This article was first posted to my website.
- For the last two months we’ve been busy building a new product called Hen.
- Since October 2015, we’ve shipped (products, prototypes, content, hired talent) and learnt (a lot)
- If you can’t “talk metrics” yet (#JargonAlert: TCV; ACV; Active users; etc), you don’t yet run a company, you are working on a project
- It will be hard to ship it if you are not obsessed with a problem or are hiring others not equally obsessed
- You can solve a problem in several different ways. If you are working on one solution for some time and are struggling to talk metrics, go look for another solution
- This post is not a startup post-mortem
- But do read this post if you are into reading startup post-mortems 😎
The inspiration behind our work and accountant phobia
In 2011, I lived in Taiwan. During my time there I had Mandarin classes in my office with my tutor Saca*, everyday at 07:30 am sharp.
Saca Studio, my tutor’s business, was going from strength to strength and was already employing three other tutors. Saca’s upbeat nature and strong work-ethics made the early morning appointments less painful, but one day, she arrived late to our morning appointment, paler and more tired than usual. Expecting a stomach bug for an explanation, her response surprised me:
“I couldn’t sleep tonight, I cringe and cold sweat every time I have to speak with my accountant”.
I then understood there was one thing that transformed the otherwise well-grounded Saca into a scared and fragile human being: Doing business.
Saca felt hesitant on all things business-related and it showed in her day to day activities: her invoicing was always late, her tutors many times collected payments in cash, overdue invoices were never chased, sales wasn’t her strength and she was always missing out on leads.
Scared off by business with a capital B, Saca relied on referrals and would often state:
“People need to see how good I am at doing what I do before hiring me.”
I’ve then realized that for business owners like Saca, their only resource was their stories.
But, these valuable stories were often stuck in neglected and un-engaging websites and blogs (Saca used blogspot — ick!)
I decided I would make storytelling work at scale. I wanted to allow more business owners to build trust by telling potential clients how good they are at doing what they do and I wanted all that trust-building to fuel a network of referrals between business owners.
For Saca, that meant an easy way to let others know how she did her magic; how she enabled people like me to order food, talk to taxi drivers and buy medicine in Chinese.
Now, given I would be building a business around small businesses, I knew I needed to find cost-effective means of customer acquisition given the much lower average annual customer value (ACV) that comes with serving SMBs. I also knew I needed to have organic traffic drive our signups and decided to build a community product.
So what on earth did we build?
We shipped a product in October 2015. It was a video storytelling community, a place where videos of the stories behind projects, specially creative projects, got shared and where the community curated what deserved to be in the spotlight.
Obviously, the success of our product was dependent on network-effects and we had planned to monetize it (yeah, getting paid later… 😳) with promoted content à la “Houzz” style.
We’ve learnt a lot from it and decided to shut it down in December 2015. We then tested some further assumptions by shipping three prototypes between January and May 2016.
The assumption underpinning all these early tests were:
- that video would help build trust among the community members (“I don’t know you but hey, you seem trustworthy in that video”)
- that our video-“maker” could help service providers tell their stories also outside our platform (also helping us with virability — think watermarked videos)
- that we could achieve cross professions-referrals (a landscaper refers a photographer; a photographer refers a caterer)
- most importantly: referrals from other businesses would provide enough value and incentive for those small businesses to spend time in our platform (after all, we were not bringing them potential client eyeballs directly — at least not at that stage)
We’ve managed to achieve healthy engagement metrics with the platform and about 60% open rates with our newsletters that shared trending project stories that made it to the daily leaderboard and tips on how to simplify and power up businesses.
However, we did not succeed in making the referrals circulate. The interest groups were too non-homogeneous, and were not enabling collaboration. New features were needed.
Another way of looking at our learnings: I like the analogies made by the Point Nine Capital’s team on how to build a $100 million business. Here’s the drill:
- It was clear we were not on the right track to make 100,000 small businesses pay us $1k per year each
- This wasn’t a consumer play either, so making 1 million consumers pay us $100 per year each also wasn’t an option
- We were not growing really really FAST
So, yeah, it didn’t work.
But, we just couldn’t ignore the click-through rates we’ve witnessed around all things related to business management. Our conclusion was that we were winning in the typically “boring” business articles space because of our breezy language, fun metaphors and by being refreshingly current.
Starting Over, Getting Better
Since we were managing to cut through small business owners’ resistance to business talk, we figured we should dig deeper.
In the spirit of “move fast and break things”, we went back to the drawing board, ran tons of customer interviews and events for London based small service businesses and freelancers and learnt the challenges these businesses face when it comes to attracting quality client leads, managing their finances and getting paid.
Why would we focus on this?
Our work combines two things I have a small (ok, fairly large) obsession with: Small businesses and figuring out how to do things better. I’m fascinated by the role small businesses play in economic empowerment and seeing opportunities for efficiency improvements is just part of my hard wiring, so no surprises that I was drawn to automation!
The tech we are building can help small business owners free up time so they can focus on things that matter the most: Growth.
And it doesn’t take a genius to figure out that more growth is a good thing.
“Thank you industrialization. Thank you steel mill. Thank you power station. And thank you chemical processing industry that gave us time to read books.” — Hans Rosling
So, we are building Hen, a virtual assistant that makes running a business as easy as chatting.
We target the large and growing market of independent and freelance workers. Approximately, 38 million of whom exist in the US and UK alone. While on a global level, about 1 in 3 workers identify themselves as self-employed.
Our focus today is on product, making sure we are simplifying the user-experience to max and building in-app virality to further drive downloads and business referrals (learnings from our community product come in handy).
Where to next?
We’re looking at a large and exciting market. We’ve got a truly unique, one of a kind product. And, we’ve got the potential to positively impact millions of new entrepreneurs. So yeah, I’d say we’re doing pretty good.
And we are very excited about the road ahead. Thanks for reading!
*names changed to protect privacy
If you believe in our mission and would like to get involved, do reach out!
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This article was first posted to my website.
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