“AARRR!”: The Pirate Metrics And Your SaaS Subscription Startup

The “Pirate Metrics” is a powerful framework that provides you with 5 key metrics to manage your startup’s growth. It was created by Dave McClure, and it’s made of essential metrics that startup founders should know by heart.

They’re called pirate metrics because… well… the acronym sounds like a pirate yelling—“AARRR!”—and it stands for:

  • ACQUISITION
  • ACTIVATION
  • RETENTION
  • REVENUE
  • REFERRAL

Despite the funny meaning of the acronym, this framework may seriously help you assess your SaaS subscription startup’s performance.

Use it to define your startup priorities, as well as to make better business decisions. Master these metrics and become more confident, before presenting your startup to investors or partners.

Are you ready to learn about the pirate metrics? Of course you are.

ACQUISITION

Acquisition happens whenever someone signs up to your subscription.

In order to acquire a subscriber, you must achieve two things:

  1. Get person’s contact data (e.g., email and name)
  2. Give the person access to experience your the core value of SaaS subscription

More than getting direct access to potential customers, “acquisition” also means that what you’re offering is somehow valuable (at least valuable enough for someone to give you her personal data).

You may acquire a subscriber in 3 fundamental ways:

  • Free-trial: you let the user experience the paid features of your platform for some time (so he/she becomes convinced it’s worth to pay for them)
  • Free-tier: you provide users with a free version of your SaaS product (a lower-value version, with less space, number of features, quality, etc.)
  • Paid tier(s): they can only access by paying for it (acquisition and revenue happens simultaneously)

Of course, offering some value for free is not mandatory. However, by reducing the friction in the acquisition process may increase your results. Why? Because some people will need more time to agree giving you their money.

Consequently, asking them to pay you before they’ve had the chance to experience the value, might send them away (without giving you any information of who they are and how to contact them in the future).

Check out how Shopify uses a low-friction acquisition method by offering a 14-day free trial:

ACTIVATION

Activation happens whenever a user experiences the fundamental value of your SaaS subscription product, for the first time.

Let’s suppose you’re the founder of new personal finance app. After some research, you’ve identified that the core value of your app happens once the user has connected it to 1 at least one of his/her bank accounts. Hence, every time a new user takes this step, you’ve activated him/her.

Remember: acquisition refers to the steps your subscribers must do in order to gain access to the value you’re offering. Activation refers to the steps they must perform to actually experience the core value.

If you sign up to Shopify 14 free-trial, they’ve acquired you. Once you build your online store and get a customer, they’ve activated you.

See the difference?

Let me give you an example of how Headspace (a meditation app) used the email below to activate me:

At that time, I had just signed up to their 14-day free trial (they’d acquired me). But, Headspace team is not stupid; They know that if I didn’t take a step further to actually perform a meditation, I would have never understood the real value of the app (and would have never become an active user).

RETENTION

Retention happens whenever a customer decides to continue experiencing the value of your SaaS product.

Here, I suggest you to consider two different retention metrics:

  1. the number of users who kept their subscriptions (remained paying)
  2. the users who kept experiencing the value of your product (remained “active”).

When people decide to cancel their subscriptions, you had a customer “churn”.

However, besides churn, you must also monitor a different retention metric: the number of subscribers who stopped using your product.

Although, they’re still subscribers of your service, they’re not regularly using it anymore. Hence, they stopped getting the core value of your product.

Check out what Amazon Prime Video did to me:

It was a time when I wasn’t watching as many Amazon Movies as they believe were needed to consider me “active”. Amazon noticed it (actually the algorithm did) and sent me this message to keep me experiencing the value (and not cancelling the subscription in near future, of course!).

REVENUE

Revenue happens whenever a user decides to subscribe to a paid plan of your SaaS product.

Being able to monetize the value you’re delivering to your customers is mandatory to make your business survive.

So, you must identify which features of your subscription plans should be free and which ones should be paid. In order to do that, allocate the features considering the customers segments who will use your product (and their use cases).

The free version (if you decide to have one) must offer some value, but it has to limit the value so it doesn’t allow more “advanced” users to get the benefit for free. These users require a more complete version of your platform, because they use it for a different purpose. So, make your paid features to produce a ton of additional value for more advanced users (so it makes sense to charge them).

For instance, Zoom presents different plans for different customer segments (as of Sep 30th, 2021):

Did you noticed it? There… at the top….

Zoom even mentions the customer segments they’ve considered to build the plans. “Personal meetings”, “Small teams”, “Small businesses”, “Large enterprise”.

Well, they know that customer segments have different needs and that each Zoom plans’ features must be aligned with those needs. That’s why Zoom’s team considered the maximum number of participants as on of the criteria to identify more advanced users.

REFERRAL

Referral happens whenever a customer refers your product to potential customers.

People believe more in friends and colleagues than in startups they’ve never heard about. Not only will they pay attention to people they trust, but they’ll also be more likely to use and eventually purchase your product.

That’s why you should save space for “referral” in your metrics dashboard.

Referral may seem something out of your control, but it’s not. Actually, you may influence your subscribers to refer your product to people they know. Do you remember that marketing campaign that offered benefits for you and for a friend, if you referred the product?

Besides marketing initiatives like this, also consider features that will make your product “referral-friendly”.

Make it easy (or even mandatory) for people to share your product with their friends by embedding referral in your solution.

Well, referral doesn’t mean you must turn your subscribers into ambassadors of your product. It may be as simple as button that sends an invitation for a non-subscriber.

Check out how Miro (an online whiteboard & visual collaboration platform) incentivizes referral by adding “Invite teammates” steps and buttons.

By providing their subscribers a way to invite and “demonstrate” the tool for their friends, Miro is boosting the chances to grow its customers base.

THE POWER OF THE PIRATE METRICS

The pirate metrics represent the core of your SaaS subscription startup’s dynamics. Whenever you improve one of these metrics, you leverage your startup’s results.

Each metric represents a step in the relationship between your subscribers and your product. Every new step will require them a new investment (of time, energy, and/or money) so they can get a new outcome.

As a founder, you must assess those metrics, set one as your priority, and focus on finding ways to improve the chosen one.

P.S.: The steps above are the basis of “Growth Hacking” methodology. Wanna know more about it? Check out this book)

Designing a Business Model For Your SaaS Subscription Startup

How much of your creative time have you invested in designing the business model for your SaaS subscription startup?

There are two kinds of startup founders.

The first believes success will naturally emerge from the product idea. The second believes success will happen only through a powerful business model.

Which kind of founder do you relate with?

The risk about being the first type of founder is that your amazing product can’t guarantee your business success.

In this post, you’ll learn a framework to build a business model hypothesis for your SaaS subscription startup, so you can increase its chances to take off.

A BUSINESS MODEL? WHAT IS IT?

Before we jump into the framework, let’s first answer a key question: what exactly is a business model?

“A business model describes the rationale of how an organization creates, delivers, and captures value.”

Alexander Osterwalder, Business Model Generation

In other words, it’s your strategy on how you’ll build a successful business from your SaaS product idea.

Choosing the price, defining how you’ll deliver your solution, assessing your business metrics, beating competition… Whew… it’s better to organize it all. Right?

Of course! To do that, let’s use a framework called Lean Canvas.

THE LEAN CANVAS FRAMEWORK

The Lean Canvas was created by Ash Maurya, as an adaptation of Osterwalder’s Business Model Canvas. It is made of 9 components that will form the basis of your startup’s business model.

P.S.: Wanna know more about the Lean Canvas framework? Read Ash’s book “Running Lean“.

Okay, let me finally introduce you to… The Lean Canvas:

The Lean Canvas a framework to help you design your SaaS subscription business model

But please, don’t just stare at it. Grab this free editable pdf and start working on it right away.

