Episode 408: 💰Startup Success: Navigating Real Problems, Market Feedback, and Market Fit 💵

Episode Transcript
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Speaker 1 (00:00):
Welcome everyone to another episode of Dynamics
Corner.
What does it take to start astartup?
I'm your co-host.

Speaker 2 (00:10):
Chris, and this is Brad.
This episode was recorded onFebruary 12th 2025.
Chris, chris, chris, what doesit take to start a startup?
Or should I say, what does ittake to launch a product or
start a product?
Today we had a wonderfulconversation and I learned so

(00:32):
much from David Herfield.
Hey, chris, let's talk aboutsomething that can really change

(00:54):
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(02:19):
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Speaker 3 (02:19):
David, good afternoon hey guys, how are you doing?
And my background flipped, oris it correct?
It looks good.
I think, your background looksgreat.
Okay, because it looks flippedto me, but it looks perfect
right here I can read it.
I guess you're looking from theinside out, so it's oh I mean
looking at um on my virtualcamera, it's correct, but when I

(02:43):
look at the rivers it lookslike Techies is spelled
backwards.
Yeah, I had the same problem.

Speaker 1 (02:50):
So from our view it looks good.
But I had the same problem onmy end.

Speaker 3 (02:55):
How weird is that that it looks right to you.
I've had this happen before,yeah, where it looks right to
you and wrong to me, but I don'tcare, it just needs to look
right to you guys, I think itwould be unique if it was
backwards.

Speaker 1 (03:08):
You'll have to watch it with a mirror Backwards and
upside down maybe.

Speaker 2 (03:13):
I think I'll have to go to a virtual background one
time and do that and see ifanybody catches that I'm living
upside down or something.

Speaker 1 (03:22):
We can't tell right now.
If your background is flip-flop, can't tell, okay, you can't
tell.

Speaker 3 (03:28):
That's why I'm weird, I just leave it the way it is
yeah, how about that?

Speaker 2 (03:33):
yeah, that's, uh, that's definitely unique.
It's that's definitely upsidedown now and now you're in the
upside down.

Speaker 3 (03:39):
Now you just have to.
You think they get it, I don'tthink they get it.

Speaker 2 (03:43):
The upside down but I think it would be even more
creative if your hair stood up.
Oh yeah, that would be reallycreative.

Speaker 3 (03:53):
If I had hair to stand up actually.

Speaker 2 (03:56):
Not having hair is actually an opportunity.
It's a saver as soon as Istarted losing it.

Speaker 3 (04:02):
I just started shaving it and I found out what
I was missing my whole life wasnot having to take care of it.

Speaker 2 (04:10):
I was in the army and I had a shaved head and then
when I got out of the army,because I liked it so much, I
kept a shaved head, so I hadnever really grown it per se.
I used to have a high and tight, and then my my hairline
started changing.
And then one year recently, Idecided to grow it out to see
what I have, and uh, and decidedto shave it back yeah, yeah,

(04:37):
I've had some experiments that Iwanted to do with it, but I
just like the not having anyhair because of the convenience.

Speaker 1 (04:42):
You just see, mine is mine was flipped, Brad, because
when I didn't, I shaved my hairoff, as you know, for a long,
long time.
And then I worked for a beautysupply company and they needed a
quote.
Unquote model for shampoo andso.

(05:03):
I was asked to grow my hair andI've grown up my hair and then
of course I kind of stuck withit since.
But I agree it's lessmaintenance right no, are you
still are?
you still a model?
No, I mean, it was kind of likea here and there in his mind in
my mind yes, I'm always goingto be like 25 year old.

Speaker 2 (05:23):
He said it, not me, but if you know anymore you can
shave your head.

Speaker 3 (05:27):
So yeah, how about the people that get to just be
hand models?

Speaker 1 (05:30):
it's like we don't really want to see the rest of
you, but your hands look nice ohI heard about those, the
insurance you'd have to put onyour hands, right, because it's
like, if that's right, yep,bread and butter, is that you
run?

Speaker 3 (05:43):
if you run head first into a truck, it's not a
problem, as long as your handsstay out of that accident.
Is there even a market for handmodels anymore?
I don't have any.
Probably not.
There shouldn't be because youcan just make prettier hands
with AI now.

Speaker 2 (05:58):
Yeah, that's what I was thinking.
That is true Speaking of.
Ai, AI seems to be all over theplace.
Before we jump into theconversation that we wanted to
speak about this afternoon, MrDavid, would you mind telling us
a little bit about yourself?

Speaker 3 (06:09):
Yeah, sure, I've been in the software business for
the last 35 years.
I started out an enterprise.
I started my own softwarecompany in the early 90s and
grew it to 800 customers in 22countries and sold it to a
publicly traded firm in 2000.

(06:30):
That was my successful exit myinitial one, and then I was VP
of products for them for severalyears and then left and started
another software venture thatdidn't go so well and that one,
after 18 months, failed.
And that one failed and Ididn't realize the things I did

(06:53):
the first time by accident, thatled me to success.
I didn't do them the same waythe second time, and if I had, I
would have been successful inthat venture too, because I was
actually getting traction on theproduct that I built, but I was
trying to get investmentinstead of generating revenue
for my customers as a way ofproving product market fit and

(07:14):
building my business model,which I did the first time.
So I started Techies after thatfailure.
It was in 2007.
I started Techies that was 18years ago and I've been doing
contract development for otherpeople ever since.
We actually have a couple ofSaaS products coming out this
year, which are products thatwe're building for our own

(07:38):
internal use, but they'reproducts that other people that
are struggling with the sameproducts that we struggle with
also need.
So really excited aboutbecoming a blended service and
product company.

Speaker 2 (07:50):
Excellent.
So Techies?
You started.
You said 17,.
Math is right?
17 years ago, you said 18.

Speaker 3 (07:56):
18 years ago I knew there was one of those it's late
in the day over here Like carrythe one type thing, yeah, carry
the one, add, yeah let's carrythe one, add the two, go upside
down and so I mean techies.

Speaker 2 (08:07):
You said you're writing software.
Contract software is you'rewriting contract software for
yourself and others, and that'swhere you're creating the
product.
You're creating products, we'rewriting software for other
people.

Speaker 3 (08:18):
Right, that's we.
I've worked with over 90startups over the last 17 years.
Um, a few of them reallysuccessful.
The majority of them fail, andthey always fail for the same
reason, for the same reason thatmine failed, and that's they
wait way too long to start togenerate revenue.
And the only way you proveproduct market fit is you ask
people to buy your product.
And until you're asking peopleto buy your product, you don't

(08:39):
know if you have a productmarket fit or not, no matter how
confident you are Right.
So, um, uh, and and then by thetime you most people, it
usually it's anywhere from, youknow, 12 to 36 months before
people formally start marketingtheir product.
Um, that's just sort of typical, because they're, you know,

(09:00):
founders are afraid to ask thehard questions of the customers.
So they get it to a certainpoint, they're MVP.
Then they want to add features,they put it out for free beta.
They're getting feedback fromthe market.
Often, that feedback'smisleading because these are not
invested users and, plus,they're focused on what their
initial agenda is to make thesoftware better for what they're

(09:21):
doing, but they're not payingfor it.
So you don't even know if thoseare gonna be paying customers
once you put those features inand then once they finally have
the software in a shape thatthey feel that's really ready
for market you know, which isusually many, several releases
past MVP then they startcharging, only to find out
people won't pay for it.

Speaker 2 (09:40):
This right here you can take me.
You just piqued my interestwith the words that you had just
mentioned.
I want to try to unpack some ofthat because I think a lot of
individuals think that it's easyto create a startup.
A lot of individuals think that, as you had mentioned, you
create a product, everybody willcome and you'll be successful

(10:03):
and you'll be retired in fiveyears or you'll be able to spin
it off and sell it for $15billion.
But a lot of individuals thatwork with startups as you had
even mentioned, you havesuccesses, but you have more
failures than you havesuccessors.

Speaker 3 (10:19):
A huge amount more failures than successes.
Um, and because to besuccessful with a software
startup requires a lot ofdiscipline and doing the heart
and doing it the hard, easy wayI call it the hard things
upfront makes everything go mucheasier later on.
Most people don't want to dothat.
They want to get to buildingthe product.

(10:39):
Um, they want to.
They because they have a visionand they believe in themselves.
Right, which are the, which isthe kiss of death for a startup
founder.
Um, you know the power ofpositive thinking.
You know abandon that idea.
Well, you gotta be anxious anda contingency planner to the max
and do the hard work up frontto understand your market,

(11:00):
understand the problems,understand the customer.
And founders that love theirproduct and believe in their
vision fail more often than not.
I mean in mass numbers the onesthat love the problem and want
to spend all their time talkingto their customers.
Those founders, consistentlymuch higher percentage, find a
path to revenue and success.

(11:21):
I love that.

Speaker 2 (11:23):
Love the product no, don't love the product.
Love the product no, not love,Don't love the product.
Love the problem and also havean exit planned, or your
contingency.
I call it an exit, but you'resaying a contingency because you
may not be successful with yourproduct.

