Starting Up #12 - The Cold Calls That Built My Company: Voice of the Customer

Speaker A: Starting a business is hard. Betting on yourself is hard. Do you know what else is hard? Working for someone else and jobs that you hate for incremental wages while hanging on to the hope that by age 65 you're going to be able to retire and do all the things that you wanted to do while you spend the best years of your life making someone else rich. That's hard. Welcome to Starting up the podcast where we're choosing the hard that gets us where we want to go faster so we can live life on our terms. I'm your host Jay Sensei. I am a non technical founder who bootstrapped the software company from idea to multi million dollar ARR, sold it to private equity in an eight figure exit and retired at 40. All without a coding background, without outside capital, and without leaving my day job. Each episode I'm going to be sharing the real story behind how I did it. The wins, the mistakes, and the playbook that you can use to start, grow and sell a company of your own. This is starting up. Uh, let's get into it. The easiest way to find out what your customers want is something most founders are scared to do. Just ask them. I picked up the phone and called strangers, housing directors, assignments coordinators, residence life professionals at colleges across the country. People who had no idea who I was and really had no reason to give me their time. It was awkward, it was uncomfortable. It was probably one of the most valuable things that I did before having somebody write a single line of code. Today on starting up the power of the cold call and why the voice of the customer is the foundation of everything we've covered. The idea, the market, sizing, the timing. Now it's time to actually talk about people who will hopefully buy your product. You know, I learned a concept through lean training, uh, which I'll talk about maybe in another episode called the Voice of the Customer. The principle is beautifully simple. This is one of the things that I tell to any aspiring entrepreneur and it sounds so ridiculously simple. And it is, but it's something that people just don't do. The easiest way to determine what is important to a customer is just to ask them. Not, assume, not, guess not. Build what you want or what you think is best and then hope for the best. Ask. The easiest way to keep a customer happy or to get a customer to buy something from you is just to simply ask them what they want and then deliver it. It's not rocket science and very few people do it. Just ask. Today I'm going to walk through exactly How I did that, what I learned, and how you can replicate this process regardless of what you're building. When I decided to finally take action on my college for me, I knew I needed to validate the idea before investing serious money. I wasn't going to code it myself, and quite frankly, I couldn't afford to build something that nobody wanted. So for several weeks, I became a researcher. I started googling names and phone numbers for people who worked in Housing and Residence Life offices at colleges that had on campus student housing. Of course, my target person was usually somebody who was involved in some way, shape or form with the roommate matching process, kind of the person who owned the problem. And I started with my alma mater, the University of Scranton. I figured they'd be willing to talk to an alumni and that would give me kind of a warm intro before diving into cold calls. From there, I called, quite frankly, as many numbers as I could find through Google searches. And here's what I said when somebody answered Good afternoon or good morning. My name is Jay Sensei. I'm an entrepreneur working on a project related to roommate matching for college students. And I'm, um, wondering if maybe you'd be willing to give me a little bit of your time and tell me a little bit about how your campus currently handles roommate matching process. And I'd love to hear if you're willing to share, you know, any challenges or issues that you've experienced with the process. That's it. Simple, non m threatening, not trying to sell them anything. Just want to ask some questions and listen. And what I discovered almost immediately is when somebody doesn't like something, they have absolutely no problem telling you about it. Once these housing professionals started talking about their matching processes, uh, the floodgates kind of opened. You know, frustrations they've been sitting on for years just came pouring out. The student complaints, the limited data points, the hours they spend matching students on paper or on spreadsheets, the, uh, meet and greets that they have to, uh, try to coordinate their room changes. And all the while I just listened and took notes. Every process they described, every complaint they shared, every wish they expressed, I wrote all that down. I was trying to build a picture, right, of what this market actually needed, but I was using the information directly from the mouths of the people who would be users, from an administrative standpoint. Then after listening for a while, you know, I'd spend just a couple minutes just kind of explaining my initial concept, right? I had no, I had no software spec, I had no product. So I was just kind of Giving them the vision. Right. Of my roommate matching software. You know, I describe what I thought it would look like. Ah, social networking platform where students could create profiles and create, um, fill out questionnaires, look at their potential roommates, and ultimately make their own roommate match. The feedback that I got from folks was extremely positive. People loved the concept. They said that they could see how it would solve their problems and how it would improve the student experience. Slam dunk, right? Right. Warning, critical warning, and a warning that I, I wish somebody had given me. Positive feedback does not equal future revenue. Most people, when you describe an exciting new idea to them, they tell you it's great. Right. They nod along, say, yeah, that sounds great. That sounds awesome. That sounds amazing. And they tell you they would definitely be interested. I think it's just human nature. People want to be supportive and they want to be positive, Especially when they can tell that you're excited about something. And so, you know, saying yes in a conversation costs them nothing. They're not buying anything. But what if they had to write you a check? What if they had to give you money right on the spot? I can tell you most of them would not. I had so many connections tell me that they would buy my college roomie when it was ready. I had people tell me that 20 to $25 per student was a reasonable price. I, um, don't know how many clients I eventually sold at that price point. Zero. Goose egg. Not one. The gap between I would buy this in a phone conversation and here's a purchase order in a budgeting meeting is enormous, and you got to prepare yourself for it. So when you're doing market research and somebody gives you positive feedback, that's good. Still take that as a win, but take it with a very, very large grain of salt. What I learned to do, and you know what I recommend to you on every single call, is first ask the open end questions. Right? You