I make web applications ADDICTIVE.

In an environment where everyone is building solutions, it’s evil to focus on the problem.

It’s a lot of fun to dream up all the things we can do and how they will work. With that excitement, do we sometimes forget what we are actually trying to solve? 

When you are passionate about dreaming up solutions, problems aren’t sexy. However, elegant solutions can come from a deep understanding of the problematic area.

Steven Jobs, the man who brought us Macs, Ipods and Iphones, focuses on the root of the problem; it’s the source of his inspiration:

“When you start looking at a problem and it seems really simple with all these simple solutions, you don’t really understand the complexity of the problem. And your solutions are way too oversimplified, and they don’t work. Then you get into the problem, and you see it’s really complicated. And you come up with all these convoluted solutions. That’s sort of the middle, and that’s where most people stop, and the solutions tend to work for a while. But the really great person will keep on going and find the key, underlying principle of the problem. And come up with a beautiful elegant solution that works” 

Steve Jobs in Insanely Great: The Life and Times of Macintosh, the Computer That Changed Everything (1994) by Steven Levy.

Finding that “key underlying principle” is the essence of marketing. We all do marketing, ‘way before we start dreaming up solutions. 

Marketing professionals don’t market the solution, they “market” problems. We can’t sell a SOLUTION if customers themselves don’t believe they have a problem.

Marketers may be “evil” but THEY don’t create problems; they just make people understand them!

Something extraordinary happens when you focus on the problem — you end up focusing on your CUSTOMER.

It’s no longer about YOU and your solution, but about THEM and their pain.

Whenever it becomes more about them than you, YOU WIN.

How do you want to approach your business:

“What do we suck at and how can we suck less at it?”
or
“What are we awesome at and how can we be even more awesome at it?”

People get excited about awesome things and not things that ‘don’t suck’. As long as your weaknesses won’t completely stop you from being considered by your customers, just focus on your strengths and, continuously and obsessively reinforce them.

That was the hack way of doing a SWOT analysis and guaranteeing you an actual actionable conclusion.

If I had one hour to sell you a nuclear bomb I would spend 55 minutes defining why you should destroy the world and only 5 minutes featuring the bomb’s benefits. 

I can’t sell you anything if you don’t believe that you have problem. Therefore demonstrating the problem is more important than demonstrating the solution.

If meetings are toxic, then Campfire is a recurring time bomb that blows up in your face every 3 minutes.

37signals has built the virtual water cooler. A place where everyone can endlessly share funny pictures, stupid jokes and the latest sci-fi movie trailer. A valuable team building tool, but it doesn’t help productivity too much.

Jason and David, founders of 37signals, didn’t design their product with the intent of impeding upon our productivity. They would argue the contrary with good reason. Campfire is, in fact, a great collaboration tool - we just misuse it. Instead of discussing projects, we exchange this kind of video:

(Don’t get me wrong. That is a funny video, but you probably - just like me and all my colleagues - have just wasted what could have been 3:22 productive minutes.)

Now that Jason and David have called out meetings as “the worst interruptions” in their new book “Rework,” their disciples flee meetings as if they were rabies. They are missing the point.

Jason and David are right, most meetings are unproductive. Like Campfire, the problem isn’t the meetings, it’s the people running them. Instead of concluding that  “Meetings are toxic,” try running one following the simple rules at the end of their essay.

Jason and David have never preached anything new, it’s pretty basic business fundamentals, they are just doing it in a refreshing way. “Rework” is a good read that should help shape our entrepreneurial philosophy. Hopefully their followers won’t turn this book into another misinterpreted bible.

Warning: Very business geeky stuff.

Situation: “NatuRi Corp. was a start up, founded in 2005, aiming to manufacture a cholesterol-lowering drug made from the byproducts of rice bran oil production. NatuRi faced several challenges, including securing funding for the organization. NatuRi had captured the attention of at least four potential investors willing to offer an investment. Its managers were challenged to weigh their options and to determine which of the four potential investors currently interested in their venture would be most appropriate for NatuRi’s future growth. In addition, the founders had only a short period of time to decide whether or not to accept a Seed and Series A term sheet from a well known venture capital firm.” What would you recommend to the founders?

The twelve teams competing in the TD Securities Financial Case Competition had three hours to analyze a 24 page Harvard Business School case study and present their recommendation.

I had great time judging the presentations and thought I would share some feedback with the participants.

It was exasperating seeing you guys so close to solving the case but never quite doing so. You would either get the right solution but not back it up with your analysis or did a great analysis but offered improbable recommendations.

It was a hard case especially if you were not familiar with start-up funding and you did a great job identifying the key facts:

• In no way could the founders accept the Seed Note Term Sheet from Waltham Partners. Most of you noted the outrageous valuation (4.5M for 50% stake) and the “suicidal” terms. One term stood out to me; in 6 months, Waltham had the right to not exercise their option and then force NatuRi’s to pay back the $500,000 loan and accrued interest, which would have probably led NatuRi in bankruptcy and allowed Waltham to claim the IP placed as a security.
• The founders were extremely knowledgeable and very experienced. They didn’t need to rely on their investors’ connections and market expertise. The angel investor, even thought he was only bringing money to the table, was therefore a perfectly suitable match. It was also fair to assume his terms would be favorable. In addition, he was offering $1M; twice as much funds that what the founders were seeking. You were too quick dismissing him.
• There were two milestones that would significantly reduce the risk of the venture to potential VCs and would increase the evaluation: (1) being able to manufacture good quality NatuRi, and (2) successfully pass the multiple FDA approval stages. Both could be significantly mitigated within 6 to 12 months.

It would have been interesting to lay out each milestones (in a timeline) and an evaluation of the level of risk, expertise and financial resources needed to achieve each. With this analysis, it would made it clear how to pair each milestones with each investor (angel, VC firm, strategic investor) such as in the chart below:

It’s in the best interest for the founders to structure their financing in way they can mitigate the investors risks by completing milestones and therefore minimize the amount of equity they need to relinquish.

NatuRi had to refuse the deal by Waltham Partners, secure their seed round with the angel which would have provided 12 months of funding; enough time to demonstrate that they are able to manufacture a quality product and pass the first half of the FDA approval process. At the same time, they would be securing their Round A funding for 2007 and exploring an exit in few years with a Proteon acquisition.

You were so close to hitting this case out the ball park but just needed a bit more time to refine your analysis.

Continue to challenge yourself as you learn so much from these competitions and come back to the next TD Securities Financial Case Competition.

Special thanks to Telfer School of Management Finance Society and Julia Polnareva for inviting me.

If promoting is sharing something interesting; marketing is having something interesting to share.