Tuesday, April 16, 2019

How To Start A Startup Even If You Have No Clue What To Build - Forbes

How To Start A Startup Even If You Have No Clue What To Build - Forbes

How To Start A Startup Even If You Have No Clue What To Build - Forbes

Posted: 16 Apr 2019 02:38 PM PDT



Why do most startup ideas fail?

"Because they [entrepreneurs] begin by trying to think of startup ideas. That m.o. is doubly dangerous: it doesn't merely yield few good ideas; it yields bad ideas that sound plausible enough to fool you into working on them," says investor and co-founder of Y Combinator, Paul Graham.

If you want to find a startup idea people need and will pay for, spend less time searching for ideas and more time getting your hands dirty. "Chance favors the prepared mind," says Louis Pasteur. Getting hands dirty simply means, instead of spending your time brainstorming ideas, find an unsolved problem you personally care to solve and then speak with over one hundred people that may be experiencing the same challenge and who have hacked a solution to solve it temporarily. Better yet, follow the approach I am about to share with you.

Talk to potential users while building an audience. The founders of the social media management tool Buffer invested close to a year blogging before launching the first version of their app. Writing articles not only helped them gain traffic and sign-ups to their upcoming product site but also get an opportunity to speak with their subscribers and learn about their needs. When the team was ready to launch, they had users lined up to buy and those users knew exactly what's coming out because they helped build it.

If you are searching for a problem to solve and even if you have found a problem worth solving, spend the early stages of your startup interacting with potential users, better yet, while building an audience. In his Startup Circle session, best-selling author James Clear said that he spent the first two years prior to his book launch learning more about his future readers and building trust while growing an audience.

Follow these four steps to start a startup even if you have no clue what to build.

  1. Publish Useful Content

People tend to overcomplicate a piece of advice just because its most basic version is "old school." In this case, there is no simpler way to say that the best way to identify an unmet need and an ideal customer is by doing. In startups, online research barely qualifies as a subcategory of "doing." Talking to customers is what you need to be doing to move the needle.

The goal of these four steps is to gain customer insights while building an audience. The best way to accomplish this goal by publishing useful content in the form of articles, videos, audio and/or video. The Buffer team started by writing about different business topics. This phase taught them what topics their audience is most interested in. Article comments, emails they received, calls to action clicked, people they met and metrics like repeat visitors, bounce rate and top articles read provided them with insights about the areas they needed to focus on.

Similarly, my venture, Startup Circle, started by addressing entrepreneurs building different business models in different verticals. The first 100 live sessions taught us for whom and how Startup Circle should be personalized and enhanced. Only when we met hundreds of founders and gathered enough data did we learn what to do next.  Sharing valuable content will give you the answers you need instead of building based on guesses and gut feelings.

  1. Test Ideas Through Content

As noted above, publishing content is the best way to start testing ideas. As simple as asking a question at the end of a guide seeking people's interest in a new tool that solves a specific problem uniquely is an easy first step to test new ideas. If readers care to share their answers in the comments section, answer a long survey, join to the waitlist or personally email you with further comments, you are likely onto something.

While your readers may not be as engaged in the beginning, sometimes for obvious reasons like not having an audience, the chances of gaining deep insights while growing an audience increase the more content you publish.

To attract more people to your content, prioritize leveraging the audience of people who have it. For articles, quote them or cite their work and then send them a personalized email telling them about it and ask if they would be inclined to share. Follow the same strategy for videos and podcasts especially if you make expert guests a core of your content value.

  1. Invite Subscribers To A Call

By now, chances are you have a much clearer direction and understanding of underserved segments and potential solutions. To make your direction even clearer, as the Buffer team did, every time someone joins your list, send them an email asking for a little bit of their time to hear their feedback on the solution you plan on creating. Once again, this is an opportunity to test readers' interest in the problem. Taking the time to spend a few minutes with you is another green signal.

