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The 3 Data Streams That Every Founder Needs

BY STEVE BLANK

Gathering real-world feedback from customers is a core concept of Customer Development as well as the Lean Startup.

But what information to collect?

Yesterday I got an email from an ex-student lamenting that only 2% of their selected early testers responded to their on-line survey. The survey said in part:

The survey has 57 questions, the last three of which are open ended, and should take about 20 minutes to complete. Please note that you must complete the entire survey once you begin. You cannot stop along the way and have your responses to that point saved.

If it wasn’t so sad, it would be funny.

I called the founder and noted that there are SAT tests that are shorter than the survey. When I asked him if he actually had personally left the building and talked to these potential customers, or even had gotten them on the phone, he sounded confused, “We’re a web startup, all our customers are on the web. Why can’t I just get them to give me the answers I need this way?”

Customer Development suggests that founders have continual and timely customer, channel, and market information. Founders need three data streams or “views of information” to truly understand what is going on in their business:

  • First-hand knowledge
  • A “bird’s-eye” view
  • The view from the eyes of customers and competitors

1. First-hand knowledge

First-hand knowledge is “getting outside the building” and talking to potential or actual customers. Customer Development proposes that the best way to get customer data is through personal observation and experience — getting out from behind your desk and getting up close and personal with customers, competitors, and the market.

Founders of tech companies often confuse web metrics like A/B testing and online surveys as the entirety of first-hand knowledge—it is not.

In fact, this mistake can be a “going out of business” strategy.

Metrics tell you that something is happening, but not why. A/B testing can tell you that one something is better than another…but not why. Getting survey responses back from customers will give you part of the answer, but you can’t watch their pupils dilate or hear the intonation of their voice. And without that, it’s just not something I’d build a business on.

Of course you need to collect metrics. It’s just that without having founders “get outside the building” you are missing a key point of Customer Development — the numeric data you collect may be blinding you to the fact that you’re more than likely working to optimize the wrong business model. Customer needs are non-deterministic.

2. Bird’s-eye view

The second picture founders need is a synthesized “bird’s-eye view” of the customer, market, and competitive environment. You assemble this view by gathering information from a variety of sources:

  • web sites
  • social media (Facebook, Twitter, blogs, et al)
  • sales data
  • win/loss information
  • market research data
  • competitive analyses
  • a/b tests
  • customer survey data
  • …and so on

From this big-picture view, founders try to make sense of the shape of the market and the overall patterns in the unfolding competitive and customer situation. At the same time, they can gauge how well industry data and the actual sales match the company’s revenue and market-share expectations.

Just remember that most market research firms are excellent at predicting the past. If they could predict the future, they’d be entrepreneurs.

My test for how well you understand this “order of battle” is to hand the founder a marker, have them go up to the whiteboard and diagram the players in the market and where they fit. (Try it.)

3. See through the eyes of customers and competitors

The third view is of the action as seen through the eyes of customers and competitors. Put yourself in your customers’ and competitors’ shoes in order to deduce possible competitors’ moves and anticipate customer needs.

  • In an existing market this is where you ask yourself, “If I were my own competitor and had its resources, what would my next move be?”
  • In looking through the eyes of a customer, the question might be, “Why should I buy from this company versus the incumbent.”
  • In a new or resegmented market, the questions might be “Why would more than a few early adopters use this app, web site or buy this product? How would I get my 90-year-old grandmother to understand and buy this product?”

Think of this technique as playing chess. You need to be looking at all the likely moves from both sides of the chessboard. What would we do if we were our competitors? How would we react? What would we be planning? After a while this type of role playing will become an integral part of everyone’s thinking and planning.

Putting it all together

First-hand knowledge is clearly the most detailed and essential data stream, but offers a narrow field of view. Founders who focus only on this information risk losing sight of the big picture.

“Bird’s-eye view” data provides perspective on the market but lacks critical detail. Founders who focus only on this image risk missing the “ground truth.”

Seeing through the eyes of customers and competitors is a theoretical exercise limited by the fact that you can never be sure what your customers and competitors are up to.

The combination of all three data streams helps founders form an accurate picture of what is going on in their business and help them hone in on product/market fit.

Even with information from all three views, founders need to remember there will never be enough information to make a perfect decision.

Building an Information Culture

The most important element of data gathering is what to do with the information once you collect it. Customer information dissemination is a cornerstone of Lean and agile companies. This information, whether good or bad, must not be guarded like some precious commodity. Large company cultures reward executives who hoard knowledge or suppress bad news. In any of my companies, that is a firing offense.

All news, but especially bad news, needs to be shared, dissected, understood, and acted upon.

This means that understanding poor click-through rates, retention numbers, and sales losses are more important than understanding sales wins; understanding why a competitor’s products are better is more important than rationalizing ways in which yours is still superior. Winning startups build a startup culture that rewards not punishes messengers of bad news.

Lessons Learned

  • There are 3 data streams that every founder needs: First-hand knowledge, “bird’s-eye view,” and the view from the eyes of customers and competitors.
  • Startups often fall into the trap of confusing metrics, testing, and surveys with real-life customer interaction.
  • The goal should be to build an information culture to help you get to product/market fit.

