And it’s a really common thing that comes up as the team is out pitching customers.

I’m going to play this conversation I had with Bob Caspe – and I’m hoping it will re-frame yoru mindset about what’s happening in these early customer conversations. Like, what’s the point.

Remember that ‘Search Selling’ is the term Bob and I use for starting with customer conversations and working backward from there. I’m asking him how to get the most out of these customer conversations and he tells a story that shows where the value is (and where it isn’t)

My expectation for any customer pitch is that you won’t make a sale. But by pushing for one and listening to the customer’s feedback, you’ll triangulate more quickly to a better solution that a future customer WILL pay for.

The clip I played in this episode is part of an entrepreneurship class that Bob and I are teaching together on HeatSpring. It’s called “Entrepreneurial Strategy” and we’re enrolling any of our current or past students into it for free. It’s a fun excuse to reconnect with each other and with people from Babson or Michigan or wherever. If you want to join just send me a note and I will make it happen.

OK, that’s my pep talk. Go talk to some customers!

Most of us had nothing to do with it, but we all remember where we were when we heard about it and still feel extremely felt proud of and connected to their success. Everybody does.

It’s not just the money though, it’s how they did it. Everybody employee had equity. They stayed in Ann Arbor when it must have been tempting to move to the Valley. They always stayed present and accessible.

It reminds me of the Pistons winning championships with hard work and toughness. For some reason it’s extra satisfying when the values of the team reflect the values of the community.

And that’s really what this episode is about. Dug Song is going to explain how Duo didn’t succeed in spite of their midwest values and ties to the community – they succeeded because of those things.

You should know about two things Dug started that you can get involved in:

• The first is the Ann Arbor Entrepreneurs Fund (A2EF). A2EF is essentially a club for startup founders. Here’s what it is and why Dug and his wife invested a million dollars to get it off the ground.
• The second is a monthly meetup called A2 New Tech, which is basically the friendly front door for the Ann Arbor startup community. I get value from it every single time I go.

This is the last episode of Finding Your Venture for 2020.

The podcast is funded by the University of Michigan Center for Academic Innovation for two more years so we’ll be back next spring with more lessons and stories.

The podcast is designed like a Wikipedia page. You can scan the episode titles and get the gist of the message, and if you see something interesting you can click and go deeper.

This year we made an effort to feature a more diverse set of storytellers and we’ll continue to do better in the years ahead. I learn so much from the diverse and interesting students in our course and building those relationships is far and away the #1 reason we teach. Teaching and creating has been an antidote to the gusher of bad news and fear spewing from my phone.

People are good. You’ll never regret investing time and resources into relationships with the people around you. Thanks for spending this time listening to the stories I love.

So telling a good story is essential for attracting customers, investors, co-founders, and employees. But what if your story is sort of weird and unconventional? And what about protecting your idea from competitors?

The potential benefit of talking to people about the problem you’re solving and what you’re working on is enormous. Your biggest competitor at the start is the world’s indifference.

When you talk about your company and ask for help, you’re activating a support network that can help you. And if you’re a decent person then your network is huge and powerful, even if you don’t know it.

You’re going to hear a story from Erika Block about how a story that doesn’t make sense at first can evolve to be effective and compelling.

Erika is a serial entrepreneur who has started a theater company, two technology startups, and a coaching business.

Students ask this question all the time and obviously there’s no right answer. The case for starting now is that you don’t have a lot to lose. Some day you’ll have a job making a lot of money and then it will be harder to walk away. The case for waiting is that you’ll gain experience and contacts in a job that will make you more likely to succeed in a startup down the road.

I’m in my forties and let me tell you – this question never really resolves itself. My friends and I still ask ourselves these sorts of questions all the time. Since there’s no single correct path to having a career you’re happy with I tell students not to overthink it too much. Be bold, try the things you’re interested in, and be ready to make a change if you know it’s not right.

The story you’re going to hear is from Dawn Verbrigghe, founder and CEO of Jottful.