Did you download it? Cool.

Is your solution there?

Yep, it’s definitely one important component of your business model. But, it’s not the only one.

So, if you’ve been talking just about your product’s features, it’s time to open your mind.

Your job isn’t just building the best solution, but owning the entire business model and making all the pieces fit.

Ash Maurya – Running Lean: Iterate from Plan A to a Plan That Works (Lean Series)

Okay, let’s prepare your smart brain so you can use it to design a killer business model.

Starting with the problem…

1. THE PROBLEM

Making people adopt your SaaS product and pay you a subscription fee is definitely a challenge. But, before persuading them to subscribe, you must convince them to listen to you.

They have a thousand thoughts flying inside their minds.

Why would they care about a new SaaS product?

The answer will vary, depending on the person we ask this question to.

But, one thing is certain; It has to be something that will radically change their lives for the better.

So, your first mission, my dear founder, is to identify the problem or the gap that is preventing your customers from getting a much better life.

In the case of your SaaS subscription startup, you must also be sure that the problem you’ve identified:

  • Happens recurrently (high-frequency)
  • Is effectively/conveniently solved through the cloud
  • Causes them a big frustration (relevance)

👉 P.S.: Ash Maurya suggests you map up to 3 problems for each customer segment.

Existing Alternatives

Once you’ve nailed the problem, it’s time to list the existing alternatives used by your customers to completely or partially solve it. Start by answering these questions:

  • What other solutions do your customers use?
  • Do they choose living with the problem and simply facing its consequences?
  • Have they built adaptations to partially offset the harm caused by the problem?

Remember: your research about existing alternatives must go beyond SaaS products. It’s about any alternative that may reduce the problem and/or its consequences.

👉 DO IT:

A) List 3 different problems your potential customers have
B) List existing alternatives through which your customers deal with these problems today 

2. CUSTOMER SEGMENTS

After defining the problem(s), it’s time to shift the focus towards the people affected by it.

When you deeply know your customers, it’s much easier to design a SaaS subscription product they’ll love.

Since your product may serve different people, it’s your job to map the customer segments and their use cases.

Early Adopters:

Customer segments differ from one another in many forms.

But there is one characteristic you should be aware of: how much each customer segment cares about solving the problem.

That means some of your customers will consider the problem an “Armageddon”, while others will consider it just a “smooth tremor”.

Since you’re still working to validate your hypothesis, start with the most desperate ones—the “early adopters”. Offer them an incomplete (but effective) solution. If they still want it, you’ve found a really relevant problem.

If you’ve done a great job in identifying the problem and the contexts in which it occurs, you’ll have enough knowledge to assume who your early adopters are.

For your SaaS Subscription Product, find a context in which the problem occurs in the highest frequency or causes the biggest damage (in the short or long term). Probably, in such scenarios, you’ll find those people desperate to hear about a solution and pay for it.

Work hard to find your early adopters, because they hold the key to unlock your SaaS subscription startup traction.

👉 DO IT:

A) Describe the customer segments your product may serve
B) Identify the early adopters for your SaaS subscription product

3. UNIQUE VALUE PROPOSITION

The third step you must accomplish to design your SaaS Subscription Startup business model is to define the Unique Value Proposition.

Your UVP should present:

  • The big transformation your product will produce in your customers’ lives
  • How your SaaS product will deliver the transformation, in general terms.

Let’s see how some SaaS subscription companies state their UVPs (extracted from their websites):

  • Netflix: “Unlimited movies, TV shows, and more. Watch anywhere. Cancel anytime.”
  • Calendly: “Easy scheduling ahead. Calendly is your hub for scheduling meetings professionally and efficiently, eliminating the hassle of back-and-forth emails so you can get back to work.”
  • CoSchedule: Organize All Of Your Marketing In One Place. From Any Place.
  • Setapp: Think tasks, not apps. Setapp curates apps for you, so you can focus on work.
👉 DO IT:

A) Describe the main transformation your customers will perceive in their lives, after subscribing to your solution
B) Describe, in general terms, how your product will deliver the transformation

4. SOLUTION

The “solution” block is quite tricky.

It’s tricky because, in general, SaaS startup founders are in love with their product’s features and algorithms.

Probably, you’ve invested so many hours in envisioning a dream product that you ended up imagining the most complete product in the world. Right?

However, considering your mission is to check if your startup assumptions are right or not, you must focus on what exactly needs to be validated about your solution.

The first assumption to be validated about your SaaS solution is how effectively it delivers your Unique Value Proposition.

In other words, you want to define the least number of features needed to solve your customers’ problem.

This rough and imperfect vehicle is called the Minimum Viable Product (MVP).

What is beautiful about an MVP is that it forces you to understand the pillars of your SaaS subscription product.

👉 DO IT:

A) Define your MVP (the minimum set of features to effectively solve early adopters problem).
B) Criticize the features you've included (can you take one of them and still be able to solve the problem? Do it.)

P.S.: If you want to know more about validation methods, check this post.

5. CHANNELS

This is your hypothesis about how your SaaS startup will acquire new subscribers.

Your path to customers can be built in many different ways (if you think you’re limited to just one or two channels, I recommend you read Traction, by Gabriel Weinberg)

As any other part of your business model, what you’ll write in this block still needs to be validated.

No one in the world can predict what will be the best channel for your startup, in your market, in your scenario. That’s why your mission is to come up with a strong channel hypothesis to be tested.

To build this solid rationale, use:

  • Your knowledge about your customer segments/early adopters: where are they found? Where should you expect to find the most promising prospects?
  • The channels that are already being used by similar products: but be careful. Just replicating what other similar businesses do may prevent you from being creative and discovering more profitable channels than your competitors.

B2C vs B2B

In the case of SaaS subscription startups, you may find a big difference between channels used for B2B and B2C.

If you’re offering a B2B SaaS subscription, have in mind the several different individuals that will be part of your customer acquisition process. Some of them will work outside client organizations (distributors, agents, etc) and some will work inside (managers, analysts, procurement employees, etc).

On the other hand, if you’re selling B2C SaaS subscriptions, you may count on a much more direct channel to reach your customers.

👉 DO IT:

A) Define up to 3 promising channels and the logic sequence to acquire new subscribers.

6. REVENUE STREAMS

In this block, you’ll design your hypothesis for how your startup will monetize the value it created for its customers.

For SaaS subscription startups, it seems obvious to say “subscription” as a revenue stream (although you should also consider including other revenue streams: e.g., additional services).

But, more than just defining how you’ll charge your subscribers, this is also the time for you to define how much you’ll charge for your subscription plans.

Although there isn’t a universal formula to calculate the exact price you should charge, some aspects can drive your pricing decision. Let’s see:

  • Recurring value perceived by your customers (how big is the impact in their lives?)
  • Purchase power (how much can they afford?)
  • Market size (how many customers are there in the market? How much would you have to charge to achieve positive results?)
  • Your cost structure (see next item)
👉 DO IT:

A) Define your revenue streams
B) Define your first pricing strategy

7. COST STRUCTURE

I know, I know. You don’t explode in excitement when you read “Cost structure”. Right?

But, investing your time to understand your startup’s costs may completely change the game for you.

The costs needed to generate and deliver the value of your solution will determine important things such as:

  • The gross margin each subscription will generate
  • The number of subscriptions you must sell to generate profit
  • The amount of funding you’ll need to validate your product.

But what costs are we talking about?

  • Validation costs: your best estimate for building and testing the MVP
  • Operating Expenses: your best estimate for the recurring costs to keep the business alive (e.g., rent, energy, salaries, etc.)
  • Cost of Goods Sold (COGS): your best estimate for the costs needed to create and deliver the value (hosting services, customer success salaries, support salaries, etc.)