Speaker 3 (11:37):
Everything Contingency.
There was a I don't remember, Ithink it was the happiness lab.
This is a podcast from thiswoman, stanford professor, lori
Santos.
It's huge podcast and she did areview of this concept of the
power of positive thinking andit turns out this was a myth
that started in the sixties andjust caught on and everybody
thinks it's great.
But if you, if you pull serialsuccessful CEOs, what you find

(12:02):
out, these are really highanxiety people.
They say I was lucky, I wasjust the right place, right time
, I was lucky.
And you scratch the surfacejust a little bit and all of a
sudden you find out that theywere everything we're sure.
They were going to fail everystep of the way and they thought
of everything that could causethem to fail and they created
contingency plans for everythingso that when something happened

(12:23):
it was like, of course, theywere lucky because they had
thought about it in advance andsort of had a plan around it.
Those are founders that are,you know, that are critical
thinkers that are successfulbecause they focus on what's the
problem I'm trying to solve andwhat are the problems that can
cause me to fail, and that'swhere they spend their energy
and by doing that.

(12:43):
They make it so that they makesort of a, they galvanize their
machine to be successful,regardless of what happens in
the market.

Speaker 1 (12:52):
They didn't make up a problem.
Like we know they didn't makeup any problem.
You know solving a problem,yeah.

Speaker 3 (13:01):
If they thought there was a problem.
They went and got in front ofcustomers, found out it wasn't a
problem, it was something else.
And the software ends up justbeing the natural conclusion to
the process of mitigating theproblem.
Not something to be in lovewith, just the thing to fix it,
to help fix this problem forthem.

Speaker 2 (13:20):
My mind is spinning.
I probably won't even be ableto articulate or communicate
during this conversation,because everything that you were
saying is just resonating sodeeply with me.
Because when you're creatingproducts, you're trying to solve
a problem and if you lose sightof the problem and you continue
to be invested in the product,it goes with what you're saying

(13:41):
this is my point of view, or I'mtaking back from my experiences
and also with what you'resaying this is my point of view,
or I'm taking back of from myexperiences, and also from what
you're saying they wait too longto make to generate revenue.
Meaning also, when do you startselling?
When do you start charging?
When do you bring market?
Oh, I always have to add thisone more thing and then it's
ready.
I always have to do this onemore thing, that it's ready, and
you get so lost in the productand I've witnessed this as well

(14:04):
that you forget the problem thatyou're trying to solve and you
end up trying to solve problemsthat don't exist and add
complexity as well to it as well.
It's the not just because youcan doesn't mean you should.
It just means you need to solvethe problem in the easiest way
possible, not in the mostcomplex way possible, because

(14:25):
you can get lost and it couldtake you forever to come to
market with whatever it could beIn a product.
We're saying it could be asoftware product, it could even
be a physical, tangible productto solve a problem such as
locking the door or somethingelse.
You need to make sure youunderstand and identify the
problem to solve it.

Speaker 3 (14:42):
Exactly, yeah, and by the way, that way that word.
You know the word feature islike.
If you, if the word feature, itkeeps sneaking into your
vocabulary.
That because you ask a foundersay, yeah, well, we need this
feature because it makes it mucheasier to do this.
I said, as soon as you put theword feature in there, you've
lost focus on the problem.

Speaker 1 (15:00):
Yeah, right you're solving a problem, right that?
Not millions of problems atonce.

Speaker 3 (15:06):
Right when you say look at this feature and you're
demoing the feature.
You've lost sight of theproblem and the customer, while
you're demoing, right, becausethey don't care about your
features, they care about youunderstand what they're
struggling with Exactly.

Speaker 2 (15:19):
No, thank you.
This comes to many differentareas.
We focus on business, centralimplementations, erp
implementations, softwareimplementations, architecture,
solving problems and solvingsolutions.
So what you're saying resonateswith what I see in many
implementations Even it may notnecessarily be a product, but
it's a solution to a problemthat sometimes individuals get

(15:42):
so lost in solving the problemthat they lose sight of the
problem right and it's oh, Icould do this.
Oh well, well, that looks cool.
Could you add this?
Oh, could you add that?
Oh, we're going to add this andyou're never ready the core
disappeared.

Speaker 1 (15:57):
Yeah, you lose the original.

Speaker 2 (15:59):
Yes, so when do you bring a product to market?
And what I mean by that is whatconsiderations?
If somebody is bringing aproduct to market whether
they're solving a solution forone particular customer or
creating a product to satisfy aproblem for many different
businesses what should theyconsider a think of before they

(16:30):
bring it to market, to alsodetermine the success of the
product, or what are some thingsthey should keep in mind?
We talked about being anxiousand having contingencies for
foreseeable problems what are?
Some other factors that theycan should consider.

Speaker 3 (16:42):
Yeah, that anxiety thing is more of a
characteristic of successfulserial founders as opposed to
something you should strive tobe right.

Speaker 2 (16:49):
But the idea that you're always I've been striving
to relax, and now you've justtold me that I can be as anxious
as I was, so I'm okay with thatnow.

Speaker 3 (16:57):
It's actually a kind of an indicator of potential
success, right?
So?
And it's not the only path tosuccess.
There are some people that justhave the charisma to bring
business in right.
So, and it's not the only pathto success, there are some
people that just have thecharisma to bring business in
right.
That's a different kind offounder, but that's the very,
very rare founder.
I was recently working with oneof those, so I do know that's
another path, but he was stillan incredibly critical thinker

(17:19):
and pivot, pivot, pivot based onfeedback of the market, and
stay focused and simple.
So he had all those instincts.
He just also had the other S,the other X factor as well, and
he just recently raised $5million with very little effort.
By the way, everybody, get thatout of your head.

(17:47):
Don't pitch, deck and MVP andget an investor.
This is not the way to go.
This is what every VC wants youto think, so that VCs have
thousands of potential startupsto sit through to pick the ones
that they want, and they havepromoted this concept forever.
It's not how to launch.
It's not the way.
It's not how to launch, youknow, unless you're a Stanford

(18:12):
20-something dropout in biotechand people are clamoring to give
you money it is.
Here's the numbers.
A VC, a typical VC, is going tosee 3,000 pitch decks, and I
have corroborated these numberswith VCs.
They'll see 3,000 pitch decks.
These numbers with VCs, they'llsee 3,000 pitch decks.
Some initial person will kickout half of them and then, out
of those 1,500 that are left,they'll do not a deep dive, but

(18:33):
they'll do a more.
You know they say, okay, thesekind of fit our model, let's see
which ones look like they mightbe decent, and out of those
they'll get a hundred of themthat will go to an analyst,
because the rest will get cutout for other reasons.
And out of those, um 60 willend up, uh, in front of the
partners, and then 30 of themwill get investment.
So it's one in a thousand.

(18:55):
Is your odds?
Was that right?
One in a thousand?

Speaker 2 (18:58):
one in a hundred.
Yes, one in a hundred.

Speaker 3 (19:00):
There we go with the zeros again one in a hundred and
carrying the, carrying the one,one in a hundred actually get
funded.
And out of those seven, um well, 30 out of 3000,.

Speaker 2 (19:12):
Wait, we're going to go back to this.
Drop the ones.
One out of a thousand.

Speaker 3 (19:15):
Yeah.
So 1% of the 1% of those getfunded Um and out of those 1%,
70% will fail.
So VC-funded startups 70% fail.

Speaker 1 (19:27):
Wow, that's crazy statistics yeah.

Speaker 3 (19:31):
Because now you've got all this pressure on you and
you've been thrown this moneyand most people's instincts are
wrong in terms of what you dowhen you've been given all this
investment or something shiftedin the market, and it doesn't
take much when you're in startupphase to derail you.
Uh uh, most of the time it'ssomething that could have been
avoided or can be steered aroundif the founders really got good

(19:54):
instincts and is disciplined.
But, but you know, startups arevery risky.
You know people think I've.
Well, but my idea is sobrilliant, right, don't you the
word brilliant code, for I'mgonna fail.

Speaker 2 (20:07):
Uh, right, I mean, there's so many code words, I
have the best idea.

Speaker 3 (20:12):
Everybody wants it right, yeah, code words, for I'm
going to fail bit, but isn'tthere always?

Speaker 2 (20:17):
a start to something.
So you're saying starters fail,so I try to take it back.
You have to start somethingsomewhere.

Speaker 3 (20:26):
Right Vision is not a bad thing.
Having an idea that you believein is not a bad thing until
that belief becomes the thingthat drives you forward.
So, in other words, you haven'tdone any.
There's no veracity around thebelief, it's just a belief.
And that's where foundersstumble, right at the very
beginning.
So what they need to do is peeloff the black robe, you know,

(20:47):
and stop preaching about thegreat idea and how cool it's
going to be, and put on thewhite coat and become clinicians
and say, okay, this is reallysolve a problem.
Who's solving it?
For what is the problem?
It's solving.
What's the value?
So the number one job.
When a founder starts a companyor is going to start a company,
he's got one job and no.
And founders don't realize this.