Dawn has a fine arts degree from the University of Michigan and took a winding path to becoming a technology entrepreneur. After college she lived in Southern California, Northern California, New York, London, and Amman, Jordan.

But before we jump ahead let’s hear about how Dawn grew up and what some of her early influences were.

Music credit: Thank you, Grammatik!

So your goal is to find the right investors as quickly as possible. And here’s the secret: They are just like you. Investors are just entrepreneurs trying to make money. And if you understand their strategy then it becomes obvious whether or not your business is a good fit. You can literally ask them what that strategy is and determine whether you’re a fit or not.

Paul Brown is a managing director at eLab – a venture capital firm with offices in Ann Arbor and Palo Alto.

He’s also a regent of the University- and before he was elected Regent, Paul taught this class. He’s one of the reasons it’s the best entrepreneurship class on campus.

Of all the great lessons Paul taught in the course, my favorite is the way he demystifies venture capital. Some venture capitalists cultivate an air of wisdom and intimidation. Paul doesn’t do that. So let’s start by hearing Paul explain who venture capitalists are and how venture funds work.

An Advisory Board is a magical mental construct that gives you access to all of the skills and experience you need but don’t have. It’s an excuse to regularly talk to smart people without paying them very much and if you’re not doing it then you’re leaving your best player on the bench.

Kate Putnam is an angel investor and helps lots of founders as an advisor.

After a quick introduction Kate is going to talk about what it means to be on an advisory board and how companies can benefit. We’ll talk about how to find advisors, how to compensate them, and the difference between an advisory board and a board of directors.

That was before I ever faced an existential crisis as a leader. In the moments when I had to lay off my friends, or got sued, or watched revenue fall off a cliff I had zero good options, no idea what was going to happen, and yet I had to make a decision and take action. In those darkest of moments the only thing that helped was remembering why we even started the company in the first place. What do we value?

In those moments where everything looks terrible you want to have a mission statement that actually means something. That you actually believe with all of your heart. Because if it’s just empty words, then in that toughest of moments, you really have nothing. And you’ll lose heart and give up.

So now you’re going to hear a crazy story of this actually happening.

This story is brought to you from Delcie Bean. Delcie is the founder and CEO of Paragus IT. He’s going to introduce himself and the dive right into the story. Then we’ll circle back and define terms and walk through how to do this for your company.

Some people are naturals at this, but the rest of us need to be intentional about it and work hard at it. And most of the time we don’t do it because it feels like a waste of time. That’s what this episode is about.

You’re going to hear from Dawn Leaks who is the CEO of Lioness Magazine. Lioness is a media company focused on female entrepreneurs, and Dawn is really thoughtful about what it means to be a great teammate. So let’s start by hearing about Lioness and how the company got started.

Some links to resources that Dawn mentions in this episode:

• Personality Types: Enneagram
• Personality Types: StrengthsFinder
• Decision making framework: Open, Narrow, Close

Music Credit: Grammatik

As much as we all try to keep these things separate – it’s impossible. As the whole world starts working from home this fact has been on display in Zoom calls around the world. But it’s always been true. The people we spend time with at work and at home are crucial to our happiness and success.

Chris Nolte is founder and CEO of Per’La Specialty Roasters in Miami, FL.

This episode starts with some background about the coffee business and how Per’La got started. Then in the second half we talk about the importance of maintaining positive relationships in your startup and at home.

This is true for a lot of students who are becoming adults. Transitioning into the professional world is strange when you’ve been a kid your whole life. But the work you’ve put into school and jobs and learning about life hasn’t been for nothing. You know more than you give yourself credit for and if you choose to start a business there are people who will pay you for your talent.

In our class we force everyone to do customer discovery and a lot of people ask “why would anyone talk to me about this stuff when I’m just a student?” And my answer is “You’re not just a student.” You’re a smart curious person who’s interested in making something better. You understand technology in ways that don’t come as naturally to older generations. And sure, a lot of people will be too busy to engage with you, but for some people you might be exactly what they’re looking for.