Such as we’ve seen in the “Channels” component, there are significant differences between B2B and B2C companies’ cost structures.

From day one, start understanding what cost structure your startup will require from you.

👉 DO IT:

A) Estimate the validation costs
B) Estimate the operating expenses
C) Estimate the Costs of Goods Sold (COGS)

8. KEY METRICS

By defining your startup’s key metrics, you prove you understand two essential things.

The first one is that measuring progress is key for any startup founder who wants to achieve success. How can you know things are working or not? Yes, through metrics.

The second one is that it’s unproductive to monitor every possible metric of your startup. Okay, you can use tons of data to generate tons of metrics. But, you must define the ones that will really make the difference.

If you’re still scratching your head to find your SaaS subscription startup’s key metrics, I suggest you start with the model introduced by Dave McClure called “The Pirate Metrics“.

The Pirate Metrics: AARRR

Okay, if you haven’t guessed yet: Pirate metrics because the acronym seems a pirate yelling (“AARRR!”).

But let’s see what the acronym stands for:

  • Acquisition: The moment someone provides you his/her personal data (which permits you to identify and directly contact him/her)
  • Activation: The moment someone experiences the core value of your product for the first time.
  • Retention: The moment someone experienced the value for a recurrent time (considering the ideal time frame for your SaaS product)
  • Revenue: The amount of revenue you’re generating through your subscriptions
  • Referral: The moment a current user makes someone else start using your product too.

Once you’ve defined your key metrics, it’s time to define how you’ll generate them.

P.S.: Put your efforts to avoid building a too complicated process to measure your metrics.

👉 DO IT:

A) Define your key metrics
B) Define the process through which you'll measure them

9. UNFAIR ADVANTAGE

And here we go to the ninth component of your Lean Canvas.

Here your mission is to create a shield against future competitors.

What happens when your business model is validated and your SaaS subscription startup gets in the traction stage?

Besides saving a bottle of champagne for this glorious moment, you must also design a strategy to prevent other companies from replicating what you just built.

But, is there really something a startup can do to prevent being easily copied by more powerful companies?

Yep, there is! The unfair advantage.

Check out some examples of unfair advantages:

  • Insider Information: to have access to specific information that is not publicly available, nor can be dug easily.
  • Experts/influencers endorsements: to count with a strong endorsement from someone in your team or from a stakeholder.
  • A dream team: a team of stars that are able to produce extraordinary results.
  • Network effects: using the connection between SaaS users to make it more valuable (than a platform with fewer people).
  • Community: using the community bonds, identity, and history, to prevent people from searching for other alternatives.
👉 DO IT:

A) Identify your potential unfair advantage (list two, choose one)
B) Define a way of leveraging this advantage (What do you must do to harness its power?)

AAAAAAAND…. ACTION!

Designing the Lean Canvas of your SaaS subscription startup is indeed a great step. It will challenge you to build a good rationale for your business hypothesis.

When founders focus solely on features and algorithms, they end up with a weak (or absent) logic for their businesses.

So, it’s time for you to take action.

If you feel stuck with one or more of the nine blocks, it’s evidence you need to invest your time and energy in your business model:

“I don’t know what to consider as my startup’s costs!” — Exactly, that’s why you need to learn about it.
“I have no idea of what unfair advantage to build!” — Yep, and that’s a risk you should take care of right now.

Read. Research. Ask others. Model successful SaaS subscription companies. Be creative. Test it. Iterate it. Pivot it.

But, especially DO IT.

Apathy

Apathy In Your Course Sales Narrative? Get Rid Of It, Before It Kills Your Conversions

No matter whether you’re offering your course in a webinar, personally, or in a sales page, your narrative must be filled with excitement. Because, whenever your customers feel apathy in your speech, their motivation to listen to what you’re saying weakens.

But, the word selling causes something weird on you; It seems there’s a voice in your ear saying: “Calm down… You don’t want to annoy anyone.” And this voice makes you slow down your narrative, and takes your enthusiasm to the ground.

Brian Tracy mentioned in his article How To Be A Good Salesman: 3 Qualities Of The Most Successful Sales Professionals:

Sales has often been called “the transfer of enthusiasm”. The more enthusiastic and convinced you are about what you are selling, the more contagious this enthusiasm is and the more your customer picks it up and acts on it.

Hence, if you want to sell your course or workshop, be truly ENTHUSIASTIC about it.

Yeah. I know… Talking is cheap.

But, let me share three tricks that always help me to overcome apathy.

Good News!

Isn’t it exciting to tell someone good news?

Like telling your parents they’ll become grandpas for the first time. Or telling one of your employees she’s promoted.

Knowing that your message means good news for the listener is enough to make you eager to say it.

And that’s exactly how you must treat your course sales from now on.

It’s not about a sale for your business. It’s good news for your customers about a positive transformation in their lives.

Hence, the key to unlock your enthusiasm lies upon your understanding about how better their lives will be.

It means the deeper you know the problem your course is solving and its consequences—frustrations, wasted time, wasted money, wasted energy, broken relationships, sleepless nights—the more you see your program as good news.

So, the secret is always to address a relevant issue that, once solved, will mean good news for your customer.

But, wait… How can you be sure to address a really relevant issue?

By digging deep into your customers’ lives. Interview them, read forums about the topic, enter group discussions, or derive insights from your own experience.

Don’t stop digging until you find something truly relevant.

It Definitely Works!

Eliminating hunger in the world is definitely good news. However, if you cannot deliver it, you’re making an empty promise.

And guess what? An empty promise will kill your enthusiasm to sell your course.

You don’t want to fool anyone, and any doubt you have about your promise will mine your excitement, and make your speech very mild.

So, the next step to kill apathy in your course sales narrative is to be sure you’re offering an effective program.

Once you’re certain that your course is really effective to solve the problem, you’ll never feel you’re “pushing too hard” anymore.

Instead of picturing yourself begging for your customers’ money, you’ll see your efforts as giving them chances to solve their problems and improve their lives.

In summary, the more you work to raise your course effectiveness, the more enthusiastic you’ll be about selling it. You won’t be concerned about annoying people, because you know they’ll thank you and leave great testimonials, when they finish your course.

It’s Soooo Worth It!

Do you enjoy wasting your money? Neither do your customers.

So, the third mindset shift you must go through is to put yourself into your customers’ shoes and see your course as an investment decision.

Really. Go in front of a mirror. Pitch your course for 1 minute. Pause.

Now, analyze the investment decision you’re asking your customers to do.

Start with how much you’re asking in terms of time, energy, and money. This is the overall investment they’ll do, once they decide to enroll in your course.

Now, ask yourself how much your course is giving them back—time, energy, money, health, relationships, etc. This is the return on their investment.

Finally, ask yourself—as if you were the customer—“Does this offer makes a lot of sense? Is the promised return much higher than the investment it requires from me?”

If you’re answer is ‘no’, ‘not really’, or ‘kind of’, it’ll be hard to be enthusiastic about it.

In this case, think hard about ways to reduce what you’re asking (their investment), as well as to increase what you’re delivering to them (their return).

Your enthusiasm will come only when your answer for the questions above is a huge ‘YES’.

In Summary….

Wanna be 100% enthusiastic about selling your course or workshop? Be sure it:

  1. Addresses a BIG PROBLEM in your customers’ lives
  2. SOLVES THE PROBLEM effectively
  3. Delivers a HIGH RETURN on your customers’ investment (time, money, and energy)

positive testimonials

3 Pillars to Get Positive Testimonials About Your Course

Do you want a ton of 5-star, extremely positive testimonials about your course? Then, make sure to help your customers achieve their goals.