(21:08):
And I didn't, and I've fallen,by the way, this is not hubris.
These are all the same mistakesI've made.
So you know this is hard knocks.

Speaker 2 (21:15):
These are the best lessons to learn or, excuse me,
the best stories to hear are thestories that people have
experienced, because we canlearn from it and, as you had
mentioned, not every story isthe same.
Your experiences may bedifferent than others that go
through the process, exactlyright, and the perspectives may
be different as well, but weappreciate you sharing this with
us.

Speaker 3 (21:33):
Yeah, yeah.
So one founder, the number onejob.
Oh, I'm happy to share it.
I'm all excited.

Speaker 2 (21:39):
I'm honestly sitting here, being very quiet and
listening to you, because thequestions and the things that I
want to say, I just if you couldsee my anxious little brain,
it's going.

Speaker 3 (21:56):
Number one job.
Yeah, I'm not going to try tounpack that that metaphor
exactly, but it was kind of coolso I can't make those sounds.
So that's why I think it's cool.
Okay, number one job.
Every founder has number onejob.
Okay, back up for just a second.
Give you the context of this jobthere's going to solve.
You have all these potentialniches you can market to, right,

(22:20):
because you've got a problemyou're solving.
That usually applies to a bunchof niches and when you look at
it from the perspective of thestakeholder in that niche and
you dig down into the root ofwhat problem it's really solving
, it usually breaks out intoseveral different problems,
right?
So you might have 10 root levelproblems that you're actually
solving with this thing andthere may be 20 different niches

(22:41):
.
Okay, your number one job as afounder is you have to pick one
of those niches and you can onlyfocus on two, at most three, of
those problems and they have tobe very tightly clustered and
those problems have to havethese ingredients.
They have to be to thestakeholder in the niche that
you're selling to.

(23:02):
It has to have a very highperceived impact because of that
problem to that stakeholder inthe niche that you're selling to
.
It has to have a very highperceived impact because of that
problem to that stakeholder.
Perceived means they believethat problem threatens them
personally in some way, becausethey won't be motivated to
listen to you if they don't havea high level of perceived

(23:22):
impact to that problem.
They won't hear you when you'retrying to reach them.
And, independently of that, ithas to have a high level of
perceived impact to that problem.
They won't hear you when you'retrying to reach them.
And, independently of that, ithas to have a high cost.
Because you can have a highperceived impact and a very low
cost, right, and then you can'tcharge much for your products.
You can't make a business outof it.
You can have the oppositeYou're going to have a very high
cost but a very low impact.
Everybody in my industry hasbeen dealing with that problem

(23:44):
for 30 years.
Nobody's going to support me todeal with that problem because
we all do it, you know, andwe've got all these other
problems we've got, you know.
So that's like the opposite,right, high cost but low impact.
So that's a hard sales job Ifyou can't get somebody to
believe that this is worthpursuing.
So if you have both of them you.
Then you can get somebody tolisten to you because they
believe that you understand thething that scares them and pains

(24:06):
them and you can charge a lotfor it so that you can build a
business around it.
And it's one niche and you gotto find those two or three
problems.
That's the number one job ofevery founder.
And then you got to figure outwhat's the messaging so that
they realize that you understandtheir problem.
How much do I charge?
What's the sales cycle?
Is it the right niche?

(24:27):
Because how long is the salescycle?
How easy is it to reach thestakeholders and buyers in that
niche?
Right, these are all thingsthat might promote a niche or
demote a niche.
But once you've done all thisright, one niche should stand
out as the clear early adopter,because it's the only person you
can really sell and that alsoinforms what you need to focus

(24:49):
on in your initial product.
But we don't want to startbuilding the product yet and
this is the.
This is, you know.
Launch first behind me.
Launch your sales and marketingengine as a way of proving
product market fit.
Create a pre-launch sales modelto this niche stakeholder.
Create some kind of highfidelity prototype, which is

(25:10):
basically a design, an animateddesign mock-up that looks like a
real product, not like justclick through mock-ups, but more
than that.
But not an MVP, because MVPsare expensive and you're having
to commit to a certain aspect ofyour product in terms of what
problem that's solving.
When you build an MVP, a designprototype looks like a real
product.
When you demo it, they thinkyou've already built it, but

(25:31):
there's no software behind itand you can pivot really quickly
.
You can get feedback, you canmake changes, go and test the
market again.
You can test the market two,three, four times in the space
of a few months and when peoplestart to buy it in your high
value model and a high valuemodel might be a lifetime
license Everybody goes lifetimelicense.
I'm not giving away lifetimelicenses, right.
But they don't step back andsay wait a minute.

(25:54):
I could sell a hundred licenseslifetime licenses, you know for
the price of maybe 18 months ofa subscription fee and and
bring in the same amount ofmoney as I would if I went out
and got a seed investment.
But I'm only giving away animmeasurable fraction of a
percent of my market with thoselifetime licenses.
I have this big group now ofinvested beta users.

(26:17):
They're not trials anymore,they're beta users.
So we're not trying to doproduct market fit anymore.
We're focused on productsolution fit, in other words,
making sure that now thatthey've got the product, they
can use it and solve the problemin the way that they thought
they could and so that you don'thave people getting it and then
leaving the product later on.
So you're focused on just onthe glue at that point, not on

(26:41):
the marketing, on what willpeople buy it at that point, not
on the marketing on what willpeople buy it.
Um, and you, uh, and you've gotrevenue and the same amount of
revenue that you'd give 10, 15%away If you got a seed investor
and all the work you do to getthat investor.
None of it is building yourbusiness, whereas everything
you're doing, if you do aprelaunch sale, it's all about
building your business.

(27:01):
You're building a salesmarketing, you're building the
design, you're refining thedesign, you're you're, you're
understanding the problem evenbetter and better every time you
demo it and you're gettingfeedback from potential buyers.
If they're not buying it Causethat's all you care about is
it's not solving the problem?
Is it not important enoughproblem that it's worth buying
in on this opportunity which youwon't get later on.

(27:21):
You know you're going to haveto have the product or you don't
know you're going to have, oris this the wrong market?
They're not early adopters.
Whatever it is, you're buildingyour business and refining the
sales and marketing engine andonce you figure it, once you get
that magic kind of formula,then you start building product
and use the revenue from salesto then fund development.

(27:41):
And if you do need to go toinvestors, it's a whole
different discussion becauseyou've got a growing market,
you've got traction, you've gotrevenue.

Speaker 1 (27:51):
Yeah, that's a good call out that you know.
You made a good point aboutbalancing where, trying to find
you understand the problem andwhether you put a lot of effort
building it now and then lateron no one is really interested,
versus creating not an MVP, moreof a click-through to kind of

(28:13):
give you the concept of like,hey, this could work, this will
solve your problem, and then beable to develop the MVP.

Speaker 2 (28:20):
That's a big problem in this space.
No, it is in a number of areas.

Speaker 3 (28:26):
Just one thing the click-through has got to be very
realistic.
Not just does the screen designthe needs to function, the
screens need to have drop downsand the data needs to you know,
needs to look like I have anickname for that stuff.

Speaker 2 (28:38):
I call it vaporware, like it really doesn't exist,
but it looks like it exists, andI mean I use that sarcastically
, but it's serious because Iagree with what you're saying
and I see this over and overagain, as Chris has alluded to
is everybody thinks that theyhave the greatest solution that
everybody needs.
They spend a lot of timedeveloping it.
Sometimes by the time what youstarted like what you, what you

(29:00):
started developing and theproblem that you had solved was
another key point that you hadmade.
If you lose focus of theproblem, the problem can change
by the time you even finish.

Speaker 3 (29:09):
Oh yeah.

Speaker 2 (29:10):
And also you think you're solving the problem in a
certain manner from a technicalpoint of view, not from a
business point of view.
So you take your solution, dropit in front of a user who has
to use this solution or thisproduct.
Again, if we're talkingsoftware or even another product
, they have to use it daily.
Will they even use it the waythat you architected it and set

(29:32):
it up?
So going with that what I callvaporware from the software side
is something we used to alwayssay is you know, we do a
demonstration of a solution.
See, if we had the buy-in, ifwe had the buy-in, then we'd
scramble and build it, so we'dkind of shell it.
So it does look functional, youcan visualize how it would work.
Well, it's not even an MVP,because if you tried to use it
it wouldn't do anything, but atleast you could put stuff in

(29:54):
there so they could see the flowof the screens, the flow of the
data or even how the productwould hold up hold up.

Speaker 3 (30:06):
Wow, this is, and also mvps only have a small part
of your vision of the product,whereas when you build the
vaporware and the actual term,if you want, like something you
can, you know, sound smart about, it's called high fidelity,
prototype um, which is reallyjust an animated mock design,
mock-up as well, but that'sbetter than I learned, learned
eight years ago.
It's what they're actuallycalled, if you want an actual
term that you can look at.

