Entrepreneurs are Everywhere Show No. 42: Tina Fitch and Alice Brooks

The more that people pay you, the more influence customers feel they should have, but they don’t necessarily know what they want.

Customers will try to be polite and tell you want you want to hear. We had to figure out how to get honest feedback.

Doing customer discovery isn’t the same as running a focus group. And customers don’t always know the best way to solve a problem or fill a need they have.

How entrepreneurs gather, understand and use customer feedback to improve their products was the focus of the guests on today’s Entrepreneurs are Everywhere radio show.

The show follows the journeys of founders who share what it takes to build a startup – from restaurants to rocket scientists, to online gifts to online groceries and more. The program examines the DNA of entrepreneurs: what makes them tick, how they came up with their ideas; and explores the habits that make them successful, and the highs and lows that pushed them forward.

tina-fitch

Tina Fitch

Joining me in the Stanford University studio were

  • Tina Fitch, co-founder of Hobnob, an app that lets users send and manage event invitations via text message
  • Alice Brooks, co-founder of Roominate, toys meant to promote girls’ interest in science, tech and engineering
alice-brooks

Alice Brooks

Listen to my full interviews with Tina and Alice by downloading them from SoundCloud here and here

(And download any of the past shows here.)

Clips from their interviews are below.

Tina Fitch thrives on building products that enable real-world experiences. Before co-founding Hobnob, she founded Switchfly, a SaaS platform that continues to work with airlines, hotel chains, payment companies, and loyalty programs in. She returned to her home state of Hawaii to become a mentor and advisor to tech accelerators and startups, and a parent of two before launching Hobnob.

In both of her startups, Tina did a lot of customer discovery to understand customer problems and see if her products offered the right solution. Here’s what she learned about managing customer feedback:

When you sell into the enterprise, there’s a very fine line between making your customers happy and potentially having them influence the product a little bit too heavily. 

You have to have conviction in your product to balance making them happy, but not necessarily changing your entire product priorities based on what they think they currently need.

The more that people pay you, the more influence they feel they should have, but they don’t necessarily know what solution they want.

You have to have enough conviction in your own vision of how you’re going to solve that problem for them to be able to take all those data points and feedback they gave you, then make a better solution for them. 

 

If you can’t hear the clip, click here

Alice Brooks is the co-founder of Roominate. She grew up playing in her dad’s robotics lab and made her first toy when she was 8 years old using a saw she received for Christmas instead of the Barbie she asked for.

Alice graduated from the Massachusetts Institute of Technology with a B.S. in mechanical engineering and holds a master’s in mechanical engineering from Stanford.

With Roominate, Alice wanted to build a toy that would encourage girls to explore science, technology and engineering. She and her co-founder, Bettina Chen, didn’t have kids of their own, so before designing the product, they did a lot of user testing:

We went out into people’s homes and watched girls play with their favorite toys and asked what they liked about them, what they didn’t like. We saw a lot of dolls – Barbies, American Girl dolls – and we saw a lot of doll houses.

We brought some building toys with us to see how girls would interact. We found they liked that just as much, but it was all about the story they were telling around them and the context that they put it in.  

With Roominate, we give them the context of ‘this is what you can with your dolls in.’ Introducing it that way first opened the door. All of a sudden they wanted to build and add more circuits.

If you can’t hear the clip, click here

During customer discovery, Alice learned a critical lesson about gathering customer feedback:

Customers will try to be polite to you and tell you want you want to hear.

We did a testing session with a group of girls where we had to make this spinning-disco-ball-dance party. We were trying to use circuits and build together in some way. They all seem like they really like it. They were dancing to Rihanna with it.

The next day, their dad calls us up, and says, “Kate didn’t want to upset you, but she told me it was very stupid. She asked me not to tell you.”

That’s how we started figuring out ways to get more honest feedback, always following up with the parents the next day.

If you can’t hear the clip, click here

Tina explained what’s different about starting up a second time:

I remember reading various business books or reading about different entrepreneurial journeys, and I thought at that time probably arrogantly that, oh, I’m never going to make those types of mistakes, I’m too smart for that. And I probably, the first time around, made every single one of them, everything from challenges with co-founders or investors or board members or clients.

The second time around, I not only have the confidence of experience, but I also have the confidence in my own instincts.

If you can’t hear the clip, click here

In her first startup, she quickly learned that everyone has suggestions and advice for how to do things, but that a founder must stand up for their vision:

It’s important to take data points and advice from people, whether they’re your peers, advisors or your board members. But ultimately, you’re going to have to bear the weight of your decision and you can’t point a finger at anyone else.  

You have to have that courage of conviction of your own instincts and believe wholeheartedly at your core that what you’re doing is the right thing. 

If you can’t hear the clip, click here

Having now done two startups, Tina is struck by the different leadership skills needed to build and manage a company:

All the skills that get you to a position where you’re building something and going against the grain – the competitiveness, the aggressiveness, almost like the Darwinistic approach to success – are different from the skills you need to run a company.

As manager, you really have to shift gears and become more of a communicator. You have to have empathy for your team and learn how to get the best performance out of people.  

If you can’t hear the clip, click here

She was also surprised to find that being a founder can be isolating:

When you’re a founder of a company, it becomes almost part of your very being.  

Bearing that responsibility day in and day out and feeling the weight of ownership over not only a product, but your team and their welfare and your community of users and their happiness becomes a very hard and lonely experience a lot of times.

If you can’t hear the clip, click here

Alice and her team made it point to not just get customer insights but to understand all aspects of their business model.

That included getting first-hand knowledge of how their manufacturers operate:

We spent two weeks in China getting to know our manufacturers face-to-face and understanding what it would take to build this product; what trade-offs we needed to make; and what we could do now, what other opportunities there were.

It was beyond helpful. When we first started setting up our manufacturing, we were using a go-between, and we didn’t understand what was really happening.

Once we got there, walked the factory and saw all the different machines they had, we got to know our manufacturer, how they do business. It was really helpful not just for that first launch, but as we grew the company and as we tried to expand knowing how business was done over there.

If you can’t hear the clip, click here

Once they found product-market fit, they launched quickly.

We had a prototype version so you could get the idea. We had to work very quickly to then make it a real product, and we did. From the start of our Kickstarter to when we actually shipped to customers was less than seven months. It was a very quick turnaround, which often doesn’t happen these days with companies.  

We didn’t have any funding. We didn’t have any money ourselves to spend, so we didn’t do any kind of hype around the launch. It was all just people that we’d met and tested with that were excited about the idea and shared it out to people. I don’t know if that would work now.

 

If you can’t hear the clip, click here

As a first-time founder, Alice had a steep learning curve. Her advice for other first-time founders is be prepared to work hard:

It gets to be more and more work as you go.

There’s this image when you’re a student thinking about being an entrepreneur that it’s going to be really glamorous and you’re going to do your product and raise a bunch of funding and then you’re going to be set. The reality is the more you do, the higher the stakes become. You become responsible to a lot of different stakeholders.  

The exciting part is you can actually get your ideas and your designs out there into real people’s hands so much faster than you could by going a different route.