want to learn about their process, so ask about the process. Listen, um, learn about those processes. Learn about their pain points, Learn about their frustrations. That's all gold. But then after you built a little rapport, all right, you've shared your concept. Ask the money question again. There's no risk at this juncture, Right. You don't even have a product to sell. But ask the money question. If this product were available today and I could deliver it to you, would you buy it? And then, critically, at what price point does a yes stay a, uh, yes? These two questions move the conversation from hypothetical to real. They actually forced the prospect to Think about their budget, think about their justification, think about, uh, competing priorities. But still, even with these questions, not everybody's going to be honest. Some are going to say yes because it's in their nature to be positive or helpful. Ask anyway. Asking sharpens the signal considerably because you'll get some people that'll say no, or you get some people that will give, uh, you some insight into what they think the value is. All right? And so the, the formula that I eventually settled on for planning purposes is, you know, out of every 10 people who tell you it's a yes, probably two, maybe three if you're lucky or legit. And of those two or three, probably actually one will become a buyer. You know, that's like a 10% conversion rate from people who express interest to people who actually purchase. And so what I found is that if you plan your finances around that number, you will be pleasantly surprised if you exceed it, and probably not that devastated if that's all you close. But if you're expecting those 10 to close, boy, oh boy, are you set up to be disappointed. You know, go into it by building a realistic foundation for your business plan. And I want to talk for a moment about something specific to my market because it illustrates what I think is a broader point. You know, one of the nicest things about selling into higher education is that you generally are going to find people that are over willing to help if they can. You know, as I shared, it's not really an industry that pays particularly well. So the people that are in that industry doing the work, primarily in housing and residence life, they do it because they care. They do it because they're passionate about student success and student outcomes. You know, they genuinely care about making the campus experience better. So because that's in their nature, they're also usually very generous with their time. So when I would call and I would say I'm working on something to improve the roommate matching process, most of them were willing to help. You know, not because they were going to buy from me, many of them couldn't. They didn't have the budget, many of them didn't. But because improving the student experience across the board was kind of aligned with their own personal mission. And I don't know if that dynamic exists in every industry. Uh, I mean, imagine you're selling to Wall street hedge funds. You're not going to get that reception, they don't give a shit about you. But I think every industry probably has some kind of version of it. You know, I think every industry has people, some People if you know a lot, maybe, I don't know, but at least some who care a lot about the problem that you're solving. You know, people that are frustrated by the status quo. Maybe people that are excited about the possibility of doing something better or something that makes their job easier or increases the outcome. Your job is really to find those people. Those people are going to be early champions. Maybe they're going to be your first users, but they're probably going to be your most valuable source of feedback. And they may not all be buyers, but they will make your product better and your business plan better. So let's go through a concrete action plan that you can start executing this week. Step one, Make a list. Google people. Whatever you got to do, make a list of 20 to 50 potential customers. Not companies. Specific people. You need to find specific people. You need to use LinkedIn, use Google, uh, use Zoom info. There's a lot of tools out there for finding specific people with specific job titles that you think have the problems that you're trying to solve. You know, these are the individuals at the companies who own the problem, right? Do the work that you're trying to solve for. Find their contact information, LinkedIn, company websites, Google. I, uh, think you might be surprised how findable people are. Write a script and not a sales pitch. Just like a research request, you know, hi or good morning. I'm such and such. I am, um, aspiring entrepreneur working on uh, xyz. I'm doing some market research and you know what, I would just love to learn about how you handle this particular problem or if you have this problem in your work. Or would you mind telling me a little bit about the steps that you take for this process? You know, can I take 10, 15 minutes of your time and then make the calls? Right? Or send the emails? You can send the emails if you want, but I've always found that calls are much more effective. Um, people will talk. Writing an email, you can't. It's not easy to ask follow ups. It's not easy to gauge passion, it's not easy to gauge frustration in an email. Always make the calls, pick up the phone. Or you know, start with emails and LinkedIn messages and try to get to the phone call. The idea is get them on the phone for 10 minutes, get them talking about the process, get them talking about their problems and give yourself a forum to ask those important questions. Um, action is what matters. You know, just start the process of reaching out and then ask open ended questions and listen. Just be a listener. Don't try to sell, don't try to pitch. Just learn and just take notes after you've listened and you've shared. Kind of ah, maybe just like a teaser of your concept. Don't forget the money question. Would you buy? And if so, what's a reasonable price? At what price point would you buy this product or service to where you feel you would be getting ample value for the return? So here's your challenge. Make 10 of these outreach attempts this week. Just pick up the phone. You're not going to get them all. Leave voicemails. They probably won't call you back. Keep trying. Some aren't not going to respond. Some are going to say they're too busy. But some are going to talk to you. And those are the conversations that might be worth more than any other type of market research report you could buy or activity you can take. I think every insight that you gather at this stage is one less mistake than that you might avoid making later. Next episode on Starting Up. Everyone says yes until you ask for money. We're going to go deeper into that gap between interest and action. We're going to talk about how to calibrate your expectations so you don't build a business on false promises. If you're getting value from Starting up, please subscribe. New episodes will drop weekly. My book, Starting up, will cover all of this in so much more detail. And when it gets ready to launch, subscribers are going to get early access. That's it for today. As always, I'm Jay Sensei. Keep Starting Up.