(30:27):
High-fidelity prototypePrototype yeah, yeah, got it.
But you can build out thevision of the product in your
high-fidelity prototype thetwo-year roadmap in a very short
period of time, because there'sno intelligence behind it,
right, but it has to look realso that when somebody looks at
it and you're demoing it to them, they don't ask you the

(30:47):
question how do I know you canbuild this?
Because if they ask thequestion, you can't get that
sale.
They won't ask that question ifit looks real.
Even if you tell them it's notreal software, they don't hear
it because it looks.
Oh, they must just be in testor something.
That's what goes throughpeople's minds and they'll buy
it if you've got the businessmodel right this is crazy.

Speaker 1 (31:14):
it sounds like you're saying that it requires a
little bit of patience to reallyget this to the market and
getting a lot of feedback loopfrom your end users, a lot of
people when they build a product, they want to make money as
quickly as possible, and then,of course, they trip along the
way and they spend a lot of timeon something that maybe you're

(31:37):
not solving a problem at all.

Speaker 3 (31:39):
It's not even a problem, but it's not one that
people feel is worth payingmoney for.
You know or they're not, orthey're the raw, or you don't
know who the early adopter is,or whatever the you know it's.
It's the homework that hasn'tbeen done properly in the very
beginning and that's preventingyou from being able to create a
revenue engine from it.

Speaker 1 (32:00):
Yeah, and I think you said market research right.
That's a big component whenyou're building a.
You know a product, a softwarethat you need to market research
to make sure that this isactually going to be the right
tool that's going to solve aproblem within an industry.

Speaker 3 (32:17):
I am always a little leery of using the term market
research only because it soundslike it has to be done by a
marketing company, and marketingcompanies actually are lousy at
this.
Marketing companies are reallygood when you have some sales
history and you know who yourideal customer is and then
building doing the research onhow to penetrate that market.
That's what marketing companiesdo really well.

(32:38):
They suck at startups, you know.
When you don't have any ideawho that ideal customer profile
is, then you need some.
A different kind of methodologyis something that I created out
of many arguments from withmarketing companies, a
metrics-driven kind of approachto doing this, and I can even

(32:59):
explain it.
You know it's basically wescore, take all the niches and
have a methodology for how youdefine a niche right.
When do you know you've made it?
It's an actual niche?
And then the same thing withthe root level problems.
Then you figure out what allthe root level problems that you
are solving.
Then you score this grid interms of how much impact on a
score of one to 100 or one to1,000, but just as long as

(33:21):
there's enough gradient in thescoring so that when you later
on you're gonna use thosenumbers to chart this, that you
can see what floats to the top.
And you do the same thing withcost.
How much does it cost for eachproblem, to each niche, you know
?
So you end up with this big,these two matrices that you
bubble chart to each other.
You take the top two or threeproblems from a scoring

(33:43):
perspective and a costperspective from each of the two
charts and you put them in abubble chart and you'll get
three or four that'll float upto the upper right, the niches.
That'll float up to the upperright, the niches, and it'll be
one of those.
That's your early adopter.
And then you have to do the moredeep dive stuff.
From that point you know what'sthe sales channel, how do you
reach them, what's the cost,what's the sales cycle, what's

(34:05):
the market size of each of theseniches right To try to figure
out.
And then you can and it's easyto test this by niche, because
you don't need 20 discoveryinterviews, which the whole
discovery interview methodologyis really subjective and very
often takes founders in thewrong direction.
Instead, as you're scoringthese niches, you realize you

(34:27):
don't know this niche very welland you're making up numbers.
So you just make one or twodiscovery calls to a stakeholder
in the niche at that time whenyou realize you need more
information, and then you canfill out.
You don't need 10, you justneed one or two, because you're
not trying to be perfect, you'rejust trying to generally
triangulate around which onesare going to come up here and

(34:48):
which ones are going to be downhere.
And then you do the deep diveon the two or three niches that
float to the upper right in thisbubble chart and one of those
becomes your early adopter andit usually is easy.
Then you do confirmationinterviews, not discovery, but
you do confirmation interviews.
There you do about 15 or 20,because now you have all your

(35:09):
numbers, your assumptions, howmuch it should cost, what
problems, how much the problemcosts them, how much the impact
is right, the language to reachthem, and then you just do.
Then you're doing your marketresearch where you go out to 15
or 20 stakeholders in that nicheUm and in the niche that you
believe is the early adopterniche, and you're looking for a
really high affinity response.

(35:31):
Out of at least 30% of thosepeople, um, affinity is like oh,
that problem is killing me.
We need to, I'll do anything toget rid of it.
I think you could charge morebecause you probably didn't
consider this and this in yourcosts.
Yeah, that's where we go to.
You know you're going to find alot of people just like me in

(35:51):
these various channels, thingslike that.
Right, I'd love to be part ofyour focus group as you're
building the product, you know,or that sort of thing, because
this will probably be your firstcustomers will be those high
affinity responses.
If you get like 30%, thenyou've got a market and you've
got an opportunity to sell intoan early adopter niche.

Speaker 2 (36:13):
With this.
So we're talking, like I said,I have a lot of questions so
with this.
So we're talking about findingthe niche, finding the problem,
determining if the problem is,or even how do you determine if
the problem is a good problem tosolve.
You talked about the process togo through that.
How do you find these problems?
So there are chances where,through that, how do you find

(36:37):
these problems?
So there are chances where inour day-to-day, someone will
come to us and say I have aproblem, I need to do x, can you
?
help me do this and then youhelp them do x again.
It's so you may be in thebusiness of consulting to
develop custom solutions forsomebody, for a product or for
something else.
How?
How can you determine if aproblem I understand that the
matrix is that even find theseproblems to say that okay?

(37:00):
This is a problem that existssomewhere.
Now I need to solve it withoutsomebody coming to you and
telling you there's a problem.
Is there a way that you cansearch out these problems?

Speaker 3 (37:09):
Well, so that's the entrepreneur looking for a
business right, as opposed tosomebody who's starting a
business.
So the best customers that I'vehad well, the best actually
customers I've had are people.
I call them recovery customers,and those are people that have
been working with other softwareone or multiple software
development teams in the pastand they've been struggling and

(37:30):
then we get them and theyrecognize how much better we are
than the other ones.
Those are my favorite customersbecause I don't have to,
because I already know how hardit is to build software and all
of a sudden it's not as hard asit was right.
So those are my favorite.

Speaker 2 (37:43):
Those are your favorite.
I don't mean that you have to,but I deal with those situations
as well and I'll give you backto your thought.
I'm sorry, oh no, no problem,but some of those customers,
have you ever run into theproblem where they've been sort
of jaded in a sense, where theymay not trust you?
I know you may do better and ittakes time, oh, but none of
them trust me.
They come in saying that I'vealready spent a volume of

(38:06):
dollars trying to solve theproblem with Chris.
Then Chris couldn't do it, so Iwent to Brad.
I spent more money.
Now I'm going to you.
I'm going to track every pennybecause I'm not throwing it away
again.

Speaker 3 (38:19):
Yeah, which is fine with us.
We track every penny for them.
So you know, if you go to mywebsite, it says at the top
hyper exceptional softwaredevelopment team.
And I don't ever ask anybody tobelieve me just because I put
it at the top of my website.
I say let me show you what thatmeans to be a hyper exceptional

(38:40):
software team and becauseexceptional teams produce
artifacts that typical teamsdon't, which is evidence.
That's easy to understand whatthe difference is just by
looking at that.
They're still not going totrust me until they see and I
don't expect them to until theystart to see that we're

(39:00):
delivering in the way that Ipromised we would, and then they
become my biggest fans.
So I love those customers forthat.
We got off the topic a littlebit only because, no, it's not
your fault.
I said my favorite customers andthen I had to back up and say,
okay, wait a minute.
Okay, then behind that, myfavorite customers are people
that come from an industry,whatever it is, where they are
struggling with a problem on adaily or weekly basis and it has

(39:23):
to be daily or weekly so it'stop of mind all the time, right,
and they can easily articulatehow much that problem impacts
them personally and what itcosts them, what that problem is
costing them in some kind ofmonetary way.
And then that person is also inan industry full of other

(39:44):
people just like them doing thesame thing they're doing,
struggling with the same problemthey're struggling with, and
there's no obviously consumableproduct that's available that
solves this problem.
Well, what I mean by consumable?
There may be really goodproducts in enterprise, but I'm
a small business, right, and sothose are out of reach for me,

(40:05):
things like that and they havesome reach to that community of
other users Like those are.
You're already 50, 60, 70% ofthe way, farther along than the
entrepreneur that just has agreat idea, whether it's a great
idea or not, because theyunderstand what they're trying

(40:27):
to solve and who they're solvingit for and have some idea how
to reach an initial group ofthose people.
So those people understand aproblem because they struggle
with it already.
So that's one way, like what youwere talking about, that's
actually the best way to startsomething.
Or they recognize there's just abetter way in my industry to do

(40:49):
something that well, I guessit's still the same thing.
Like I have somebody in thehealthcare world who realizes
how much hospitals would save ifthey can predict illnesses and
he came up with algorithmsduring the pandemic that could
predict somebody was going to behospitalized three days before
they started showing anysymptoms and it was like 95%

(41:12):
accurate.
Anyway, so that was a customerI've had for the last couple of
years who turned that into an AIvoice-enabled nurse that
reaches out to somebody in lowerincome population like usually
Medicaid patients, and will goout and call them and have a

(41:32):
conversation with them when theysee things as a result of their
wearable device that go out andcall them and have a
conversation with them when theysee things as a result of their
wearable device that go out ofthat show patterns of there's
something starting that we needto get a hold of before that
person's in the hospital andit's costing the healthcare
system a fortune.

