Ready Aim Fail

We are Checklet, a startup of two co-founders – Katrina and Ashley – who are sludging through the ups and downs of the customer development process, and have arrived at the point where we believe we’ve discovered the market where we will find our customers: A noisy, fragmented, problematic, exciting market.

Initially this market, crafters and makers, appeared to be a thin sliver of a niche located on the fringe of the web. Having delved more deeply into it, we’ve discovered that it is a rich and eclectic culture that exists with one foot firmly planted in the offline world, and whose online presence has been growing rapidly for the past five years.

Our product ideas have for the most part been centered around solving excruciating workflow issues, and while the customer love has been overwhelming in that area, we’ve recently begun looking at finding ways of giving crafters and makers actionable insights to grow and sustain their online and offline sales.

Most of these sellers don’t have expertise in managing and viewing their data (or any data, for that matter), and since they tend to work across many channels at once this adds confounding factors to any data that is there.

While there are several great analytics services available, including Google Analytics, KISSMetrics, Chartbeat, MixPanel, and others — none cater specifically to the key performance indicators that are unique to handmade, crafted, and custom businesses, and none provide the active hand-holding that many of a creative bent need when they look at numbers.

This is how we got here.

The Backstory

In ancient times, Katrina worked at a medium-sized startup.  The core idea of the company was very exciting. A prototype was built, angel funding was showered upon the company, and then later VC money flowed in. The prototype went into production (duct-tape and all), and slowly but surely most of the company was working hard to support the prototype that — let’s be honest here — was pretty much a so-called ”solved problem”.  Ah, heck, it was the solved problem’s bumpkin cousin.

The lure of the juicy problem that drew her to the company in the first place shimmered at the edge of the roadmap at all times. She learned things, she built things, she worked with smart people, and she had a paycheck. The company did pretty well, if you looked at the vanity metrics: Lots and lots of signups, lots of exciting partnerships, lots of employees. If you looked closely, though, it was apparent that this company was scaling without having found a business model.

She was worried that the company would run out of runway before she got to solve the exciting stuff. Her solution to this was to come up with a pitch for an alternate approach to the business that focused solely on the core idea of the company. It stated a number of assumptions about possible customers, possible problems, and possible solutions. She and a co-conspirator (also a developer at this startup) pitched this to the president of the company. They basically asked to become a black-ops division that could create quick and dirty experiments to generate and test hypotheses, and iterate until they found a small product that had a product/market fit of at least 40%, using survey.io to measure it. They failed to convince. A few months later both had left the company. A year or so later, the company was no more.

Meanwhile, elsewhere on the planet, Ashley was also digging into customer development. Entropy increased in the universe, oh wait — too big picture. Actually, what happened was, Katrina’s co-conspirator introduced them. They took all the research they had done on customer development and started playing with ideas for products of their own. They had devoured Steve Blank’s Four Steps To the Epiphany and read story after story of people using the lean startup concepts that Eric Ries developed to build a successful bootstrapped startup. They had spent months scouring Hacker News, and sending each other blog post after blog post.  Armed with a road-map from the giants in the industry, it was tempting to think that the recipe for creating a successful startup was Just Add Water. Which it is, essentially: Water, soap, more water, more soap; wash-rinse-repeat. Given the right environment, this can go on for a very long time at which point you’ve invented The Clean Startup [sic].

Our First Hypothesis

Our first idea was in the space of homeschooling. We were confident that homeschoolers had a pain-point with respect to customizing learning modules, and we wanted to build the “Next Great Learning Platform,” focusing specifically on the needs of homeschooling parents. We wrote down a list of our assumptions, made a list of questions to probe about their pain, sent tons of emails… and… nothing. They didn’t feel that pain at all. In fact, they seemed to be extremely happy — albeit chaotic — campers, and the one thing they agreed on is that each homeschooling family is a unique snowflake. They didn’t think that anyone could make a single system that could be useful to a bulk of the homeschooling families. I think we actually spent several weeks trying to get feedback before we realized that the sound of crickets chirping in the background is pretty significant in itself. Thankfully, no code had been written. We had failed, and we cut our losses.  We became somewhat discouraged by the amount of time we had put in, and realized that if it took that long to fail, maybe we needed a better hypothesis.