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Pitch Night Cohort 4 Empower Accelerator May 1, 2018

If you are yearning to explore your inner entrepreneur, StartUP FIU’s Pitch Night on May 1st is the place to be inspired!

The intrepid entrepreneurs from Cohort 4 of the Empower Accelerator are preparing their investor pitches for Pitch Night.  Going through the intensive 14-week Accelerator program has pushed them to the limit in refining their business models through rigorous and continuous testing of their assumptions about what it will take to be successful. On May 1st, you can see the fruits of their labor, as they each have 5 minutes to tell their stories to inspire potential investors to want to take a risk on them.

Here are the Cohort 4 companies preparing to pitch:

Safe Emissions Systems: Designs and builds a life-saving muffler for portable generators that eliminates 99.1% of the toxic carbon monoxide fumes.

CivicPro: Provides an online customizable database to track public meetings and legislation across cities.

MDocLive: Developing a platform that provides direct communication between health care providers and a patient or family member, including critical patient care instructions.

Ecological Atlas: Offers visually beautiful and flexible data-driven graphic mapping tools to enable landscape designers, gardeners, and environmentalists understand the bloom times, colors, and seasonality of their local environment.

Visional Forensics: Manufactures easy-to-use onsite crime scene detection of dangerous substances. Developed by career forensic lab experts.

Kangowrite: Provides digital learning tools to help students write research assignments in less time with less stress.

Mandatum: Enables consumers to name their own price for products they buy online.

Metastatic AI: Diagnoses the presence or absence of breast cancer with 99% accuracy by using deep machine learning.

NestNotes:  Provides a website and app for families to make it easier to record and print keepsakes.

Owletpass: Enables parents to find and register, online, their kids in a wide-range of activities on a one-time or continuous basis.

SunVessel:  Provides network of solar charging stations that enable people to easily rent, return, and charge personal mobility devices for fast and fun urban transportation.

SmartsAid:  Enables refugees, homeless, and other people in need to easily access aid services using a mobile app.

To see these teams pitch and get inspired, please join us for Pitch Night on the evening of May 1stat 6:30 pm on the main campus of Florida International University, SASC Auditorium, room 160. You can register here.

For more information, contact:
Kate Sackman, Director of the Empower Accelerator
kate.sackman@fiu.edu
305-348-4187

 

How to get from poverty to prosperity

The Prosperity Project from TheNewTropic on Vimeo.

By: Ariel Zirulnick

Hey! Breaking news! Miami has some affordability issues.

Okay, not actually breaking news. But #notfakenews either.

Miami Dade County’s poverty rate is 19.8 percent – way higher than the national average. Sixty-one percent of renters spend more than a third of their income on housing. The experts call that being “cost-burdened.” Miami is the third most expensive housing market in the U.S. Only the top 5 percent of earners are gaining in prosperity. The rest of us are struggling more and more to afford the same. The divide has been dubbed the “prosperity gap.”

You’ve probably seen these numbers before. There’s a headline every week about how damn expensive it is to live in Miami, that even people with well-paying professional jobs are paycheck to paycheck; that no millennial is ever going to be able to afford to buy a house here; that our booming real estate and tech industries belie a hollow center.

But what does that mean?

It means that we have a large number of neighbors who are financially precarious. A major medical expense or an unexpected job loss could wipe them out in a month. The number of people in this situation is bigger than anyone realizes.

At The New Tropic, we want to make this city a better place to call home, someplace where people can afford to #livelikeyoulivehere. So does Citi’s Community Development team. So we’re teaming up to explain all this a little better, and start talking solutions through the Prosperity Project. There are some out there we haven’t heard about, and others coming down the pipe. Smart people are asking tough questions and grappling with grim realities to bring us much-needed fixes.

We talked to a few of them in the video above: Miami-Dade County Commissioners Jean Monestime and Daniella Levine-Cava, who have led this conversation in local government; Gretchen Beesing, the CEO of Catalyst Miami, one of our leading anti-poverty organizations; and Emily Gresham, an assistant vice president in FIU’s office of innovation and economic development who has a passion for connecting under-resourced communities to opportunity.

Local is more important than ever. So is getting to know your neighbors. It’s a rocky time right now. Addressing that starts in our backyard, with listening to each other.

So, we want to start by hearing your stories. How do you make it month to month? What would happen if you had to go to the emergency room? If you had a car accident and had to pay your $500 deductible to get it fixed? Could you do it? Would you have to go without something else to do it?

If that’s cool with you, we’d like to ask you a couple questions.

We’re looking forward to having this conversation with you in the coming months. Drop us a line at hello@thenewtropic.com to share your thoughts.

Editor’s note: The poverty rate was updated after publication.

