In his groundbreaking book, “All Marketers are Liars Tell Stories”, Seth Godin defines a “worldview” as the set of rules, values, beliefs, and biases people bring to a situation.
Good marketing is NOT about changing a person’s worldview, but rather framing your story in terms of their pre-existing worldview.
The same is true in entrepreneurship.
Good entrepreneurship is NOT about brute-forcing your solution, but rather framing a business model story in terms of your audience’s pre-existing worldview. Your audience, in this case, comprises of investors, customers, advisors, and even competitors.
I’ll illustrate this using a 1-page business model: Lean Canvas — which also happens to be a great business model story-telling tool.
The Story We Tell Ourselves
When we get hit by an idea, the thing we most clearly see is the solution. I show this as the awesome box on the canvas below.
We spend a disproportionate amount of time talking about the uniqueness of our product features or its underlying technology breakthroughs. And we believe that if we simply build out this solution, everything else will work itself out. Not necessarily true…
The bigger and more immediate problem though is that other people don’t see what you see (yet). In order to get them on your side, you have to frame your story differently.
The Investor Story
Investors are in business for one reason alone — that’s to get a great return on their investment. They don’t care about your solution, but a business model story that promises them a return on their investment within a set time frame.
This is what they really want to know:
- How big is the market opportunity? They don’t care who your customers are, but how many — your market size.
- How will you make money? They want to understand the intersection of your cost structure and revenue streams — your margins.
- And finally, they want to know how you will defend against copycats and competition who will inevitably enter the market if you are successful — your unfair advantage.
Let’s look at an example. Say you have invented a method for reliably capturing an eye tracking signature. So what? Instead of leading your pitch with a description of your invention, lead with your business model. If this eye tracking signature can be used as an early diagnostic system for autism in children (big market) at a fraction of the cost of existing alternatives (potential margins), and you have a patent pending on the method (unfair advantage) — that is a big deal.
But what gets an investor’s attention above everything else is traction. If you walk into an investor’s office with the beginnings of a hockey-stick curve, you’ll trigger a Pavlovian response — they’ll sit you down and try to understand the rest of your business model story.
The hockey-stick curve starts out flat, but has a sharp inflection point when it starts quickly trending up and to the right - indicating that good things are happening. So how we get us some of this traction?
Traction is nothing more than a measure of your product’s engagement with customers. And any traction is better than no traction. So rather than first chasing down investors, it would be more effective to first chase down a few good customers.
The Customer Story
Customers don’t care about your solution either, but the problems (or obstacles) that keep them from achieving a goal or getting a job done.
You probably didn’t wake up today with a burning desire to buy an IOS 7 app or to signup to a website written in Ruby-on-Rails On the other hand, if you were looking for a job, you might have signed up for a job listing service that used the headline: “We help you find your dream job in 30 days or your money back”.
Getting a customer’s attention is the first battle. That’s the job of the UVP. The headline above is an example of an effective unique value proposition (UVP) that communicates, not your solution, but the finished story benefit one gets after using your solution.
If your promise connects, then only do you have permission to tell your customer more about your solution — typically through a demo.
A demo is a carefully scripted narrative that helps the customer visualize how they go from point A (riddled with problems) to point B (problems removed by your solution).
If you deliver a compelling demo, the only thing left to address is what you want in return — the currency exchange captured under revenue streams. In a direct business model, this may be a direct money exchange. But in multi-sided models, this may instead be a derivative currency (like attention) that is then converted to money through a secondary transaction (with advertisers).
These are the two big business model stories to tackle first. You always want to lead with your strongest foot forward. With investors, this is with a strong traction lead. With customers, this is with a strong promise lead.
The next conversation is a bit different.
The Adviser Story
We all need people other than ourselves to guide us, call our B.S., and hold us externally accountable — aka advisers.
Advisers too bring a unique worldview to the conversation, but unlike the others, their worldviews are driven by their past experiences and interests. That is why it is important to surround yourself with complementary advisors AND to be as open and honest with them. When you simply practice “success theater” with them (where you only share good news), while it may result in a pat on the back, it misses out on a huge opportunity for learning.
When talking with advisers, I find it best to provide a quick business model progress walkthrough (5 mins or less) using the Lean Canvas as a visual storytelling aide. Then I shut-up and just listen. I listen for objections (risks) and ideas (possible solutions)— without getting defensive or trying to change their mind.
No one has a crystal ball and you alone “own” your business model. Your job isn’t to blindly follow the advice given, but rather to rigorously test the most promising ideas — and make them your own.
There is one more story…
The Competitor Story
We also have conversations with competitors. These are not your nice “sit downs over coffee” types of conversations. Rather these conversations test your marketing, pricing, and positioning stories in your business model — your unfair advantage.
I put this one at the end because I find that too many entrepreneurs prematurely pay attention to their “competitors” too early. This is predicated on the fact that your supposed competition has a clue. What if they are as clueless as you are?
Simply positioning against your competition guarantees a different approach, not the right approach.
Your true competition is NOT determined by who you think they are, but who your customers think they are. This is something you uncover from your customers, not through a SWOT analysis. Once you understand the existing alternatives your customers hire today to get their jobs done, by all means anchor, price, and position against these existing alternatives which is the most effective technique for getting customers to switch to you.
Startups Are Conversations
Your job is to systematically de-risk your startup through a series of conversations. Each box on the Lean Canvas represents a different facet of risk that you uncover through these conversations or stories.
Here are some key takeaways:
- Sketch your “big idea” on a 1-page Lean Canvas. Visit http://leancanvas.com to get started.
- Remember that while building a great solution is important, it’s only one ninth of your true product — a working business model
- Tackle customers, before investors.
- Customers care about your promise, investors care about traction.
- Surround yourself with great, but vetted, advisers. Share everything.
- Pay more attention to customers than competitors.