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A Key To Entrepreneurial Success: Focus On Problems, Not Solutions

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Problems, it’s been said, are nothing but wake-up calls for creativity.

Just look around. There’s plenty of evidence to support that view when you consider some of today’s most significant companies that were start-ups not long ago—Tesla, WhatsApp, Facebook, Uber, Netflix. The list goes on.

Uri Levine knows a lot about start-ups. He’s co-founder of Waze, the world’s largest community-based driving traffic and navigation app. In 2013 it was acquired by Google for $1.1 billion. He was also a key investor and the first board member at 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 midlevel success, to financial and market homeruns. He has the skills and persistence to launch successful companies, paired with the self-awareness to know how he did it.

Levine’s book is Fall in Love With the Problem, Not the Solution: A Handbook for Entrepreneurs. His focus on connecting with the end consumer should be a key guideline for every entrepreneur at every stage of the business-building journey.

Rodger Dean Duncan: Your book title itself seems to be a good formula for assessing business opportunities. What questions should entrepreneurs ask in making such assessments?

Uri Levine: Creating a lot of value for a great number of people is certainly a formula that works. While this seems obvious, it’s not that simple. Let me try to explain.

Value means solving a problem. When solving a problem for someone, you create value for that person.

Next, you need to qualify how much value you create and how many “someones” there are. As a rule, way before you even start your journey you would need to think of a problem, a big problem, something that’s worth solving, that the world will become a better place if you solve it. Then, you should determine who has this problem and try to define those by groups—for example “working parents”—and try to define multiple groups.

Next, go and speak with those people to understand their perception of the problem.

Only then start thinking about the solution. Speak with as many potential users as you can. The outcome will be:

1. It will qualify and help you to fall in love with the problem, or even better, it will disqualify the problem.

2. It will provide you with the right perception of the problem

3. It will provide anecdotal stories for you to use on your journey

Duncan: You say that an entrepreneur’s passion for making a change must be greater than his or her fear of failure and the alternative cost. How can people be self-aware enough to know if they really have the mindset for entrepreneurial success?

Levine: Entrepreneurship is about making a leap of faith, even when people around you tell you “this will never work” in so many shapes and forms. But you also need to be in love in order to make that leap.

If you never made such a leap of faith, ask yourself, “Why?” It may help you to overcome this barrier. But in general—and this is something that we need to accept—there are too few entrepreneurs in the world, and not everyone is made for this irrational leap of faith.

Duncan: It may seem counterintuitive, but you say a start-up is a journey of failures. Why is failure so important?

Levine: Startup is a journey of failures mainly because we are trying to do something that no one had done before. We start with having the conviction 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 once we figure out it doesn’t work, we try something else. We do it again and again until we find the one thing that does work. Once you realize that this is going to be a journey of failures, the most important insight is you need to fail fast, because then you have time for another attempt and another experience. Those additional attempts 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 one shot, your chances are fairly low. But if you have ten shots, you increase the likelihood of scoring by about 10X. With limited time and funding, the best way to have more shots is to fail fast.

Duncan: One of your “sound bite” pieces of counsel for entrepreneurs is “Launch before your product is ready.” Please give us an example of how that works to advantage.

Levine: The only real way to make progress is to try it out your product and get the users' feedback. The sooner your product faces real users, the faster you will move and the faster your product will become good enough. Many people would want to think that the risk of releasing a pre-mature product is high, but in reality there’s 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 point of view help an entrepreneur identify promising opportunities?

Levine: It’s the other way around. Nearly all disruptions happened through startups that had nothing to lose and therefore could take a completely different approach. It could be about a product, a business model, pricing, or making information available. The disruptor's POV is very simple. It always starts with the current state being totally wrong as a trigger for a different thought process and a disruptive approach.

Duncan: For entrepreneurs, what seem to be the keys to successful fundraising?

Levine: Let me share two feedbacks that I received from experienced investors over the years. The first one was essentially about first impression. I’ve asked one of the leading VC managing partners in Israel how long it takes them to decide if they like the entrepreneur they meet or not. The surprising answer was, "Before they sit down.”

While this seems completely irrational and definitely inappropriate, ask yourself how long it takes you to establish a first impression on a candidate, or a date? Seconds. And maybe you allow yourself a few more minutes to either let that first impression sink or to change your mind.

Now, if this is the case, then you want to start with the strongest point at the beginning because by the time you will get to the point, they may have set up their mind already.

The second insight is perhaps even more important. I’ve asked some investors why they decided to invest in certain companies (first investment round) and I’ve heard very consistent answers: “I liked the story and I liked the CEO.” If this is the case, then I would say there are two conclusions here: (1) CEO goes alone to the first investment meeting—the CEO needs the stage to shine and anyone else in the spotlight will not help. (2) CEO needs to 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 establishing trust that the CEO can deliver.

Duncan: What are the tell-tale signs of a start-up opportunity that should be abandoned?

Levine: I would start by saying that my friend and super entrepreneur Dov Moran, who invented the USB drive, told me that an entrepreneur will never know when it’s the time to quit. He is right. Entrepreneurs will never give up. But there are two major signs that an entrepreneur should stop: (1) The team is not right, and you cannot change it—you may want to consider changing the team by your leaving. (2) The problem or the perception of the problem disappeared.

Duncan: What seem to be best practices in hiring people to staff a start-up operation?

Levine: There’s a complete chapter in my book called firing and hiring, and when I’ve submitted my book proposal to various publishers, I’ve heard back it should be hiring and firing and I said NO! Firing is a hard decision. Hiring is an easy decision.

Hard decisions are hard, easy decisions are easy. Firing is first. Forget about hiring. Start by knowing who, and how to fire, and then it nearly wouldn't matter if you are an excellent hiring manager or just above the average.

When someone doesn’t fit, everyone knows it within a month, sometimes even sooner. Therefore, your hiring process should have one critical phase. A month after hiring a person, ask yourself, “Knowing what I know today, would I hire this person?” If the answer is no, fire them immediately. Everyone already knows they don’t fit, and the longer you wait the more damage you create for everyone—to the organization, to you and in particular to the new hire.

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