One of the biggest mistakes you can do when building your course or workshop is to think it’s all about organizing and presenting your knowledge to your customers.

But, the truth is: your customers care less about what you know and more about the results they’ll get from it. It means they’ll give you great testimonials about your course, as long as it has produced positive results in their lives.

Do you want to guarantee strong results for your clients in your next course? Then, work hard to build: a clear roadmap, powerful frameworks, and smart safety nets.

A Clear Roadmap

Your customers want to achieve great results but they don’t know how to do it. Therefore, the first element of an effective program is a clear roadmap.

A roadmap shows all the important milestones and major steps that must be completed in order for your customers to achieve success. The milestones and the steps in your roadmap must also be linked to one another so your customers understand they’re all part of your program’s journey.

Maybe you already presented the roadmap on your free webinar. But, it’s important that you assure your customers clearly understand it, before moving on to teaching them the first framework.

The better they understand the roadmap…

  • …the more engaged with your program they’ll be
  • …the less doubts they’ll have about how to perform the required steps
  • …the more resilient they’ll be about the potential hurdles (once they understand the importance of each step, they’ll find a way to accomplish them)
  • …the more they’ll leave you positive testimonials

Powerful Frameworks

Just knowing what to do and why to do it (roadmap), still won’t make your customers able to perform the steps by themselves. That’s why you have a second mission when designing your program: to build powerful frameworks.

In your program’s context, a framework is the fundamental structure to execute a specific task. It’s the recipe behind a specific achievement. Your customers will use your frameworks to know what to do, how to do it, and in what order.

You should love creating great frameworks. Why?!

Because every time you build an effective framework, you transform your expertise into pure results for your customers.

You see?! It’s the point when you stop just teaching concepts, and start producing results through your know-how.

More than that, when you build a great framework, you increase your value as an expert because you just got your clients a better—or easier, or cheaper—way to perform a task.

Without frameworks, your program will be just informational. So, when designing your course, be sure to create frameworks that are both clear and effective.

The better you design your frameworks, the faster your customers will get to their final goal.

But, how to build great frameworks? By always answering these two questions:

  • What are the steps my customers need to perform in order to achieve each milestone in the roadmap?”
  • “What is the clearest way to guide them to perform each step?”

Safety Nets

It’s very tempting to simply stop in the first two elements of the equation (Roadmap and Frameworks). But, your course’s effectiveness is at risk if you don’t care about a third element: “Safety Nets”.

You know that net placed under an acrobat when she’s performing her show? Yep… In case something goes wrong, she doesn’t hurt herself.

I know… Your customers are not hanging their bodies 20 meters above the ground. But, as an acrobat, they’re also testing their limits.

When you ask people to invest their time and energy to learn and practice something new, it’s very likely they’ll fail somehow.

But, why would they fail, if you’re already providing them with a brilliant roadmap and powerful frameworks?

In fact there are many reasons why. Here are just some examples:

  • They’re very busy and cannot find enough time to dedicate to your program
  • They’re too tired (after working the whole day) to pay attention to what you say
  • They may not have money to invest in the tools or equipment you’re asking them to buy.
  • And so on…

Let’s suppose you’ve built a course about “how to include financial planning in kids’ lives”. Although you put your efforts to produce a great course, very busy parents will find it difficult to attend it, or to sit for hours and teach their kids about finance.

Hum… What about including audio only episodes such as podcasts (so they could attend your course while commuting)? Or maybe shorter lessons and a slower progress plan (so they could perform the tasks in a longer time-frame)?

Providing your clients with smart safety nets will help them get rid of potential hurdles in their journeys and, consequently, increase your program’s effectiveness rate (number of people who attended your program vs. number of people who achieved expected results).

In Summary

To guarantee positive testimonials about your first (or next) course, don’t forget to:

  1. Present a clear roadmap, so enrollees understand and believe in the process and go the right direction
  2. Build powerful frameworks, so they take the right steps in the right way to produce solid results
  3. Design safety nets, to help them deal with and overcome the hurdles in the way

That’s it; Three pillars that equal success for your customers and positive testimonials about your program.

P.S.: Your success on building these pillars is strongly related to your ability to niche down.

niche down

Why You Must Niche Your Course’s Scope Down

Do you want to avoid building a program—course, workshop, etc.— that falls into the “just another course” zone? Then, you must consider to niche its scope down.

While it’s tempting to build an “ultimate” course that encompasses everything you know about a topic, it mines your efforts to entice potential customers to buy it.

But, what are the advantages of niching your program’s scope down?

I’ll give you three.

1. Niche Down to Get Your Customers’ Attention

The first reason why you should niche the scope of your course down is to make your customers listen to you.

Different customers deal with different problems. Also, these problems happen in different contexts. That’s why each person describes their struggles differently.

The magic of niching down happens when you use in your narrative the same wording your target customers use to describe their problems.

Check out these two examples of courses’ promises about the same topic (marketing):

  1. “Learn everything about marketing in my 3-day workshop.” (very generic promise)
  2. “Build an effective digital marketing routine for your brick-and-mortar business, in 3 days, in my workshop.” (specific)

While the first promise may be completely ignored by your audience, the second one does ring a bell inside their minds. When they hear (or read) words like “brick-and-mortar” and “digital marketing”, their senses open up to your message: “Brick-and-mortar? Digital Marketing? Tell me more about it…”

In summary: when you base your course’s promise on your expertise (e.g.: marketing), your potential customers will see your offer as part of your strategy to be successful.

However, when you design it based on a specific outcome (e.g.: digital marketing for brick-and-mortar businesses), they’ll perceive your course as their strategy to succeed.

Go it?

2. Niche Down to Increase Your Program’s Effectiveness

Increasing your program’s effectiveness is the second reason why you should niche its scope down.

First, it’ll have a positive impact on the perceived effectiveness.

Customers are not stupid; They know that their specific contexts demand different approaches. So, when they realize your program was designed for their specific situations, they’ll give it more credibility. Isn’t it likely that a specific program will provide better methodologies, frameworks and tools for a specific case? No doubt about that…

Second, niching down will also have a positive impact on the real effectiveness.

Since, you’re providing your customers with better frameworks, they’ll start achieving better results. As a consequence of this focus, the number of success cases will rise. In turn, these cases will boost your program’s future sales—via testimonials, case studies, etc.

Great, huh?

3. Niche Down to Be Seen as a Specialist

Finally, niching down will increase your reputation as a specialist.

If you want to be recognized as a reference for a topic, you must know that topic upside down. The more you talk (or write) about that topic, the more your audience will see you as an expert.

But, when you try to address a broader topic, you’ll find yourself overwhelmed. Even if you try hard to learn and produce content about that topic, people won’t see you as a specialist.

Imagine two different professionals who offer a program that promises to teach you how to plant beautiful trees in your garden.

The first professional, named Sam, has a course called: “Learn how to plant beautiful trees in your garden”.

The second one, named Sarah, has a course called:”Grow beautiful fruitful trees in your garden, with low maintenance costs and zero-stress.”

So, if you want to build beautiful fruitful trees that require small effort and money, who do you think is more capable of delivering results? Yep, Sarah.

See?

Takeaway

In summary, if you’re building your course or workshop, start with a specific scope.

This narrower scope will help you to:

  • Make your customers pay attention to your offer
  • Build the credibility of your program
  • Build your reputation as a specialist in that specific topic

At this point, maybe you still have a doubt: “But, there are successful generic courses. Aren’t there?”

Yes, there are.

But, if you still are not recognized as a specialist nor have built massively successful courses in the past, you should go narrower.

