Even before I moved to Silicon Valley, I was already learning all I could about The Industry. I was studying journalism and I wanted to work for someplace like Tech Crunch or Engadget, so I stayed up-to-date on the goings-on on the opposite coast. While I’ve never worked at a large publication such as those, I did work for a lot of tech companies, from publicly-traded giants to shared spaces in an incubator.
I’ve seen a lot of growth and a lot of failures. I’ve seen a lot of really dumb companies and some really brilliant ones. Over the years I’ve developed this 3-part test to determine if the company will succeed. You don’t need to throw together some crazy spreadsheet or study market trends, no math required. Think of it like the next step after an elevator pitch, your answers should be just as short and sweet.
[I’ll be using names of various companies in this post, sometimes as verbs and sometimes as names for their industry in general. Other times I won’t be using names at all. These aren’t endorsements or anti-endorsements or things like that. And let’s be honest, it’s impossible to have a meta discussion on startups without mentioning Uber.]
1: Can you explain your product to your grandmother?
This is in the vein of “don’t eat any food your grandmother wouldn’t recognize” (sorry, Go-Gurt), this forces you to distill your company into something that actual, real people can understand. We forget a lot that terms like “the Uber of [thing]” means nothing to a lot of people. The simpler a concept of a product, the more people are going to find a reason to use it. No one wants to feel like they need a computer science degree to work a smart-bulb.
They also need to do something that doesn’t already exist. If your grandmother will say “wait isn’t that just…?” then you have a problem. Also, most SaaS, such as Docker or Salesforce or even Cloudflare, would have trouble with this one. But those products aren’t for Regular People, like how an 18-wheel truck isn’t for Regular People, but a regular pick up truck could be. You can also think of this question as “can you explain what your job is to your grandmother?” Saying “I design the breaks for big-rig trucks” is understandable, as would be “I design tools that make it easier for companies to keep the Internet running.”
Amazon: It’s a catalogue, but online! And it has thousands of things! You can get weird things that you’d have to check 2-3 shops to find.
Netflix: They mail the DVDs to your house, no more going to Blockbuster! Which then turned to No more mailing DVDs! You get the movie as soon as you want to watch it!
Uber: You can call a taxi and it’ll know where you are. You don’t have to look up or remember phone numbers, so it’s great when you’re in a new city.
Any company that can only be described as “the [startup] of [startup]”. e.g. the Uber of WeWork (cloud kitchens)
Lunch delivery for employees to work through lunch: It’s catering….but they drive to your office and put it into the fridge for you. How is it different than regular catering?
Every company that cold-emails me because they see I work in digital marketing: Grandma only knows about one type of cookie and it’s not the one you’re telling me I need to buy.
Juicero: It’s a thing that squeezes a packet really hard…but why don’t you just use your hands? Why does it need a QR code? Why can’t you buy a bottle of juice at the store?
2: Can you convince your aunt in suburban Kansas why she needs your product?
One of the biggest problems I see time and again with startups is that they forget that there is a world outside of here. You can sell to other startups and other techies…but you’ll run out eventually. You need a large customer base to grow, and many of these companies need huge customer bases to ever dream of being profitable. You need to convince regular folx that they can benefit from your product. Your aunt who still struggles with Facetime is the perfect litmus test of “does this product have wide appeal?” Suburbs are also very spread-out; if you want a coffee, you’re either making it at home or getting in your car, there’s no walking. A decent number of companies only work in dense housing/office areas, and for a lot of America, that isn’t the case.
Amazon: The products come in the mail, so it’ll get to your house. Everyone needs to buy things sometimes. You can buy presents for your kids and not have to worry about finding time to shop away from them.
Netflix: Not going to Blockbuster is one more thing off your errand list. There’s a huge selection and there’s no need to worry about late fees.
Blue Apron: Sometimes you’re just too busy to meal plan, so you don’t have to worry about a few meals, plus you’re cooking it, which is better/healthier than ordering pizza.
Uber: While not a common thing she’ll use, not having to worry about having someone pick you up at the airport is pleasant. You won’t have to rent a car if you only plan to drive once or twice when you’re on vacation. She won’t worry if her kids have a designated driver when they go out drinking with friends.
Every single scooter startup: Where are people going to use it in the suburbs? People will have to walk very far to get to one and they’ll just end up in front of random people’s houses. Most places are also too far apart; that “the last mile” is more like “the last 10 miles.” She’ll also be mortified that no one is wearing a helmet.
Juicero: They sell bags of smoothie stuff in the freezer section and your aunt probably already has a blender. Why does she need a product to make one thing? And it requires refills she can’t buy at the store? She probably doesn’t know the “benefits” of fresh cold-pressed juice and you’ll be hard-pressed (squeezed?) to convince her.
WeWork: What’s wrong with starting your company in your garage? That’s what all the greats did, the Google and Apple. Office rents in smaller cities and suburbs are nowhere near as terrible as they are in big cities, so there’s little reason to rent out a few desks when you can have your own, actual office.
Those little robots that drive around sidewalks and have your food delivery inside: Everything is too far for this to work. Some suburbs don’t even have sidewalks or street lights, so the robot will have to share the road and risk getting run over.
