Your Startup Is a Myth
Make it a good one.
I have conversations with lots of engineering students who want to become technology entrepreneurs. And conversations with lots of venture capital and angel investors that would love for these students to be successful.
You’d think that I’d be positioned to make for some beautiful, lucrative matches, right?
Except I’m not.
Engineering school does little to prepare my students for entrepreneurial ventures because engineering school is all about solving problems and a Startup begins by formulating problems.
I wrote about the reasons why in What Problem Are You Trying to Solve?
Just because engineers are outstanding problem-solvers doesn’t mean they have any skills in problem formulation. In engineering school, we drill our students in problem-solving, but as far as they know these problems come from professors, from worksheets, from politicians, bureaucrats, or middle managers… . And the answers to all the odd numbered problems can be found at the back of the book.
Engineers typically have no idea where problems come from, and it’s my fault. As an engineering instructor, I’ve failed to give my students opportunities to practice problem formulation, because I (like my colleagues) have been so caught up in drilling them on problem-solving.
There are four questions essential to engineering innovation and entrepreneurship:
WHAT problem are you trying to solve?
WHY is this problem important?
WHO has the problem? and
HOW MUCH are the people with the problem willing to pay for a solution?
Recently, I had a conversation with an experienced entrepreneur that helped me realize that engineering students aren’t the only one struggling to answer these questions.
When I asked him, “What problem are you trying to solve,” he kept coming back at me with his solution.
I think that’s a very natural reaction. After all, his solution is what he’s most proud of. It’s an expression of his creativity. It’s what he wants me to see about him. But when I say, “That’s a solution not a problem,” he was dumbfounded to let his solution go and instead describe the problem.
Everyone starting something new faces this challenge.
To pitch investors, customers, or other stakeholders on our new venture, we must become adept at starting our story in a place where they’re familiar, but not satisfied. And that place is with a problem that they can recognize.
For example, let’s say that you’re thinking about retail in America right now, and all the changes that it’s going through. You might draw up a pitch like the one I helped craft for two recent engineering grads working on a new app, and it might sound something like this.
You know, I used to work at Banana Republic, on the floor, handing out coupons. And only 25% of the people in the store to whom I gave the coupons actually used them.
Everybody says they shop online because it saves them money, but here when I give them a discount, just for showing up in our store, they don’t even use it.
Brick-and-mortar retail is getting it’s ass kicked by online right now, and the problem is…
See how this works?
In this case, the pitch starts with something that should be familiar, but is a little peculiar. An old story contains a strange oddity that might create a little sense of mystery or surprise that hooks the audience. (You think it’s an undersea documentary, but It’s Really A Shark Attack Movie).
In the first 30 seconds of the pitch, you have to get the audience nodding their heads like, “Yeah, that sounds right.”
Everybody knows that Amazon is kicking brick-and-mortar’s ass in retail, right?
And once you speak the phrase, “… and the problem is…” your audience won’t be able to turn away. Because everybody thinks they know what the problem is (price, convenience, service, selection… whatever) but you’ve created a sense of mystery. An expectation that maybe you’re looking at the problem in a new way that nobody every thought of before.
… and the problem is that the online stores know everything about their customers, and I knew nothing about the people at the mall to whom I was handing out coupons.
You’re formulation of the problem is different, and right away you’ve set your audience up to believe that your solution will be different, too.
Once you hook your audience on your problem, you get to hook them on the idea that you might have the solution.
The phrase “What if… ?” signals that change in the pitch.
What if we had access to the same kind of information about out shoppers at the mall that Amazon has about them online? Couldn’t we create a better experience for them?
And I’m not talking about when they are at the check out, and they swipe their loyalty card and you give them a receipt that’s like, 7 feet long, with coupons for stuff they’re never gonna buy. That’s too late.
I’m talking about right when they set foot in the store, we have to know who they are. We have to know what they like, so we can offer them the kinds of things they will enjoy.
Just like the online stores do, but better.
Wouldn’t that be interesting?
You haven’t technically revealed your solution yet. You’ve just set up the plot of your story.
And in this story, you (the entrepreneur) are the Hero.
The people who want to know how the story ends have to participate in your success. They either invest, or they buy, they advise, or they supply.
The fact is that no one knows yet how the story turns out, because you’re in a Startup, and you’re just at the beginning.
But everyone wants to be part of a good Hero story. Everyone wants to live vicariously through the people with the courage to do something important and different.
You might think you’re making an app, or a product, or starting a new service.
But if you’re in a Startup, before you get to do any of that other stuff, you’re going to have to get good at telling your Story.