If you can’t hear the clip, click here

Listen to my full interviews with Tina and Alice by downloading them from SoundCloud here and here (And download any of the past shows here.)

Coming up next on the blog: Dakin Sloss, founder of Tachyus; and Ajeet Singh, co-founder of ThoughtSpot.

Tune in Thursday at 1 pm PT, 4 pm ET on Sirius XM Channel 111 to hear these upcoming guests on Entrepreneurs are Everywhere:

Entrepreneurs are Everywhere Show No. 41: Chris Schroeder and Andy Cunningham

There are only two emotions in startups — utter ebullient enthusiasm and outright terror.

Here’s the big thing about tech companies: They all believe that if they build it, the world will come, but it doesn’t really work that way.

The reality distortion you create is imperative to be able to believe what you’re doing, and get the people around you to believe what you’re doing. But you must find ways to check those realities.

A founder’s conviction will help get a startup off the ground. Hubris can kill it.

Why it’s important for entrepreneurs to temper confidence with regular reality checks was the focus of the guests on today’s Entrepreneurs are Everywhere radio show.

The show follows the journeys of founders who share what it takes to build a startup – from restaurants to rocket scientists, to online gifts to online groceries and more. The program examines the DNA of entrepreneurs: what makes them tick, how they came up with their ideas; and explores the habits that make them successful, and the highs and lows that pushed them forward.

Chris Schroeder

Chris Schroeder

Joining me in the Stanford University studio were

Andy Cunningham

Andy Cunningham

Listen to my full interviews with Chris and Andy by downloading them from SoundCloud here and here

(And download any of the past shows here.)

Clips from their interviews are below.

Chris Schroeder is an American entrepreneur, advisor and investor in interactive technologies and social communications.  

He wrote the first book on startups in the Arab World, Startup Rising: The Entrepreneurial Revolution Remaking the Middle East, and was previously the CEO and Publisher of washingtonpost.newsweek interactive and co-founder of HealthCentral.com, sold in 2012.

In his work with startups, Chris notices that founders tend to think investors hold some magic key to their success. He reminds them to look to themselves:

Don’t be in awe of money. I think across the board, young people think that if all that happens, if Sequoia invested in my company, everything will get taken care of.

First of all, most of your customers don’t know or care who any of these venture firms are.

Second, the individuals who invest in you are invariably more important than the venture firms themselves. For customers the venture firm brands don’t matter. For you and your startup it’s the individuals inside those firms who will either make your life miserable or who really understand what it takes to help you build your company. It’s your company. You are the entrepreneur.

Just because someone happens to have access to wealth, more often than not, they haven’t done what you’ve done. They don’t know what you do.

If you can’t hear the clip, click here

And while believing in oneself is critical, it’s equally important for a founder to validate his vision, he says:

You create a reality distortion field, and the power of your narrative is to be able to believe what you’re doing, get the people around you to believe what you’re doing, and to get employees passionately dedicated to work it.

But there’s a very fine line between believing your own spin and taking a dispassionate views of what you’re doing and not getting lost in your own narratives.

You must find ways –without getting caught in 360 degrees of advice– to check those realities, because you can get trapped by naysayers who say it can’t happen or it’s a bad idea. But on the other hand, you can believe in things so deeply and just sort of get trapped in believing in your own idea. 

If you can’t hear the clip, click here

Andy Cunningham is the founder and president of Cunningham Collective, a brand strategy firm dedicated to bringing innovation to market.

Andy came to Silicon Valley in 1983 to work for Regis McKenna and help Steve Jobs launch the Macintosh. When Steve left Apple to form NeXT, he chose Cunningham Communication to represent him. Andy continued to work with Steve for several years and has developed marketing, branding and communication strategies for game-changing technologies and companies ever since.

An entrepreneur at the forefront of marketing, branding, positioning and communicating “The Next Big Thing,” she has played a key role in the launch of a number of new categories including video games; personal computers; desktop publishing; digital imaging; RISC microprocessors; software as a service; very light jets; and clean tech investing. She is an expert in creating and executing marketing, branding and communication strategies that accelerate growth, increase shareholder value and advance corporate reputation. 

Andy says world-class founders exude confidence and refuse to listen to the naysayers:

You have to believe in yourself and realize that it’s lonely at the top. If you can live with being lonely and if you can believe in yourself, then just go for it.

Be crazy, be wild, just go for it and don’t listen to anybody telling you that it can’t be done.

If you can’t hear the clip, click here 

However, to be successful, founders must be more than confident and passionate, she says:

Here’s the big thing about tech companies: They all believe that if they build it, the world will come.

You have to believe that because it’s all about believing in yourself, but it doesn’t really work that way. That’s where marketing comes into play.

If you can’t hear the clip, click here

Chris said the hardest thing about doing an internal startup at the Washington Post was to convince others in the company to share his vision for the new interactive product:

I probably spent 30 percent of my time in shuttle diplomacy between departments inside the Washington Post, convincing them that if we did not leap into the future, the future would be would be taken from us.  

The good news was that you had amazing clay to play with –  amazing content, amazing journalists and journalism – and you could rethink worlds powerfully.  

The down side of it was a lot of the legacy businesses at the Washington Post, particularly on the business side, didn’t understand the interactive and online business and felt threatened by us.

If you can’t hear the clip, click here

Keeping the interactive unit separate from the rest of the company helped, he said. But he wonders if the company could have made a bigger move:

They were very smart to break us off. We were a separate company completely, reporting to the Board in a separate physical space and for a time, to give us cover, I think that was important – at first.

What ended up happening, however, was we were eventually subsumed under the traditional media business. I think the one audacious step would have been the reverse that, have the print people working for the interactive people.  At the end that what’s happening to journalism and the Washington Post.

If you can’t hear the clip, click here

Here’s how Chris compares his intrapreneurial experience at the Washington Post with what it was like to do a startup:

There are only two emotions in startups — utter ebullient enthusiasm and outright terror.  

The good news is that when I was doing HealthCentral, I didn’t have to ask anybody’s explanation for anything, I didn’t have to worry about newspaper circulation being affected as I did in the intrapreneurial experience I had at the Washington Post.

The bad news is that as a startup founder you have no brand, you have no balance sheet, you have investors behind you, you have employees that you’re responsible for, you have an impact you’re trying to make on people’s lives while building a business. Every day was a sine wave of highs and lows of figuring that out.

If you can’t hear the clip, click here

Andy explained that, years ago, a PR person’s was to turn so-called influencers like journalists and analysts into advocates for your client. That goal hasn’t changed, but the playing field has:

What I do today is what I really did in the old days, which is to make sure that the story is differentiated and compelling.

When there was only a small number of influencers, it was a little bit easier to do. Now today, there are zillions of influencers and they don’t have to be anyone famous. They can just be somebody who writes a blog.

With social media and with bloggers and with the cable TV and all the different networks that you can get on television and radio like this, everybody you look at is an influencer now. It’s a lot harder to target it.