Speaker 2 (41:48):
That's genius, because everybody wears wearable
devices.
I wear a wearable device, Itrack, track everything and to
have somebody be able to analyzeit where you can see a slight,
anonymally anomaly anomalyanomaly I got it.
I got it a slight anomaly thatyou may not notice, because
right, yeah that you may notnotice and somebody can see that

(42:13):
trend based on other data aswell, because that data has to
go somewhere.
I track all of this informationwith my sleep, my HIV, my steps
, my heart rate, my oxygen, andit's goes somewhere.
I take a look at it.
But to be able for someone tobe able to alert me and say, hey
, you're resting heart rateslightly elevated, which it gets
typically for me if I'm ill,they may be able to see that an

(42:37):
illness may be coming, I thinkthat's genius.

Speaker 1 (42:39):
Preventative.

Speaker 2 (42:39):
I think that's what we need and it does.
It becomes preventativemaintenance on your body Right.

Speaker 3 (42:44):
Yeah, absolutely.
Yeah, yeah, but from a Medicaidperspective it dramatically
reduces the cost of healthcare.
Right, if you can catch thatbefore they even have any kind
of symptoms that that personwould recognize as something
they need to do something about.
Yeah, so, anyway, that was anexample of somebody who had a
better way of doing something,but it came out of this initial

(43:08):
research that he did on beingable to predict, do predictive
analysis on diseases, to try toreduce hospital costs,
healthcare costs.
But I can talk about like in myown world.
So I'll give you a coupleexamples of some ideas that we
are now pursuing turning intoSaaS products that I mentioned
earlier.
One of them is as a result of alot of the podcasting I do.

(43:29):
I end up creating referralrelationships with some of the
podcasters and some people thathear me in the interviews and
things like that, and they referprojects to me or I refer
projects to them and I have tohave a way, and of course,
there's referral fees and allthat involved, which can be
really lucrative, and so people.
So I need to be able to trackthis in a pristine way, and

(43:53):
after you get so many referralrelationships, this becomes
really difficult.
So I went looking for softwarejust for referral partner
relationships and there'snothing out there that's any
good.
You know, the stuff that is outthere that's consumable is
mostly about trying to establishthese referral relationships,
not about tracking and managingthe relationships and the status

(44:16):
of them.
Where you give the referralpartner a portal where they can
log in and see the status of thereferrals or put a new referral
in and see what they've earnedand all that right.
It exists for affiliatemarketing.
It's been around forever forthat.
It exists for enterprise in thechannel marketing world.
There's a bunch of solutionsthere.
But this is one of thoseconsumable things.

(44:36):
But for just somebody like mewho's got these loose referral
partner not loose, I meanthey're, but the referral
partner relationships and it'snot some big channel partner
program there's nothing outthere.
So we're building that,building it for ourselves
originally, and then I'm goingto go out and do a bunch of
prelaunch sales, just like Italk about, and, assuming that

(44:56):
I'm getting the traction I want,then we'll add all of the SAS
scaffolding around it and thenstart to market it.
You know officially, but we'rebuilding it anyway because we
need it.
So another one we do a very,very detailed job, when we do
estimates way more than mostsoftware companies do so.

Speaker 2 (45:15):
Just can I go back to what you said.
So you're building the productfor yourself because you're
solving a problem for yourself,but you also want to see if
there's a market for thatproblem for others.
So in that case you're buildingsomething that you're solving
one of your own problems, so youcan have some measure of
success there.
So even if it's not somethingthat is marketable or sellable

(45:37):
to others in the state, you atleast benefit from it because
you gain efficiencies.
I was going to build it anyway.

Speaker 3 (45:46):
And then, talking with people, I find out that
they need the same thing so thatthey can manage their referral
partner, and I've had manypeople say well, let me know
when it's out.
And I thought, okay, you knowwhat?
So we'll make it a littleprettier than we would have for
just our own internal use, butnot much.
It's still not going to be somebeautiful polished product when
it's done, but it'll be usable,and I that's all I care about

(46:09):
right now usable and reasonablein terms of the the user
experience, so that I don't hateusing it, because if I do, then
we'll start ripping it apartand fixing that.
But right, I'm solving aproblem for myself and in the
process of doing it, it turnsout that this looks like there
may be a market for this product.
So another one we do, like Iwas saying, estimates.

(46:30):
When we do a project estimate,we go into way more detail than
most software shops, and I knowthat because I talk with a lot
of other founders of customsoftware shops and we talk about
oh yeah, we do really detailedestimates and I say, yeah, so do
we.
Would you like to see how we doit?
Because maybe I'll learnsomething from them if they show
me theirs.
So I always show them minefirst, and when I show it they

(46:53):
go oh no, we don't.
Our estimates are really highlevel compared to yours.
That's really cool.
Tell me more about your process, and every single time I get
that.
So that's how I know thatthey're way more detailed than
most.
But it's expensive process todo that right, because it takes
my most expensive people.
We break it down into an actualfunctional module delivery on

(47:16):
what we're going to build andput estimates to each one of
those modules.
And the modules have to bebroken down small enough so that
they fit in what we callt-shirts.
So it's a t-shirt sizingmethodology that we which we
didn't invent, but we've kind ofbuilt on that.
So we're building an AI modelaround this which on the 20th of
this month, I'll see the firstversion of this ready for us to

(47:38):
start using internally.
We're building it around GoogleSheets because that's how we do
our estimates now, but it'll beall generated and hopefully even
improve how we do our estimatesnow and again I've heard from
other software shops that I'vetalked to that they want the
same thing because it'll helpthem make better the estimates,
will be more accurate, and it'llalso give them make their

(48:00):
proposals more effective.
Right, because I have so muchdetail and then.
So I'm going to turn, go out,do a prelaunch sale model on
that once we've got that and weknow it works for us, and then
we'll build the SAS.
You know the UI which we'vealready created, the design for
the SAS, so I can demo that.
But we're not going to buildany of those really pretty
screens until we know thatthere's a market for it.

Speaker 2 (48:23):
So with that product that you're talking about there,
you're solving a problem forestimation, which is a challenge
and a struggle for many, acrossmany different industries or
software industries, becausesoftware to me is rather general
.
It's almost like someone sayingI work in it, I work in
software, because software cancover many different facets of

(48:45):
problems industries, functions,languages.
The model that you're workingwith is it applicable to a
specific type of industry, typeof product, or is it an
estimation model that can beused across the board?

Speaker 3 (49:02):
Pretty much across the board Pretty much across the
board, I mean and it will giveyou the ability to make
adjustments.
So it's learning from yourteam's level of expertise and
ability to deliver and manageprojects, because a lot of an
estimate has to do with the teamright In terms of how accurate
you are.

(49:22):
The estimates will be accuratebased on certain assumptions
that it makes initially, but youcan change those assumptions
and teach it based on things youalready got that are components
that you've built that reduceyour time in certain areas and
other areas where you don't havemuch expertise and it adds time
.
And as it's learning, you knowit'll start to be really

(49:44):
accurate for your own team oranybody's team.

Speaker 1 (49:47):
Yeah, so, david, the problem you were trying to solve
then and forgive me if I'dmissed this when you're
explaining it was that it tooklong, or or took too long, to
create an estimate or statementof work.
Is that the biggest problemthat you dealt with?

Speaker 3 (50:04):
Cost and time.
You know I want to give acustomer an estimate within a
day or two, but we never canblock out enough time of my
senior people where they candedicate to it right.
The first they have to evaluatethe requirements, look for gaps
, go back to the client toclarify right and take the
requirements and turn it intosomething organized that the

(50:25):
client can go back through andreview and make sure that it's
in enough detail and thateverything's there that they
understood and then right.
So this model does all that aswell, as then takes that, does a
module, breakdown of it andputs the estimates to everything
based on our team's expertise,and eventually it'll also then

(50:47):
say, okay, this is the team mixyou need and here's the duration
and how the team is allocatedover the period of three or four
months or whatever thatestimate time is, because we do
that too, but the software won'tdo that initially.