Let’s think about it…

Every outcome demands an investment—of time, energy, and money. When you choose a bigger scope for your course, you’re also asking a bigger investment from your customers. The bigger their commitment is, the higher the friction to buy will be.

This additional friction will require from your customers a stronger belief that they’ll get the results they want. This stronger belief will only be possible if they have proof it worked for other people like them in the past.

So, the logic is to start with a smaller scope, help your customers achieve success, then go to bigger scopes.

7 Customer Interview Tips To Generate The Best Insights

Okay. You’re excited because you’ve scheduled some customer interviews. You know this is a great opportunity to generate insights that will boost your startup development. But, some entrepreneurs simply waste this wonderful opportunity because they ignore one or more of the following customer interview tips.

1. Ask Open-Ended Questions

The more your customers talk, the higher the likelihood to generate great insights.

But, how will you make them talk? Using a magical ‘trick’ called open-ended questions. These questions start with ‘WHY’, ‘HOW’, ‘WHAT’, and they’ll demand from your customers longer answers than a simple ‘yes’ or ‘no’.

Let me give you an example; Let’s suppose you’re doing interviews with potential customers for your flowers lovers app.

You may decide asking a closed-ended question such as: “Is it hard to find the right seeds?”
And hear: “Yes.”

Or you may ask an open-ended question as: “How do you find the right seeds?”
And hear: “I start by checking with my neighborhood what were the seeds he has planted in his garden. Then, I select a different one. It’s like a healthy competition… who has the most beautiful flowers, the most exotic, the tallest ones, etc. We have a lot of fun in our ‘mini-war’. And some of our neighbors are already joining the game. The size of the challenge grows every year, because it’s harder to find such unique seeds.

Have you notice the difference? Besides the second answer is longer than the first one (duh!) it revealed more useful insights too. It was also more spontaneous, which helps you preventing yourself from inducing your interviewees to answer what you would like to hear.

2. Simply Shut Up

Every time you’re talking, your customers are not. So, be sure to open your mouth only in appropriate moments—to build rapport, to deepen or to change the topic, to clarify any blurry point.

But, why do we have problems to being quiet during customer interviews? Because we’re driven by the willingness to be:

  • Respected: we fear that the person we’re talking to will judge us badly if we stay too quiet. So, to make sure we’re not ‘stupid’, we try to dump everything we know about the topic and related matters.
  • Accepted: human beings need to be accepted so we constantly try to please other people. And to demonstrate we agree with them, we end up talking.
  • Right: No one enjoys being wrong. Indeed, we should recognize our failures as a means to learn, but the truth is we always prefer to be right. During customer interviews, this willingness to be right may trick us into trying to convince the interviewee about our point of view. If the interviewee doesn’t agree with us, we assume she didn’t understand it and we start ‘explaining’.

After each interview recap the moments you opened your mouth. Were you trying to be respected, accepted or right? If this was the case, work hard to avoid doing it again in the next interview.

3. First The Forest, Then The Trees

Many times, the most powerful insights are hidden in the less obvious places.

For that reason, you should begin your interview with broader questions, in order to understand your customers’ context. Once you capture the big picture, you’ll know which aspects are worth being further explored.

By being broad and open to the unknown, you’ll allow yourself to generate insights from:

  • Interesting quotes: that reveal hidden beliefs, paradigms, prejudices, ideas, etc.
  • Unexpected statements: something that goes to the opposite way you’re expecting it to go.
  • Additional problems: complaints about different issues than the one you’re addressing with your solution (maybe a more relevant one).
  • Adaptations: Self-made solutions or adaptations customers are already doing to partially or completely solve the problem (when something bothers them, they can be reeeeally creative).

4. Be Curious

From all these customer interview tips, this is definitely the most powerful one. If you are really curious about your potential customers’ lives, all the rest becomes much easier.

So, I have a challenge for you: instead of just focusing on putting a checkmark on the task, I want you to take a humbleness pill and work hard to understand how different and amazing your customers are.

When you truly empathize with your potential customers, you become apt to understand their fears, goals, thoughts, frustrations and logic. All these elements are fundamental if you want to make them open their wallets to buy your solution in the near future.

Yes, you may come up with ‘smart’ questions before the interview starts. But, don’t forget that many of the smart questions cannot be anticipated. So, trust in your curiosity to formulate powerful questions during the interview.

5. Don’t Pitch

Simply put: interviewing is about being open to discover; pitching is about presenting to convince.

Do you see? They go to very different directions.

That’s exactly why you must keep in mind that the interviews are all about the customers.

Every time you choose to pitch your idea—instead of listening to your customers—you waste an opportunity to discover what is running in their minds.

Besides that, if they believe you’re pitching, they tend to be less honest too—they may agree with you and say things like “It’s a great idea!” so you don’t become disappointed.

6. Stop Assuming Things

Another common mistake is to take some assumptions for granted.

If you’ve ever said something like “I didn’t ask him, but of course he does that.”, be careful.

In this very beginning, don’t consider something as ‘too obvious‘.

Maybe, you would act in a particular way. But, since you don’t know your customers’ context, you need to ask.

You’re painting a picture from scratch. You know the elements you want to use to paint it. But, you don’t know what kind of picture it is. Let your customers guide your masterpiece.

7. Why?

I love the word ‘why’… Why?

Because it’s so short, but at the same time it’s soooo powerful.

It’s like a small key that opens your customers’ minds and reveal their context, goals, logic, values, judgment, and dilemmas.

So, every time you want to put some color to grey answers—like a ‘yes’ or ‘no’—simply ask ‘Why?’, and be prepared for a ton of powerful insights to come.

customer interview

Doing Customer Interviews? Be Sure To Cover These 7 Topics

Generating insights from customer interviews is one of the 9 Cheap (But Powerful) Steps To Get Your Startup Idea Going.

But, what kind of insights should you get from these interviews?

To avoid turning customer interviews into just nice conversations, I always have in mind the following seven insights.

P.S.: I Consider items 1 to 5 for the Problem Interviews and items 6 and 7 for the Solution Interviews.

1. The Context

Your customers’ context means the conditions in which the problem arises. Once you’ve finished the interviews, you must have a clear picture of these conditions.

So, pay a ton of attention to the following elements in your customers’ narratives:

  • People involved: “my wife”, “my daughter”, “my boss”, “my friend”, “my colleague”
  • Places: “in my house”, “at work”, “in my family’s ranch”, “in the restaurant”
  • Times of the day, week, month, year: “after finishing my work”, “on the weekends”, “on holidays”, “when I’m doing laundry
  • Events: “on my vacations”, “when I visit my grandmother”, “when we visit our clients”, “when we plan our budget
  • Goals: “I want to be more productive”, “I need to do it faster”, “I wish I could be a better father”, “one day, I will…”, “I want to save more money”
  • Constraints: “I would if I could”, “I cannot do X because of Y”, “I don’t have a good memory”, “but it’s so expensive for me”

2. The Relevance Of The Problem

If I told you I can solve the biggest problem in your life… Wouldn’t you be absolutely crazy to hear what I have to say? That’s a great reason for you to do customer interviews: to be sure you’re solving a problem people really care about.

To do that, during the interview, check if:

  • The customer mentions the problem before you do: instead of asking how your customer deals with the problem you want to solve, ask her how she handles the situation (in which the problem should be happening). If she doesn’t mention the problem, maybe it’s something not relevant at all (or she doesn’t realize its relevance yet).
  • The customer expresses a strong negative feeling about the problem: even if your interviewee mentions the problem, you still need to check her reactions about it. Can you sense a high level of frustration in her narrative? If you can, they definitely may be crazy for a solution. If not, try to understand why she is not as frustrated as you expected her to be.

