Simplifying Entrepreneurship

26. 3 Reasons Why Startups Fail and How to Beat the Odds with Jay Haynes

November 09, 2021 Pete Mohr Season 1 Episode 26
Simplifying Entrepreneurship
26. 3 Reasons Why Startups Fail and How to Beat the Odds with Jay Haynes
Show Notes Transcript

Jay Haynes is a successful entrepreneur who has lead several Silicon valley companies through growth and success and is the founder of THRV.com Jay has created a platform that will help you better understand how to frame the result of what you sell instead of the features it has!

Here’s a glance at what you’ll learn from our discussion in this episode:

  • Companies fail because they run out of cash before they figure out what their customers want
  • The Getting Jobs Done methodology
  • Delivering your promise with accuracy and speed is crucial
  • Always deliver the result of what they truly want

If you can find out more about Jay and THRV at THRV.com!

If you’re ready to transform your entrepreneurial frustrations into freedoms by cutting through the chaos and using frameworks that help you run an even better business and enjoy an even better life, simply go to:   www.Mohr.Coach

Take the free assessment on the top right-hand side of my website and we’ll set up a time to chat!

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Jay Haynes  00:00

Pete, I don't know if you own the Zune, or any of your listeners did, but it was an unbelievably huge failure. Microsoft lost $300 million in one quarter. So they probably lost about a billion dollars trying to take share of this suppose an iPod market? Well, there's no demand for iPods. That's the key insight there is demand to create a mood with music. And why did we switch to Pandora and Spotify streaming services, essentially, remember, right? When the Zune launched, Pandora was signing up 90,000 new users a day. So what could Microsoft had done to see that market differently? Well, they could have looked into the demand by saying, Where are customers struggling in the job of creating mood with music?

 

Pete Mohr  00:48

Hey, it's Pete, and welcome to another edition of the simplifying entrepreneurship podcast, designed to provide the tips and tools that will help you cut through the chaos of running a business and transforming your frustrations into freedoms for your business and life as a leader. And today, I had the opportunity to speak with Jay Haines from thrive. And we get into some interesting conversations around how to position your products and services all around this idea that people want the end result, they don't necessarily need to know the features they're buying the end result and why companies fail and why products fail is because typically, the marketing side of things aren't marketing, the idea that you're going to create the result for the person and what creates customer demand is really what we're talking about here today. On the podcast. We'll dig right into it with Jay Haynes. Hey, Jay, welcome to the simplifying entrepreneurship podcast.

 

Jay Haynes  01:46

Thanks for having me.

 

Pete Mohr  01:47

Yeah, it's a pleasure. And I mean, we haven't had a chance to meet before about five minutes ago before we hopped on this call. But I've been looking at your stuff here today and download your growth spreadsheet and really interested to learn more about what it is you do and all of the stuff around your business. And our topic today here around why companies and products fail. It's one of those things, every entrepreneur I mean, as entrepreneurs, we always have certain things that fail and certain things that go so I'm really interested to get into that topic with you. And why do companies fail and products fail?

 

Jay Haynes  02:20

As one of my favorite Business School professors said, all companies fail for the exact same reason they run out of cash, pretty straight cash flow. But the question is, why do they run out of cash. And if you're an entrepreneur, you're likely burning cash ahead of having profitability, because you go into a dip to build your products and your services. And then the idea is that you start shipping them and people pay for them and you make money. And if you don't, you go out of business. So the real reason that companies fail, the reason they run out of cash is because they're not building something that customers want, and that customers are willing to pay for. And that is the crux of the problem. That is the question is figuring out what do your customers really want? And how do you go about doing this. And I've seen this the past 30 years in my career, I started working in the finance industry in the early 90s. And then I went and was a product manager at Microsoft and went back to business school, I ran a couple Silicon Valley, Sand Hill Road back companies. And throughout those 30 years, were really the first 20 years of my career, what I realized is no one had a systematic way to understand what customers wanted. No one had a way of saying, Wait, why are people going to shift from their record collections to their CD collections to iPods and then to the streaming service? I'm old enough, I've literally rethought my entire music collection by four or five times. Tell me about it. Yeah, seems insane. So why did we do that? And why did we switch off of blackberries and keyboard devices to iPhones and androids? What are the underlying causes, that causes customers to switch to new products? And that really is if you don't understand that, and you don't have a very good systematic way to understand what customers want and what they're willing to pay for. You're likely going to fail. And most startups most entrepreneurs fail. Oh, for sure. Statistically, yeah, we talked about all the success stories. But really, it's an incredibly low success business. So that's really what we're trying to do is help companies, entrepreneurs, help them avoid failure with less risk. So before you invest all that capital in developing your product, figure out what it is see your customers want. And that's really the key that keeps companies from failing.

