off to offer other services and products, their original successes stem from offering the best solution to one simple problem. 

Jordan offered stickK.com’s B2B (business-to-business) and B2C (business-to-consumer) models as examples of how having two products can split your attention.  Originally stickK.com focused on the B2C market, but in recent years they have added B2B on top of that because originally, Jordan believed that B2B would just be a dashboard added onto stickK.com’s core consumer product.  However, as Jordan engaged with businesses to build out the B2B product, he realized that they would need to massively customize the B2C version to suit the businesses’ needs.  As a result, Jordan feels that stickK.com has had to de-emphasize the B2C product over the past few years to develop the B2B suite.

Don’t Outsource Your Product

For web companies, Jordan stressed the importance of the tech team.   Your first hire should be a CTO if you don’t already have one.  Make sure that your CTO is enthusiastic about and has a vision for your product.  Also an important factor to consider when hiring a CTO is that he can work in the same room as you: Don’t outsource your product!  “You need someone you can sit next to,” Jordan said.  Building your product in-house makes communication easier and clearer and working in the same room as your development team can speed up the build process and improve the final product.  Jordan also pointed out that business co-founders needed to treat developers with the proper respect, saying, “Engineers are not a commodity, they are talent.”

The Takeaway

Concentrate on building one product or feature, and build it really well.  Keep the product simple and develop it for a big market.  Don’t outsource the development of your product and don’t be afraid to make some mistakes early on (“If you put a big BETA sticker on your site, people will forgive small defects and bugs,” he says.)  So, once you have a working product, even if it’s not 100% perfect, get it out there, because there is no substitute for a reality check.

By Avery Faller

A gentle wind blows through light-dappled treetops, leaves swaying in ever-shifting patterns of green—a sight that is almost beautiful.  Almost, that is, until you realize that along with the trees, you too are swaying: the platform you are standing on, seventy feet above the ground, is bolted directly into a tree and where the tree goes, you go.  And while trees may look beautiful from the ground, the new perspective that comes from standing amidst their tallest branches makes you all the more aware of the power of these silent sentinels.

Stepping up to the edge of the (railing-less) platform, there is an involuntary surge in your stomach; your pulse quickens and every alarm that your body has shouts “NO!”   Then it is your turn, you can delay no longer, you are committed and you lift up your legs and just like that, away you go, the pulley’s wheels humming on the steel aircraft cable above you, leaves and branches swaying on your sides and below, nothing.

Video By Emmy Pickett

Going Against the Grain

The Summer Fellows went ziplining yesterday at Empower, an outing described as a “bonding experience.” Now I apologize in advance for any of you who dislike metaphors but here goes: In many regards, ziplining is a lot like entrepreneurship. Society, inward-facing, huddles together around the tree, accepting things the way they are.  The first step of an entrepreneur is to turn away from society and see that there is a whole forest out there waiting to be explored.  Earlier this week YEI summer speaker and CEO of Preferred Brands International Ashok Vasudevan spoke about predicting the future: “If you want to find a lake in the forest,” he said, “climb the tallest tree.”  How right he was.  From your lofty perch on the zipline platform you seem to gain a new perspective on life.  In that same fashion, entrepreneurs need to be able to step back so that they can effectively see the ways in which society works and identify a problem.

The Goal

As you near the platform edge and squint to catch a glimpse of another small wooden platform dangling off of a tree in the distance, you wonder how you’ll ever make it there.  Your mode of transportation is a thin line bouncing above you in the wind, and the forest floor is a bad excuse for a safety net.   The entrepreneur faces similar problems.  Just like the platform in the distance, the entrepreneur must set goals that seem distant or impossible.   Often obstacles will block or obscure that path, just as the wind blows branches into the path of the zipliner.  Yet, you realize that with the risk comes a reward, for the zipline is a shortcut between trees, and if you make it, you may just beat the rest of the slow, ground-walking society to your goal.

The Leap

Taking that first step over the edge as an entrepreneur can be daunting.  Every instinct you have may tell you “no,” and let’s not forget the harm that doubting words from others can inflict.  It’s hard to choose the path of entrepreneurship as you watch your friends choose the tried and true paths of banking and finance.  You are testing the waters, a guinea pig.  If the line holds, others will surely follow, close on your heels.  Yet the hardest step is that first one, the decision to commit.  And afterwards, though you may constantly feel like you are falling, it is important to not lose sight of your goals.  Don’t be distracted by the possibilities rushing past you; stick to your ideals, and you may just make it!

By Avery Faller

Who: Tim Ogilvie                                                                                               Company: AdBuyer.com

Let’s face it; odds are that no matter how calibrated and precise your startup’s “Plan” is, at some point down the road it’s not going to work.  Something will fundamentally change, either in the world, or in how you understand the world, that will make your startup irrelevant or impossible.  Serial entrepreneur Tim Ogilvie, who recently sold his third company, AdBuyer.com, spoke to the Summer Fellows last Friday and gave them some helpful insights into the practices that will help ensure that their startups last through a pivot (or two). 

Building Your Team

You’ve probably heard this before, but starting with a strong, well-rounded team is one of the best ways to prepare yourself for the unforeseeable.  Tim breaks down the ideal startup team into several parts:

1) The Financial Guy – This is not the same thing as the excel guy.  This is someone who understands the big financial picture and understands who will buy or invest in your company at the next stage.

2) The Industry Guy –Someone who knows the industry that the venture is in and knows what the milestones are that you have to reach in order to prove yourselves.

3) The Entrepreneurial Been-There-Done-That-Before Guy –The guy who knows how to get things done.  Big picture is great and all, but if you can’t walk the walk, the big picture is irrelevant.

4) The Advisory Board –A group of people who will help you get through your problems.  They are experts in your industry and some of them may have even invested in your startup.  Be aware, their goal is often to sell shares of your startup to the next round of investors, for better or worse.

Along with this, Tim gave several warnings.

Don’t confuse an Advisory Board with a Board of Directors.  A Board of Directors is a legal construct that has power over the company.  An Advisory Board is often composed of investors who have knowledge of the industry and are qualified to give advice to the company.  The members of these two boards should not overlap.

When appropriate, minimize outside investment for as long as possible.  Often it is hard to get a business of scale without investors.  Although this would seem to imply that you should be working to acquire investors from the get-go, Tim emphasized that many times investors will have a different agenda than you do.  This means building your business as big as possible before you seek out investors, and accepting fewer checks with more zeros.  Don’t take every $5,000 and $10,000 investment opportunity that comes your way.  Seek out that one big fish who believes in your product and is willing to take a risk and write you a check for $100,000.  He will ultimately be more committed to your success than several smaller investors would have been.  Also, it will be easier for you to manage, both financially and strategically, one big investor over a dozen smaller ones.  Other investors will also be more willing to invest in you in the future because someone has already taken that initial risk.

The Takeaway

Odds are that your plan for the future will most likely need to change.  Does this mean that you don’t need a plan?  No!  Just the opposite.  You should do everything in your power to ensure that every contingency is covered.  Just be aware that when something unexpected does crop up, the closer and more confident you are in your fellow cofounders and advisory board and the more supportive your investors are of you, the more likely your success.