  1. Presell An Idea

You know you should move to the next stage when a high percentage of your readers and interviewees talk about the same problem and express the same need. When you reach this stage, your priorities change to focus exclusively on testing the riskiest assumptions. The quickest way to test users' real intentions is by preselling the idea.

There is another key benefit from investing time in the first three stages as they allow you to not only gain insights and find an idea worth solving while building an audience but also build trust with the group. In preselling a product, your audience will invest in you because they trust you will deliver the promise. Without investing in relationship and trust building, your chances of getting strangers to pre-commit are very slim unless you leverage the audience of someone who's taken the time to build trust.

No one has all the answers. Even those who seem confident about the value proposition of their solution and their ideal customer end up itera

ting and sometimes pivoting their product and direction multiple times before finding what sticks. If you wonder how to start a startup without a clue what to build, follow these four steps and let the customers answer those questions for you. They may even pay you to build what they ask!

Birth control delivery startup Nurx taps Clover Health’s Varsha Rao as CEO - TechCrunch

Posted: 15 Apr 2019 09:31 PM PDT

Varsha Rao, Airbnb's former head of global operations and, most recently, the chief operating officer at Clover Health, has joined Nurx as its chief executive officer.

Rao replaces Hans Gangeskar, Nurx's co-founder and CEO since 2014, who will stay on as a board member.

Nurx, which sells birth control, PrEP, the once-daily pill that reduces the risk of getting HIV, and an HPV testing kit direct to consumer, has grown 250 percent in the last year, doubled its employee headcount and attracted 200,000 customers. Rao tells TechCrunch the startup realized they needed talent in the C-suite that had experienced this kind of growth.

"The company has made some really great progress in bringing on strong leaders and that's one of the things that got me excited about joining," Rao told TechCrunch. Nurx recently hired Jonathan Czaja, Stitch Fix's former vice president of operations, as COO, and Dave Fong, who previously oversaw corporate pharmacy services at Safeway, as vice president of pharmacy.

Rao, for her part, joined Clover Health, a Medicare Advantage startup backed by Alphabet, in late 2017 after three years at Airbnb.

"After being at Airbnb, a really mission-driven company, I couldn't go back to something that wasn't equally or more so and healthcare really inspired me," Rao said. "In terms of accessibility, I feel like [Nurx] is super important. We are really fortunate to live in a place where can access birth control and it can be more easily found but there are lots of parts of the country where physical access is challenging and costs can be a factor. To be able to break down barriers of access both physically and from an economic standpoint is hugely meaningful to me."

Nurx, a graduate of Y Combinator, has raised about $42 million in venture capital funding from Kleiner Perkins, Union Square Ventures, Lowercase Capital and others. It launched in 2015 to facilitate women's access to birth control across the U.S. with a HIPAA-compliant web platform and mobile application that delivers contraceptives directly to customers' doorsteps.

Today, the telehealth startup is available to customers in 24 states and counts Chelsea Clinton as a board member.

Brex, the credit card for startups, raises $100M debt round - TechCrunch

Posted: 16 Apr 2019 09:04 AM PDT

Brex, widely known for its billboards littered across San Francisco, has secured a $100 million debt financing from Barclays Investment Bank.

The company, which provides a corporate credit card designed specifically for startups, has previously raised $215 million in equity funding at a $1.1 billion valuation in the less than two years since it graduated from the Y Combinator startup accelerator.

Debt, Brex chief executive officer Henrique Dubugras tells TechCrunch, will power the company's next phase of growth, which includes the launch of a credit card for large enterprises. A necessary step for a company navigating an inherently risky business of supplying credit to upstarts, known to unpredictably fold or file for bankruptcy.

"Because we raised so much equity so fast, we put a lot of it to work on the lending; this will allow us to scale way beyond our equity," Dubugras said, adding that the company has no plans to raise additional equity funding right now: "Especially after this debt raise because now a lot of the capital that was tied up we can get back."