Speaker 1 (51:01):
That is a great problem to solve because that is
common right now.
I mean, even if it's not just asoftware problem and even if
it's just like consulting you,you know you're putting a
statement of work.
It's a lot of work to put thattogether because then you got to
take into consideration of allthe things you've learned from a
discovery and then translatethat and then provide a solution

(51:25):
.
So it sounds like this one,your tool, your software, would
expedite a lot of that whichgives you a quicker turnaround
time.
And then, where the clientdoesn't feel like they're
waiting weeks for you to respondto an rfp you know, which is we
all know that takes foreverright to respond to those I love

(51:46):
.

Speaker 2 (51:46):
Rfps, chris, those are the best things.
They're so general and vague.
I'd rather just say everyonepicks them in the way I say
vague too.
I'm sorry, but I'd rather havesomebody just call me up and say
here are some questions I haveand you can answer them.
Because the basic genericquestions does your software
have this or can you do this?
Yes, no, requires modification,can't be done.
I can take any question and sayit depends.

(52:08):
Yes, do you have a chart ofaccounts?

Speaker 3 (52:10):
what do you mean, and then they get really stupidly
detailed for things that reallyaren't going to matter, like you
, you know exactly.
You know.
Tell me what hospital you wereborn in and where did you right
it's?

Speaker 2 (52:20):
crazy.
You see these RFPs over theseyears.
I understand the concept ofusing it to try to maybe narrow
down your focus, to go for somemore detail, but with such broad
questions, anybody can go well,yeah, we do that, but does it
require modification?
It depends.
How detailed do you need to bein your chart of accounts, for
example, or is it?

(52:41):
I agree with it?
I do?
I just remember those questionsExactly.
I remember one specifically andthey hammered on a particular
topic that was so basic, withpure details, and such broad
stroke on.
It was actually had to do withlike interfacing and
connectivity and processing ofthe data.
It's like oh, can you interfacewith other systems?

(53:01):
Like one question versus youknow.
And then they were talkingabout purchasing and it was like
a thousand questions andsometimes the same question
worded differently.
Yeah right, I see those on RFPsas well, where it's they want
to catch you.
I don't know if they want tocatch you, or if they just take
it and copy and paste in thequestions and adjust them, and I

(53:23):
always say, well, if you wantto talk to me about an RFP, to
see if we're even in the samespace.
Let's go through it together.

Speaker 1 (53:30):
And I can ask you the questions you know, to save
everybody's time.
But, and I can ask you thequestions you know, to save
everybody's time, but they won'tdo that.
The crazy part is that they putall the effort and then at the
end it's like, oh, we didn'treally need all of this, or you
know, there's a simpler process.
You know, and you just killedall those time putting that
together.

Speaker 3 (53:48):
They just have to look like they're making a
decision independent of any kindof influence, right?
That's usually where these RFPscome from, you know?
Or they just want a bunch ofpeople to provide them proposals
without them having to do anykind of engagement with those
people until the proposals areout.

(54:09):
You know, it's one or the other.
Either way, to me it's just,it's a.
It's a lazy way of makingdecisions.

Speaker 1 (54:16):
Well, yeah, I mean, I think you know especially for
you know your consulting firmthat you're trying to build your
business and the more volumethat you get for these RFPs or
even putting together astatement of work, you're going
to be living in it and that'sall you're going to be doing,
because it takes too long to tobuild those out.

Speaker 2 (54:38):
So this is, this is exciting that you're building,
so we'll you know I like theidea of it and, for the record,
I don't mind someone askingquestions if we can do something
.
I'm just saying rfs and thegeneral concept are so broad and
vague that they're wasteful ofeveryone's time.
It it's not just the time ofthe individuals filling it out,
it's the time of who puts ittogether, the time that who's to

(54:58):
analyze it and collect it andsuch Not to go off on a little
tangent there and then you don'tknow anything.

Speaker 3 (55:03):
Forever, while you're waiting for them to close it.
They're reviewing.
You're sure that they have nointerest in you because you
can't get anybody on the phoneand they haven't responded after
two or three months, right, andthen you find out you're a
finalist or that they alreadypicked somebody and contracted
them before you ever spoke tosomebody or one.
You know, it's just veryfrustrating.

(55:24):
You have to really have a thickskin and do a lot of rfps to
not you know, uh, to not takeeach one sort of as a personal
failure.

Speaker 2 (55:35):
Yeah, no, it's well again.
It's business, you can win someyou lose some, as they say.
It's yeah, always have to takethings and make it not personal,
I think, when it comes tobusiness.

Speaker 3 (55:45):
With RFPs.
I always feel like you eitherare in the business where you're
responding to lots of RFPs, oryou're not touching RFPs.
Yeah, there's no real happymedium there.

Speaker 2 (55:59):
And not touching rfps .

Speaker 3 (56:00):
Yeah, there's no real happy medium there, and those
that want to do them the nightbefore, I think and they can
just whip through it right, it'sso easy.
It's so easy.
Do you remember what hospitalyou were born in me?
Specifically the name theobscure questions that come up.
I'm not, that's obviously.
I'm I'm kidding, I understand Ilike the sorry.

Speaker 2 (56:16):
My sarcasm level is off the charts.
Oftentimes people can't tellthat I'm being sarcastic, which
is unfortunate uh, so it's tough.
Well, I get it oh good, I see Ilike this.
Okay.
So what else do you have?
I mean this whole startupjourney.
I know we wanted to talk aboutsome other topics, but we seem
to have gone down this startuproad, this product road, because
it's important to understand.

(56:39):
And it's not even just astartup company I'm taking it
and maybe looking at it from astep back, is even taking a
product to market.
So you may be an existingcompany that may want to bring
another product to market andthe considerations would be the
same.
It's almost as if, if it's new,if it's a new line of business,

(57:01):
yeah, yes, well, because inessence, you go back to your
venture capital and funding.
If you already have a seasonedbusiness, successful business,
and you have a new product thatyou want to bring to market,
even if you're funding ityourself, it's still somebody
providing the capital for that,to fund it, and all of the
things that we have spoken aboutduring this session still come
into play to make sure that youhave a market because you may

(57:24):
not be wasting or spending Idon't use the word waste again,
it's the sarcasm you may not bespending.
Somebody who's um funding youtheir money.
You know the what they call thefree money, but it's not free
because you do pay it backsomewhere yeah right within your
product, uh, sometimes even alittle bit more.
No one's going to give you moneyfor free, but you're funding it

(57:47):
yourself, right?
So you need to make sure thatyou really understand where is
your money going, so that theproduct that you have, you
understand your success, becausenot many people want to just
give money away.
Right, it is interesting.

Speaker 1 (58:03):
Oh, go ahead, david, go ahead.

Speaker 3 (58:04):
No, no, you go ahead because I've been talking a lot.

Speaker 1 (58:06):
No, no, it's all good .
So I'm very interested in thisconversation about the startup
journey because Brett and I haveworked in the ERP side, which
is Nav, and now Business Central, now Business Central, now
Business Central, as thesoftware application itself now
has an app source or marketplacethat people can download.
So we're starting to see a lotof these applications popping up

(58:30):
and I think it's an importantconversation to have you know
how do you get into that space,what kind of problems you're
solving, because they arepopping up everywhere.
There's, like you know, over5,000 applications now in the
market app place and it'sgrowing.
But I think it's important forpeople to understand what it
would take to take a productthat is trying to solve a

(58:54):
problem in the business centralspace.
How do you market?
How do you get it in front ofpeople?
How do you get people to buyinto it?

Speaker 3 (59:04):
I think it's an important conversation, yeah, so
if you're, let's say, there's alot of different types of
products that you might launchwhen you're creating a new
product in your company, one isa product that is that fits into
a category of products that arealready successful selling,
products that are alreadysuccessful selling, and so
that's where your marketingdepartment's going to be able to

(59:24):
, you know, be very successfulin helping you craft and launch
the marketing and the outreachand everything else, because
you're already in that businessor some aspect.
Like I'm a Fritos and I'mcoming out with a new type of
chip, for example, that would bethat type of product.
Or I'm a um, um, I'm an ERP andI know that many of my ERP
customers need some CRMfunctionality in the ERP or

(59:47):
accounting functionality, and soI'm coming out with a new
accounting product and I alreadyhave lots of requirements for
my clients.
So these are all kind of inyour channel.
You know who you're marketingto, you know who your ideal
customer profile is and allthose things.
But a lot of companies are, youknow, there's a growing number
of these things calledinnovation centers in large

(01:00:08):
companies, where they're lookingfor company employees to
innovate on ideas that may notbe lateral to what they
currently do, may be different,and Google's famous for this
right.
In fact, maybe they I don'tthink they started it, but they
were certainly the ones thatmade this idea of innovation

(01:00:29):
being a part of your job.
You get a day every week toinnovate on your own things and,
as a result of that, productsthat are completely different
than anything else they had cameout of that, like Gmail and
things like that, you know, whenthey were a search company.
And for those products productslike that then something like

(01:00:51):
Launch First makes total sense,because you don't know who the
ideal customer profile isnecessarily for these new
products, right?
So you're really innovatingsomething completely new like an
entrepreneur and you have tostart from scratch.
So the quest now in a bigcompany like that, one of the
benefits you have is your owninternal users.