If you can’t hear the clip, click here

The way to get influencers’ attention is to show how you’re different from everyone else. This is called positioning and it’s different from marketing. Here’s how Andy did explained it to a client:

I reverse-engineered the process that I’d been going through for decades and out of all the hundreds and hundreds of companies I’d worked with, there was really only three types of companies.

First, there are product-oriented companies, like Microsoft or Oracle;

Second, there are customer-oriented companies like Zappos or Airbnb; and

Third, there are concept-oriented companies like Apple was in the early days. 

I gave product-oriented companies the nickname of mechanics, I gave customer-oriented companies the nickname of mothers and I gave concept-oriented companies the nickname of missionaries.

In the end, it’s about how you tell the story, and the center of that story has to be a differentiated statement about your role and your relevance in the market.

If you can’t hear the clip, click here

Positioning must be authentic, she stresses:

Here’s the thing about great positioning or great PR: You have to be aligned with who you are.

It’s like I can’t go out into the marketplace and convince people that I am a blonde ballerina. I’m not blonde and clearly I’m no ballerina. Because my DNA tells me I’m really more like a racquetball player I can’t pretend to be a ballerina for very long before I get found out.  

The same is true with companies. If you’re a product-oriented company and you want to be a missionary — which many of them do, in a very short amount of time the marketplace will find out you’re not authentic.

You have to align who you are, your DNA, with how you position yourself in the marketplace.

If you can’t hear the clip, click

Listen to my full interviews with Chris and Andy by downloading them from SoundCloud here and here. (And download any of the past shows here.)

Next on Entrepreneurs are Everywhere: Sunny Shah, assistant director of the Engineering, Science & Technology Entrepreneurship Excellence Master’s Program at the University of Notre Dame and Curt Haselton, co-founder of the Haselton Baker Risk Group.

Tune in Thursday at 1 pm PT, 4 pm ET on Sirius XM Channel 111.

Want to be a guest on the show? Entrepreneurship stretches from Main Street to Silicon Valley, from startups to big companies. Send an email to terri@kandsranch.com describing your entrepreneurial journey.

Entrepreneurs are Everywhere Show No. 42: Sunny Shah and Curt Haselton

We as researchers go in with a bias – that obviously these guys want our technology – but that is not the case for a lot of customers. What you think about your technology is great, but at the end of the day you’re not the one buying it.

It was intimidating from day one. I am good with doing research and doing experiments but talking to customers is not my forte.

Scientific research it is hypothesis-driven. You’re just guessing and then trying to prove it true or false. This whole commercialization side of things is not that much different

For scientific researchers who want to commercialize their technology, doing a startup first pulls them out of their comfort zone. But then the Lean Startup’s scientific method of validating their business idea quickly has them feeling right at home.

What it’s like to go from the comfort of the lab bench to the chaos of a startup was the focus of the guests on today’s Entrepreneurs are Everywhere radio show.

The show follows the journeys of founders who share what it takes to build a startup – from restaurants to rocket scientists, to online gifts to online groceries and more. The program examines the DNA of entrepreneurs: what makes them tick, how they came up with their ideas; and explores the habits that make them successful, and the highs and lows that pushed them forward.

sunny-shah

Sunny Shah

Joining me in the Stanford University studio were

curt-haselton

Curt Haselton

Listen to my full interviews with Sunny and Curt by downloading them from SoundCloud here and here.

(And download any of the past shows here.)

Clips from their interviews are below.

Sunny Shah is an Assistant Director for the ESTEEM Graduate Program at the University of Notre Dame.  In addition he conducts research with Dr. Hsueh Chia Chang in Chemical Engineering. Sunny received his Ph.D. from University of California, Davis in Biomedical Engineering. For his doctoral work, his research focused on liver tissue engineering and stem cell differentiation.

Sunny’s startup idea emerged from a diagnostic tool he’d developed in his lab to detect pathogens. He thought it might have an application in the food service industry and so leapt at the chance to join the National Science Foundation Innovation Corps.

He was initially overwhelmed:

It was intimidating from day one. I was out of my comfort zone. I am good with doing research and doing experiments but here there are these four teaching faculty trying to infuse into us to find the need and then see if your problem fits the need.

The only way to do that is by going out and talking to the customers who would eventually buy this. We’re used to just talking to scientists, but here they were asking us in six weeks to do a 100 interviews. Not on the phone, not over Skype but in-person interviews with potential customers.

I’ve never talked to people at food processing plants and meat processing plants.

On our flight back from the workshop, I was trying to come up with excuses to drop out of the program. I thought, ‘This is not something I signed up for. I’m interested in the commercialization side but this fast-paced talking to the customers is not my forte.’

But we stuck with it. We found people to talk to through Google searches. We went to the USDA list and found whatever meat processing plants they inspect and food processing plants they inspect, and went from there. 

If you can’t hear the clip, click here

Once he found customers, he had to speak with them. Here’s what he did, and why he had a change of heart about I-Corps that marked a career pivot for him:

I started not even cold calling; it was cold showing up. There were a couple streets, the meat district of Chicago, and I just started knocking on doors.

I was afraid these guys weren’t going to understand what I was doing but it turned out that once you get in the door and start talking to them about how they do testing for pathogens right now, that’s when you saw them open up.

That’s when I realized that this is something I can do because even though it is uncomfortable for me, they are very interested in talking, they just want a sounding board and that’s what I wanted to be. 

 

If you can’t hear the clip, click here

I realized the importance of talking to customers, listening and learning from them. The more you talk to them you start seeing how painful it was for them.  

They said, ‘We currently have detection techniques that take two days and while we wait for the results we have to store the food.’  What that meant was that until the test results came back the food can’t ship and that’s lost revenue for them. In talking about how expensive the costs of that two-day delay are for them we could start seeing that maybe our research could help these people.  

For me, it was seeing not just what goes on the bench in our lab but there is some sort of real-world application for it.

And to hear it from these people who are not scientists, that was kind of cool.

If you can’t hear the clip, click here

Curt Hazleton is a leader in structural earthquake engineering, focusing on building code development, building collapse safety assessments, and earthquake damage loss estimation. He’s a co-founder and CEO of HB Risk, and a Professor and Department Chair in Civil Engineering at California State University, Chico. He received his Ph.D. in Structural Engineering from Stanford University in 2006. Among his awards, Curt received the 2013 Shah Family Innovation Prize from the Earthquake Engineering Research Institute, honoring an individual under the age of 35 for creativity, innovation and an entrepreneurial spirit in earthquake risk mitigation and management.

Like Sunny, Curt participated in the NSF I-Corps and quickly learned how illuminating customer interviews could be:

We were extremely surprised that by simply getting out of the building and using the customer discovery process you can go and interview people and they’ll tell you exactly what they need and what you can build for them and how much they’ll pay for it.  

If you can’t hear the clip, click here

In doing customer discovery, Curt and his co-founder started out with one customer in mind, but quickly found a more lucrative option:

We initially started with the structural engineers as our target market because that’s what we knew. That’s where we saw the initial need.

As we went through that it’s been verified that there is a market there and they’re interested, but we’ve also seen there’s another market that we call the risk-pricing market. Those are the people insuring the buildings and underwriting the mortgages for the buildings.