Lisa Sauve is Founder and CEO at Synecdoche Design Studio.

In this episode you’ll hear Lisa describe the transition from architecture student to startup founder. We hope that hearing her story will help you feel more confident approaching customers for your new venture.

Music Credit: Grammatik

It’s up to you what that impact looks like. For some people that means money. But impact is about more than money. Whether your goal is to dismantle systemic racism, fight climate change or to solve a problem that is interesting to you, forming a venture means establishing a structure that can scale beyond you.

Christie Wong Barrett is the CEO of MacArthur Corporation.

MacArthur is an automotive supplier. During normal times they make stickers and labels used in manufacturing. During the COVID-19 pandemic MacArthur got invited to do something different but important. This is the story of how they responded.

Since revenue numbers for private companies aren’t public information, fundraising PR is the best way to pick at that scab of self doubt sitting in my subconscious. And I know it’s not the thing that matters. I know this. But I forget sometimes and need to be reminded.

That’s where Alisyn Malek steps in to save me.

Alisyn graduated from the University of Michigan College of Engineering. She worked at GM for almost eight years before starting a company called May Mobility. May Mobility has taken a different approach to deploying autonomous vehicles – one that is actually working – and this year they are the third fastest growing company in Detroit. Alisyn is so cool. And I’m excited for you to hear her story.

Song Credit: Grammatik

Photo Credit: TechCrunch

So it makes sense that most people you reach out to are going to ignore you. But for a lot of us that rejection feels bad. And that’s why the #1 most common issue I see among rising (and experienced) entrepreneurs is that they haven’t pitched enough people to draw any conclusions about what’s happening. Yesterday I talked to somebody who sent three emails and was stuck because nobody replied. That’s an example of getting discouraged too quickly.

You’re going to hear a story from Jen Baird that will recalibrate your expectations about how many people you need to pitch.

Jen is a 5x founder. Her best known win was with Accuri Cytometers, which was sold for $205M in 2011. Today she’s the CEO at FifthEye. You’re going to hear her talk about why you have to pitch lots of people before you can start drawing any conclusions about the opportunity.

If you’re interested in more from Jen, consider reading and subscribing to her new blog: www.startupceoreflections.com

Music Credit: We’d like to thank Gramatik for our theme music for Season Two, “Muy Tranquilo“.

It sucks. The list of things that can make you feel like an outsider goes on forever. Race, gender, sexual orientation. Your age. Every startup founder I know has felt like a misfit at some point and here’s why that’s not a coincidence :

The world as we know it was built by ‘normal’ people – so normal people don’t see anything wrong with it. Being ‘weird’ or different gives you an advantage in locating problems and imagining a future that is different but better.

The story you’re going to hear is from Kim Gamez – founder and CEO of Mi Padrino.

She’s a mother of five from the midwest who dropped out of beauty school to become an entrepreneur. She raised venture capital to launch a party planning app used by more than more than a million users in the Hispanic events market.

She’s funny and confident and determined to win. I hope you hear something you can relate to in her story.

Thank you to Gramatik for allowing us to use “Muy Tranquillo” as our theme music during Season Two.

And everybody is going to have advice for you. Do you have IP? Have you hired an accountant? Did you see there’s a company in the Valley that is doing that same thing now? It doesn’t stop, and it’s overwhelming. Your only hope is to somehow pick which things are most important, and focus on them first.

This is literally my #1 favorite thing to do. In class we will fill up a room full of white boards with all the things you will need to do, then pare that giant list down to a handful of things that matter most. It’s not a perfect science, but it’s essential for getting unstuck. The goal is to validate your key assumptions as quickly as possible and modify your plans as you go.

You’re going to hear how Jeff Mason used this strategy to outmaneuver the biggest companies in the insurance industry.

