What Amy Hoy taught me about starting a business
I first heard about Amy when I saw Twistori. Soon after, I started following her on Twitter. It didn’t take long for me to realize that Amy could teach me a lot about starting a business and building products. Since then we’ve interacted on Twitter and through email. I haven’t taken her 30×500 class (yet), but I hope to in the future (maybe once all of our kids are in school).
In the meantime, I found an interview that I think illuminates her business philosophy perfectly. In Founder’s Talk episode 6 (witih Adam Stacoviak) Amy describes her best advice for building a product [42:00]:
First: Define what you want to achieve
This involves setting goals for you and for your business. I love that she mentions the personal goal. It’s important to ask: what do you want to achieve for yourself? Amy says: “Get really concrete about it. How much do you want to earn? [Something like] ‘I want to bring in $200,000 a year,’ is a great place to start.”
When you launch into a project without first identifying what you want to achieve, how will you know if you’ve succeeded? Having a goal of earning 200k is a lot more achievable than “I want to make a lot of money”. It gives you something to shoot for but also leaves you accountable if you fail. That’s the point.
Second: Forget ideas; study a market
This is Amy’s best piece of advice. We’re all holed up in our caves, with our notebooks, trying to come up with great startup ideas. Amy says: “Forget ideas. Go actually spend lots and lots of time with people”. What are you doing while you’re spending time? You’re searching for their pain not pitching them ideas. It’s actually better to not have ideas; instead just walk yourself into a room, plunk yourself down, and just listen to what people are complaining about. What problems does this market have that you could solve?
Update: Amy recommends listening for pain online (in forums, etc…) rather than interviewing people in real life. The risk is that “in real life, people will bitch, just to have conversation”.
Third: Target people with money
Amy continues her thought: “[Spend time with people] who obviously like to pay for things.” This is our second problem as founders: we often target people with no money! We go after teachers, consumers, non-profits, students, and hobbyists. Meanwhile, there’s an office manager somewhere in Winnipeg who loses $3,000 worth of productivity to paperwork every month. That person is dying for help and would gladly pay $300/month for an app that solves her problem.
Fourth: Make sure you like your customer
So you’ve identified a market that has money, and where you can create value; time to get started, right? Not so fast. Think about this: you’re about to start a business serving this niche of people. This could become your life’s work: would you be OK interacting with these folks every single day, for the rest of your life? “[These have to be] people who you like, and can imagine doing business with”, Amy says. She also put it this way: “If you don’t like drunk frat boys, don’t open an Irish pub”.
Fifth: Identify where you’re going to provide value
Now you have a market, and you have a list of things that are causing them pain. Now it’s time to narrow it down: where can you create real value that they’ll pay for? “Be very pragmatic”, Amy cautions:
Don’t say: ‘How can I change their lives?’ Instead, say: ‘You pay me $30, and I’ll save you $60 a month or earn you $60 month’. Make it about the math.
This is why you want to target folks who can pay. A college student might want software to organize their homework, but they can’t afford to pay anything. A business owner, on the other hand, will gladly pay $30/month if you help them save money or earn more income. This is why Amy built Freckle (a time tracking app): if you can track your time, minimize waste, and invoice your clients easier, you’re going to earn more money (and waste less time).
Finally: Build it and charge for it as soon as possible
Once you’ve checked off the previous five items you’re ready to get to work. “When you find that [place where you can create value], build it and charge for it as soon as possible” Amy concludes. It’s not easy to build a product, but your chances of success are much greater if you build the the right product for the right market.
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