Lesson Learned: If you are going to fail, fail faster.

Our Second Hypothesis

For our second idea we decided to take a look at the younger crowd. We had noticed a lot of activity in a community of parents who were eagerly teaching their babies and toddlers to read. Many of these parents actually made hundreds of homemade books for their babies. We came up with an idea for an incredibly elaborate community site for sharing homemade books and crowdsourcing content. I’m sure there were numerous buzzwords involved. We spent about 15 minutes coming up with a name for it, and even bought the domain name. When trying to get the parents to describe the pain involved in actually making these books, the response was practically non-existent. If I recall correctly, a single parent even bothered responding, and that was to say “it’s not too bad”.

Lesson Learned: A $7.95 domain name is about as helpful to your startup as an expensive cup of coffee with all the trimmings, unless you specifically use it for vaporware to test your hypothesis.

Taking a Break

We got extremely busy on about 5 other fronts for a couple months, and didn’t have time to experiment further. But we couldn’t shake the lean startup methodology. We kept gravitating back to it, motivated to start from scratch… again.

Our Third Hypothesis

For our third idea, we got excited about an idea in a completely different industry: A Point-of-Sale system for small businesses that have more than one location, or that sell in multiple channels. We wrote up several pages of hypotheses regarding the small business and their problems with inventory, and got meetings with several likely candidates for a problem interview. Ashley spent hours in boutiques around Reno trying to drag a pain point out of these small business owners.  Like the homeschoolers the small business owners, as it turns out, had a latent need that they either weren’t aware of or weren’t inconvenienced enough by to want to do something about. Their jimmy-rigged solutions for accounting and inventory management suited them just fine. By this point we were getting sick of poking a stick at complex pain points (complex pain points, much like complex numbers, have an imaginary component).  We  were getting impatient and wanted to build something. However based on the customer interviews we didn’t have much to go on.

After 5 interviews we knew for certain that:

1. We were entirely correct in our assumption that they have massive problems with consolidating their inventory.

2. They were completely oblivious to these problems.

3. There was no way we had the resources to educate them about it.

4. We needed to find a market that understood their own pain.

Lesson Learned: You can kill a weak idea in 5 days with 5 interviews and a handful of $5 Starbucks cards if your hypothesis is specific enough.

Our Fourth Hypothesis

We tossed some ideas back and forth, and somehow ended up talking about a slightly different crowd. Same basic idea — selling through multiple channels and inventory management — but this time the people who caught our attention was the artisans, crafters, and makers. Those who sell on 4 different online venues, go to craft fairs, sell from the local cafe/art gallery, and occasionally from their own studio or kitchen. Be it homemade candles, vintage clothing, or sensors programmed to greet people with “Thunderboy!”, this was a crowd we were excited to explore.

We had some interesting brainstorms, wrote down some assumptions, particularly centered around the problem of consolidating inventory across multiple channels, and the pain of manual repetitive tasks, such as entering the same information at multiple websites. Before we had time to interview any of our target customers, Ashley (who is herself an Etsy seller) came across Etsy’s Handmade Code contest. The contest gave us a great extrinsic motivator in that we had to make the deadline and we had only two weeks to find a pain point, develop a product, and launch.  The Etsy forums were truly amazing. A literal gold-mine of pain points we could choose from.

We scoured the forums, and picked a problem we thought we could solve reasonably well in the two weeks before the contest ended, and the result was Favoritizer: an app to organize your Etsy favorites. We didn’t win the contest, but did get 2,700 users with 0 marketing dollars, using only word-of-mouth and fast customer service as our customer acquisition plan. It’s a free app, and we’ve decided to leave it that way. Through it we have learned tons about the Etsy community, the Etsy API and the Etsy ecosystem. Heck, we even got an honorable hack award for it.

