Discover why understanding customers and adopting a Minimum Viable Product approach is critical for corporate startups, and how the Shadow Partners Incubator is becoming a game-changer for companies brave enough to step into the arena.
Ever wondered how startups like eBay and Facebook evolved from their initial concepts to become industry giants? This episode takes you on a journey through the startup lifecycle, emphasizing the significance of pinpointing your true customer base and tackling complex industry problems that could lead to 'creative destruction'. Learn the art of customer discovery, witness the birth of new consumer spending habits with technological progress, and explore how corporates and startups within incubator programs mutually flourish through collaboration. Join us for an episode that not only promises to challenge your perspectives but also equips you with the strategies to thrive in the ever-evolving world of the AEC industry.
Want more discussions like this? You can connect with KP Reddy and other innovators in the AEC and CRE Industry in the Shadow Partners Community....go to https://bit.ly/ShadowPartnersCommunity to learn more today!
You are listening to the Shadow Network with KP Ready, your gateway to innovation and architecture, engineering, construction and real estate, with a sprinkle of startups that are making a difference. In between, check us out on YouTube at Shadow Partners. Never miss a live stream fireside chat or talk that we got going on with the industry's most interesting innovators and leaders. Every single week. You can connect with KP Ready and other innovators in the AEC and CRE industry in the Shadow Partners community. Go to bitly slash Shadow Partners community to learn more. Today. All it takes is a few clicks for you to make a difference. Welcome to the future and welcome to the Shadow Network with KP Ready.Speaker 2:
All right, welcome back. I am here with KP Ready. If you're not following KP, you're missing out over on LinkedIn, kp Post sometimes multiple times a day, talks about his insights, the things that he he learns reflecting on the conversations that he has with not only entrepreneurs and startup founders, but also leaders in the AEC and CRE space, and so it's if you want to know what's going on in terms of innovation for the built environment, you need to follow KP Ready on LinkedIn. So K Period, p Period Ready, r-e-d-d-y on LinkedIn. My name is Jeff Eccles. I am the head of marketing and a senior advisor at Shadow Partners. Kp is the CEO and founder of Shadow Ventures and Shadow Partners, and I get to come here every week and say, kp, what were you thinking when you wrote that post? And we do this unpacking KP. It's a lot of fun. We just dig into one of these articles, one of these things that KP has posed. So, kp, thanks for being here again this week.Speaker 3:
Always happy to.Speaker 2:
This is fun. Last week we talked about Dave Grohl and Foo Fighters and Nirvana and we just that was a lot of fun. This won't quite be the rock star, you know, like the Dave Grohl type rock star, but I think what we're going to talk about today really does sort of get to the rock stars of business maybe. So this post that I'm referencing it starts out you say, earlier this year I spoke at a Morrissey Goodale conference and met Mick Morrissey for the first time. So you and I both know, mick, we're doing some fun things with Morrissey Goodale now and you were at their conference and it was in Texas, wasn't it?Speaker 3:
No, it was in Vegas.Speaker 2:
It was in Vegas. Okay, so it was a Morrissey Goodale in Vegas in 2023. You went on to say needless to say, we hit it off and he has been very supportive of my efforts to drive innovation in the AEC space. So we're excited to collaborate and have Morrissey Goodale host the Shadow Partners Incubator demo day at their 2024 Southeast Symposium, and I'm particularly excited about that because the Incubator is one of my projects here at Shadow Partners. I love being involved with the Incubator and it will culminate this time. We always culminate with a demo day and with this next cohort that we're running now, it will culminate, as you said in your article, at the Morrissey Goodale Symposium in Miami, and so attached to your post is the word on the street article from Morrissey Goodale. It's titled Shark Tank for the AEC industry. It says we've added a ton of new features and content to our symposiums for 2024. One of the most exciting additions is the Innovation Incubator for the AE industry, which showcases some of the industry's most exciting new startups and business ideas. The concept is based on the popular TV show Shark Tank, except these are new businesses and they're focused on making a splash in design and construction industries, and we don't have anyone who goes by the moniker. Mr Wonderful, we could probably change that. I don't mean we may not want to tell Nick, but we might.Speaker 3:
I think you know it always remind people Shark Tank as a show. It's meant for entertainment, Not for an event, but I think it does get people's attention. I think one of the you know I do a lot of advisory work and workshopping for some of the CEOs of the Topian. Our firms and so many of them are building internal startups and I think one of the coolest things we do with our incubator is the mashing up of traditional startups with corporate startups and I think it's pretty unique. I don't think anyone else is doing it. And I think there's a reason one. We do it because we, we it's part of our mission. There's not really an economic reason why we do it, it's more just part of our mission. And I think as I meet with these companies and they're like oh we have these three ideas, we have these five ideas. When I start digging into how did you come up with these ideas and how were you going to market and all the things that adventure capitalists would ask, all those questions that make everyone uncomfortable, I am finding that 0% of the time these corporate startups are doing it well. They just are not doing it well. They are not doing customer discovery. In many cases they don't even know what I'm saying. They don't understand what an MVP is, because in many ways, a minimum viable product as a consumer of technology, they would never buy a minimum viable product. They would never. They want the whole suite, they want everything done. They wanted bulletproof, soc compliant, all those things. I find that they tend to overinvest in their internal startups with very little evidence of the market, the market size, etc. I think the benefit of the incubators that we allow corporate startups in and not only do they get a better feel of one, they get treated in our incubator. Maybe in our incubator maybe I'm Mr Wonderful, I think I'm just Mr Pragmatic they definitely get some unfiltered feedback around how they're approaching things and what they're doing. I think they're also in the room with other startups that are not. These founders are not getting a paycheck on the first and the 15th, unlike our corporate startups. The culture and behavior of these startups I think our corporate startups tend to feel it, move with it and engage with it. Where I think it drives a little bit of cultural behavior, I think for our startups to meet with corporate people and see what I think. I just think it's a fantastic. It hasn't been done in our industry. We used to do something similar to Georgia Tech, so it's not my idea. I borrowed it from when I was running Georgia Tech's incubator, but I think it's a really good system and I'm really excited to see some of the corporates that apply and also to hear from them post-fat, like the learning process. My theory is, whether it's us or somewhere else, if you're really going to build a game-changing startup and a corporate, you got to move outside your four walls. You got to really move outside of it. Whether it's our incubator or someone else's or whatnot. I really think that at a corporate level, this is not something you can do yourself. I've seen some companies try to do it. You just can't. It's a different mindset, it's a different skill set that you have to go through. There's a reason why there's why a combinator and then there's a Harvard MBA. They're very different.Speaker 2:
Right To be clear. You said 0% Zero.Speaker 3:
I mean none of them would ever get venture capital, because they can't answer the basic questions. I think that's a little bit of well we know our customers. It's like do you know your customers, right?Speaker 2:
Yeah, it's Like you said. This is something we do and I can look at examples. Here's a corporate that ran through the incubator and they came in pretty polished. They had a good idea, they had a legitimate product already at that point. Their pitch was decent coming in, but all of those things they still went through. This incubator and our incubator is focused on pre-seed stage and we do focus on customer discovery. So maybe I should take a pause there, since 0% even know what you're talking about. What does customer discovery mean?Speaker 3:
Yeah, I mean I think that the foundation of customer discovery is going out in market in a lot less of an analytical approach. It's not a market survey, but to go understand in an unbiased way what the market is interested in. What problem are you solving? I would say a lot of it is problem validation. In fact, talking in customer discovery, if you talk about a solution F-minus you already screwed up. You should never be talking about the solution. What you want to do is be a great scholar on the problem, and part of unpacking and understanding the problem is engaging with customers To one identify the problem. Is it a real problem? First question. Second, is it a painful problem? Is this a hey, we throw a Band-Aid on it type of problem? Or oh my God, we're going to die here? Yeah, and then the third one, the next part, is like is there a problem? Is it real? Is it big enough? Lots of small problems out there, maybe not worth solving for. And then the last one is is it keeping them up at night? Is there an imperative around solving this problem? And that's what you're going out to understand. And it's not 10 people, it's not 50 people. A pre-seed, if you're going to raise money, it's more like 500. And that's when you know. I see it with startups, it's not just the corporates, I see it with startups and the corporates. If the field of dreams model, if we build it, they will come. It's a recipe for failure Like it's just absolutely you will fail. Full stop, right. Prove me wrong, but I think where a lot of startups get it wrong and a lot of corporates get it wrong to go out and do customer discovery. A you don't write code. B you don't have to hire anyone. That's why I love, like you know, even some of our pre-seed startups. Many of these folks have full time jobs. It's like don't quit your day job yet. Yeah, like, go do your research. And