They care more. Engineers care about the design of the building, absolutely, but they’re not the ones with the money on the line.

If you can’t hear the clip, click here

Along the way, they met both skeptics and visionaries:

The difference between early adopters and mainstream people was very interesting, especially in the emerging market on the structural engineering side.

The early adopters would see the vision that we see. I was told by one of them it doesn’t even make sense that not everybody is adopting this right away today, because in five years everyone’s going to be doing it.

Then I’d go to people that I would characterize mainstream and they’d say, “Well, it doesn’t meet a need that we have right now.”

We had to take both pieces of feedback and realize it was an emerging market and not everyone would see the vision.

Since then, a few of those skeptic mainstream people have actually come back to us for licenses once they’ve had clients that want this done for them.

If you can’t hear the clip, click here

Ultimately, Sunny and his co-founders killed their startup idea

We decided as a team that there was no match between what we’d learned in customer interviews about where the need was and what we were providing.

We decided we shouldn’t pursue this market.

It was tough at first but when you think about it, we saved time and money. That was the whole point of the exercise.

If you can’t hear the clip, click here

Today he teaches his students at Notre Dame how to use Lean Startup principles. He tells them:

Scientific research it is hypothesis-driven. You’re just guessing and then trying to prove it true or false. This whole commercialization side of things is not that much different. It’s a scientific method.

What you think about your technology is great, but at the end of the day you’re not the one who will be buying this, it will be the customers who will be buying this. The only way to know what they want is to get out of the building and talk to them.

If you can’t hear the clip, click here

Curt said the pace of startup life surprised him

I made more progress in the startup in the first four months than I did in the first four years as an academic chair.  

That doesn’t mean we didn’t make progress in the department. We made a lot. It’s just a different nature. The startup pace has been a lot of fun.

If you can’t hear the clip, click here

Here’s his advice for other academics with tech ideas they’d like to commercialize:

Most researchers come at it with, “I have a product that I really love and I think someone should buy it from me,” and don’t come at it from, “There’s a need in the industry somewhere and I can create something to fill that need.”  

Getting as quickly away from that first approach as possible would be my first recommendation, because in the Innovation Corps process we clearly saw that.  

Most people said, “I have this great technology. I’ve never been out of my lab. I think someone will want to buy it from me,” but the commercial side of it wasn’t there.

You need to get at, “Does anyone care? Does anyone want to buy it?” as quickly as possible.

If you can’t hear the clip, click here

Listen to my full interviews with Sunny and Curt by downloading them from SoundCloud here and here. (And download any of the past shows here.)

Coming up next on the blog: Tina Fitch, co-founder and CEO of Hobnob; and Alice Brooks, co-founder and CEO Roominate

Tune in Thursday at 1 pm PT, 4 pm ET on Sirius XM Channel 111 to hear these upcoming guests on Entrepreneurs are Everywhere:

 Want to be a guest on the show? Entrepreneurship stretches from Main Street to Silicon Valley, from startups to big companies. Send an email to terri@kandsranch.com describing your entrepreneurial journey.

The National Geospatial Intelligence Agency Goes Lean

We tend to associate the government with words like bureaucracy rather than lean innovation. But smart people within government agencies are working to change the culture and embrace new ways of doing things. The National Geospatial Intelligence Agency (NGA) is a great example.NGA

The NGA, an organization within the U.S. Department of Defense, delivers geospatial intelligence (satellite imagery video, and other sensor data) to policymakers, warfighters, intelligence professionals and first responders.

A team from their Enterprise Innovation Office has joined us at NYU as observers at our 5-day Lean LaunchPad class, while another team is in Silicon Valley with the Hacking for Defense team learning how to turn their hard problems into partnerships with commercial companies that lead to deployed solutions.


The Innovation Insurgency
Over the last year the National Geospatial Intelligence Agency (NGA) has become part of the “Innovation Insurgency” inside the U.S. Department of Defense by adopting Lean Methodology inside their agency.

In July the NGA hosted the inaugural 2016 Intelligence Community Innovation Conference with attendees from across the Department of Defense and public sector. At the conference Vice Chairman of the Joint Chiefs of Staff Air Force Gen. Paul Selva said, “Implementing innovation [in the government and large organizations] is like a turning battleship, you may have an upset crew with cooks having to clean up spilled food and sailors falling out of beds but that ship can turn with effort. The end result is often that change can happen but it is going to come at the cost of disruption and difficulty.”

The good news for the country is that the leadership of the National Geospatial Intelligence Agency has decided to turn the ship now.

To connect to innovation centers outside the agency, their research group has set up “NGA Outpost Valley” (NOV), an innovation outpost in Silicon Valley. The NOV is building an ecosystem of innovative companies around NGA’s hard problems to rapidly deploy solutions to solve them.

To promote innovation inside the NGA, they’ve staffed an Enterprise Innovation Office (EIO) to coach, educate and advise the entire agency, from core leadership to the operational edges, with methods and concepts of validated learning through rapid experimentation and customer development.

The NGA has adopted Lean Innovation methods to make this happen. The process starts by collecting agency-wide ideas and/or customer problems, collecting a group insight, and sorts which problems are important enough to pursue. The innovation process uses the Value Proposition canvas, customer development and the Mission Model Canvas to validate hypotheses and deliver minimum viable products. This process allows the agency to rapidly deliver projects at speed.

NGA Lean Innovation

To help start this innovation program the NGA’s Enterprise Innovation Office has had their innovation teams go through the already established Innovation-Corps classes at the National Security Agency (NSA), and they’re about to stand up their own Innovation-Corps curriculum inside the NGA. (The Innovation-Corps (I-Corps for short) Program is the Lean Innovation class I developed at Stanford and teach there and at Berkeley, Columbia and NYU. It was first adopted by the National Science Foundation and is now offered at 54 universities, and starting last year taught in all research agencies and the DOD.)

This past week a team from the NGA’s Enterprise Innovation Office observed the 5-day Lean LaunchPad class I’m teaching at NYU.  Their goal is to integrate these techniques into their own Lean innovation processes. From their comments and critiques of the students, they’re more then ready to teach it themselves.

At the same time the NGA Outpost Valley team was in Silicon Valley going through a Hacking for Defense workshop (we call a “sprint.”) Their goal was to translate one of their problems into a language that commercial companies in the valley could understand and solve, then to figure out how to get the product built and deployedLike other parts of the Department of Defense (the Joint Improvised Threat Defeat Agency (JIDA) and the Defense Innovation unit Experimental (DIUX),)  NGA’s Outpost Valley team is using a Hacking for Defense sprint to build a scalable process for recruiting industry and other partners to get solutions to real problems deployed at speed.

Putting lean principles into NGA’s acquisition practices
As part of the Department of Defense, the NGA acquires technology and information systems through the traditional DOD’s acquisition system – which has been described as the antitheses of rapid customer discovery and agile practices. The current acquisition system seldom validates whether a promised capability actually works until after the government is locked into a multiyear contract, and fixing those problems later often means cost overruns, late delivery, and under performance.  And as any startup will tell you, the traditional government acquisition processes create disincentives for startups to participate in the DOD Market. Few startups know where and how to find opportunities to sell to the DOD, they seldom have the resources or expertise to navigate DOD bureaucratic procurement requirements, and the 12 plus months it takes the government to enter into a contract makes it cost prohibitive for startups.

