It has been said that problems are nothing more than a wake-up call to creativity.
Just looking around. There is plenty of evidence to support this view when you consider some of today’s most important companies that were founded not so long ago – Tesla, WhatsApp, Facebook, Uber, Netflix. The list goes on.
Uri Levine knows startups well. He is the co-founder of Waze, the world’s largest community-based driving traffic and navigation app. Acquired by Google for $1.1 billion in 2013. He was also a lead investor and first board member of Moovit, sometimes called the “Waze of public transportation,” which was acquired by Intel for $1 billion.
Levine has built more than a dozen start-ups and has seen everything from failure to moderate success to financial and marketing home runs. He has the skills and grit to build a successful company, plus the self-awareness to know how he did it.
levin’s book is Falling in Love with the Problem, Not the Solution: An Entrepreneur’s Handbook. His focus on connecting with the end consumer should be an important guideline for every entrepreneur at every stage of their entrepreneurial journey.
Roger Dean Duncan: Your title itself seems like a good formula for evaluating business opportunities. What questions should entrepreneurs ask when conducting such assessments?
Uri Levine: Creating a lot of value for a lot of people is certainly a proven formula. While this may seem obvious, it’s not that simple. Let me try to explain.
Value means solving problems. When you solve a problem for someone, you create value for that person.
Next, you need to determine how much value you create and how many “people”. Often, before you start your journey, you need to think about a problem, a big problem, something worth solving that would make the world a better place if you solved it. Then you should identify who has this problem and try to define those by groups – eg “working parents” – and try to define multiple groups.
Next, go talk to those people to find out Their awareness of the problem.
Only then start thinking about solutions. Talk to as many potential users as possible. The result will be:
1. It will qualify and help you love the question, or better yet, it will disqualify the question.
2. It will provide you with a proper understanding of the problem
3. It will provide anecdotal stories for you to use on the go
Duncan: You say that an entrepreneur’s enthusiasm for change must outweigh his or her fear of failure and replacement costs. How can people be self-aware enough to know if they really have the mindset for entrepreneurial success?
Levine: Entrepreneurship is all about taking that leap of faith, even when people around you tell you “this will never work” in one form or another. But you also need to be in love to make that leap.
If you’ve never taken such a leap of faith, ask yourself, “Why?” It may help you overcome this hurdle. But in general — and this is what we need to accept — there are too few entrepreneurs in the world, and not everyone is born for this irrational leap of faith.
Duncan: It seems counterintuitive, but you say entrepreneurship is a journey to failure. Why is failure so important?
Levine: Entrepreneurship is a journey of failure mainly because we are trying to do something that no one has done before. We start out believing we know exactly what we’re doing, but in reality, we don’t.
So, for example, we try one solution or one product, and once we see that it doesn’t work, we try something else. We do this over and over again until we find what works.Once you realize that this is going to be a journey to failure, the most important insight is that you need to fail quickly, because then you have time for another try and another experience. These extra attempts are essentially increasing your likelihood of success.
Imagine you’re trying to make a three-pointer from half court. If you only have one shot, your chances are pretty low. But if you have 10 strokes, you’re about 10 times more likely to score. With limited time and money, the best way to get more opportunities is to fail fast.
Duncan: One of your “piercing” pieces of advice to entrepreneurs is to “launch before the product is ready”. Please give an example of how it works.
Levine: The only real way to make progress is to try out your product and get feedback from users. The sooner you get your product to real users, the faster you can move and the sooner your product will become good enough. Many people would like to think that the risk of launching a premature product 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 a lot to gain by moving faster.
Duncan: How can disruptive ideas help entrepreneurs spot promising opportunities?
Levine: Quite the opposite. Almost all disruption happens to startups, which have nothing to lose and therefore can take a completely different approach. It may be about products, business models, pricing or providing information. The POV of the saboteur is very simple. It always starts with the current state being completely wrong as a trigger for different thought processes and destructive approaches.
Duncan: What seems to be the key to fundraising success for entrepreneurs?
Levine: Let me share two pieces of feedback I’ve received over the years from seasoned investors. The first one is basically about first impressions. I asked one of Israel’s leading VC managing partners how long it took them to decide if they liked an entrepreneur they met. The surprising answer is, “Before they sit down.”
While this may seem completely unreasonable and definitely inappropriate, ask yourself, how long does it take you to make a first impression on a candidate or date? Second. Maybe you can give yourself a few more minutes to let the first impression wear off or change your mind.
Now, if this is the case, then you should start with the strongest point in the beginning, because by the time you get to that point, they’ve probably already made up their minds.
The second insight is perhaps even more important. I’ve asked some investors why they decided to invest in certain companies (first rounds), and I’ve heard a remarkably consistent response: “I like the story, and I like the CEO.” If that’s the case, then I would say there are two Conclusions: (1) The CEO goes to the first investment meeting alone – the CEO needs the stage to shine, and no one else in the spotlight will help. (2) CEOs need to learn how to tell good stories, and good stories are not about facts or figures. It’s about creating an emotional connection with the audience and building the trust a CEO can provide.
Duncan: What are the signs of a startup opportunity that should be passed up?
Levine: I’ll start by saying that my friend and super-entrepreneur Dov Moran (who invented the USB drive) told me that entrepreneurs never know when to quit. He is right. Entrepreneurs never give up. But there are two big signs that entrepreneurs should stop: (1) The team is wrong, you can’t change it – you can consider changing teams when you leave. (2) The problem or perception of the problem disappears.
Duncan: What seems to be the best practice for hiring people to staff a startup?
Levine: There is an entire chapter in my book called firing and hiring, and when I submitted my book proposals to various publishers, I heard it was supposed to be hiring and firing, and I said no! Firing is a difficult decision. Hiring was an easy decision.
Hard decisions are hard, and simple decisions are easy. Shooting comes first. Forget recruiting. Start by understanding who to fire and how, then it hardly matters whether you’re a good or mediocre hiring manager.
When someone isn’t a good fit, everyone knows within a month, sometimes sooner. Therefore, your hiring process should have a critical stage. After hiring someone for a month, ask yourself, “With what I know today, would I hire this person?” If the answer is no, fire them immediately. Everyone already knows they’re not a good fit, and the longer you wait, the more damage you do to everyone—to the organization, to you, and especially to new hires.