if the research you think is talking, you know, looking on the internet and looking on Reddit, like that is not research, right, in our world, it is customer discovery. So go talk to 50, 100, and 500 people and guess what? The results of this are not chartable. This isn't about charts and graphs of 20 respondents said X, y and Z. I would say the way you interrogate I don't even call them interviews the way you interrogate the market, from your first five interviews to interview 495 to 500, will be absolutely different. Yeah, right. And my point is you know, in startup world we have this concept of pivot and I always say look, if you're pivoting around solving the same problem but with different solutions, that's a pivot. When the problem inherently changes, that's just a do-over Right, because there's lots of ways to solve a problem. You know it could be solved through a consulting business, it could be solved through technology. It can be solved through an insurance policy. You know how can you reduce risk? Well, maybe increase your premium. Maybe it's not technology, right yeah, sometimes it's finance, like, oh, just allocate more capital and you'll reduce your. You know, you'll solve that problem. So I think this customer discovery is really about understanding the problem set and iterating it to really understand the importance of the problem set. And, unfortunately, corporates well, we're in this, we're in the environmental engineering business. Of course we know you don't know, right, right right. And I would say the reason in the AAC industry specifically why there's just why they don't know is they are an industry that responds to RFPs. I what you're selling, the customer is very used to buying. When you try to invent a startup in your space, you bias it towards what your customer already knows. I think what startups do is they try to sell things and build things to solve a problem where the customer does not have a solution yet. Right, I don't think you can do that. You can't invent new solutions. It's just that framework does not exist.Speaker 2:
Yeah, I guess one way to it's probably way oversimplified, but one way to say that, restate that maybe is that the traditional startups they are innovating, they're attempting to innovate, and most of the corporates maybe not so much. Like you said, maybe it's just an iteration. When you were talking about the pivot versus the do-over, one of the things that I hammer in, I mean my role is to facilitate the, essentially to facilitate the incubator. We have mentors that get embedded with the teams and we have advisors and we have speakers that come in, subject matter experts that come in over the course of the weeks of this incubator. I think part of my role is the coach or the cheerleader, or something I say over and over and over. If you are the same this week that you were when you first started, if your example, I think, is perfect. The interrogations If the interrogation today is the same six weeks from now, you've got a problem. You didn't grow, you didn't change. I think that is hard, maybe harder for the corporates because they're just not in that space, they're not used to that. We have people co-founders that come in that pivot. We had in this last cohort co-founders that did a do-over. They passed on the live pitch. At Shatter Summit in Atlanta. They showed up and they said you know what we're not going to pitch. But, then they came back three weeks later, I think it was. We did the virtual demo day and they pitched it virtual and it was a do-over. They changed it fairly completely from where they started growth A lot of growth there 100 percent At this stage, when you look at like ideation precede.Speaker 3:
it is so rare that the first idea is the final idea. Ebay was about trading PES dispensers and collectible PES things. That's not what they are today. There's so many examples of Facebook was essentially like a dating app Day one. I think this idea of the first idea I think being having a deep understanding of the problem set, digging deep and really understanding whether it's the analytical side or the ethos side is super important. But, by the way, the problem doesn't always have a customer, which is something that people struggle with sometimes. In other words, are you solving a problem for a person? Maybe, but are you solving a systematic problem? When you're solving a systematic problem, what happens there sometimes is that you actually have what the term is creative destruction. In other words, if you're a structural engineering firm and you build a product to sell to architects, to structural engineering firms, whatever it is, will you ever build something that puts that customer out of business? Because maybe the beneficiary of solving that problem isn't who you think the customer is, would you ever do something that puts a DOT out of business? I think there's this idea sometimes in corporate innovation is we're going to develop ideas and solutions to solve for our customers, which might be the wrong idea. It might actually be we're going to put our customers out of business. It might be that, holistically, we're solving this problem because it's a systematic problem, because we deal with a lot of engineers. Right, whose problem is the pothole? Right? Is it the DOTs? Is it the taxpayer? Like you know, who's is it? And the customer is not always the customer, you know.Speaker 2:
Right, right, yeah, we. One of the sessions that we do for the incubator is it's a customer, payer, user Right, they're. These are different roles sometimes, and one of my, one of the things that I see most commonly. This goes back to a comment you made earlier. It reminded me of this, but you know the problem, the size of the problem, the customer. The question we've got to ask is is this problem big enough? Does anybody care enough to pay for your solution? And we see that a lot, right, it's. Oh, we've got this great solution for this problem. That's great. Does anybody actually agree with you to the level that they're willing to pay for it? Because, if not, that's a really nice hobby you have there, I guess, right.Speaker 3:
No, and I do think too, it's like the idea of like, my solution will replace another, another solution that's out there, and you know not to go too far down this rabbit hole. But you know, when we all started, like cutting the cord to cable because it was cheaper to stream, what have we done? We still have cable because we need internet access, and now we're paying $500 a month in streaming services.Speaker 2:
Which has happened right. 16 different streaming services.Speaker 3:
Right. I mean sometimes there's a loser, but sometimes there's actually market expansion. Yeah, you know, I definitely am a fan of winners and losers. And yeah, netflix beat blockbuster Right. Those are great stories. I enjoy those stories, right, and I enjoy seeing it in action too. But I think you also have that question like is there a net new market? Because it turns out people will pay $1,500 for a smartphone which was never imagined. It turns out people will spend $500 a month on streaming service. They'll pay more than what they paid on cable to have streaming services. Didn't see that one coming right. We all thought our you know one. We thought all our cell phone bills were gonna get cheaper over time. That's not true. That's a lie. We thought our entertainment budgets were gonna go down over time. It turns out that's not true. You know, when video gaming was getting popular, the demographics said that the biggest number one threat to the movie industry was the gaming industry. That hasn't really happened either.Speaker 2:
And so I think it's really I mean, look, but this is part of customer discovery is really understanding these things, and that's why I'm really excited about the. You know, we had several corporates in our last cohort looking forward to seeing a lot more in this cohort, and I think, when we talk about driving change and driving innovation in the industry, the commingling of these two silos of people startups and corporates is like magic. It's absolutely magic.Speaker 2:
Yeah, it definitely brings an energy to the room and you said this earlier. You know the corporates love being there because they love the fantasy of the traditional startup culture. They have a lot to learn, you know, fluidity and flexibility and everything else. And on the flip side, the traditionals like being in the room with corporate. That's a lot of them. That's where they eventually want to sell to, et cetera, or serve. So it does. I think it does bring a really unique energy to the incubator program, looking forward to kicking off the next or the next cohort of the incubator in January of this year. If you want to know more, right, if you're a corporate or even a traditional founder, co-founder, reach out to me or reach out to KP. We're happy to help you navigate to the program. We do make it a competitive selection process. We make it competitive to get to the point of pitching and, as the Morrissey Goodale article says here, shark Tank, the innovation incubator for the AE industry at the Morrissey Goodale symposium in Miami in March. So it is competitive, but, you know, if this is something you're interested in and, most importantly, if you're interested in building a better product and understanding the customer discovery process and going through that process for your startup. Reach out to me, reach out to KP. It's a good program that you can get involved in. Kp. Again, thanks for joining me today. If you missed somehow, if you missed the very beginning of this, we've been talking about the article or the post from KP's LinkedIn. And again, if you're not following K period, p period, ready R-E-D-D-Y on LinkedIn, you need to be there, you need to be following what KP is talking about on LinkedIn. He says earlier this year I spoke at Morrissey Goodale the conference in Las Vegas and he met McMorsey for the first time. Needless to say, we hit it off and Mick has been very supportive of my efforts to drive innovation, the AEC space. So we're excited to collaborate and have Morrissey Goodale host the Shadow Partners Incubator Demo Day at their 2024 Southeast Symposium that's coming up in March in Miami. So the incubator will launch. The next cohort of the incubator will launch in the late in January of 2024 of this year. So let me know, let KP know, if you think you have a project worthy of that incubator and we're happy to talk about that. So, kp, thanks again for unpacking this post, looking forward to our next conversation, but this has been a good one.Speaker 1:
Thank you for tuning in to another episode on the Shadow Network here with KP Ready as always. Remember you can connect with KP and other innovators in the AEC and CRE industry in the Shadow Partners community. Go to bitly slash Shadow Partners Community to find out more today. Until next time, yi.