 

Pete Mohr  04:37

I couldn't agree more. I mean, so much of what I teach with my clients and all that stuff is is around this idea that you're not selling the features. You're selling the benefits. And I know that's sort of in line with the spreadsheet that I just downloaded that

 

Jay Haynes  04:50

Yeah, technically it's a it's a cheat sheet. Yeah, I don't want anybody gets scared away from the fact that the spreadsheet, oh, yeah. My mistake. Yeah. No, no worries. It's a done document that explains the method basically, yeah,

 

Pete Mohr  05:02

I think anybody could take a lot of benefit from this, just to look over it and get their mindset around how that can be, and how they should be laying some stuff out and thinking about things. You know, tell me a little bit more about that, and how you align that with your business, a little bit more about your business, and how you can take care of some of those problems and how you help people through those problems that they're having with regards to doing things the old way compared to your way.

 

Jay Haynes  05:28

Yeah, that's great. And the method we use is called jobs to be done. Clay Christensen, you know, famous Harvard Business School professor, put it very succinctly, he said, customers are not buying products, what they're doing is hiring products to get a job done. And that's a very, very simple, straightforward concept, almost deceptively so. But the key idea there is your customer has a goal they're trying to achieve. That is the end result they're looking for. So and you can see examples of this in consumer business and medical markets. So for example, sure, we all hire Apple and Google Maps, the underlying job, the goal we're trying to achieve is to get to a destination on time, we all hired record collections, and then CDs and iPods and now streaming services to create a mood with music. And if you're a parent, one of the jobs you need is to get a baby to sleep through the night, that's a job. And then in businesses, businesses have tons of jobs, they need to optimize cash flow, acquire customers satisfy customer needs, you know, etc. And the medical markets are the same way. Obviously, every medical market exists to optimize your health. But are you trying to optimize your health with COPD or cancer, are you trying to restore artery blood flow after a heart attack. So all of these things that are now known as jobs to be done, the key is that they're independent of any solutions. They don't have any solution statements. And the reason that's so powerful is they're going to remain stable over time. The job of creating music 100 years ago is the exact same as it is today, it's the exact same as it's going to be 100 years from now, that's true of getting to a destination on time, and really any job that defines the market. And what's interesting is, if you look at any goal that a customer is trying to achieve any job they're trying to get done, it is very, very complicated, you can break it down into a series of generally about 15 to 20 steps and about 100 different customer needs, that all relate to getting the job done. So a good example is getting to a destination on time, we all know it because we use Apple and Google Maps, that job has 15 steps or so and about 100 different needs. So it seems like a relatively straightforward thing I need to you know, get that car and go from point A to point B. But if you really break it down into all of the different variables that are required from estimating the departure time planning the stops, optimizing the sequence of Stiles, finding parking all that, if you put all that together, it's a very, very complicated job. And if people want to see an example, this, our cheat sheet, and our ebook have all sorts of examples to explain this in consumer and business and medical markets.

