Startup-CEO.com (Eli Portnoy)

Early Stage VC has an incredible post about the number 1 mistake almost every entrepreneur makes. We come up with an idea – and too often we build, build, build without thinking of the customer and their pain points…and how we are actually easing it. 

I must have made this same mistake over and over and over. Amazing how simple it is, but how almost every entrepreneur I have spoken to has missed the point too - technology isn’t about the wow-factor, but about the easiest way of simplifying  pain points.

So if you are building something, stop and talk to your users and potential users. Really talk to them, set up a focus group, survey them, interview them, and make sure you ask the right questions…this will make life a hell lot of easier for you

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Continued from previous post…

In July of 2005 I was 24, I knew nothing about the startup space or building a business, and I had already left my job. I would wake up in the morning and take long walks trying to develop an idea around which to build a company. At that point I had already decided that my next venture would revolve around the Hispanic community. I was also fascinated by the emergence of Craigslist, not so much by its meteoric rise, but by the democratization of information that it was allowing. I also loved the network effect that essentially allows Craigslist to operate in a monopolistic bubble. And so it is not shocking that the first idea that I began to contemplate was to shape a craigslist style marketplace for the Hispanic community.

The idea had merit, primarily because the Hispanic demographic in the US is organized around pre-existing social networks; the family and the Church. Providing a fluid platform by which these institutions could leverage their existing social connections would be very powerful. Secondly, these communities tend to be very insular and as such are perfect for a local classified type system. Finally, as most marketers are figuring out now, the only way to truly engage this community is through grass roots marketing campaigns – thus the platform I envisioned would be significantly valuable real estate and could allow for some interesting monetization strategies as well as serve as a springboard for other businesses.

There were significant hurdles that would need to be overcome, primarily the lack of internet penetration in the communities I was hoping to serve and the English fluency issue. Even though internet penetration was gaining quickly, it was still much more significant of an issue than what the data suggested. Many people in these communities that are being counted as internet enabled, had and still have very limited internet access, usually checking their email 1-2 times a week via public libraries, friends, or internet cafes. As for the English fluency issue, a bi-lingual site could have solved the problem, though as I would later find out it just wasn’t going to be that easy.

The idea that I conceived was to create a hybrid online-offline system that would allow posters to submit classifieds via the internet, which could then be searched online or in a weekly newspaper I would publish. I also wanted to add a simple translation engine to the site that would allow employers to post online in English, and for the posting to be printed in Spanish. Not a very elegant business model, but a quick and easy way to overcome some of the obstacles challenging my end goal of becoming the craigslist of the Hispanic community.

My first order of business was to begin the development of the website. I spoke to about 50 web development companies and got quotes that ranged from one thousand dollars to fifty thousand dollars. I contacted local printers and found a company that could print our newspaper. I interviewed over 30 freelance print designers to come up with a standard format for our newspaper. I ran around the city forging connections, learning more about the community and generating some interest in what I was doing.

I then ran into a really big problem, how was I going to distribute the newspaper. For some reason I had totally overlooked this seemingly obvious and indispensible part of the business. I racked my brain trying to figure out a quick and dirty way of getting the newspaper in front of as many people as possible. I tried a couple of different ideas, including hiring a professional company, until I realized that I was going to have to create my own distribution network. I forged agreements with close to 1,000 retail distribution points and hired 4 drivers to each deliver papers to 250 locations over a 2 day window.

The business was getting ready for launch, and I had spent under 10k at that point. I was excited, I was ready and I was going to take over the world.

Next week, how the idea performed…reality hits.

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I was working on another mundane consulting project, doing nothing more productive than rearranging a power point document for the eleventh hundred times, when I decided I had enough. This was not work that was challenging me, these were not the type of people I could learn from, and this is not how I wanted to spend my time. I know this doesn’t sound PC, but as I recount the story of how I became an entrepreneur and built an internet recruitment site for non-internet users, I am going to be as real as possible.

So anyway, back to the story. I was working on a strategy project for a pretty large firm. I can’t get into too many details on what we were doing, but you can trust me in that it pretty boring stuff. We were staying in the office until 11-12 at night for no good reason other than the senior manager had some sort of complex, whereby he thought that the longer he could keep us in the office the more likely he was to be promoted. So there we were reworking the same exact slide. Changing the colors, adjusting the font, spending hour upon hour on the details, and only spending a couple of minutes and a few guesses on the actual numbers and recommendations. I wanted to challenge myself, learn, be exposed to new concepts, isn’t that why I decided to do consulting?