(01:01:12):
You can see how well they'readopting these new solutions and
it gives you sort of an earlyadopter perspective that you
wouldn't have if you're not abig company perspective that you
wouldn't have if you're not abig company.
But there's a lot of smallercompanies that come out with new
products that they have enoughmoney and they're successful,
and now they've got a new ideabut it's not directly related to
their product.
But I guess what I would coachthem is don't build that product

(01:01:35):
.
Find something that fits intoyour existing market and go
after that until you've gottenreally big.
But a lot of companies theystart to feel like they have to
spread the risk around tocompletely different markets
earlier than maybe they should,and for those they should, you
know, go back to lean startup.
So a lot of my ideas come fromlean startup, not all of them.

(01:01:56):
A lot of them just come from myown experience.
Like the whole pre-sale model isnot a lean startup thing.
It comes from the idea of testit.
You know, come up with a, yougot an idea, so to make a
hypothesis about what you thinkthe outcome should be, come up
with a way of testing that and away of measuring the results of
that test.
So you know what's success andwhat's not.
And then and that's you knowright out of lean startup

(01:02:20):
Handbook and we just do the samething for doing pre-launch
sales, as that's how you measuresuccess is you're generating
enough revenue?
And the metric for that, by theway, for SaaS is you have
enough your cost of sale versuswhat you calculate as your
lifetime value of your customer.
There's a three to one ratiothere as your lifetime value of

(01:02:43):
your customer.
There's a three-to-one ratiothere because you need enough
profit in there so that you nowcan take that profit and put it
back into the system to scaleand grow your company.

Speaker 2 (01:02:52):
When you're looking at the testing of your product
and maybe if it's a new productor an existing product.
And then I have anotherquestion about launching a
product, do you ever do any A-Btesting?
Do you recommend any A-Btesting across different
customer bases to see if it fitsoutside of maybe a target for a

(01:03:12):
broader range?

Speaker 3 (01:03:14):
Well, that's what that whole matrix process is.
It starts there because you'relooking at all of the different
niches, right, and you'rescoring them.
So you're sort of baby testingit from a theoretical
perspective, given the fact, theidea that you understand those
niches well.
And if you don't, then you'regoing out and talking to the
customers, not about yourproduct but about their problems

(01:03:36):
.
By the way, there's a greatbook.
It's my favorite business.
I love reading the mom test.
Are you familiar with that?

Speaker 2 (01:03:43):
You can't even say that I didn't even know there
was a book, but that's what Ialways say If that's a book,
it's.
Really, yes, honestly, I swearon anything on this planet.
I always say to everybody Ialways use my mother, because if
my mother can use it and mymother likes it, then it's okay,
because it has to be somethingmy mother can use.

Speaker 3 (01:04:02):
Oh, okay, well, that's very similar, but it's
not quite the same.

Speaker 2 (01:04:06):
I want to hear this now.
I'm looking this book up.

Speaker 3 (01:04:15):
The problem with asking your mom if she thinks
that she can use that, or if shethinks your idea is good,
assuming you have a goodrelationship with your mom.
Right?
She's going to say oh, ofcourse, I think it's a great
idea.
You're so smart, you'll figureout how to make it work, right?
That's not helpful.
Well, that's not what.

Speaker 2 (01:04:24):
I'm talking about.
I'm saying if my mother has aproblem and I can create
something for her to use, thenit's a good product because it's
simplified to a point where mymother can use it, because what
I see oftentimes is peoplecreate something so complicated
and complex, they eliminate ahuge market of the population
because it becomes too involvedand too complicated to use Right

(01:04:48):
.
So you're yes, I'm sorry.
So what's this mom test book?

Speaker 3 (01:04:54):
It's funny that you say that often.
That's that is right.
From a UX perspective, Itotally agree with what you just
said, but from whether or notyour idea is a good one or not,
you know your mom is the worstperson to ask about your ideas.
But how would you ask your momthe questions in such a way that
you would actually get honestanswers from her about whether

(01:05:16):
the ideas are good?
And that's what the mom test is, why it's called the mom test,
and it's not really about askingyour mom, but that's,
metaphorically, what the book isabout.
It's how do you, when you go outto the market, most people do
their product research withcustomers by talking about you
know, talking about maybe talk alittle bit about the problems

(01:05:36):
they're trying to solve.
And then they go into featuresof what they want to build and
get, try to get, feedback, andpeople don't give you honest
answers, sometimes becausethey're just lying, but a lot of
times just because they don'tknow until or they don't have
enough context to know what thehonest answer is.
So the MomTest talks all aboutthe fact that when you're doing

(01:06:00):
market research on the productyou want to build, you never
talk about the product ever.
You only talk about theproblems customers are
struggling with, how they'vedealt with those problems
historically.
Have they?
Have they ever found productsthat satisfy the problem, that
mitigate the problem, and whydid they stop using it?
And you just focus on them andtheir problems and never, ever,

(01:06:23):
bring up your product or anyfeatures.
Would this if you had a productthat did this, would that help?
They don't do that because thenthey immediately start shifting
into wanting to make you feelgood mode and then and you get
nothing valuable out of it.
So that's why I like and theguy is a serial entrepreneur,
His name's Rob Fitzpatrick, asuccessful serial entrepreneur,

(01:06:46):
and he has just a brilliant wayof I talked about some of these
concepts myself before I foundhis book, but he goes way more
in depth.
He has a whole system for howyou do this, from the conception
of your product to even afteryou launch and you're selling it
.
How you speak to customers toget honest truth from them, so

(01:07:07):
that you can basically createthe right sales cycle, the right
product, the right features ina product that really connects
with them and syncs with whatthey need.

Speaker 1 (01:07:20):
Does the conversation need to start asking and
talking about the problem?
And then do you go back thenand do a demo Like, let's say,
for example, you already havethe product that will, you know,
potentially solve the problem.
Or maybe you had a conversationwith them and you know that
your product will solve thatproblem.
When do you want to demo thatand show that to that prospect?

Speaker 3 (01:07:45):
demo.
Then show that to that prospectwell with the.
Well, if you're approaching allthis right, they're going to
ask they would ask you for it.
I mean, if you're solving theproblem that's big enough that
they need solved and and costthem enough, and you've already
and you've made them feel likeyou really understand their
problem, then they naturallyassume you can solve that
problem.
They're going to draw you inright, as opposed to you having
to find some way to get in frontof them.

(01:08:07):
There are exceptions to that,but in general that's kind of
what you're after.
So it's like the differencebetween selling and consulting.
So when I'm talking withsomebody, for example about the
project, first time I've talkedto them, they don't know me and
they're kind of questioning meto find out whether I'm somebody

(01:08:30):
that is even worth talking to.
Usually in the first fewminutes they'll ask me something
or say something that I'lldisagree with, because they have
some perception perception andI look for those opportunities.
I say, no, that's not how itworks, so you can't do it that
way, or I won't do it that way.
And here's why because now I'vecreated a schism with them and

(01:08:52):
now it gives me an opportunityto create a bridge.
I said, however, let's look atit from a different perspective
and I give them a bridge tosomething that feels good to
them.
And now, all of a sudden, wehave a relationship where we did
not have a relationship.
I was a salesperson, they weresomebody looking for, and I
don't do this intentionally.
I just realized sometime youknow, years ago that this seems

(01:09:13):
to happen often in myconversations, just because I'm
very honest when I'm talkingwith people about what I can and
can't do, what I think theyshould do, what I don't think
they should do, when I don'tknow what they should do, and I
usually can back those things upwith something and I can tell
right away when we've had thatmoment, usually in the first few
minutes, because then theystart to ask me for help instead

(01:09:36):
of trying to figure out whetherI'm somebody worth working with
.
Right, and now it's so in asales situation, when you
connect with a sales, with acustomer, from that same kind of
perspective, where they feellike you really understand their
problem, you might be able tohelp them with it, and now it's
not about trying to find a wayto show them the product, it's
more just about sort of planningto show how you've mitigated

(01:09:58):
the problem, because they wantedas much as you want to show
them.

Speaker 2 (01:10:00):
I like that how you've mitigated the problem,
because they wanted as much asyou want to show them.
I like that.
Speaking of problems, from theconversation that we've had thus
far, I've been inferring thatit's a problem that may not have
been solved, or it's a newproblem.
Or if it's a problem thateverybody has, what about
products that solve problemsthat have already been solved,
For example, the general broad?

(01:10:21):
There are many email.
People need to communicateemail.
There are many email clientsout there to serve email within
organizations or for individuals.
What's the approach or what'sthe consideration for taking an
existing problem that has asolution and coming up with an
alternative solution?

Speaker 3 (01:10:41):
Right.
Nobody's going to buy that ifthat's all they think it's just
another solution that does thesame thing.
If it's not solving a problem,okay.
Everything gets down to problemand how much somebody feels
impacted by the problem, whichan impact means that it creates
some level of fear in them aboutthis problem.