This year, the company has been putting its boatload of venture capital to work, taking the necessary steps toward maturation. Recently, Brex closed its first notable acquisition, poaching the blockchain startup Elph right out of YC in a deal that closed just one week before Demo Day. The Elph team brings their infrastructure security know-how to Brex, helping the company build its next product, a credit card for Fortune 500 companies.

Brex is backed by Y Combinator Continuity, Ribbit Capital, Greenoaks Capital, DST Global, IVP, Peter Thiel and Max Levchin.

Brex, which recently launched a rewards program tailored to startups needs, doesn't require startups to provide a personal guarantee or security deposit. The company simplifies corporate expenses by providing companies with a consolidated look at their spending and gives entrepreneurs a credit limit that's as much as 10 times higher than what they might receive elsewhere.

Logistics startup Zencargo raises $20M to take on the antiquated business of freight forwarding - TechCrunch

Posted: 16 Apr 2019 05:12 AM PDT

Move over, Flexport. There is another player looking to make waves in the huge and messy business of freight logistics. Zencargo — a London startup that has built a platform that uses machine learning and other new technology to rethink how large shipping companies and their customers manage and move cargo, or freight forwarding as it's known in the industry — has closed a Series A round of funding of about $19 million.

Zencargo's co-founder and head of growth Richard Fattal said in an interview that the new funds will be used to continue building its software, specifically to develop more tools for the manufacturers and others who use its platform to predict and manage how cargo is moved around the world.

The Series A brings the total raised by Zencargo to $20 million. This latest round was led by HV Holtzbrinck Ventures. Tom Stafford, managing partner at DST Global; Pentland Ventures; and previous investors Samos, LocalGlobe and Picus Capital also participated in the round.

Zencargo is not disclosing its valuation, nor its current revenues, but Fattal said that in the last 12 months it has seen its growth grow six times over. The company (for now) also does not explicitly name clients, but Fattal notes that they include large e-commerce companies, retailers and manufacturers, including several of the largest businesses in Europe. (One of them at least appears to be Amazon: Zencargo provides integrated services to ship goods to Amazon fulfillment centers.)

Shipping — be it by land, air or sea — is one of the cornerstones of the global economy. While we are increasingly hearing a mantra to "buy local," the reality of how the mass-market world of trade works is that components for things are not often made in the same place where the ultimate item is assembled, and our on-demand digital culture has created an expectation and competitive market for more than what we can source in our backyards.

For companies like Zencargo, that creates a two-fold opportunity: to ship finished goods — be it clothes, food or anything — to meet those consumer demands wherever they are; and to ship components for those goods — be it electronics, textiles or flour — to produce those goods elsewhere, wherever that business happens to be.

Ironically, while we have seen a lot of technology applied to other aspects of the economics equation — we can browse an app anytime and anywhere to buy something, for example — the logistics of getting the basics to the right place are now only just catching up.

Alex Hersham, another of Zencargo's co-founders who is also the CEO (the third co-founder is Jan Riethmayer, the CTO), estimates that there is some $1.1 trillion "left on the table" from all of the inefficiencies in the supply chain related to things not being in stock when needed, or overstocked, and other inventory mistakes.

Fattal notes that Zencargo is not only trying to replace things like physical paperwork, faxes and silos of information variously held by shipping companies and the businesses that use them — but the whole understanding and efficiency (or lack thereof) that underlies how everything moves, and in turn the kinds of businesses that can be built as a result.

"Global trade is an enormous market, one of the last to be disrupted by technology," Fattal said. "We want not just to be a better freight forwarder but we want people to think differently about commerce. Given a choice, where is it best to situate a supplier? Or how much stock do I order? How do I move this cargo from one place to another? When you have a lot of variability in the supply chain, these are difficult tasks to manage, but by unlocking the data in the supply chain you can really change the whole decision making process."

Zencargo is just getting started on that. Flexport, one of its biggest startup competitors, in February raised $1 billion at a $3.2 billion valuation led by SoftBank to double down on its own freight forwarding business, platform and operations. But as Christian Saller, a partner at HV Holtzbrinck Ventures describes it, there is still a lot of opportunity out there and room for more than one disruptor.