Meet the entrepreneurs in Cohort 2 of StartUP FIU accelerator

By: Nancy Dahlberg

StartUP FIU is launching its second cohort of its 14-week accelerator, Empower, this month. The cohort includes entrepreneurs from 17 businesses or concepts in a variety of industries, including music, fashion, shipping, health, and education. It also includes a number of social entrepreneurs. The free program accepted entrepreneurs from the idea stage to revenue-producing companies; it includes community members as well as FIU students and alumni. Read more about the program here: Multi-campus StartUP FIU gets ready for takeoff

Who’s in Cohort 2 of StartUP FIU?  Find the list below: 

Audio EP

Founder: Stephen Sullivan

Audio EP provides music students interactive exercises to develop various music related skills essential to music production and songwriting in today’s digital age. It also connects students with music instructors through the online platform for coaching services.

BECOS

Founder: Jorge Arias

BECOS produces handbags, book bags, wallets and others, with recycled materials in order to create conscience within our customers. The recycled materials are from cement bags and food sacks for animals, and these bags are put together by employees with disabilities. In addition to that, 15% of annual profit will support children that have been displaced by violence.

BENBO

Founder: Carolina Hoyos

BENBO is a new interactive, simple and easy to use business networking app, where we try to simplify the user’s interaction when sharing business cards.  BENBO lets you: Create and customize your very own business card, uniquely designed, in just a few seconds.

Boatrax

Founder: David Villegas

Boatrax facilitates the logging experience for boat owners with a mobile app that allows them to organize their logs and share them with local service providers to purchase right-on-time services using our marketplace platform.

Cargo42

Founder: Francine Gervazio

Cargo42 is a marketplace for trucking committed to reducing idle time and capacity. We seek to provide shippers (local businesses) a more competitive rate and simplify the shipping process, while carriers (local trucking companies) enjoy an additional revenue stream and maximize the trucks productivity.

Clutch Couture Bags

Founder: Jordan Johnson

Clutch Couture Bags provides a luxury handbag rental service that serves US customers via an online store. We provide a service that allows fellow fashion-lovers to experience the luxury of carrying some of the world’s most sought-after handbags, while paying a fraction of the price on a monthly basis.

Container Retail

Founder: Charles Sims

Retail Incubator space developed with reused shipping containers located in (Liberty City) Miami, FL. The hope is that a sustainable model can be created and deployed in similar communities throughout the U.S.

Extreme Weather Experience

Founder: Erik Salna

Extreme Weather Experience is a one-of-a-kind concept to develop an immersive, experiential, interactive, hands-on weather education theme park attraction with entertainment, retail, restaurants, a weather forecast center and a media broadcast center.

Give Wink

Founder: Francine Delarosa

Give Wink is a full-service boutique that provides added value services such as full space planning and design, nursery set up and reveals, customization and personalization of many products, gift registries and educational classes/events

 

GlanceHouse Cloud

Founder: Andrew Ritch

GlanceHouse allows businesses and organizations to automate the backup and archiving of video surveillance data to the Cloud. Users can store that data from 30 days to an indefinite amount of time.

Mind&Melody

Founder: Cristina Rodriguez

Mind&Melody has designed a proprietary music curriculum with three goals: to deliver live musical performances; teach music theory concepts in a simple, fun and artistic way; play sheet music and create original composition through our color-coding system. Our program is highly individualized to reach and engage different levels of dementia and musical ability.

SkillCourt LLC

Founder: Gudmundur Traustason

SkillCourt is an athletic training system consisting of pads built with LED lights for cue targets. The goal of the illuminated targets is to be hit with an object like a soccer ball through a timed sequence. Inside each pad are sensors that provide feedback for detailed performance which reports performance information to the SkillCourt app.

Stealth Simulation

Founder: Christian Gutierrez

Stealth Simulation by Boorpus™ LLC was born out of the need to increase the fidelity of standardized patient physical examination. We focus on technology-driven innovative solutions aimed to improve medical simulation while maintaining the highest degree of realism of virtual patient encounters.

Viera Academy

Founder: Carlos Raul Garcia

Viera Academy provides a playground e-learning platform that specializes in Standardized Tests, as well as world level Mental Math and Memory courses, developed by Guinness World Record holders.

WeWomen

Founder: Dorothy Peck

WeWomen is aiming to solve the lack of feminine hygienic pads in refugee camps. Their solution is using banana leaves from banana trees to produce hypoallergenic and environmentally friendly menstrual pads. Providing women with a product that will allow them to work, go to school and be productive members in society

Worcket

Founder: Sergio Klarreich

Worcket is a millennials-ready phone app and a cloud service that enterprises use to recruit University and College students or professionals for employment opportunities, in the US first and then worldwide. It leverages disruptive technologies like Video Profiles, Machine Learning, and Artificial Intelligence. We are a truly innovative Seattle based start-up, that is part of the Microsoft BizSpark incubation initiative. Our first production release will be ready in mid-December.

No Name Company

Founder: Megan Twomey

The idea presented here is for a novel class of Nitric Oxide (NO) probes that are based on unique metal photoluminescent complexes that directly react with NO to provide highly sensitive and cost-effective detection. This novel class of probes would benefit the scientific and medical communities by advancing the understanding of NO’s biological roles and subsequent pathological conditions that arise from NO dysfunction.