Stockwell (nee Bodega): It’s a vending machine…but worse. You need a phone to use a vending machine now? Where would you even put it in a suburb? Why not just go to 7-11?
3: Does it work in New England in the winter?
This is the one that always trips people up. Many parts of the country (and the world at large) have 4 distinct seasons. Places have snow! And ice! It gets cold! If your product/service doesn’t work half the year, then you’re severely limiting the people who will use you over something else.
Obviously, not everything will work or be available during a blizzard or when the power is knocked out. What I’m referring to is the regular days when there’s snow and slush on the ground and you’re bundled up to stay warm. The parts of winter where the snow is no longer nice and pretty and everything is slushy and ugly.
Amazon: The mail always comes, no matter what. Your package will make it to your house. Plus, when the first snow hits you can buy a new winter jacket and get it in 2 days. This is excellent for holiday shopping, too, since there’s even fewer parking spaces during the winter.
Netflix: Snowed in but still have power? Perfect weather to binge a new series. Kids home from school? They’ll have things to keep themselves occupied.
Doordash: The poor dasher will bring McDonald’s to you as long as the McDonald’s is open. Just be nice and tip accordingly.
Uber: No one is going to want to wait for a bus in this weather, plus it gets dark very early, so knowing that you’ll have a safe, warm ride home after a Christmas party is very appealing.
Blue Apron: Ever go to the store and everything is stripped bare because of the upcoming storm? Well you’ll have a few meals set, at least! Plus you won’t have to worry about leaving the box outside too long since it’s so cold out.
Those little robots that drive around sidewalks and have your food delivery inside: There are no sidewalks in winter, not to mention the tires needed to deal with the terrain. Your food will also probably be cold by the time you get it.
Every single scooter startup: They’re all going to be slaughtered by the first plow that comes through. Or they’ll be trapped in the giant snow piles in the corner of the parking lot. No one wants to scoot when it’s that cold out and it’s dangerous with icy roads.
Self-driving cars: In theory, self-driving cars should be easy. Streets have painted lines and signs, there are strict rules people need to follow. Reality, however, is chaotic. These companies mechanical Turk the training data, labeling where curbs and marks on the roads are so the algorithm can learn. Oh, you’re a human? Pick every picture of a boat. Now imagine the streets of Boston during winter. There’s 1.5 lanes available, the asphalt is shades of white and grey, you’re not going to see any white paint on it. It’s 3 PM which means it’s dark as hell out so the cameras aren’t reading street signs (assuming they even can with giant snow piles in the way). How is this ever going to work? Who is going to pay tens of thousands of dollars for self-driving tech if they can’t use it a good portion of the year? Conditions can change so quickly, especially with black ice, so having drivers not having their hands on the wheel is a recipe for disaster.
All of us techies live in a bubble, which we tend to forget. We’re entrenched in these buzzwords, we know all about connectivity and the benefits of buying a piece of tech to make a small portion of our life easier. Blackberries existed for a long, long time but your aunt never had a need for something like that…until the iPhone came along. Meanwhile, Theranos promised to revolutionize blood-testing by having a machine in everyone’s home…but what average person needs that? Besides diabetics–who already have a (very portable!) dedicated device–who has a need to have their blood tested every single day by a big machine? But we get swept up by buzzwords, we see comparisons to Apple, we’re told things will “disrupt” or “revolutionize,” but does the average person get that?
Veggie burgers have existed for a very long time, but the only people who bought them were vegetarians, because they didn’t have many options. They didn’t have to taste awesome, since the market was only vegetarians, no one was trying to win over omnivores. None of those products ever got very popular, only Burger King sold a veggie burger, all the other fast-food chains had no plant-based protein options. It was a dead-end industry because the average person had no interest in those products.
Now there’s multiple unicorns that focus solely on plant-based proteins. What’s changed? Someone realized that everyone has to eat, and most people want to eat healthier, either for themselves or for the planet. A product that delivers on that and is a good-tasting alternative to beef or chicken has a potential customer base of billions. We have the McPlant Platform (McPlantform?) coming, the Beyond sausage pizzas at Pizza Hut and Little Ceasar’s, KFC but without a chicken. The “chicken sandwich wars” were so big because so many people can eat chicken and wanted a good alternative to Chic-Fil-A. But everyone* can eat plants.
We’ve all seen that TED talk about rates of adoption and the bell curve, but ultimately we’re not the people that need to be convinced. Apple, Amazon, Google** and Microsoft are trillion-dollar companies because they’ve made products every person can benefit from. However, you’re reading this post is thanks to at least one of these companies. There’s no question that these companies are profitable, and that’s because they’ve become integral parts of so many people’s lives. Same thing with your car, your groceries, your home appliances. Where does a Juicero fit in? An electric scooter? If your company disappeared, would anyone’s lives suffer? Would anyone mourn it? Or will your aunt keep living her life as if nothing has changed…?
*assuming they don’t have food allergies. Allergies to meat is incredibly rare, while soy is one of the top 8 most common allergens in the US. Outside of Jainism, there are no major religions or moral policies that prohibit the eating of plants all the time, compared to beef, pork, and animal products in general. But companies tend to forget about food allergies so people with soy allergies like me get to miss out on all these “disruptive” products.
**technically Alphabet, but we know it’s because of the Google-branded stuff that made the company worth so much