Technology solves CUSTOMERS' PROBLEMS!

I was recently reviewing an executive summary for a company.  The summary did a good job of articulating a large market, a team to address this market and details on the technology the company intended to use to solve the problem.  The company also addressed how their technology was protected and patented, which is important.  However, something was missing.  When I got done reading the summary, I had no idea who would buy their solution and why.

As entrepreneurs in the technology field, we often focus too much on telling people details about our widget or device.  For example, our sensor can detect up to 9 chemicals within 10 microseconds.  These technical details seem important to us given the we have spent large amounts of time getting our technology to work.  As we talk to people and present our technology, we fail to realize why no one understands the value of these details.  We fail to realize that every detail we mention needs to be positioned in terms of solving a customer's problem.

Now, let's go back and review how we could improve that executive summary.  Having a large market, a good team and technology is important.  However, we need to fill in the gaps with details as to why someone would buy our technology and how many people have the problem we solve.  We must start with a customer or potential customer who has a PAIN.  Our executive summary should include little to no stats or information on the details of the product or technology.  It should focus on outlining the customer's problem and how they view your solution as solving this problem.  Similarly, the market section should emphasize how many people have this problem, and how much is cost them to avoid solving this problem.  The team section should highlight to capabilities of your team that are going to help you address your market opportunity.  Everything should focus on explaining who has the burning problem you want to solve, and how you are well positioned to solve this problem.

Let me stop for a second an emphasize that your biggest competition may be that the customer decides to do nothing.  Your potential customer can always chose to do nothing.  Even if it cost them millions or billions of dollars, they can chose to do nothing.  In all of the business plans and executive summaries I have read and created, I have found this by far to be the most under articulated competition.  Realistically articulating how your customer's ability to do nothing impacts your ability to address your market will go a long way towards building credibility with your audience.

If I were investing in a technology company, I would want to know as much as possible about the individual characteristics of the customers you intend to have.  I would want to know that their is a small targeted group of people who need your solution.  When I say "need your solution", I mean that they are losing significant amounts of money without your technology or that they could make tons of money by implementing your solution.  Connecting your solution to a customer's problem/pain will go a long way towards helping people understand that you have a valid business opportunity.

As an attempt to understand how to articulate the customer's problem, I recommend the following exercise.  Spend some time with your team building a case study that articulates the details of a potential customer's problem that you can solve.  Think about what they are doing now to solve this problem (i.e. ignoring it).  Think about how much their current solution to this problem is costing them.  Think about how much time, money, and energy they will spend implementing your solution.  Think about what other options exist to solve this problem besides yours.  Spend some time understanding what would have to change in their organization, both technically and operationally, to implement your solution.  Would they have to reorganize in order to use your solution?  Would they have to buy all new equipment?  Can they even use the output of your solution?  Does a $10M per year company care about saving $10K?  Push your self to think about the reasons why this customer would pay you to solve their problem (i.e. what is their return on investment).

Once you have a chance to put together this case study, use this as a basis to figure out how many people have similar problems to the customer you outlined.  Use this to help define the true market opportunity.  If there are large and small companies in your market, who would be the most likely to adopt your technology first and why.  Again, this process may help you focus on who your customers really are, what problems they have that you solve and how you are going to solve those problems.

I have written and read many executive summaries that read like the one I mentioned.  My goal is to help you understand and avoid the mistakes I have learned from my experiences.  As technology entrepreneurs we tend to want people to see us for our technology or our product.  The reality is that customers only care about their problems and how to solve those problems.  Sometimes you may even have to help them understand that they have problems.  Further, you have to help them understand that the cost of your solution is significantly less than the cost of ignoring the problem.

Hacking Through the Jungle with a Machete

As entrepreneurs in America, we are often surrounded by comfort.  If we feel the need for coffee, our favorite coffee shop is nearby.  For breakfast, lunch and dinner, our options are many.  When we go home, we enjoy all the creature comforts available to us in America, such as cable TV, movies, or a warm shower.  We drive reasonably nice cars, and our offices are typically nice, clean and pleasant.  All these comforts lead the entrepreneur to believe that he/she is living in a safe, comfortable environment.

The reality of the life of an entrepreneur could not be further from this illusion of comfort and safety.  Our day-to-day reality is more analogous to an adventurer trekking through the Amazon with a machete, than it is to the person down the street who has a steady paycheck working for a large company, a government agency, or some other stable institution.  We often have no safety net to catch us if we fall.  It is rare, especially in the early stages, that we have a cushion of cash to support us through a slow period.  We must careful weigh decisions, build our team, and manage our cash, because every team member and every resource counts.

The popular phrase, TGIF or “Thank God It’s Friday”, doesn't seem to work for me.  My version of this phrase is more like “Oh God It’s Friday”, what did I not get done this week.  Every day I look at my to-do list and wonder if I have done enough to earn the money I need to pay the bills over the coming months.  No one is around to tell me what constitutes a good job other than my customers and my creditors.  If both are happy, then I am doing is good.  But even they can be hard to read at times.

Now, just like any adventurer, living the life of an entrepreneur can be full of extremely rewarding and fun experiences.  My point in this blog is not to say that it is all doom and gloom.  My goal is simply to help illuminate the experience for what it is: an adventure.  I believe it is hard for us to understand our experiences as trail blazers when we are surrounded by comforts.  We are risking our professional lives daily in pursuit of our adventure, but the comfort of our environment fails to let us see this reality.

It is my belief that this dichotomy has lead many entrepreneurs to experience high degrees of stress and frustration.  We expect our experiences to align with our surroundings.  We live with spouses, friends and kids that have relatively normal lives.  Our friends seem to cringe when we tell them our latest struggles with customers, bills or employees.  To them, our adventure seems way too risky.  We start to believe they are right, and we lose sight of what we need to do to survive in this environment.  We get frustrated when we compare our lives to theirs.  This leads to a misalignment between our reality and our perception of our reality.  This discrepancy has derailed many an entrepreneur.

The best cure for lowering your stomach acid as an entrepreneur is to appreciate your situation.  Make sure you are properly accounting for the challenges and risk you are taking.  Realize that most people who are doing what you are doing are going to fail.  Realize that you need to protect yourself, your friends, your family, and yourself from these failures.  Build a network of others around you who understand your experiences, and who can counsel you through challenging times.  Leverage other peoples’ money where you can, because you are going to need more than you think.  Realize that the time it takes to get to each milestone will always be longer than you predicted.  Appreciate that you are walking a less traveled path.  Finally, remember that most, if not all, the other people at Starbucks will have absolutely no understanding of your day-to-day reality as an entrepreneur.