Jeff has had a successful career in the insurance industry, then left to start a technology company called Groundspeed Analytics that has become one of the fastest growing companies in the region. Groundspeed uses artificial intelligence to digitize insurance records. The company went from an idea to raising a $30M Series B in two and half years. Jeff is one of the nicest people you’ll ever meet. We met at Groundspeed headquarters in Ann Arbor.

There are four sections in this episode – In this first section you’ll hear about Jeff’s background and how he came to start Groundspeed.

But your time on earth is finite so you have to make choices about where to invest your time. Your career might last fifty years and if it takes ten years to build a company then you’re not getting too many chances. But if you don’t go for it sometimes then you’ll never really start anything. It’s tough. All of the hardest decisions I’ve ever made have been about whether to dig in or give up. Choosing badly can cost you time, money, relationships, and your health.

What happens sometimes is that you get excited and dive into a startup idea that has a lot going for it, grind it out for a long time, and then at some point you look back and wish you would have been more deliberate and selective about the opportunity up front.

This is a three-part episode.

Brian Kelly is going to tell you how he and Dave Corcoran evaluated potential business ideas, passed on one that sounded promising, and picked the one that turned into Censys, a successful early stage technology company.

Brian has been a founder or early employee at a series of technology companies including Duo Security, TrustBearer Labs, Nutshell, and Censys. He has been a host for A2NewTech and a generous contributor to the Ann Arbor tech community.

Let’s start by hearing about what Brian and Dave were trying to do back in 2016.

So it will probably be disappointing when I tell you that If you don’t sell, then your startup will fail. And really this is true for any ambitious person in any profession – even if you work in a big company, government, non-profits – to have an impact anywhere you have to sell yourself and your ideas.

The good news is that sales can be fun. And you can do it in a way that feels authentic and honest. To me it’s just a big scavenger hunt, where you’re looking for clues and trying to find the person who wants to buy your product. And the skills to get very good at this are available to anyone.

Ted Dacko was a math major who has spent his career in sales – you’re going to hear Ted explain why that isn’t as crazy as it sounds.

Ted is best known as the CEO who helped Ann Arbor-based HealthMedia exit for $185M. He is the founder of Arbor Dakota, and the Director of the Blue Ocean Pitch Competition.

Ted has been very influential in helping me think about my career as a founder and startup CEO. We met to record these stories at Ann Arbor SPARK, where he teaches and mentors. I hope you enjoy Ted’s stories as much as I do.

Marketing is just a giant math problem

Well not completely – I just read that Kylie Jenner’s phone is the entire marketing department for her billion dollar cosmetics company. But that’s not normal. All of the other startups out there can make better investments in marketing by testing and tracking and adjusting along the way. Marketing is a giant math problem. You can map a customer’s journey from the time they learn about you until they become a customer. When you know the number of customers at each stage, then you can test the best ways to coax them through the journey faster. Good marketing does this efficiently, bad marketing doesn’t.

In class we will learn about a sales funnel, marketing channels, and media ratio. Together these form a foundational language for startups to make informed decisions about how to spend their time and money acquiring customers. The numbers can be really basic when you start and then grow in complexity as the business grows.

I asked Rishi Narayan to share a story about using numbers to make better marketing decisions. And he actually tells a really funny story about not tracking and not using numbers and how it came back to bite him.

Rishi is best known as owner of Underground Printing, a custom apparel printing company with headquarters in Ann Arbor. He makes t-shirts – lots of them. Rishi also teaches e-commerce at the University of Michigan’s Center for Entrepreneurship and is an active Angel investor. As you’ll hear in the story he also owns the local professional soccer team: AFC Ann Arbor.

Casey Frushour is the graphic designer you hear in the episode.

Here’s a link to learn more about Casey’s Head.