 

Pete Mohr  07:57

We own some shoe stores as well. From that perspective, we always say that we're delivering comfort, as opposed to the shoe, right? We want them to have that Ooh, and off feeling of when when they put the shoe on, it's like, ah, those feel awesome. And Ooh, those look great. And if we can deliver those feelings, no matter what the shoe is, then we've delivered that sort of feeling that sort of end result that we're trying to get with every time we sell a pair of shoes,

 

Jay Haynes  08:23

people hire shoes for an enormous number. Oh my gosh, different jobs. So if you're a runner, clearly, not only is comfort, but you want to avoid injury, I happen to have just torn ligaments in my ankle. And so I bought a pair of crazy hiking high tops, because I'm trying to get extra support because I don't my ankle reinjure itself. If you're in a stand up desk all day, or if you're at a construction site, I mean, all of these are very, very functional. So and we distinguish between the functional jobs, the emotional jobs, but you're absolutely right, the feeling. And those emotional jobs can be just as important. So you want to feel a certain way about yourself when you're buying and using a product and you want to be perceived by others in a certain way. So good examples of this are even getting to a destination on time where if you're trying to get to destination on time, one of the emotional feelings you want is being perceived as professional. So if you show up, and you're like, oh, sorry, I'm late to this meeting, there was a ton of traffic people gonna be like, well, they just didn't plan their day well, and that's conscious and unprofessional, because there's always traffic. So those emotional jobs are incredibly important. And we break those down into functional jobs and emotional jobs. And then another category we called consumption jobs. Cool. I

 

Pete Mohr  09:34

think that's awesome. One of the other things that we wanted to talk a little bit about today, Jay was the idea of what creates customer demand and what's creating these, what's creating these jobs.

 

Jay Haynes  09:46

The first starting point is defining who is your customer and we work with a lot of companies and even big companies. We work with entrepreneurs and startups all the way to fortune 50 companies, it is surprising that a lot of times teams can't even correctly define who their customer is. So the starting point is easy. And it's always a person. Even if you're in a b2b market you're targeting, you know, the VP of finance, the VP of HR or some human being that's got some responsibility to achieve some goal. And we break the customers down into job beneficiaries who ultimately benefit from getting the job done. Job execute ORS who might help the beneficiary get the job done, and purchasers who can influence the purchase decision. So that's the starting point. So and in all markets, start with the job beneficiary. And I'll give you an example. Businesses used to hire on premise er p systems to help acquire customers. And the job beneficiaries, obviously the VP of sales or sales director or sales manager, whoever. And the job executed in that case was an IT manager, because in order to use the RP system or the CRM system, to acquire customers, you had to set it up on premise and install servers install software, it can take years and it could take millions of dollars to install these big systems. Well, it managers went away, right? Because once Salesforce and SaaS applications came about, you didn't need an IT manager users log in. And that's because the markets always evolve towards the job beneficiary because no one wants this extra person along the way. This is even happening in medical markets, we worked with a company who it's a fascinating product company called seven cents, and they build a device that allows you to draw your own blood. Now, I'm sure everybody listening has had their blood drawn and is no fun. And the job actually heater in that case is the phlebotomist who's a professional who's trained to do this knows the medical procedures, the risk, the precautions, all that. And now you can do it yourself painlessly, with this little device, amazing even market has completed that move towards a job beneficiary. So what creates the demand is someone who benefits from the job either a consumer or business person or a medical professional. And then the reason they're willing to switch is they basically struggle to get the job done. That is what creates demand for new products and services. If people are so frustrated with whether it's getting to a destination on time, or restoring on re blood flow, or getting a baby to sleep through the night, and the solutions today aren't helping them, do it as fast and accurately as possible. And it's that's the key is that their speed and accuracy are the key metrics. I love that if it's too slow, it's too inaccurate. It's too expensive. It's too time consuming is too costly. That's when you look for new solutions. So I'll give you a concrete example of where of what not to do. So Apple had sold 200 million iPods at 150 bucks apiece. So that's a $30 billion market. So Microsoft looked at that and said, Well, okay, there's clearly demand for iPods. There's a market for iPods. And this is very, very traditional. If you look at marketing textbooks, they'll tell you the size of the market is the price of the product sizes the number of buyers are, so that's a $30 billion market. And Microsoft said, hey, let's take some of that because there's clearly demand for iPods. We'll make an iPod competitor called the Zune and Pete, I don't know if you own a Zune, or any of your listeners did, but it was an unbelievably huge failure. I mean, Microsoft lost $300 in one quarter, so they probably lost about a billion dollars trying to take care of this. Suppose that iPod market? Well, there's no demand for iPods. That's the key insight there is demand to create a mood with music. And why did we switch to Pandora and Spotify streaming services, essentially. And remember, right when the Zune launched, Pandora was signing up 90,000 new users a day. So what could Microsoft had done to see that market differently? Well, they could have looked into the demand by saying, Where are customers struggling in the job of creating mood with music, and one of the needs in that job is to find a new song for the mood. So if you measured the speed and accuracy of finding a new song for a mood with iPod, how would you do it? Well, you got to go to iTunes, you got to look around. And famously iTunes algorithms were not great. You like the Rolling Stones, you might like the Beatles, it wasn't that in depth, right. So then you got to find the song you got to listen to it, you got to preview it, you got to decide to purchase it, then you got to hook up your iPod to your iTunes, you got to download it to your iTunes, you got to put it in a playlist. So literally, you're talking minutes, potentially hours just to find a new song for the mood. So Pandora famously had these incredible algorithms that if you liked this combination of music, or if you entered the song, it would generate an automatic playlist. And so what did you have to do to find a new song for the mood, you just push play, and it was doing it for you. And we all switch to the streaming services because it's faster and more accurate. That is the explanation of the success of every innovation in the world that I can think of. So that idea of speed and accuracy That is what you should be measuring as an entrepreneur, like, what is the baseline today to get the job done? And then how can we do a much, much better job in the future.