3. The Consequences Of The Problem

During customer interviews, your mission is also to uncover and understand every single consequence the problem causes to customers. Sometimes, customers are not even aware of all the consequences.

So, have in mind all the chain of consequences the problem can cause to your customers. When customers are talking about the problem, pay attention to everything that happens after the problem emerges:

  • Do they get angry? Frustrated?
  • And what does that anger make them do?
  • And by doing that, what happens next?
  • And so on…

4. Customers’ Wording

The words your customers pick to describe their thoughts and feelings about the problem are magical.

When you know these magical words—and understand their meanings—you start entering your customers’ minds.

Once these magical words find their way back to your customers’ eyes (in a sales page, for example) or ears (in a podcast episode or a video) these customers get instantaneously sucked into your narrative.

Therefore, avoid doing your own interpretation of the words you hear. For example, don’t hear ‘exhausted‘ and register ‘fatigued‘. Nor write down feeling ‘upset‘ when your customers said ‘miserable‘.

5. Current Alternatives (to your solution)

To understand how amazing your solution is to your customers, you must first understand what alternatives to your solution they have on their hands.

And I suggest you look for alternatives in three different categories:

  1. Products and services that solve—even if partially—the problem you’re addressing.
  2. Adaptations or self-made solutions your customers might have created to solve the problem or reduce the effects the problem has on their lives.
  3. Doing nothing: Yes. Doing nothing about the problem and accepting its consequences must be considered as an alternative. Sometimes, simply facing the consequences is preferable to investing time or money in any kind of solution.

6. Level of Excitement About Your Solution

The more excited your customers are about your solution, the higher the probability they’ll pay for it. And you can capture this level of excitement by paying attention to customers’ keywords such as:

  • “How much is it?
  • “Where can I buy it?”
  • “Is it already available?”
  • “I would love to use it even if it’s not finished yet.”

These and other statements that clearly show your customers’ strong intention to take action, should be considered too.

CAVEAT: Statements like: “This is a great idea.”, “You’re brilliant!”, “You’re going to earn a lot of money from it.”, “This is what the world was missing.”, “How hasn’t someone come up with that before? SHOULD NOT be considered as evidence of excitement (especially if they’re coming from your mom or best friend).

7. Rationale and Friction Points

Finally, customer interviews will help you to anticipate your customers’ rationale to decide if they’ll buy your solution or not. Inside this rationale, you’ll find several potential barriers that can make them say ‘no’—instead of ‘yes’—to your product, like:

  • “It’s too expensive.”
  • “It’s too complicated/hard to use.”
  • “It’s too boring.”
  • “It’s too big/small.”
  • “It’s too ugly.”
  • “I’m not sure it will solve my problem.”
  • “It’s too unstable.”
  • “It’s too risky.”
  • “It’s too laborious.”
  • “It’s not good enough.”

Every time you hear one or more of these negative statements, don’t be sad. Use them to start digging deeper into your customers’ rationale and to find ways to overcome these barriers.


Okay. Before investing a lot of money, time, and energy in building a solution, go talk to your customers and build THE solution they’ve been looking for.

9 Cheap (But Powerful) Steps To Get Your Startup Idea Going

Is “lack of money to launch my startup” your favorite excuse to not executing your business idea?

Definitely, you must redesign your logic. Right now.

Money is indeed necessary to build a successful business.

But, not having enough money to build the whole business doesn’t mean you cannot start your execution.

Actually, taking the first small steps in your entrepreneurial journey is cheaper and has a bigger impact than you imagine.

Below, you’ll find 9 powerful steps you can do today to advance in your entrepreneurial journey.

Here we go…

1. IDENTIFY THE MAIN COMPONENTS OF YOUR BUSINESS IDEA

One of your first tasks as the founder of your business is to clearly define the components of your idea.

Certainly, designing your product features is important, but not enough.

When you say you have a business idea, you must be assertive about: the problem, the market size, the cash metrics, the skills needed, the business model, and the approvals and the patents required.

P.S.: I briefly explain all these elements in this free ebook)

2. ASSESS THE LOGIC BEHIND YOUR BUSINESS IDEA

Once you’ve identified the components of your business idea, it’s time to criticize the logic they’re based on.

Of course, validation requires you to test your assumptions with real people. But, even before doing that, you must come up with a strong rationale.

By building a solid hypothesis, you’ll avoid some easy-to-identify mistakes, which will save you a lot of time/energy/money when testing your idea in the market.

P.S.: Interested in doing an assessment? Check my Biz-I Assessment here.

3. INTERVIEW POTENTIAL CUSTOMERS

This is an extremely powerful tip. Don’t ignore it. Your potential customers can provide you invaluable insights to validate or improve the assumptions of your idea.

Despite being a cheap task, it may also save a lot of your startup’s cash in the future too.

Understanding what your customers really need before building the solution will prevent you from building things nobody wants.

4. BUILD YOUR STARTUP’S CASH FLOW FORECAST

Cash management is at the core of any startup success. If the cash ends, your dream ends too.

Investing time to produce your startup’s first cash flow forecast will provide you a means to take well-based decisions about the launch of your startup.

Simulating revenue scenarios, as well as forecasting costs, expenses, and investments, will increase a lot your chances to succeed.

If you still don’t have a cash flow forecast, check my Cash Flow Forecast Template, so you can easily generate your forecast. 👇

5. NETWORK WITH POTENTIAL COFOUNDERS OR PARTNERS

Finding the right people to partner with, takes time and patience. If you still don’t have money to build your business, use your time to develop relationship with potential partners.

Look for people who will complement your skills and that have the same values as yours.

Start by identifying the benefits your startup could provide to partners and, then what benefits a potential partner could add to your business.

Building strong partnerships completely changes the outcomes of your business. But, don’t expect them to happen naturally. Start designing and nurturing ideal partnerships for your business, in order to make them become true.

6. DEFINE AND BUILD YOUR VALIDATION METHOD

After defining a strong rationale for your idea, you must test and validate its riskiest assumptions in the market—in the fastest and cheapest way.

To do that, you may count with an infinite number of validation methods. In a previous post, I presented you 5 methods to validate your solution. If you haven’t read it yet, I suggest you to do it right now.

Defining a validation method and building a first version of your solution is super-powerful to generate insights (and much easier and cheaper than building a full-feature product).

7. DESIGN YOUR MARKETING FUNNEL

Just building a great product won’t make people naturally come and buy from you.

As an entrepreneur you must design a clear marketing funnel that conveys a strong strategy to intentionally make people purchase your solution. Consequently, this funnel will be the basis of your marketing metrics and initiatives.

There are some great free and paid online services you can use to design your marketing funnel. One tool I like using is funnelytics.io.

8. BUILD YOUR REPUTATION

If you don’t have enough money to build your solution, yet you may find some time to start developing your reputation in the industry.

Start engaging in conversations about the problem you’ll solve through your solution. These conversations might happen through social media, blog posts, podcast episodes, etc.

Why is that important? Because when you have a strong reputation on a specific topic, people will listen to what you might say about a potential solution.

And guess what… You’ll have a solution that precisely solves their problem. Such a coincidence. Right? Of course not, it’s pure long-term strategy.

9. IMMERSE YOURSELF IN THE INDUSTRY AND LEARN EVERYTHING YOU CAN ABOUT IT

Learning is definitely one of my passions. The more I learn, the easier it becomes to understand some of the world’s dynamics.

While you’re still preparing to execute your business, you may start absorbing a ton of knowledge about your industry from sources like:

  • Books
  • Researches and publications
  • Videos
  • Social Media Accounts / Influencers
  • Hashtags
  • Social Media Groups
  • Podcasts
  • Many others…

The knowledge you’ll gain will help you to take well-based decisions about your business and drive it faster towards success.

