Focus and Market Alignment: Mentor Chats Lokesh Kumar and Amu Fowler
In this Mentor Chat, hosted by Amu Fowler Founder of Startups Ignite a Social Impact Accelerator, Lokesh Kumar an experienced entrepreneur, mentor, and investor shares his wisdom on pivotal startup issues. Lokesh places great emphasis on a startup's need to stay focused, identify the use case that delivers the most value, and hone it, rather than trying to cater to multiple applications simultaneously. He advocates for startups to clearly define their customer profile and deeply understand the problem they're solving, despite the challenges in narrowing down their Total Addressable Market (TAM).
Lokesh advises startups to initially target smaller clients facing similar problems as a strategy to build credibility. He highlights the importance of understanding the risk taken by the individual advocating for the initial sale within the client organization. Lokesh concludes by expressing excitement for startups with significant human impact and those already demonstrating hustle and initiative. Particularly, he admires startups that can solve a problem and satisfy customers without necessarily building a product right away, underscoring the rapid pace of today's technology development.
Transcript
Amu: Hi Lokesh, welcome to our Rapid Mentor Fireside series. This series aims to connect our startup community, including our internal cohorts and external community, with mentors like you who've been with us for quite some time. This platform allows us to share knowledge on a broader scale.
You've founded numerous startups, some of which have secured substantial funding. As an investor, mentor, and advisor, you've seen that certain questions come up repeatedly in our cohorts.
This platform serves as an efficient way for you to address those recurring questions. So, let's dive right into the first common question. Many founders are enthusiastic about their work and excel at networking and cultivating potential partnerships. However, we often get asked how to convert this initial interest into a pilot, and ultimately, a paying customer?
We'd love to hear your perspective on this.
Lokesh: Amu, first of all, thank you for the warm welcome. My journey with you all has been rewarding and I'm excited to be here today. Regarding your question about transforming initial interest into a concrete partnership: Assuming that the potential partner is larger than the startup, there are several key considerations.
First and foremost, understanding your partner or client's needs is essential. They show interest in partnering with you because they believe you can address a specific need. So before initiating any partnership or pilot, it's crucial to clearly comprehend your partner's needs and goals.
Invest a substantial amount of time in listening to the client, asking detailed questions, and conducting research to truly understand their specific needs at this stage. Your aim should be to alleviate their pain point, not just to push your product.
Once you understand their needs, you can develop a pilot program. Collaborate with them to define what the program should look like and how to assess the viability of your joint offering. Then, it's time to execute.
Ensure that you constantly monitor the results while implementing, maintaining transparency with your partner at all times. Lastly, nurture a strong relationship with your client. That's my advice.
Amu: From your response, I understand that the focus should be on what the partner is asking you to solve, approaching it with curiosity and gathering as much information as possible to tailor your offering to their needs.
Learning is a significant part of this process.
Lokesh: When you go in with this mindset, you may discover that you should have been building a different product than initially thought. You might even identify a more promising and realistic market than the one you initially targeted.
Amu: Your thoughts make a great transition into our next question. We often hear that a startup's concept, idea, or solution has potential for multiple types of customers or applications. Sometimes, we see startups running multiple pilots in completely different segments. What is your advice here? Should a startup take on whatever they can, aiming to learn and build traction? Or should they be more focused, concentrating on a particular segment or approach or strategy?
Lokesh: The key is to stay focused. You can't chase after many use cases initially. You need to find the one that offers the most value to your customers and perfect it. In a land grab situation, you may acquire a lot of territory, but you'll spend so much money doing so that you won't have funds left to actually extract value from it. So, my answer is: be focused.
Amu: So, you're saying it's crucial to have a specialty instead of spreading oneself thin by chasing too many things. Can we delve a little deeper into that? How should a startup define the sector or customer profile that they're targeting?
Lokesh: I'm a fan of what Professor Roger Martin suggests: in his model, there are five elements, the top two being 'where to play' and 'how to win'. 'Where to play' involves defining your customer so specifically that you can describe them instantly. Is it a manager of a B2B company valued at 500 million? Is this manager at the second level and facing collaboration issues amongst his employees? Get specific with the problem definition. Then 'how to win' will become clear as you focus your solution on that specific problem.
Amu: So, you scrutinize the problem you're solving and identify that exact person.
Lokesh: You really need to drill down to understand what that is. However, this can be difficult and intimidating, as narrowing down your Total Addressable Market (TAM) might make it seem smaller, which can be disconcerting. Yes, it's daunting, but it's something you need to do.
Amu: The law of constraints is quite effective. If you know exactly who you're targeting and you can't reach them, then it's probably the wrong segment. Now, moving on to the final two questions. Sometimes, we work with impact startups that aim to serve larger accounts because they're catering to underserved populations, which aren't typically their end customers. These startups might eventually want to work with a large agency or government agency or even a large corporate account, but they find it difficult initially. How can they establish credibility while working on solving the problem, even if they're not catering to the size of the account they aim for in the early stages?
Lokesh: As you've rightly said, it's tough to land large accounts because the person on the other end is likely risk-averse, due to numerous approvals and plans they need before committing. So, it's always advisable to start with a smaller client facing a similar problem. They're more nimble, and given your resources are limited, this makes sense as a first step. Successfully executing with a smaller client builds your credibility for larger ones. Remember, it's about the person you're selling to, understand their concerns and how your solution could impact them. Start with the smaller client first; the bigger one will follow.
Amu: As long as you know you're solving the same problem, it does build credibility. It's also about understanding the risk the person who advocates for the initial sale is taking.
Lokesh: Absolutely. Start small - solve the problem for your community or county first. Then, the doors will open.
Amu: What would you say excites you the most when a startup approaches you for collaboration?
Lokesh: I've worked with startups whose impact on human life is significant, and I genuinely appreciate that. What also intrigues me is when a startup demonstrates hustle and initiative. However, one key aspect I look for is whether they can solve the problem without necessarily having to build a product right away. Can they first deliver satisfaction to their customers? You see, in many instances, a startup can build something small and get the customer to use it, instead of raising millions of dollars to develop a product. Nowadays, technology development is relatively fast and simple, barring highly sophisticated systems like turbines or carbon sequestration technologies. So, I find it especially exciting when a startup tells me they've already built something that customers are actively using and paying for in real-time.
Amu: That's a fascinating perspective. Thank you so much. I'm excited to work with you in the upcoming cohort and look forward to seeing you then.
Lokesh: Thank you. I appreciate it and am also looking forward to it.