(01:11:02):
If they don't get rid of it,then I'm never going to grow my
business.
My competitors will eat away atmy customer base.
I'm going to start losingpeople in my team because
they're unhappy with you know,because I don't realize there's
problems with the manager untilit's too late.
Whatever, it is right.

(01:11:23):
Or I've got people walking outof a restaurant one of my three
restaurants, one of them'slosing customers and leaving
one-star reviews because of abad wait person and I don't
realize right, these areproblems that I feel that
threaten me in some way.
Or if it's, if it's your ERPsystem that you know you always

(01:11:47):
have a fear that you're notrunning your organization, your
distribution, manufacturing,delivery, whatever it is well
enough in some respect.
And if you can tap intowhatever that is, then people
will lean forward and go andbecause they realize you
understand what the problem is.
You'd only be talking about itif maybe there's some way you
can help resolve, you know,mitigate that problem, even

(01:12:09):
vacations.
Why do people get excitedlistening about vacations?
Because they're afraid that ifthey miss out on these vacations
they're going to live a dulland boring life.
It's.
You know, I don't like the ideaof it.
I used to fight against thisidea, but I realized that it all
comes down to being trying tomitigate your fears.
You know, if you can tap intothe real root level of those

(01:12:30):
fears, um and I don't mean likeyou're trying to, you know,
basically become a horror filmto somebody, but you know, um,
uh, but you basically tap it.
You people want to feel betterthan they do because they're
afraid of how they afraid ofwhatever that is that's making
them feel that way.
Most decisions are made based onemotion, if not all.

Speaker 2 (01:12:50):
So it's tapping into it's exactly what you said is
you're tapping into the emotionof someone making the decision.
A person makes decisions basedon emotion and a fear is an
emotion.
Is I'm going along with whatyou're saying, but I am afraid
of something, so I'm going tomake this decision.

Speaker 3 (01:13:09):
Or this is going to make me happy, or I feel good,
right, so I'm making thisdecision that's going to make me
happy, and I'm afraid that Iwon't be able to capture that
happiness if I don't do it Right.

Speaker 2 (01:13:20):
There's some fear that's driving it.

Speaker 3 (01:13:22):
Right, yes, if you're just always incredibly happy
and so satisfied with everything.
Nothing's ever going to get youexcited or motivate you to make
a decision to be becausethere's, there, has to be, has
to be a perspective right, thishas to be better and this is
worse.
And I don't want this worse.
Right, better, and this isworse.
And I don't want this worse,right, even if it looks like
it's, I'm only doing it becausethis looks like it's going to be

(01:13:44):
really fun.
You know, if I don't do itright, I thought, oh, this is
going to be fun and if I don'tdo it, I'm going to miss out.
Right, fomo, I'm going to missout on this really fun thing.
How horrible would that beright, you're pulling on Pulling
on that emotional string, yeah.

Speaker 2 (01:14:00):
There's so much involved with all of that
process so it's a lot to tapinto.

Speaker 3 (01:14:07):
The only reason to put a product out there, a new
product out there, is becauseyou're mitigating a problem,
you're tapping into somebody'sfear, and they're real.
I'm not trying to make it soundlike you're manufacturing fears
.
These are real things Likemaybe it's a new ERP system.
Erp systems are reallyexpensive.

(01:14:28):
Maybe you have one that'sequivalent, but it's a third the
price, and for some companiesthat can't afford the bigger
ERPs but need it, that's a hugeproblem to solve.
Or even though all thefunctionality exists remember I
said one of them is consumable,right?
If the problem is, if there'snothing out there that's

(01:14:48):
consumable, or you may havesomething now, but it doesn't
integrate with other things thatthis particular niche needs
desperately, and so now that's aniche you can use to get your
product into an industry thatmight be already saturated.
But if that doesn't exist,you're never going to sell it,

(01:15:10):
right?
If you can't find that thingthat people need to fix, then
there's no reason for them tobuy it Because I'm learning a
lot about the path that you'retaking as sort of a startup
mindset.

Speaker 1 (01:15:25):
But maybe you've been in the business for quite a
while but you still have thatstartup mindset of growth and
trying to put a solution outthere.

Speaker 2 (01:15:34):
That's how I look at it.
I look at it, to me it's a dualconversation.
We're talking about startups,things to consider, but also for
mature companies that aretrying to bring a new product to
solve a new problem coming intomarket.
It's still to me, in my opinion, it sounds like it could be the
same way, the same process.
I think it is.

Speaker 3 (01:15:54):
Yeah, if it's not again in a channel they're
already really familiar with andthey're just adding another
brand in the same channel.

Speaker 2 (01:16:02):
Yeah, you said you use doritos you're adding, you
know, spicy doritos or cheesydoritos you still have a core
product, you're just expandingupon it.
But if you're branching offinto you're making doritos and
now you realize you want tostart making it, might even I
don't know soft drinks, mightstill be in the food product.

Speaker 3 (01:16:16):
Yeah, you're going to apparel, right?

Speaker 2 (01:16:18):
it would be a different story.

Speaker 3 (01:16:21):
Yeah, exactly.
Well, this is good.

Speaker 2 (01:16:23):
Well, Mr David, we appreciate you taking the time
to speak with us today.
I've learned a lot.
We did have more that we wantedto speak about, so we'll have
to see if we can coordinate.

Speaker 1 (01:16:33):
We did.
I'll have to bring it back.

Speaker 2 (01:16:34):
I'd love to have you come back for part two on this,
because I really wanted to talkwith you about some of the AI
and workflow topics that we haddiscussed.

Speaker 3 (01:16:45):
Which is what I thought we were going to talk
about too.
So this is, but you know it'sfun talking with you guys, so
I'd love to come back and do itagain.
I would definitely like toreschedule something.

Speaker 2 (01:16:56):
We'll finish something after.
I apologize for taking anothertangent, but when you started
talking about the startups, Igot a little excited, and it's a
little bit of what you do herewhen we talk with everybody.
We really don't have a format.
We'll pick a couple of topicsand whatever sticks with the
conversation we'll expand upon,but you express some valuable
insights.
I've learned a lot.
I have a lot of differentperspective on something, so I

(01:17:18):
really appreciate the time thatyou spent with us today and also
the valuable information thatyou shared, and I definitely
will reach out to you afterwardsto get you on for part two,
because, if the AI workflow thisis another struggle.
I talked about this in aprevious episode that we just
released, maybe a week or twoago.
I really need to incorporate AIinto my workflow to help me

(01:17:39):
keep up with tasks, and I wassuper excited to talk about it
with you.

Speaker 1 (01:17:43):
Yeah, so we'll hopefully get that soon, I think
we spent a lot of time on RFPright, it's perfect.

Speaker 2 (01:17:53):
It is perfect, but in the meantime, we do have your
guest information, the guestsection of the podcast.
We have the information and ifanyone would like to reach out
to you to learn more aboutstartups, learn about some of
the great things that you'redoing or some of the other
valuable insights that you have,what is the best way for
someone to contact you?

Speaker 3 (01:18:13):
Go to techiescom, which is spelled T-E-K-Y-Z dot
com, t-e-k-y-z dot com, and youcan email me directly.
Don't put my email link in thething, but if somebody makes it
to the end of the show, then tome they should get my email.
David at techiescom.
Absolutely, yeah, and feel freeto reach out to me directly and

(01:18:36):
on any subject.
If I can just be helpful andsteer you in the right direction
, I'd love to talk to you,whether it has anything to do
with future business for me ornot.

Speaker 2 (01:18:46):
Oh, perfect, thank you, we appreciate that.
And again, we appreciate yourtime.
Time is, to me, is the currencyof life.
Once you spend it, you can'tget it back.
Any money that you spend doingone thing, you're not doing
another, and we truly value thetime that you spent to speak
with us today and share yourinsights with us and those that
are listening, and we definitelylook forward to talking with
you again soon.

Speaker 3 (01:19:05):
Okay, yeah, we'll do that soon.
Thank you guys.

Speaker 1 (01:19:07):
Thank you, Dave Bye.

Speaker 2 (01:19:10):
Thank you, chris, for your time for another episode
of In the Dynamics Corner Chair,and thank you to our guests for
participating.

Speaker 1 (01:19:17):
Thank you, brad, for your time.
It is a wonderful episode ofDynamics Corner Chair.
I would also like to thank ourguests for joining us.
Thank you for all of ourlisteners tuning in as well.
You can find Brad atdeveloperlifecom, that is
D-V-L-P-R-L-I-F-E dot com, andyou can interact with them via

(01:19:41):
Twitter D-V-L-P-R-L-I-F-E.
You can also find me atMattalinoio, m-a-t-a-l-i-n-o dot
I-O, and my Twitter handle isMattalino16.
And you can see those linksdown below in the show notes.
Again, thank you everyone.

(01:20:02):
Thank you and take care.

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