I know that sounds really obvious but startups forget all the time. There’s so much to do you just get turned around. In class we talk a lot about customer discovery and we introduce the concept of user experience design because these are the best tools we have to navigate this chicken and egg problem. Real companies use these tools. In this episode you’ll hear Matt MacQueen talk about how Coursera, Uber, and AirBNB create great products by staying committed to this process that anyone can do. As Matt’s stories illustrate, great user story mapping and design sprints are an essential step in launching your new venture.

Matt MacQueen and I recorded these stories at the ITHAKA Headquarters in Ann Arbor, MI

Matt was the first Director of Product Design at Coursera. He held similar roles at Google, Motorola, and was a member of the Kleiner Perkins Design Advisory Council. Today he is the VP of Product Design and Customer Experience at ITHAKA. You can see Matt and other contemporary design leaders discuss the role of design in tech in, “Design Disruptors“, a documentary film by InVision.

Matt is a legit leader in this space, which makes his stories really powerful. Not only does what he’s talking work for companies like Coursera and Uber, but it’s also very doable for your startup.

Here’s the book Matt recommends for learning about design sprints:

Read “Sprint” by Jake Knapp.

“Whether you’re a designer or just a smart businessperson or creative person, it’s a really great book and it is literally THE guidebook that is I think now our industry standard for design sprints .”

– Matt MacQueen

Problems have more than one solution

When you’re starting your company you’re going to be excited. You’re going to have a vision for what the company will do and what will make it special. You’ll start pitching the idea and becoming more and more invested in that vision. Startup mythology will encourage you to believe even when others don’t.

Before you commit to the business with all of your heart and soul, it’s a good idea to hit pause. Take a step back and look at the problem you’re going to solve, and brainstorm all of the ways you could solve that problem. You have nothing to lose. But I’ve never encountered a problem that had only one solution and frequently the first one that jumped into your mind isn’t the best one.

Consider a variety of business models, test them, and be intentional about the one you pick.

I asked Hien Lam to share a story about how they picked the business model for Huck Finch

Hien is Co-Founder of Huck Finch, a digital branding agency. He hosts the “Life on Brand” podcast, and he’s one of those people with a million ideas for new companies and new products.

I asked Hien to talk about the problem they are solving and how they picked their business model over all the others they could have pursued.

That’s a tough question to answer because it doesn’t matter what anyone thinks except your customer. If they like it enough to buy from you at a price where you can make money, then it’s a great idea. If they aren’t, then it’s not.

The academic term for talking to people is ‘Customer Discovery’.

Customer Discovery is oxygen for startups

As you’re going to hear in this episode, there are always groups of people who’s needs aren’t being met. If you can understand their needs in a way others do not, then you’ve opened up a tiny little advantage for your business. Your capacity to create value is directly related to how well you understand your customer. And the good news is, you live in an amazing time where it’s easier than ever to connect with people and see these opportunities.

The best companies build this into their DNA right from the start. Before deciding on a business model or a product to sell, we have to learn about our customer, because it’s what they want to buy – not what we want to sell – that matters most.

I asked Brook Boyle to share a story about how customer discovery helped her identify an opportunity in the market

As Founder and CEO of Engage, Brooke specializes in connecting individuals with opportunity by introducing them to people they wouldn’t have otherwise met. Her career started with a degree in Psychology. She went on to sell women’s clothing, sold business leadership programs to executives, ran operations for her father’s executive search firm, then took time off to gain life experience as the mother of an infant child who survived leukemia.

After moving to Ann Arbor four years ago, Brooke’s work focused on community and employee engagement within the tech sector. She realized that her unique knack for human connection could be leveraged in a way that’s causing a paradigm shift in networking, recruiting, and the economic impact that can be driven by a social enterprise.

The way Brooke started Engage is a case study in customer discovery. Let’s listen to her talk about how she did it.

It’s harder to find a good customer than it is to build a good product

Do you agree that this statement is true? I hope by the end of this episode that you’ll feel liberated and empowered by this mental model. As you’re going to hear in this episode, I believe cost of customer acquisition is the thing that sinks most startups. That’s why we force you acquire a customer first. You do the hardest thing first, and everything else feels easier.