It’s time to start making progress!

Abartys Health: Saving Lives by Providing Accurate Patients’ Data – with Dolmarie Mendez [Ep#21]

Abartys Health is a startup from Puerto Rico. It has created a system that allows seamless data flow and communication between insurers, doctors, and patients. Today, it has more than 1 million patients registered, 700,000 providers enrolled and $11 million in Annual Recurring Revenue.

In our 21st episode, Dolmarie Mendez tells us Abartys traction story and how she turned a (very) tough moment in her life into a startup that is saving lives.

Listen to the full episode here:


SHOW NOTES

The notes below are just part of the interview. Listen to the audio to get the whole episode!

THE PROBLEM AND THE SOLUTION

What is the problem you’re solving and what is the solution Abartys Health is providing to its customers?

Today, we give insurance companies and providers a centralized place, where they can exchange information—like their credentials and all the documentation that evidence they are capable and they are up to date with all their license and documentations in order to treat a patient.

A very high percentage of patients in the United States—to be exact 10%—die in the emergency room because they [payers and providers] don’t know anything about that patient. They don’t know if they are allergic to something—to penicillin or latex.

Information about the patients is crucial in order that those patients get the right treatments. So, having the right information from the provider and having it available for the patients are crucial in order to be efficient. Abartys is providing a solution to mitigate the fragmentation in the healthcare systems.

A VERY TOUGH TIME

How did you have the idea to build such a system?

In 2014, I had an infection. I had a shock—a bad reaction to crop—while I was in one of my continuing education trips. I had poisoned food—something that sounds simple to treat. But, if it’s not treated right, it can bring complications later.

I had a sepsis and I spent six months between hospitals. They didn’t know what was happening to me and no one was able to treat me in the right way, with the right treatment.

I said goodbye to my family because they told me I was not going to recover. My weight was 81 pounds—I’m five, three inches. So, imagine, very small. I lost my hair, my intestinal flora. And I remember like yesterday, praying: “Oh, my God, if I recovered from this, definitely I’m going to dedicate my life to collaborate some way to fix this.”

And I remember like yesterday, praying: “Oh, my God, if I recovered from this, definitely I’m going to dedicate my life to collaborate some way to fix this.”

That is the foundation of Abartys Health. After that, I got obsessed with wellness, prevention and making sure I have access to clinical data. That is the essence of our technology: access to clinical data and access to providers’ data.

ZERO MONEY, BUT MANY CONTACTS

How much money did you have when you decided building something together?

We had no money.

I was a vice-president of a benefits management agency at that moment. So, we proved our concept with the clients that we already have in here, managing their benefits. It’s about being strategic and wise about how you move all your stakeholders around you. When you are going to start a company, you need to keep your job, unless you have a good amount of money saved that you can go without nothing.

So, we started conversations with some of our friends, and a friend—of a friend of a friend—put us in contact with some people that could make some recommendations. Then, Lauren realized she had a friend that ran the physicist’s department at the University of Puerto Rico. We explained everything that he wanted to know and his first words were: “You are both crazy.” It was feedback that we were getting from everybody.

We explained everything that he wanted to know and his first words were: “You are both crazy.” It was feedback that we were getting from everybody.

I know a ton of people in the healthcare industry here. So that gave me some perspective and data bank to go on talk and ask for feedback. And the feedback was: “We trust you. If you make that, just call me because I’m going to buy it immediately.”

MONEY FROM AN UNEXPECTED SOURCE

What did you do next?

We needed to bring people with a fresh mind or thinking out of the box, that you just explained the problem, they learn from knowledge transfer, and they say: “What about this?”

We built a lab with students from the University. We were not able to pay them. At the beginning, it was just our word: “We cannot pay you.”

Then, at that moment, I spoke with my employer and we had a good number of clients in the company—that were my clients—and they trusted me. So, I told him: “Hey, I have this personal commitment and I really want to do this.” And he trusted me too. He said: “I’m going to fund your project.” That’s our seed investor and that’s where we saw our first capital seed—$562,000.

We used that money to build the company and to start with the technology.

When did you have something to show people?

We used another technology—a B2C product that you can buy online to manage wellness products—and it was like a third-party technology. We got the license and we started with two insurance companies here and employers to give them wellness benefits. We did clinics on side, physical exams on side.

And then we challenged that vendor: “Hey, can we take lab results? Can we process the lab results?” And we did it.

But we wanted something bigger. Because when we finished—after our case studies—we realized that we had the capacities to make this bigger. And then we said: “We’re going to build our technology.”

PARALLEL18

We went to Parallel18—an international accelerator here—to visit another startup, in the first generation, that had something we thought we could use as part of our solution. When we explained everything to them, we already had the platform to start managing membership. And they said: “You don’t need another startup to do that. That’s an easy thing.”

And we applied for the second generation [of Parallel18] from our cars. I remember we had like one hour left to submit the application and we got accepted. We were very lucky to be part of the second generation.

There, they give you $40,000 without equity and we invested all the money to start paying the guys that were working for free.

WORDS FOR STARTUP FOUNDERS

Usually as startups, we are told: “Don’t show your idea. Don’t tell anything. Don’t talk to everybody.” And you need to be wise about that. It’s not about not talking; it’s about how to talk about that. And it’s something that we did very, very wisely.

The feedback is very important. You need to take that feedback. You need to read about everything. I stayed in the medical office the whole day to look at people and see their reactions. You need to involve in the problem in a way that you have to feel it into your skin. If you don’t live what you’re trying to solve with your startup, honestly, it’s very difficult to achieve your goals. Because it’s a very rocky road.

If you don’t live what you’re trying to solve with your startup, honestly, it’s very difficult to achieve your goals.

Sometimes you’re going to get hit by a bus. And you need to start it all over again, go back and think “what happened here?” and learn from your bad experience.

All of them are good experience, because you’re learning something from it. So, there are no errors, no failures. There is no negative. It just depends on how you learn from it and what are you going to do to mitigate that?

The other thing is that do not underestimate yourself. That is something very important. While we raised capital, I was pregnant—and we raised $1.5 million. At that moment, Lauren and I were single moms. And I remember one investor telling us “Never say anything about your children. You don’t have a family, that is not true.”

And our investors, they love the fact that we are women and we have children. We raised 1.5 million in 2018 while I was pregnant, and now we raised $3 million while Lauren was having her baby.


MORE ABOUT ABARTYS HEALTH

Abartys Health (Website; FacebookLinkedIn) is a Puerto Rico based technology company founded in 2016 by Dolmarie Méndez and Lauren Cascio focused on centralizing and improving healthcare processes by creating solutions that streamline data, communication, and services for the three major components of healthcare – patients, doctors, and insurance companies. The Abartys Health system provides a consolidated solution to many of the inefficiencies contributing to the almost $1 Trillion loss in healthcare every year. The company has Developed a health  technology system that is moving healthcare from the existing dis-jointed state to a centralized hub.

Among the solutions that the company has created for the Healthcare Industry, Abartys has built the first truly shared digital provider data management system to increase data quality, drive down costs, decrease credentialing approval waiting times and to ultimately reduce the total long-term staffing, hosting and integration costs of maintaining and man-
aging multiple applications in support of costly credentialing, online look up and compliant provider directory management.

Cityfurnish: An Indian Startup That Provides Online Furniture Rental – with Neerav Jain [Ep#20]

Cityfurnish is a startup from India that offers online furniture rental. It was founded in 2015 by Neerav Jain and Saurabh Gupta and today it has more than 10 thousand subscribers, $3MM in Anual Recurring Revenue.