NGA researchA year ago Sue Gordon, the deputy director of the NGA, sent out an agency-wide memo that said in part, “…we must build speed and flexibility (agility) into our acquisition processes to respond to those evolutions. It is our job to acquire the technologies, data and services that NGA and the NSG need to execute our mission in the most effective, efficient and timely manner possible …”

In addition to NGA’s internal Lean Innovation process and innovation outpost in Silicon Valley, they are starting to use open innovation and crowdsourcing to attract commercial developers to tackle geospatial intelligence problems.

This week the NGA posted its first major open Challenge  – The NGA Disparate Data Challenge– on Challenge.gov, the U.S. government’s open innovation and crowdsourcing competition. Government agencies like the NGA can use the site to post challenges and award prizes to citizens who  find the best solutions. Putting a challenge on a crowdsourcing platform is a groundbreaking activity for the agency and opens the possibility for a number of benefits. 

  • Presenting a problem instead of a set of requirements to startups leaves the window open to uncover unknown solutions and insights
  • Setting up the challenge in two stages hopefully gets startups to participate while learning about the NGA and its technical needs
  • Asking for working solutions offers the potential for minimal viable acquisition to quickly validate who can solve the problem prior to committing large sums of taxpayer funds
  • Finding solutions at speed by shrinking the timeline for determining the viability of a solution without the need for executing any large scale contract.

The NGA Disparate Data Challenge has two stages.

  • Stage 1: teams have to demonstrate access and retrieval to analyze NGA provided datasets. (This data is a proxy for the difficulties associated with accessing and using NGA’s real classified data.)  Up to 15 teams who can do this can win $10,000.  And the winners get to go Stage 2.
  • Stage 2: the teams demo their solutions and other features they’ve added against a new data set live to an NGA panel of judges, in hackathon style competition. First place will take an additional $25,000; second $15,000; and third $10,000 with an opportunity to be part of a competitive pool for a future pilot contract with NGA.

NGA’s challenge is its first attempt to attract startups that otherwise would not do business with the agency. It’s likely that the prize amounts ($10-$25K) may be off by at least one order of magnitude to get a startup to take their eye off the commercial market. Curating a crowd and persuading them to work together because the work meets their value proposition is hard work that takes incubation not just prizes. However, this is a learning opportunity and a great beginning for the Department of Defense.

Challenges in Embracing Innovation in Government Agencies
Innovation in large organizations are fraught with challenges including; building an innovation pipeline without screwing up current product development, educating senior leadership and (at times intransigent) middle management about the difference between innovation and execution, encouraging hands-on customer development, establishing links between department and functional silos that don’t talk to each other (and often competing for resources), turning innovative prototypes and minimum viable products into deliverable products to customers, etc.

Government agencies have all these challenges and more. Government agencies have more stringent policies and procedures, federally regulated oversight and compliance rules, and line-item budgets for access to funding. In secure locations, IT security can hinder the simplest process while a lack of access to a physical collaboration space and access to data, all set up additional barriers to innovation.

The NGA has embraced promising moves to bring lean methods to the way they innovate internally and acquire technology. But what we’ve seen in other agencies in the Department of Defense is that unless the innovation process is run by, coached and scaled by innovators who have been in the DOD and understand these rules (and have the clearances), using off-the-shelf commercial lean innovation techniques in government agencies is likely to create demos for senior management but few fully deployed products. (The National Security Agency has pioneered getting this process right with the I-Corps@NSA.)

Lessons Learned

  • Lean Innovation teams are starting up at the National Geospatial Intelligence Agency (NGA)
    • NGA has an Innovation Outpost in Silicon Valley working on it’s first hacking for Defense Sprint 
    • NGA is experimenting with open innovation with its first problem on Challenge.gov
  • The goal of Lean in government agencies should mean deployment not demos
    • In order to successfully deliver products with speed and urgency, this requires coaches and instructors who have been the customer: warfighters, analysts, operators, etc.
    • It will take innovation built from the inside as well as acquisition from the outside to make it happen

Entrepreneurs are Everywhere Show No. 40: Stan Gloss and Matt Armstead

A lot of people, especially in the Midwest, will spend their time thinking too small. They’re a creature of their habit and habitat, in looking at potential investors and market opportunities.

If you see a need or problem and you think you can solve it, you don’t want that destiny to belong to someone else.

You have to disprove the naysayers. You sometimes get a chip on your shoulder and say, “You know what? I’ll show you.

 Thinking big, destiny and naysayers — three things in the life of a startup founder.

Why founders need to be their own boss and how they capitalize on business opportunities were the focus of the guests on today’s Entrepreneurs are Everywhere radio show.

The show follows the journeys of founders who share what it takes to build a startup – from restaurants to rocket scientists, to online gifts to online groceries and more. The program examines the DNA of entrepreneurs: what makes them tick, how they came up with their ideas; and explores the habits that make them successful, and the highs and lows that pushed them forward.

Stan Gloss

Stan Gloss

Joining me in the Stanford University studio were

  • Stan Gloss, co-founder of BioTeam, consultants that design computer systems for life sciences companies
  • Matt Armstead, a serial entrepreneur and co-founder of Lumos Innovation, which helps Ohio-area founders launch their startup ideas
Matt Armstead

Matt Armstead

Listen to my full interviews with Stan and Matt by downloading them from SoundCloud here and here.

(And download any of the past shows here.)

Clips from their interviews are below.

Stan Gloss co-founded BioTeam following his tenure in business development with AVAKI Corporation, a pioneer in global grid software solutions. Previously, at Blackstone Computing, a computing and IT consulting company for scientists, Gloss led the sales initiative that launched the company in the life sciences market. Prior to working at Blackstone, Gloss was a department chairman and faculty member at Quinnipiac University. 

Leaving the corporate world to do a startup was a leap of faith Stan welcomed:

The previous jobs that I had in big corporations were almost like being in school again. There’s all that structure and all these things that really didn’t play to my strengths.

By being an entrepreneur I have the freedom to build things and do things that play to my strengths.

If you can’t hear the clip, click here

Stan was an account manager at Blackstone Computing when the company was reorganized under a new CEO. Though they’d never done a startup before, Stan and some of his co-workers saw an opportunity in the leadership change. Together, they started down a new path:

Eventually we saw the writing on the wall with the new company and four of us decided to go off on our own and continue doing the consulting piece of what we did. 

We were already entrepreneurial. We just took a leap of faith and said, “We can get all the clients that we had in the consulting company, and we can go out and get more of them together. Look at how good we did here. Let’s just go do that.”

If you can’t hear the clip, click here

Starting the company was a little scary, but it helped that Stan was surrounded by domain experts and recognized his personal strengths, he says:

Everything was new every day. I didn’t even know that area, so I used to sit at meetings and not understand the science. I really didn’t understand high-performance computing either.  