That night I had an epiphany: I was going to leave my job and start a business. I was going to abandon the consulting world and venture out on my own. I always had the entrepreneurial bug, and I was going to live the dream. Problem was, although I had an idea of the space I wanted to be in, I really didn’t have a clear cut vision of what I was going to build.

Being originally from Mexico, speaking a fluent Spanish, and having a pretty good understanding of the US Hispanic culture I decided my business would revolve around the fastest growing demographic in the United States. That was my starting point and from there I decided on the name Emerging Demographics Inc. and our company mission: “to level the cultural, technological and linguistic barriers that impeded Hispanic progress through innovative and profitable ventures.” That was the entire idea and from there I took the giant leap of faith that I could take a concept and a direction and develop a business around it.

• Next week, how the idea became a business…the first few months.

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This is why I don’t like reading Guy Kawasaki. Here is a guy who was great for Apple, but has no experience building a company, yet loves to distill terrible startup advice. His book is a compilation of startup clichés and his blog is a rehash of the same.

Truemors, is his latest project, and Guy is running around hyping how amazing it is that he built it for 12k. I am happy for him that he is getting some hands on experience, and on the whole he is a pretty smart guy. My problem with him shouting and screaming about how little it costs to start a business is that he is giving false hope to thousands of people out there who think they can build a Google with that kind of money.

Forget about whether Truemors is a good site or not, the point is those 12 thousand dollars were entirely spent on developing the software and legal fees. That’s not a business. Heck, there are countless high school kids who could build the same thing for 2k. How do they then get distribution? How do they generate revenue? How do they put together a sales team?

A little website is nothing but a little website. Guy is maybe one of a handful of people who can get the kind of exposure he did. Almost no one else can, and so they will need to spend tens of thousands of dollars on PR, Marketing, Business Development deals to get the traction he did.

I have made a lot of these points before, as have some other people. It’s just irresponsible of Guy to misinform and misdirect aspiring entrepreneurs this way. If someone has 15k saved up, they shouldn’t start a business thinking that will be enough…don’t encourage that kind of very dangerous behavior, because this is why the startup failure rate is so high.

Stop evangelizing yourself and let us use the power of blogs to disseminate real, from the trenches, information that is actually helpful.

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I remember vividly the day I left my job as a management consultant and began the entrepreneurial journey that ultimately resulted in Emerging Demographics. One of the most satisfying feelings was a sense of ownership – I would live and die by my own work.

Entrepreneurs often talk about the extreme highs and lows of starting a business; we feel it so much more than any other profession in the world because our companies are just an extension of us. They are our vision, our labor, our hopes and our dreams.

The first few days of the business were incredible, I was running around getting incorporated, interviewing developers, researching the market, writing a preliminary business plan…and just basically running around like a wild chicken without a head. There was so much to do – and I was on such a high. I was the king of a company and finally all of my ideas would be implemented. No more fighting bureaucracies, hierarchies, and Sr. managers. I was finally going to prove that I had it in me to build a company. Like I said, there are some really extreme highs in starting a business.

But there are also incredible lows. A few days later I ran into my first problem. I spoke to seasoned business professional and he asked me how I was going to distribute my product. I told him some of my thoughts, but he ripped them apart. He told me to go back and find a job. I felt crushed, maybe I didn’t know everything, and maybe I was taking on a stupid, crazy risk before I was ready. Maybe my brilliant idea wasn’t so incredible.

These highs and lows happen just about every day in business, but the way to level them out and build a business while maintaining emotional sanity is to surround yourself with loved ones who will help you and guide you no matter what. One of these key people in my life taught me a very valuable lesson during those early days. He said that there is a common denominator that all successful entrepreneurs share – a willingness to accept criticism and failure, learn from it, and overcome it. He told me I had a choice, I could get knocked down by every failure that I was going to encounter or I could analyze it and figure out a way to knock it back and be stronger because of it.

So I did just that, I thought about distribution, I put together a plan and I continued forward. I fought my inexperience, I challenged myself by my future failures and I continued forward.

Being an entrepreneur is a great feeling, but be weary of those highs and lows. Don’t get too caught up in the highs to think that you or your business are brilliant or a sure thing, and don’t let the lows make you doubt your ability to overcome or circumvent the challenges that will present themselves.

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