TMF lessons I learned (the hard way) during my first venture

[windchaser]

Hi all,

I recently finished reading TMF and joined the forum and I would like to share with all of you a little bit of my entrepreneurship journey and the lessons I learned from it, many of them are good examples of the ones explained in the book.

First of all, let me explain a little bit about the business model and my circumstances at the moment: This idea came up about 3 years ago, while I was studying my MBA, where I met my business partners. One of them had the idea of this project and proposed some of us who had complementary skills to start a venture to execute it, I thought it was an excellent opportunity and, despite it was not in my original plans and it was to be conducted in a different country in which I had no intention to live in the future, I decided to seize it!

The business model: it is an app that charges users a monthly membership that grants them access to services from our network of providers. The providers are small businesses in a very fragmented industry and generally have very limited to no online presence, high fixed costs, low variable costs and struggle to fill their idle capacity and attract new customers. The way it works is that they let us use their product at a steep discount and in exchange we provide them online presence (in our app, website and social media) and bring them customers to fill their idle capacity and also provide them with a software that helps them running their business more efficiently.

TMF lessons we learned the hard way:
1) The planning fallacy: don´t overplan and act, asap!!!!! OMG, now I see how obvious this is, hence while facing the situation how difficult it is. I mentioned this idea started around three years ago but it actually launched around 2 years ago. Can you imagine how much time we wasted planning? Especially in disruptive business models it is very easy to make this mistake. We wanted to offer such a high quality product that we were scared to launch until we had it. But, at the end, when we realized that it was never going to be perfect and we started implementing we realize how much more progress we were making. The faster you test your assumptions and learn from real customers, the better.

2) Take market research with a grain of salt: Again, it is not the same saying I would totally buy this product than actually buying it paying for it. The best market research you can do is putting your product for sell, fullstop. The rest is pure conspiracy. So you have an idea, our accuracy on people interested and actual behavior was around to 20% , maybe lower, hahaha. Also, never forget, people lie, a lot!!!! and not always intentionally, they just confuse wishful thinking with reality.

3) If you do a pilot, use as many real customers as you can: This is an extension of the previous point. When be had the beta of our app, we were more concerned about testing the technology and fix the bugs than about proving the concept and acquiring customers. Big mistake!! We launched a pilot with around 50% friends, 40% friends of friends and 10%real customers, our reasoning was that we didn't want to risk first customers to hate the app for having so many bugs and because we wanted them to give feedback and report all errors (again we were more concerned about the technology itself) and also, the process was a pain, they had to download a link manually and it was not intuitive. This was a terrible idea as well, and our success rate on people actually participating in the pilot was showing it. Also, now we realize that the data we obtained through the pilot was not representative of the truth (as expected) but it is true it helped to improve the technology. It served its purpose, but looking back I believe our priorities were not the right ones.

4) Don´t underestimate the costs (both in terms of money and time): Make a forecast the costs you think you will have (in terms of money and time) and then multiply them by 10, that way you will have a better estimate of reality! I remember developing the app (we outsourced), it was a huge pain and very frustrating, things always take longer than expected and problems arise. After a lot of back and forth, we managed to get the app with over 6 months delay (and for what I learned form other people we were lucky!) and that acted as a big bottleneck for us. I believe that was another mistake (considering the app a bottleneck), it is true it was key to our product but at the end in this case it was just the distribution channel, not the product itself and we should have launched earlier and used our customer´s insight to develop it.

5) Challenge all your assumptions and don't be scared to explore: I would say, all your assumptions are wrong unless it is proved otherwise!! Don't assume what your customers want even what they say they want, actions versus words/ thoughts. We know realized that they don´t fins as much value in certain features we lost a lot of time developing and that they value more other features (that were simpler and easier to buy) and we wasted precious time there.
The same goes for marketing channels, I remember we made a lot of assumptions on what would be the best channels and we were so mistaken! For example, we first thought that Facebook ads would be a great way to acquire customers. We were so wrong! however, it was great for branding and engaging with customers. We explored other channels that were cheaper and we were not very excited about and they end up being te ones with the higher success. The same happened for posts in social media, we explored different styles and sometimes the posts we thought were a little crapy were the ones with more engagement!

6) Don´t let competition scare you for the wrong reasons: I felt so identified when I read MJ´s story in the book about how he almost quit his idea when he saw there was competition. We had the same experience when we saw a competitor showed up. This idea was disruptive and nobody was doing it at nobody was doing it, we were going to be the first ones in the market and suddenly someone shows up!!! we were shattered and reconsidered everything. However, we realized there was room for competition and we could offer more value and we decided to go ahead, then another competitor form another country showed up as well (with a vey similar name than us). The thing was that this second competitor was no real competition for us as the offered superior value to both our customers and providers, however, they did such a crapy job with the providers that it hurt us indirectly. At the beginning we were obsessed with our competitor and almost stalked everything they did. However, once we calmed our nerves, we only looked at competition to know what they were doing and how we can offer a superior product and more value to customers but focused on our company and our customers.

Well, there were many other things I learned but these pretty much summarize the main ones.

 

Dislike ads? Become a Fastlane member: Subscribe today and surround yourself with winners and millionaire mentors, not those broke friends who only want to drink beer and play video games. :-)