"It's such a big market that is so broken," he said. "Right now it's not about winner-take-all."

Daymond John-backed start-up Bombas is reinventing the sock—and it's bringing in $100 million a year - CNBC

Posted: 16 Apr 2019 07:44 AM PDT

For many, socks may seem like an insignificant wardrobe staple. But for David Heath and Randy Goldberg, founders of buzzy sock start-up Bombas, socks are not only big business, they are helping make people's lives a little bit better.

Founded in 2013 and backed by "Shark Tank" star Daymond John ("I'm really happy to be part of what they're doing," John tells CNBC Make It), Bombas is often referred to as the "Toms" or "Warby Parker" of socks for its socially conscious business model: For every pair of socks sold, Bombas donates a pair to the homeless.

In fact, the charitable aspect of the business isn't just an afterthought, it's what sparked the idea for the company in the first place. In 2011, Heath stumbled upon a Facebook post that said socks were the most requested clothing item at homeless shelters. The statistic gnawed at him.

"I thought, 'How sad is it that — something I've never spent more than a couple of seconds thinking about [how to pay for] could be seen as a true luxury for somebody else,'" Heath, now 36 and CEO of Bombas, tells CNBC Make It.

At the time, Heath was working with Goldberg at a media start-up, so he told his friend what he'd learned. Inspired by the boom of other buy-one, give-one companies, they thought maybe they could replicate a similar business with socks.

"We didn't grow up dreaming of starting a sock company. I'm not sure anybody ever has. But we got obsessed with socks," says Goldberg, now 40 and Bombas' chief brand officer.

"We looked at every pair of socks in the market [and] we realized that what most people were wearing just weren't that comfortable. And there were ideas and features that we started to notice that we could improve upon, and we just set out on a ... journey to create one, amazing pair of socks."

To begin constructing the perfect pair of socks, the duo worked with manufacturers around the world, testing existing socks then sampling their own versions and giving them to friends to test. It was a challenging time, since they were still working their full-time jobs while hustling on Bombas at night and on weekends from home and at coffee shops.

Friends and family were interested in giving them seed money, but Heath says they chose to bootstrap the research. They believed if they could just get the product out there, it would be a hit.

After all the testing, Heath says they decided to make seven material improvements with Bombas socks for better comfort, including using high-quality cotton and merino wool, reengineering the toe seam, creating a "honeycomb" arch support to hug the middle of the foot and using an improved stitching technique on the heel to grip the foot. Additionally, Bombas calf socks were created so they don't slide down or leave marks on the leg, and for its ankle socks, there's a cloth blister tab to avoid rubbing.

The toe seam improvement was actually inspired by Heath's own embattled history with socks. He has ADHD and as a kid, suffered from hyper-sensitivity issues, so finding a comfortable pair of socks was something he struggled with.

"I tried pretty much everything on the market," he says. "I ultimately resorted to turning my socks inside out, because the toe seam over the front would always irritate me. Whether I was in class or playing sports, I just couldn't let it go. So, in a weird way, starting this company kind of fulfilled somewhat of a childhood problem that I solved."

In 2013, the co-founders quit their day jobs and launched a crowdfunding campaign on IndieGoGo that spring and summer. Originally, they set a goal of raising $15,000 in 30 days, but within the first 24 hours, Heath recalls, they had raised over $25,000. In total, Bombas crowdfunded just over $140,000. With the capital, they officially launched the business that October.

In 2014, Heath and Goldberg raised a $1 million seed round from friends and family. The entrepreneurs also went on ABC's "Shark Tank" and scored a deal with Fubu founder John. (The original deal was $200,000 for 17.5 percent equity in the company, but The New York Times notes that the terms were renegotiated after the show.)

In the two months after their episode aired, Bombas told CNBC Make It, the company did $1.2 million in sales and sold out of its inventory.

John tells CNBC Make It Bombas one of his top three most successful "Shark Tank" investments.

