Supported by Greenhaven Road Capital, finding value off the beaten path.
Jerry Neumann uses Rob Fitzpatrick’s book, The Mom Test in his Spring 2019 class. Spring from there, we’ll work our way through a number of talks and interviews Fitzpatrick has given about his 2013 book.
This isn’t our first alt-school approach. We made a YouTube playlist for Michael Mauboussin’s Spring 2019 class and outlined the DIY MBA. There’s also ‘Deep Books’, China Books, and the Penn Consumer Psychology minor reading list.
As Bill Gates put it to Charlie Rose:
“It’s an incredible time to be a learner, I remember when I was young and it was very good, but I always felt like ‘I gotta get into this more, I want to understand it better.’ Today, the videos and courses that are online with the very best professors is phenomenal.”
I was excited to learn from Fitzpatrick because one of the lessons of failed startups is poor feedback. Founders would scratch their own itch or eat their own dog food to no avail. Scott Norton did not and said, about their first tasting session for a new line of ketchup, “We knew if we had one and invited all our friends they would be ‘this is amazing.'”
Fitzpatrick said, “The reason I call it the mom test is because you ask questions where even your mom couldn’t lie to you.”
Fitzpatrick’s idea boils down to asking before building. Once we have A THING and present it to A PERSON all of our social NORMS kick in. Fitzpatrick said about his mistakes, “I was essentially asking for compliments and opinions rather than getting real data, real evidence, and real commitments to purchase.”
Instead, he preaches an iterative approach with limited stakeholders. This, he said, is why college students are entrepreneurship cockroaches, “They can keep trying dumb stuff until something works.” College students don’t have mortgages or families or reputations to maintain. They have few stakeholders.
Stakeholders mean commitments which reduce time and opportunity for solving problems. Sam Altman advises founders they get one other big thing – family, hobby, sport – besides their startup.
Fitzpatrick gives permission to stay small. “The temptation to look big makes you more fragile.” And reminds founders that smaller means agile, “big companies can’t innovate because their mistakes would be too expensive.”
This is the entrepreneur’s advantage.
Think about buying from an entrepreneur, it’s usually a terrible choice on some dimensions like size, permanence, and resources. But, “The reason they buy from a startup is that you’re doing something to make their life better in a way that no one else is.”
Much like IDEO, Fitzpatrick suggests starting with the customer’s actions. Look at what they do, not what they say.
Ask them about their life, not your product.
Ask them about the past, not the future.
Ask them and then listen, don’t talk.
This is all very cheap, it only takes time and not even full time. Consider making meetings and taking lunches, after work, or on the weekends. “Nothing is expensive until growth.” And don’t aim for growth until after people love it.
Then scale might come, and along with it a whole new set of responsibilities like lawyers, investors, and a team. Those are all further stakeholders. Don’t forget A rounds lead to B rounds and on down the line, “Being committed to fundraising brings a lot of extra admin tasks.”
That’s the scaled startup path and Fitzpatrick said that was all he knew early on because it’s all the media covered. But there are smaller startups too “No one writes about this in the press because it’s not a dramatic story.”
Bootstrappers pull money through time. “The main idea criteria is that someone will pay you money quickly, that’s it.” One way to do this is like how Peter Rahal did it with RXBAR.
Direct to consumer has very generous payment terms, immediate.
Being small also lets founders talk to their customers. Fitzpatrick said, “If you do a survey it gives you data you can put in a pie chart but you lose the depth of it.”
Quantitative data works for large organizations because of dapper decision desires, everyone wants to look logical. “It’s difficult to justify making decisions on that (conversational) data because it’s not statistically significant and it doesn’t feel rigorous but I’d much rather make a decision on a small amount of truthful data than a big amount of superficial data.”
Grant McCracken articulated the same problem.
“When a senior manager says, ‘Fine, that’s what you think, where are the numbers?’ And the best we can do is say, ‘Just trust us.’ It’s like, yeah right, ‘I’m not trusting my career, my children’s opportunity to go to college on your impression. Where’s the data?’ By data they don’t mean, I did an ethnography in someone’s kitchen. They mean, please could I have some numbers.”
This is why Paul Sonkin and Paul Johnson wrote the book Pitch the Perfect Investment, to help analysts understand the local logical of their managers.
Within organizations, there’s the decision but also how the decision appears.
And as groups grow, more people move away from the customer. They lose what McCracken calls “kitchen table data” or what Tricia Wang calls ‘dumpling stand data’. Larger organizations need to create ways for everyone to have a customer touchpoint. Kayak had a service phone everyone answered. RXBAR did too. Fitzpatrick said that some companies have their engineers ask one or two follow on questions about use when they are working on bug tickets and others have Friday parties users are invited to.
The goal is to reduce biases. The Mom Test is about reducing our bias toward kindness. “It’s not enough to talk to them,” said Fitzpatrick, “you have to talk to them properly.” How so? “If you can meet them in a cafe rather than an office you’re immediately going to get more honest feedback.”
Thanks for reading.