In our 20th episode, Neerav tells us about the beginning of the journey, the idea validation process, the marketing channels that were successful and more.

Listen to the interview:


SHOW NOTES

The notes below are just part of the interview. Listen to the audio to get the whole episode!

FLEXIBLE AND AFFORDABLE

What is the problem that you’re solving for people in India?

I did my undergraduate in New Delhi—the capital of India. While I was studying there, we were three friends staying in an apartment. As we realized later on, more than 70% of the apartments in India are either unfurnished or semi-furnished. So, we also ended up in an unfurnished apartment.

That actually led us to a problem which we faced at that time: there was no alternative to buying expensive furniture for temporary needs. So that was kind of a problem statement: If you don’t want to buy new furniture or old furniture, there needs to be a solution for it or an alternative […]

[…] there was no alternative to buying expensive furniture for temporary needs

Then, when we were leaving college, the second problem occurred. While we’re moving out of that city, it’s not easy, and it’s very painful actually to either discard or resell the furniture. So, that was a kind of an awakening to us that the amount that we had spent to buy the furniture and the amount we got from selling the furniture was frankly disproportionate. […]

[…] the amount that we had spent to buy the furniture and the amount we got from selling the furniture was frankly disproportionate.

At the same time, an average Indian shifts between jobs every 18 to 24 months. That does not resonate with their lifestyle. Because if they’re looking for something flexible and affordable, buying does not solve that problem.

SUBSCRIBE, INSTEAD OF BUYING!

How are you solving the problem for them?

We wanted to provide flexibility and affordability to our users. The way we do that is that we provide them a rental subscription plan that you can pay a monthly affordable rate. You can select items by packages, or by combos, or you can select it individually as well.

So, an average two-bedroom apartment, including furniture, furnishings, and appliances, will cost you roughly around $80 a month if you’re taking furniture from us, in India. And that resonated very well with the users.

TWO HUNDRED INTERVIEWS

Okay, let’s go back to September, 2015…

The day zero scenario was actually very funny and very challenging. We follow this book, The Four Steps to Epiphany. There was this very good saying: “For every assumption, you need validation.”

The way we went about it was that first, we needed to validate: “Is there a need for rental furniture or is it something we just want to solve, but there is no market need for that?”

That was day zero for us. Just me going into metro cities and job hubs where majority of IT centers are located and doing interviews. So, I did around 200+ manual interviews, in which I asked two major questions.

Cityfurnish’s Offices: 2015 (left) and 2017 (right)

First was “If you’re living in a rental house and if that is unfurnished, how will you furnish it?” As I expected more than 95% said, either they will buy new furniture or old furniture.

My reason to ask that question was to understand: “Is there an awareness already about furniture rental available in the market or will we have to create that awareness and category as we go about that?”

That was day zero for us. Just me going into metro cities and job hubs where majority of IT centers are located and doing interviews.

The second question we asked them: “If we provide you two-bedroom furniture and appliances, rental solution, around $80 a month, does that excite you?” And an astounding 89% said “Yes”. And we got our first 20 subscribers through that interviews itself.

So that was a big resonance for us, though the category awareness was not there. But if the category awareness is available to the users, the conversion is there. And there is a market sizable need, which we need to solve.

LEAN START

Did you count on any money at that time?

That time it was on ourselves. First of all, to do the interviews and surveys, we didn’t need any money at that time to start with it. Even the website was something which I and Saurabh did in the house.

So it took very limited budget to start with. But, as soon as we started getting orders and to buy the inventory and to fulfil those orders, we started using our savings to fund that.

OLD PARTNERS

What are your backgrounds?

I come from a furniture industry background. I did my undergraduate in Commerce. Post that I was working with Pepperfry—a retailer of furniture in India.

Saurabh is graduated from IIT in Computer Science. He has done his MTech from there. He has worked in companies like Vodafone and HCL and Mdocs, for close to 10 to 15 years before we’ve both started in one more venture—prior to Cityfurnish, That did not work eventually.

Post that, we started Cityfurnish. We knew each other for I think like two and a half years before we started Cityfurnish.

GOOD ENOUGH TO LAUNCH

Was this first version much different from what we have today?

The first version was very limited. We just had five options in total for furniture, at that time. The homepage and the products page were kind of similar. You just placed an order, then everything was done manually at our end. We used to call the customer, send them the emails, collect their KYC over the email.

Now, most of it is automated. The customer can have multiple items, view, place the orders, do the payment and upload documents also on the website. […]

We have done a lot of iterations from 2015 to today. And in every iteration, the theme which is consistent is that our users should get more trust and confidence while coming on to the Cityfurnish website.

TRACTION AND CONFIDENCE

When did you start seeing traction coming?

To be very frank, when we were doing these 200 interviews is when we got the first 20 subscribers. That was a very happy moment for us, because we were just stopping random people coming out from metro stations and just asking them. Actually, those 20 guys did place an order.

So, it was a very good validation and that increased the confidence for the complete team a lot. Maybe towards the April of 2016 was when scale actually started coming up a little bit, because we were doing a very good number of orders—in Delhi at least.

Then, we became a little bit more confident that we could expand into one more city. And that’s how we scale to Bangalore. So, that was the confidence level we were waiting for and once we got it, we expanded to Bangalore.

THINGS THAT DON’T SCALE

From 50 subscriptions in 2015 to more than 10,000 subscriptions in 2019. What were the marketing channels you used to acquire so many users in that period?

As one YC was saying: “do things that are not scalable for marketing”. So, we did a lot of this kind of thing.

There are a lot of expats and communities for expats. So, we used to do a lot of marketing promotions on Facebook and inter-nations related groups to target the expat community. Because we had a very good start in the expat community in terms of the orders that were coming in.

And then we started tapping into those and started converting into referrals as well. Around 35% of our orders are towards organic and referrals. In the beginning, most of our orders were towards organic and reference—through word of mouth and to reference. So, that worked really well for us.

As we started scaling, we understood that, in India, most of the apartments that are available for rentals, are available through the broker’s channel community—real estate agents and brokers. We started onboarding real estate agents to work as a channel partner for us. Now, you will see that we have an Android app called Cityfurnish Partner, on which a real estate agent can come on board and become a channel partner.

We started onboarding real estate agents to work as a channel partner for us.

And whenever he is working with a tenant or a landlord, he can input those leads into the channel on the partner app and our team calls them and then converts those leads, to fulfill those orders. So that was a very interesting and a very different approach towards increasing the orders. And that worked really well for us.

YC GOT ME

You were part of Y Combinator Winter 2019 batch. What was the most valuable learning you got from this three-month program?

I think the biggest advantage or learning from YC is the YC community in itself. Wonderful founders and peers you are working with, amazing pedigree of founder partners who are working with YC who are helping and guiding you. So that experience is invaluable, to say the least. YC community has a very good factor to make everyone push harder to excel in their work. The weekly office hours that they have make everyone accountable in a way that everyone is motivating and pushing each other.

FINAL WORD

What would you say to startup entrepreneurs that want to build a successful startup?

One major key thing I would say is that you should not do a startup because you want to do a startup; You should do a startup if you’re looking or if you’re able to solve a problem. So like, that major difference between those two things, I think is a key enabler to take through all the pains and sorrows which are going to come. And if you are doing it for the right thing, and you’re trying to solve a problem, eventually you will be able to find a solution for it.

Hey, did you like this episode? Check other startup stories here.


MORE ABOUT CITYFURNISH

Cityfurnish logoCityfurnish (Website; Facebook; Pinterest; LinkedIn) is revolutionizing the furniture industry by providing quality furniture and home appliances on easy monthly rental. With the immense focus on product quality and customer service, we strive to become most preferred name in furniture industry by customer’s choice.