But I knew how to make meetings productive, I knew how to facilitate meetings, and I was smart enough to put our domain expert in the room with the domain expert from the customer.

I used to sit there and just let them talk — and then collect the order at the end.

If you can’t hear the clip, click here

Stan adds that being dyslexic gives him an edge as a founder because from an early age he had to develop skills that turn out to be critical when building a startup:

Every day in school was a day of fear, uncertainty and doubt. You never knew if you were going to get called to the board, you were going to have to stand up and read, all of these things that are very challenging for kids like me with dyslexia. School became was just day-in and day-out hard to do.

You learn to become comfortable with being uncomfortable. You learn to outwork everybody.

You also learn to negotiate. You say, “Hey listen, you’re good at math. I’m good at English. I’ll do your homework if you do mine.” Or you negotiate with the teacher.

And you face people telling you, “No, you’re not going to go to college, no you’re not going to be doing this, no you’re not going to be doing that.” You have to disprove the naysayers. You sometimes get a little chip on your shoulder and say, “You know what? I’ll show you.”

If you can’t hear the clip, click here

Having now done several startups, Matt has learned to keep his eye on a singular aim: The goal is to get customers, not to raise money:

There are a lot of people that are just chasing dollars, trying to get a VC to fund them, and they’ll give up 40 percent of their company in the first round just to get some major amount of money.

I learned that you can actually do things very inexpensively. You can bootstrap it. You can build a Minimum Viable Product. You can learn from your customers.

If you can’t hear the clip, click here

He learned, too, that building a company outside a major startup ecosystem like Silicon Valley doesn’t have to limit a founder’s horizons:

A lot of people, especially in the Midwest, will spend their time thinking too small. They’re a creature of their habit and habitat, in looking at potential investors and market opportunities.

They have to think outside of their own back yard, get really active and make trips out to San Francisco or to New York to build some very important relationships.

If you can’t hear the clip, click here

Matt’s advice for other entrepreneurs included this recommendation about finding co-founders:

I’ve talked to a lot of startup and entrepreneurs that need to find a technical co-founder. They’re just looking for the first person that can code, the first person that fits that capability that they’re looking for.

That’s a mistake. You really have to date a little bit. You have to build a relationship with a prospective co-founder. These are the people you’re working 24/7 with.

If you can’t hear the clip, click here

Listen to my full interviews with Stan and Matt by downloading them from SoundCloud here and here. (And download any of the past shows here.)

Next on Entrepreneurs are Everywhere: Chris Schroeder, Internet/media CEO, venture investor and author of “Startup Rising: The Entrepreneurial Revolution Remaking the Middle East” and Andy Cunningham, founder and CEO of Cunningham Collective.

Tune in Thursday at 1 pm PT, 4 pm ET on Sirius XM Channel 111.

Want to be a guest on the show? Entrepreneurship stretches from Main Street to Silicon Valley, from startups to big companies. Send an email to terri@kandsranch.com describing your entrepreneurial journey.

Entrepreneurs are Everywhere Show No. 39: Jeremy Johnson and Michael Eidsaune

The existence of a problem doesn’t mean there’s a solution to that problem. Wanting to create impact is great. But to do it, you need to actually have a sustainable business model.

I don’t recommend anyone become an entrepreneur. It’s too hard. It’s too painful. Starting a business is too risky. There are better ways to make a living. Yet I can’t imagine doing anything else.

One mistake was trying to build out too much tech too quickly. We thought that the tech was going to be the solution, that if we added more features, it would solve the problem. We were wrong.

Identifying a problem doesn’t mean you’ve automatically created a business.

And building a startup is not for the faint of heart.

The tools and temperament needed to get from startup idea to startup success were the focus of the guests on today’s Entrepreneurs are Everywhere radio show.

The show follows the journeys of founders who share what it takes to build a startup – from restaurants to rocket scientists, to online gifts to online groceries and more. The program examines the DNA of entrepreneurs: what makes them tick, how they came up with their ideas; and explores the habits that make them successful, and the highs and lows that pushed them forward.

Jeremy Johnson

Jeremy Johnson

Joining me in the Stanford University studio were

  • Jeremy Johnson, founder of Andela, which embeds talented software engineers on the African continent into top engineering organizations worldwide
  • Michael Eidsaune, co-founder of Carely, a software platform that facilitates communication among families caring for sick or elderly relatives
Michael Eidsaune

Michael Eidsaune

Listen to my full interviews with Jeremy and Michael by downloading them from SoundCloud here and here.

(And download any of the past shows here.)

Clips from their interviews are below.


Jeremy Johnson is an education innovator. Prior to founding Andela, he co-founded 2U, an education technology startup that went public in 2014. 
Outside of Andela, Jeremy serves on the board of the Young Entrepreneur Council and the education non-profit PENCIL and co-authored a book Education & Skills 2.0: New Targets & Innovative Approaches.

Before founding 2U, Jeremy developed Zinch, intended to be a virtual guidance counselor to help low-income students navigate the college application process. He explains why it didn’t get off the ground:

It was a great idea, but a terrible company. 

It turns out the existence of a problem doesn’t mean there’s a scalable or profitable way to solve that problem — or at least at the time.

The goal was to help low-income students better understand the college application process.

For the past 30 years great colleges have approached recruitment by creating a list of names from the PSATs and then sending out glossy brochures. Often they don’t think about it through the lens of what is the best way to spend or allocate resources to try to get better students. So while Zinch was trying to create an offering that would support low-income students that wasn’t where the majority of college recruitment dollars were being spent. So it was tough. We couldn’t charge the low-income students we were looking to help enough to keep the business going.

In the end we learned that wanting to create impact is great. But to be able to do it, you need to actually have a model that sustains it.

If you can’t hear the clip, click here.

The effort was a good learning experience, he says:

The beauty of trying things when you’re 21 and have no idea what you’re doing is that you get the chance to make a lot of mistakes really quickly and learn from them.

One mistake we made was trying to build out too much tech too quickly and thinking that the tech was going to be the solution, that if we added more features, it would solve the problem. We were wrong.

We thought, ‘Why don’t we think through all of the different potential users that might use a system and how they might want to interact with it?’

We tried to boil the ocean in the most literal sense.

If you can’t hear the clip, click here

Prior to founding Carely, Michael Eidsaune earned his MBA in finance and spent several years in investment management, eventually earning his level 1 CFA certification. He also worked for a time as a contract negotiator for the US Air Force.

The idea for Carely was sparked by personal family experience. Michael started the company with his father-in-law, working on it part-time, while he worked with the Air Force.

Since its founding four years ago, Carely has seen ups and downs. Michael’s vision and passion have gotten him through it:

I don’t recommend anyone do this. It’s too hard. It’s too painful. Starting a business is too risky. There are better ways to make a living that are much safer.

And yet, while I would never recommend anybody do this, I can’t imagine doing anything else.

If you can’t hear the clip, click here 

An experienced team made all the difference to 2U finding success, Jeremy said:

We had a phenomenal early group of people that were brought together to try to address the problem.

