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Problems, as the saying goes, are nothing more than wake-up calls for creativity.
Just look around. There is plenty of evidence to support this view when you consider some of today’s most important companies that were start-ups not so long ago – Tesla, WhatsApp, Facebook, Uber, Netflix. The list goes on.
Uri Levine knows a lot about startups. He is the co-founder of Waze, the world’s largest community-based traffic and navigation app. In 2013 it was bought by Google for 1.1 billion dollars. He was also a lead investor and first board member in Moovit, sometimes called the “Waze of public transportation,” which was acquired by Intel for $1 billion.
Levine has built more than a dozen startups and seen everything from failure to mid-level success to financial and market success. He has the skills and tenacity to launch successful companies, coupled with the awareness to know how he did it.
Levine’s book is Fall in Love with the Problem, Not the Solution: A Handbook for Entrepreneurs. Its focus on connecting with the end consumer should be a key guide for any entrepreneur at any stage of the business building journey.
Rodger Dean Duncan: The very title of your book seems to be a good formula for evaluating business opportunities. What questions should entrepreneurs ask to make such assessments?
Uri Levine: Creating a lot of value for a large number of people is certainly a formula that works. While this seems obvious, it is not that simple. Let me try to explain.
Uri Levine
Value means solving a problem. When you solve a problem for someone, you create value for that person.
Next, you need to qualify how much value you create and how much “some” there is. As a rule, long before you start your journey, you should think of a problem, a big problem, something worth solving, that the world will become a better place if you solve it. Then you have to determine who has this problem and try to define them by groups – for example “working parents” – and try to define multiple groups.
Then, go and talk to those people to find out Theirs perception of the problem.
Only then do you start thinking about the solution. Talk to as many potential users as you can. The result will be:
1. It will qualify you and help you fall in love with the problem, or better yet, disqualify the problem.
2. It will provide you with the right perception of the problem
3. It will provide you with anecdotal stories to use in your journey
Duncan: You say that an entrepreneur’s passion for making a difference must outweigh his or her fear of failure and opportunity cost. How can people be self-aware enough to know if they really have the mindset for entrepreneurial success?
Levine: Entrepreneurship is about taking a leap of faith, even when people around you are telling you “this will never work” in so many shapes and forms. But you also have to be in love in order to take that step.
If you’ve never taken such a leap of faith, ask yourself, “Why?” It can help you overcome this obstacle. But in general – and this is something we have to admit – there are very few entrepreneurs in the world, and not all of them are made for this irrational leap of faith.
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Duncan: It may seem counterintuitive, but you say that a start-up is a journey of failure. Why is failure so important?
Levine: Startup is a journey of failures mainly because we are trying to do something that no one has done before. We start with the belief that we know exactly what we are doing, but in reality we don’t.
So, for example, we try a solution or a product, and when we realize it doesn’t work, we try something else. We do it again and again until we find the one thing that works. Once you realize that this will be a journey of failure, the most important knowledge is that you must fail QUICK, because then you have time for another effort and another experience. These extra efforts are essentially increasing your likelihood of being successful.
Just imagine you’re trying to make a three-point shot from half court. If you have a stroke, your chances are pretty low. But if you have ten shots, you increase your odds of scoring by about 10X. With limited time and funding, the best way to have more hits is to fail fast.
Duncan: One of your “sound” tips for entrepreneurs is “Wash before your product is ready.” Please give us an example of how it works on the edge.
Levine: The only real way to make progress is to test your product and get user feedback. The sooner your product gets in front of real users, the faster you will move and the faster your product will become good enough. Many people would like to think that the risk of releasing a product prematurely is high, but in reality there is no risk at all. You don’t have a brand name yet, you don’t have users yet, so there’s nothing to lose, but so much to gain by moving faster.
Duncan: How can a disruptive perspective help an entrepreneur identify promising opportunities?
Levine: It is the opposite. Almost all of the disruptions happened through startups that had nothing to lose and therefore could take a completely different approach. It can be about a product, a business model, price or making information available. The disruptor’s POV is very simple. It always starts with the fact that the current situation is completely wrong as a trigger for a different thought process and a disruptive approach.
Duncan: For entrepreneurs, what seems to be the key to successful fundraising?
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Levine: Let me share two comments I’ve received from experienced investors over the years. The first one was basically about the first impression. I asked one of the top VC managing partners in Israel how long it takes them to decide whether they like the entrepreneur they meet or not. The surprising answer was: “Before they sit down.”
While this seems completely unreasonable and obviously inappropriate, ask yourself how long it takes you to make a first impression on a candidate or a date? Seconds. And maybe give yourself a few more minutes to let the first impression sink in or change your mind.
Now, if that’s the case, then you want to start with the strongest point first, because by the time you get to the point, they may have already made up their minds.
The second insight is perhaps even more important. I’ve asked several investors why they decided to invest in certain companies (the first round of investment) and I’ve heard very consistent answers: “I liked the story and I liked the CEO.” If that’s the case, then I’d say there are two conclusions here: (1) The CEO goes alone to the first investment meeting – the CEO needs the stage to shine, and anyone else in the spotlight won’t help. (2) The CEO must learn how to tell a good story, and a good story is not about facts or data. It’s about creating emotional engagement with the audience and creating trust that the CEO can deliver.
Duncan: What are the telltale signs of a startup opportunity that should be abandoned?
Levine: I’ll start by saying that my friend and super entrepreneur Dov Moran, who invented the USB, told me that an entrepreneur will never know when it’s time to quit. He is right. Entrepreneurs will never give up. But there are two main signs an entrepreneur should stop: (1) The team isn’t right and you can’t change it—you might consider changing the team by leaving. (2) The problem or perception of the problem disappeared.
Duncan: What seem to be the best practices in hiring people to staff a startup operation?
Levine: There’s a whole chapter in my book called firing and hiring, and when I submitted my book proposal to different publishers, I heard back that it should be hiring and firing, and I said NO! Retirement is a difficult decision. Hiring is an easy decision.
Hard decisions are hard, easy decisions are easy. Rest comes first. Forget employment. Start by knowing who and how to fire, and then it almost doesn’t matter whether you’re a great hiring manager or a slightly above-average one.
When someone doesn’t fit, everyone knows within a month, sometimes even sooner. Therefore, your hiring process should have a critical phase. A month after you hire a person, ask yourself, “Knowing what I know today, would I hire this person?” If the answer is no, stop immediately. Everyone already knows they’re not a good fit, and the longer you wait, the more damage you’ll do to everyone—the organization, you, and especially the new hire.