 

Pete Mohr  15:07

I think that's a great spot to cap our conversation here today. I love the conversation today, what you do is all around this and all around bringing that to the table for entrepreneurs, right. And I want everybody to know how they can get ahold of you how they can download this particular sheet, the cheat sheet so that they can get a little bit more information about you and go from there. So why don't you tell them?

 

Jay Haynes  15:32

Yeah, sure, you can reach us at THRV.com, that's thrive without the vowels thRV.com. And we have the cheat sheet, we also have an entire free course on this. So you can log in and try our software for free. And it comes with a course that goes through every element of this from defining your customer, the market competitors, identifying customer needs segmentation, sizing, pricing, roadmapping, a whole shebang. So if you're interested, you can take the course for free. It's all online. And hopefully it's helped some entrepreneurs out there.

 

Pete Mohr  16:03

Yeah, I love that. I love that. And it's been a great conversation today. Really appreciate you joining me here today on the simplifying entrepreneurship podcast. Jay.

 

Jay Haynes  16:10

Thanks, Pete. Thanks for having me.

 

Pete Mohr  16:15

Thanks for spending some time with me here today and think about how you can apply the topic today around why companies and products fail and what creates customer demand, this whole idea of the jobs to be done idea and the fact that you're selling the job to be done, you're not selling the features and benefits or the features anyway of your products as much as you are what you're doing to enable that customer client person to get the job done in the way that they want to in the cheapest and fastest way. And I think that was a real key point for me today, too. You're always looking to make it cheaper and faster so that you can actually topple. As we talked about, even the music industry, topple the music industry by bringing all these different things and just really over the last 30 years from records and tapes to CDs, I thought that was a great analogy as well think about some of the things of how your customers want to get a job done, the willingness to pay to get the job done and the struggles with the job. We're not talking about those characteristics and those features you're thinking about it from their perspective so really enjoyed the conversation here today gave me lots to think about and I'm hoping it did for you as well. always putting together these conversations so that you can have an even better business and an entrepreneurial life after all you lead your business and it shouldn't be leading you always remember clarity creates confidence and confidence ignites momentum and today's conversation I think was really all around that. So if you liked the podcast please share it with your friends. You can really help me out by rating and reviewing this episode and most of all, subscribing to the podcast so you can hear future episodes. For more information on my coaching leadership programs just Google Simplifying Entrepreneurship and there you'll find our podcasts you'll find the website you'll find LinkedIn connections Instagram, Facebook, or you can just email me at Pete@Mohr.Coach that's a simple way as well. So until next time, make it a great day.

 

18:19

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