You might look at it and say, “In some ways, that team is overkill for an early-stage company. These people are overqualified for what they’re doing.”

But it turns out that when you’re growing really quickly, having folks who have been through it a couple times before is really useful in the early days, even to make sure that you’re able to really grow effectively while maintaining culture. 

If you can’t hear the clip, click here

Andela selects and trains world-class tech talent from Africa and matches them with U.S. companies. Here’s how Jeremy came up with the idea for Andela, and why he decided to create the company even though he was still working on 2U at the time:

A good friend invited me to Nairobi to give a talk for the MasterCard foundation on the state of online education around the world. That kicked off this long conversation about how you might try to leverage this evolution of education technology to create scalable impact in places where tuition couldn’t be the driver of growth.

At the same time, I’d gotten to know a young Nigerian serial entrepreneur who had become sort of a friend and mentee, and was building something similar to 2U but focused on Africa. Through those two experiences I became more and more familiar with the continent. As I was thinking through the notion of what would become Andela, my initial thinking was, “We’ve just gone public. We’ve got a lot of work to do. This is not something I can spend time on. I could potentially fund it and put the team together, but I’m busy.”

At the same time I thought, “This should exist in the world.” We put a small team together, funded it initially, put a pilot together. We were looking for four students for the program, four developers in training, and we ended up getting 700 applicants in a week.

We got that down to six finalists. I went to Nigeria to meet that first cohort, interview them and try to pick four from the six. I realized after half a day of interviews that each one of them would’ve run circles around my classmates at Princeton. 

If you can’t hear the clip, click here

Jeremy dropped out of Princeton to become an entrepreneur. Here’s what he says about founders going to college:

You’re never going to convince someone to work with you because you have a degree.

You’re never going to come up with a different strategy for how you approach the world. You’re never going to raise funding or bring in different teams by virtue of your degree.

A college degree is great if you’re looking to get hired. But if your goal is to be an entrepreneur then it’s a little bit different and folks care a little less about it. 

If you can’t hear the clip, click here

Carely was built to foster communication among family members with sick or elderly relatives in a nursing home, assisted living residence or hospice care.  

At first Michael and his co-founder thought they’d be selling to individual users, but after talking with service providers, they realized there was a bigger opportunity:

I took our prototype – a PowerPoint presentation — out and sat down with several CEOs of a hospice organization, a nursing home, home-care company and said, “Hey, this is something we think we would use as a family. Tell me why it won’t work.”  

In doing that, we learned that the problem was more applicable than just our family — that lots of people were dealing with this idea of miscommunication and frustration wrapped around care giving.

We realized that there was a value proposition there for the actual industry. The providers of care actually liked the product and would pay for it because when a family’s not doing a good job communicating with each other around their loved one, it’s often the facility or the care provider that has to step in and play middleman to those conversations.

If you can’t hear the clip, click here

A pivotal meeting with nurses at Hospice of Dayton in Ohio helped them figure out what features to build:

It was a bit like leading sheep to wolves, and became one of our biggest learning moments.

The reality is nurses don’t have a lot of extra free time to learn a new system and to try something new. They wanted something that would help improve the lives of their clients’ families. They loved that part of the company. But they didn’t want to have to learn a new system and learn a new task and add something to their to-do list at the end of the day.

So we just said, “OK, if you guys don’t want that piece of it, we’ll leave it out.”

At this time, we hadn’t even built the product yet. We hadn’t invested any money into development, so we just didn’t develop that piece.

If we’d built the product first, however, we would have wasted months and thousands of dollars.

This is a perfect example of why it’s important to talk to customers. For the first six months we spent only a couple of hundred bucks.

If you can’t hear the clip, click here

Somewhere along the line, however, Michael and his co-founder stopped listening to customers. Here’s what happened:

We got the product out; we got paying customers.

We thought we figured it out. We assumed we had product-market fit and all we had to do was keep selling.

The problem was had the wrong business model at the time. Our revenue model was wrong.

We were charging a really high up-front annual fee to these providers and the end result of that was a pretty long sales cycle. It involved lots of face-to-face selling and it wasn’t enabling us to scale the product very quickly.

It took about 2 months to realize we needed a new pricing strategy, from, an average $5,000 to $10,000 a year per provider to about a $99 a month provider fee.

We tested the new strategy with several customers in the pipeline and it took our sales cycle from about 60 days to 1 week. Plus, it enabled us to scale much more quickly with much less effort.

But by then we were so far along our original path. My co-founder didn’t quite agree with the change of direction because it was going to involve us taking on some outside capitol.

I made the tough decision to go against what he wanted to do and it led to us kind of breaking up the company at the time.

If you can’t hear the clip, click here

Listen to my full interviews with Jeremy and Michael by downloading them from SoundCloud here and here (And download any of the past shows here.)

Next on Entrepreneurs are Everywhere: Stan Gloss, co-founder of BioTeam; and Matt Armstead, co-founder of Lumos Innovation.

Tune in Thursday at 1 pm PT, 4 pm ET on Sirius XM Channel 111.

Want to be a guest on the show? Entrepreneurship stretches from Main Street to Silicon Valley, from startups to big companies. Send an email to terri@kandsranch.com describing your entrepreneurial journey.

Entrepreneurs are Everywhere Show No. 38: Ryan Smith and Lane Merrifield

If you don’t value your product neither will your customers. No one used it when we gave it away for free. Freemium was a going out of business strategy.

When a reporter asked, “Your kids must think you’re the coolest dad in the world,” I couldn’t answer the question, because I realized that I hadn’t seen my kids in three weeks.

I learned that making a complicated thing look easy is extremely hard.

People appreciate things more when they pay for them. And no amount of business success is enough if you don’t have time with your family.

Values – who and what founders and customers hold dear – were the focus on today’s Entrepreneurs are Everywhere radio show.

The show follows the journeys of founders who share what it takes to build a startup – from restaurants to rocket scientists, to online gifts to online groceries and more. The program examines the DNA of entrepreneurs: what makes them tick, how they came up with their ideas; and explores the habits that make them successful, and the highs and lows that pushed them forward.

Ryan Smith

Ryan Smith

Joining me in the Stanford University studio were

Lane Merrifield

Lane Merrifield

Listen to my full interviews with Ryan and Lane by downloading them from SoundCloud here and here.

(And download any of the past shows here.)

Clips from their interviews are below.

Ryan Smith co-founded Qualtrics in 2002 with his father in the family basement. Their goal was to make sophisticated research simple. As CEO, Ryan has grown Qualtrics to one of the fastest-growing technology companies in the world.

In the early days of building Qualtrics, Ryan tried giving the product away to entice customers to use it. Their reactions surprised him:

There’s something about people appreciating something they have to pay for.

Our pricing model was something like $5,000 a school. For the big schools we tried to give it away, but in every school we gave it away to, no one ever used it.

I remember that at Wharton I gave it to them free, went back a year later and there were only, like, five people using it. We had to charge them to get them to use it. Now there’s thousands of users across campus. 