"It's been a dream working with them, honestly. They're laser-focused," John tells CNBC Make It. "I don't even know if they ever call me for anything more than a little bit of words of advice, and they go out and they execute, so it's not been a lot of heavy lifting on my part. They've also taught me about the value of when a consumer feels that you have a social cause that is really amazing and they believe in you, how they will support you."

At first, Bombas offered just ankle and calf socks, but it has since expanded to offer everything from no-show to ankle to quarter and knee-high styles and athletic socks as well as dress. And Bombas socks are not cheap: A 12-pack of women's ankle socks can cost $145, while a single pair of men's vintage stripe calf socks costs $12, and a pair of women's no-show socks costs $10.50.

But people are buying them.

In 2015, Bombas did $4.6 million in revenue, according to the company, then $7.5 million in revenue in 2016 and $46.6 million in 2017, a notable jump that Bombas attributes to its full-team working together on everything from product design and development to marketing. In 2018, its revenue was $102 million, according to the company. The latest valuation of the New York-based company was in 2015 at $15 million, according to PitchBook.

The start-up has had issues along the way. Customers complained about incomplete or incorrect orders and a lack of customer service response during the 2018 holiday season, for example. Bombas tells CNBC Make It that it is committed to customer satisfaction and refunded or issued gift cards to orders that were affected.

Others have questioned the general effectiveness and ethics surrounding the altruistic business model, which is core to Bombas' brand. Some have even called the practice "guilt laundering." But giving back is deeply ingrained in the company and not something it simply puts in marketing, Bombas says. The Bombas team volunteers weekly, according to the company, connecting directly with the organizations it donates to by handing out socks and serving food.

Then of course there's the fact that $12 for a pair of ankle socks seems steep. But Goldberg likens Bombas' pricing model to Starbucks, explaining that pre-Starbucks, Americans weren't spending that much money on coffee, opting to brew Maxwell House at home or purchasing a cup at the corner deli for a handful of change.

"[Starbucks] improved the quality so much and improved the experience around coffee, that they were bringing the price up to three times what they used to spend," Goldberg says. "So if it's 75 cents at a corner deli and it's $2.25 at Starbucks, you're willing to pay extra for a better experience, for a better product. And it's the same thing for our socks."

But as of Monday, it's not just about socks for Bombas. The company launched its first new category of product: T-shirts. The shirts are made with Peruvian pima cotton and are designed to feel soft and cool (kind of like "the other side of the pillow," the company says). Bombas T-shirts cost around $36, and for every shirt purchased, Bombas will donate a shirt to someone in need. The company opted for T-shirts, Bombas says, because of customer demand.

"They waited a good amount of time to do it, they didn't spread themselves too thin," John tells CNBC Make It of the T-shirt launch. "When their product comes out, it has been worked on and really well thought of and developed."

The Bombas team plans to launch additional categories of apparel and — as a result — donate more. To date, Bombas says, it has donated over 18 million socks and T-shirts, items that are engineered to "specifically meet the needs of people who don't have the luxury of putting on clean clothes every day, such as anti-microbial finishes, reinforced seams and darker colors to show less visible wear," according to the Bombas site.

"Something that we say sometimes is, 'It's just socks.' But when we say that, what we're saying is, 'It's just socks, but look at what socks can do,'" Goldberg says. "You hand somebody a pair of socks who's having a hard day, and it starts a conversation and that's a moment of dignity and then all of a sudden, you have a little bit more compassion, a little bit more understanding, and you've helped somebody out."

"These are the types of things that when you start a business, you don't imagine all the subtle and important things that can come of it," he says. "But the basic concept is what drives all this."

Correction: This article has been revised to correct Bombas' 2015 and 2017 revenue numbers.

Don't miss: How this 22-year-old with Down syndrome built a multimillion-dollar business off his love of crazy socks

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Disclosure: CNBC owns the exclusive off-network cable rights to ABC's "Shark Tank."

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