In 1976, Steve Wozniak, the cofounder of Apple, first began designing a computer -- what would ultimately become a portion of the Apple I -- because he couldn't find an affordable teletype machine.
In 1999, a Bay Area entrepreneur named Nick Swinmurn founded Zappos. He was frustrated that he couldn't find a pair of brown Airwalks at his local mall.
These founder fables sprung to mind when I read an interesting article on London Business School's site by lawyer-turned-entrepreneur Sahar Hashemi. Along with her brother, Hashemi cofounded Coffee Republic, the UK's first US-style coffee bar. They built it into a chain of 110 bars. In 2005 she founded Skinny Candy, a brand of sugar-free sweets. Glisten PLC bought the company in 2007.
In her article, Hashemi says that the idea for both companies came because she couldn't find what she was looking for as a consumer. "I started both my businesses because of an unmet personal need: Coffee Republic because I couldn't find skinny lattes and Skinny Candy because I couldn't find guilt-free sweets," she writes.
What can today's entrepreneurs learn from this? Two things:
1. Initial inspiration only gets you so far.
Eventually, you'll need kickass sales skills and leadership. In Zappos' case, Tony Hsieh came aboard in 2000, having already built and sold LinkExchange to Microsoft for $265 million. Wozniak, for his part, had Steve Jobs as a partner. Jobs famously called Wozniak at work one day (Wozniak still worked full-time at HP) to tell him they'd received a $50,000 order for 100 of the computer boards that Wozniak built.
For Hashemi, too, initial inspiration had its limits. In the early days at both companies, she writes, "Every decision was driven by the question, 'As a customer would I want this?' To be honest, there was no other insight we could afford. Market research and focus groups were too pricey."
But as her businesses grew, that focus changed for the worse. "We focused on customers as all companies do, but not in that unique entrepreneurial way," she writes. "It became 'us,' the company, trying to sell things to 'them,' the customers. Why? The new people weren't hired because they loved the product. They were hired because we could now afford to give decent salaries and it was a fast-growing, exciting business. Where did their loyalty lie? To their immediate boss, to the appraisal system and to the org chart, of course."
2. Stay close to the customers, as you grow.
Hashemi found that as her companies prospered, the executives "grew further and further away from customers and the real needs of the business." The final straw, pun sort of intended, was when the marketing director she hired came to work holding a cup of coffee from a competitor. "I assumed he was tracking some new thing they were doing as it was customary to visit competitors," she writes. "But, no: his commute didn't take him past a Coffee Republic. He admitted he hadn't visited a store for two weeks. I was mortified. What could be more important that visiting stores, trying the coffee and searching for inspiration?"
What's the best way to stay close to customers as you grow? One way or another, the best advice comes down to watching how customers interact with and use your product or service.
One fantastic example comes from Ford, which relied on a team of ethnographers to study what consumers really craved in the Mustang. Through these studies, as reported in MIT Sloan Management Review, Ford realized that it needed to make the Mustang feel and sound powerful -- so that drivers felt vibrations as they drove and heard the revving of the engine. These factors, Ford learned, were just as important as the car's actual power, as gauged through horsepower numbers.
Similarly, Intuit founder Scott Cook was a master at learning how customers actually used early versions of QuickBooks. Through Intuit's "Follow Me Home" program, an Intuit employee would "hang around the local computer store until someone bought Quicken off the shelf (this was back when people did that sort of thing)," writes Michael Hopkins in Inc. As a next step,
The employee would then ask the buyer to take him home so he could see how difficult the product was to install. He would watch the process silently, noting everything from how easily the shrinkwrap came off to which lines of direction bred that confused look on the new user's face. If there were problems, the fault was Intuit's, Cook insisted, not the customer's. Every pause, every source of frustration, were evidence of something Intuit needed to fix. Cook was a radical simplifier. He knew, right from the start, that Intuit didn't need only to make Quicken better and easier than every other software program; it needed to make Quicken better and easier than the pen in your hand and the paper check-writing process that Quicken aimed to replace. And Cook knew that if he and his company could just be alert and creative and open-minded enough, then making it so was possible, because would-be customers could tell them how.
Eventually, entrepreneurs began using Quicken to run the finances of their companies. That step -- when Intuit learned about it -- led to the creation of QuickBooks.
All of which illustrates that listening to your customers -- and acting on what they say -- is an ongoing process. It can't stop with the first iteration of your idea. It must guide the evolution of the organization.