If you can’t hear the clip, click here

Lane Merrifield is a co-founder and CEO of FreshGrade, a learning collaboration and portfolio tool focused on enhancing teachers’ lives and making students’ learning visible. Lane’s first startup was Club Penguin, the largest online virtual world for kids, which was acquired by The Walt Disney Company in 2007 for $350M.  Lane served as Executive Vice President at Disney for five years before returning to his entrepreneurial roots to become an angel investor and launch FreshGrade. 

Lane also founded Wheelhouse, a Canadian organization that supports other entrepreneurs through mentorship, access to early stage capital, and connections to global business networks and executive expertise. 

Lane explained that and his co-founders, Lance Priebe and Dave Krysko, built Club Penguin to give their kids a safe place to play online. It quickly became a hit, but that success had a dark side, Lane says:

It totally consumed my life.

I was sitting in a press interview in Australia talking about Club Penguin, and the reporter asked, “Your kids must think you’re the coolest dad in the world.” I gave her some pat answer –“Well, they like to play it once in a while, but to them I’m just dad” — but I almost couldn’t answer the question, because I realized in that moment that I hadn’t seen my kids in about three weeks.

Ironically, this thing that I built for them now had me traveling around the world and being a pretty crappy dad.

If you can’t hear the clip, click here

Finding early customers for Qualtrics was difficult, Ryan says. It was a challenge to convince companies to think past the traditional method of hiring consultants or researchers to test user experience:

At first I tried to call business and enterprises. But in the corporate world in 2002, no one was ready for it.

I specifically remember calling one airline, and they said, “Hey look, if our customers aren’t happy, they’ll just call us.” Now today that mindset seems silly.

In the meantime, we had this case study that said academics were really ready for us. So we started in the academic market — because they would actually buy. I remember selling Angela Lee at the Kellogg School of Business, and Angela referred it to someone at Wharton, who referred it to someone at Columbia and Duke, and the rest is history. 

Ironically, though, academics are horrible customers. They have a laundry list of features they want that are more than you can listen to in an hour. They’re hard to service and support because they want to talk to someone as smart as them, which is almost impossible, and they have no money. No MBA business model would ever come out with, “Hey we’re going to go target the academics.”

If you can’t hear the clip, click here

Still, academics made up Qualtrics’ core market for five years. Over time, students at those institutions took the product with them into their corporate jobs, growing Qualtrics’ customer base.

While it looked to the world like Ryan and his team planned to grow that way, nothing could be further from the truth.

Everyone comes up now — the VCs, the market – and they say, “Hey wow, that was a beautiful business model. You guys were geniuses.”

I kind of start laughing because no one ever thought we were geniuses; it was desperation. Typically that’s when innovation comes out. You innovate when you’re desperate.

If you can’t hear the clip, click here

One important lesson Ryan learned was how difficult it is to make a complicated thing seem seamless:

Everything my dad wanted to build was way too complex for anyone to understand. So we had this built-in test where we’d see if I could figure it out, because if I could figure it out, then others could. 

I learned that making a complicated thing look easy is extremely hard.

If you can’t hear the clip, click here

Club Penguin launched with modest expectations. Lane and his team built a virtual world to give their kids a safe place to socialize online, thinking others might like it, too. They were in for a big surprise:

Our hope was just to be able to find enough people out there that we could keep it sustainable. We bootstrapped it. We took out lines of credit on our homes; we maxed out credit cards. There were no investors.

We hired a few people part-time, we contracted a lot of work, we’d pay as often as we could, and we started a subscription business, which back in the day was insanity. It was freemium, but the term freemium didn’t exist yet. It was try and then buy.

Through some of these mini-games that my co-founder, Lance, had created, we had a small audience initially. But when we rolled out the virtual world, it grew from a few thousand kids to 30,000 or 40,000 within about a month.

If you can’t hear the clip, click here

Built before Facebook existed, the company was at the cutting edge for scale, which attracted potential investors, but also presented some interesting challenges:

We had some great VCs come out of the woodwork, and we said, “Listen, have you dealt with infrastructure problems like this before? We have hundreds of thousands of concurrent users logging into servers that are meant to be having long, 2-, 3-, 4-minute sessions, and we’re having millisecond sessions, and our servers can’t handle that?”  

We brought in experts from IBM, we worked with the biggest service providers in the world, and some of the largest data centers. They all had no idea what to do with us, because they were used to a database and the web, and the web sessions last for minutes at a time. At this point in time, we had hundreds of thousands of users. We were basically hacking these servers to do what we needed them to do.

If you can’t hear the clip, click here

Like most founders, Lane and Ryan are glad to pay their success forward.

Today, in addition to running FreshGrade, Lane mentors other founders. He tells them this:

Know why you’re doing what you’re doing. Don’t focus on the what, don’t tell me about the market opportunity, don’t tell me, “I’m Uber for this” or “I’m Slack for that.”

I don’t care about that. Tell me why are you building what you’re building.

If you can’t hear the clip, click here

He said that because the Club Penguin team was clear about their “why,” they embraced being acquired by Disney in 2007:

Our goals weren’t about an exit. I didn’t even know what the term “exit” meant. For us, it was about taking Club Penguin to the next level.  

By the time we were acquired we had millions of users, we had a massive demand for consumer products, massive demand internationally. We needed to translate the game into other languages. We didn’t have any of the infrastructure to do that.

Disney gave us more resources to make our vision happen.

If you can’t hear the clip, click here

Ryan counsels other founders to never give up. Qualtrics has 8500 customers today, but back in his father’s basement in 2002, things weren’t so rosy. This memory helped him keep things in perspective along the way:

I remember thinking, “We’re in the basement, no one knows about us. We need to go to a trade show and get some exposure.” I called this trade show company that was putting on this great marketing event in New York City.

I borrowed my brother’s trade show booth and flew to New York. We took the train from the airport, because we couldn’t afford a taxi, and I sat on the train with this trade show booth in a bag between my legs. I remember specifically hauling that thing up the stairway and coming out of the subway station pretty close to Wall Street.

Fast-forward ten years. We were hosting a Qualtrics Live event for our customers in New York City in a hotel in the same neighborhood where the trade show had been. We now had 250 New York customers there; the room was full. Coming out of the hotel walking around the street, I was looking for somewhere to eat, and I passed that subway station. I could almost picture myself as a young kid hauling that trade show booth up the stairs.

It was kind of surreal, a message like, “Don’t give up. Trust your ideas.”

I can’t tell you how many times I’ve had to rely on that memory and the lessons I learned from hauling that trade show booth up the stairs.

If you can’t hear the clip, click here

Listen to my full interviews with Ryan and Lane by downloading them from SoundCloud here and here. (And download any of the past shows here.)

Next on Entrepreneurs are Everywhere: Jeremy Johnson, founder of Andela; and Michael Eidsaune, co-founder of Carely.

Tune in Thursday at 1 pm PT, 4 pm ET on Sirius XM Channel 111.

Want to be a guest on the show? Entrepreneurship stretches from Main Street to Silicon Valley, from startups to big companies. Send an email to terri@kandsranch.com describing your entrepreneurial journey.

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