Lesson Learned: Go find the forums. Find the problem with the most “me-too”s and nail it.

This gave us “blood on tooth” as the Norwegians say — a real taste for solving pain points, and an idea started germinating for a larger suite of tools for Etsy sellers, again based on things we were reading in the forums and hearing from the Etsy sellers we talked to. It was clear that the makers and crafters did not want to be spending as much time as they were on the administrative tasks of taking pictures, uploading pictures, writing item descriptions, tracking inventory, shipping, etc.  They wanted to spend more time creating. We set about to create a virtual tool set for them to speed up the process.

Our Fourth Hypothesis, Take Two

We decided to start with a tiny piece of functionality (rapid fuzzy search of all of your own listings). This time, however, we made the mistake of starting to build it without writing down our hypotheses about the customer, problem, and solution. This app is living a lonely life on a test server for the moment. While building it, we talked to a successful Etsy seller who told us about other issues that were frustrating her. Thinking back, the right thing to do at this point would have been to write down our hypotheses about the customer (Etsy sellers with a certain amount of volume); the problems (e.g. figuring out how much they need to pay in sales tax each quarter and calculating their total sales for a year for income tax); and the solution (our app, naturally), and then interview several more Etsy sellers. And then build the app.

Ah, hindsight.

We didn’t venture out into the real world until we had built the basic functionality for TaxTime, which took about a week of spare time. Ashley promptly started talking to customers and getting feedback while we filled in some gaps and put finishing touches on it.

The feedback was enthusiastic, and we breathed a small sigh of relief, and then held our breath as we launched, because honestly — we really didn’t know if what we had made stood a chance. We decided to put a paywall up immediately so that we had no opportunity to kid ourselves about whether or not it was succeeding.

Lesson Learned: Without a hypothesis you risk tumbling down the rabbit hole of confirmation bias. Bloodthirsty, you must be. Your ideas, you must attempt to kill.

We went live five days ago, and as I type this, we just made our first sale. Somebody paid us MONEY to solve a PROBLEM. ZOMG.

[Update: A day later, we've made 10 sales. I'm as giddy as a giggle of teenage girls. --Ed.]

What now?

First of all, we’re going back to first principles, and restating our hypotheses. We messed up on TaxTime in that we were sloppy about actually having something we could disprove. This suggests that the lean principles are even more powerful than we realized, as even a partial application has been more successful than things we’ve made before discovering lean. We will be filling in Ash Muraya’s Lean Canvas several times over before we build anything else.

And then?

Ironically, in the past few weeks we’ve noticed an overlap in the things we decided to tackle for Etsy sellers, and the things that Etsy themselves have been taking care of (go Etsy!). We’ve shifted focus from the administrivia approach of improving workflow and reducing repetitive and boring tasks, over to the tangential and actually more interesting problem of figuring out how to take a chaotic and wonderfully eclectic business and provide them with actionable metrics to create sustainable sales.

Lesson Learned: When working against platforms and ecosystems, it can be dangerous to get too close to the company’s core offering.

We’ve had a very interesting road down multiple paths in customer discovery, and have disproved more hypotheses than we’ve proved. We’ve proven to ourselves that we can apply lean principles to a micro-scale product, and get paying customers in the process.

We’re ready to do it again, this time with more focus, and with larger and more daring hypotheses.

Update: It has been suggested to us that what we’re doing isn’t very sexy, and that we should have visions of sugar-plums and $160 billion markets. I could add ‘world domination’ to our list of goals, but it would be like beginner guitar-players who play really, really fast to try to impress. It’s just embarrassing.

So this is what you get: a completely unsexy story that happened in the real world, nowhere near the cool kids.

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PS: We’d tell you all about the tools we’ve used along the way (many of which — and more — are available in the impressive AppSumo Lean Bundle). And while we love well-crafted, excellent products that help us stay lean, seriously — it’s not about the tools.

Published in response to the AppSumo Lean Startup Challenge.