Many entrepreneurs seek to create something new, but not everyone has the drive to create new and valuable solutions for today’s problems. Every successful company, established or on the rise, shares this feature: they provide value to their customers.
The real value of any company depends not on its share price but on the value it provides to its users. Gusto CEO and co-founder Josh Reeves has seen firsthand how this value is built.
“The company doesn’t exist for its own benefit. A company exists to make someone’s pain point or problem go away.”
Minimum Loveable Product, not Minimum Viable Product
Try this thought experiment: Imagine being asked, for the 10,000th time, to explain your motivation for what you do. As you launch into your 10,000th explanation, do you still feel authentically excited about what you do? Because if not, you might need to reconsider where and how you spend your time.
Minimum Lovable Product (MLP) is a principle that can apply to any mission-critical product—products with no beta that have to work right out the gate. Gusto didn’t invent the concept of MLP, but they have embraced it.
Developing a product that solves a customer’s pain point provides a sense of pride and can drive the positive, emotional moment of awe that retains customers for the long haul. Winning the trust of your customers may take time (and can be lost in a fraction of that time), but earning that trust is essential to success.
Lifting your foot off the accelerator
Many companies have a “growth at all costs” mentality, but this aggression can lead your company to pitfalls that negatively impact your product and your mission.
“Your due north is ‘serve the customer.’ Make their life better.”
If you want to optimize your growth for the long term, consider developing specific priorities in the areas of your business model, customer experience, and employee experience.
- Business model. If you try to scale up without first proving the viability of your unit economics—CAC payback, gross margins, and so forth—you’re just turning a small, bad business into a big, bad business. If the metrics are heading in the wrong direction, slow down.
- Customer experience. If your growth results in a degradation of the quality of your product, slow down. If you don’t, you may find that your focus on immediate growth is sacrificing your long-term survival.
- Employee experience. Companies need to grow at a pace that still allows their employees to experience the onboarding and responsibility that will set them up for success. Give them a chance to grow!
The more value you provide the customer, the more you benefit yourself. This approach gets to the heart of the subscription-based business model. Identify a pain point, solve that pain, and get paid (regularly) for continually creating value for customers. Reevaluate whether your service is still essential to them if the customers don’t want to pay any longer.
Every business is a people business
A company’s values sit at the heart of its mission. They can serve as a filter for hiring every employee, even if not every interviewee will align with them. That doesn’t make them bad people. Rather, it’s just a sign that they may find more growth and potential at another company more aligned with their values.
Companies shouldn’t be in the business of convincing candidates to join, just as candidates shouldn’t have to compel companies to hire them. A healthy company should strive to align with its people in multiple ways.
- Values. At Gusto, for example, this might entail a shared service mindset, dreaming big, or building with humility.
- Motivation. Why does someone care about joining this business? Both company and employee alike embrace the problem and dedicate themselves to the mission.
- Skillset. Most valuable employees will want to grow and develop new skills. Ideally, that growth should align with the needs and values of the company.
The same goes for your investors. Seek alignment between values, motivation, and skill set. Take the time to know them—especially outside of the fundraising space. Your investors become as much a part of a team as those on the payroll, so choose wisely.
Once your company gets past the early stages of development, take time to consider what your company is doing today versus what you hope to do tomorrow. Horizon planning helps break your company’s future into distinct segments, like a portfolio split between short-term, medium-term, and long-term goals.
- Horizon 1: Remain focused on your core customer and market.
- Horizon 2: Begin to consider how you might expand into adjacent markets.
- Horizon 3: Lay the groundwork for orthogonal revenue streams.
What you create matters as much as how you create it, whether it’s the traditions you grow along the way or the rewards and incentives you develop to get the most out of your team.
Prioritize not only the potential for your mission to solve a problem but build a team that shares the passion for making that future a reality. Always work to center your values from top to bottom, from fundraising to hiring. Because value isn’t just made, it’s earned.
Go to Publisher: SaaStr
Author: Amelia Ibarra