Most people don’t do this and some of them succeed anyway. But have you ever met somebody that keeps pitching a good idea but the business isn’t going anywhere? I have. I’ve been that person and it feels terrible. At some point the business starts feeling like a burden that you’re carrying around. Determination is good, but sometimes your allegiance to your idea makes you rigid and becomes a disadvantage.

So liberate yourself from the tyranny of a good idea and start with the customer, instead! Doesn’t that sound kind of obvious? I first learned this approach from my teacher at Babson College – a guy named Bob Caspe. Bob’s advice liberated me from the oppressive mythology that entrepreneurs had to be visionaries. It took the pressure off of my vision – something I either have or don’t have – and put the emphasis on what I could find out by talking to people – which is something I can do something about.

I asked Bob Caspe to share a couple stories that illustrate how this mental model can benefit a new entrepreneur

Bob Capse is an electrical engineer who became the founder and CEO at several successful technology firms, including Leaf Systems, CDA, and Sound Vision. He taught entrepreneurial marketing at Babson College for seven years starting in 2005, which is where we met. Without Bob we could have never started HeatSpring, and his influence on my life is a big reason I decided to teach.

Listen carefully to Bob’s examples and try to see the genius in the subtlety of what he’s saying.

Selling to companies is different than selling to consumers

Consumers (you and me) have very complex and sometimes irrational buying behavior, but companies are motivated by just two things: 1) Increase revenue, and 2) Cut costs

The fact that they have these straightforward goals makes it easier to understand how they make decisions. Unlike consumers, they make very rational decisions about what they buy.

If you solve a big problem for them, they can pay a lot of money for the solution. And their problems aren’t always obvious to the casual observer – you have to really get in there and learn about the business, which means there can be less competition for some of these big opportunities. That’s why we focus mostly on business-to-business opportunities in this class.

There are infinite approaches to increasing revenue and lowering cost – which what makes business fun and creates opportunity for innovative startups like yours. It’s OK for your solution to be new and innovative, but it needs to be grounded in those two fundamental business objectives.

Never forget what you’re trying to do for your business and for your customer: increase revenue and lower cost.

I asked Mike McFall to share a story about remembering business fundamentals

Mike McFall is Co-Founder and Co-CEO of BIGGBY Coffee. His new book, “Grind” is a practical guide to starting a new business and he is the new co-instructor for the extremely popular course offered through the University of Michigan Center for Entrepreneurship: “Finding Your Venture”.

Mike’s success as a franchisor requires fanatical attention to detail and an obsessive focus on revenue and costs. The story he tells is a great reminder about not getting lost in the weeds and forgetting the big picture objectives.

You’re plenty smart and there are enough opportunities out there. The more pressing question is whether you want to do it. Everybody likes the idea of doing a startup, but it’s a lot of hard work. 90% of startups fail, the outcomes are highly variable, it can take longer than you expect, plus there’s an opportunity cost to skipping an internship or leaving your job to do it.

So before you commit to doing a startup it’s important to articulate why you’re doing it. What do you hope for? What are you afraid of? What would happen if the company failed? Is there a less risky way you could pursue this thing you’re so excited about?

I acknowledge he title of this episode is the same as Simon Sinek’s famous TED Talk, but the guy totally nailed it when he said: You’ve got to start with why.

The story you’re going to hear is told by Mike McFall.

Mike McFall is Co-Founder and Co-CEO of BIGGBY Coffee. There are more than 250 BIGGBY locations around the world and they are growing like crazy. He just wrote a new book, called “Grind”, which is a practical guide to starting a new business that skips past the MBA and goes right to the nuts and bolts of building a successful, self-sustaining company.

Most importantly, Mike is the new co-instructor for this course. He and I will be teaching “Finding Your Venture” together on Thursday afternoons this Fall. Mike told this story sitting in my living room right before we walked to get poke bowls for lunch.