Testing a Startup Idea Live On The Pod, Part 1

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• A Week for Ceilings

Why This Episode Exists + Nerdy Stuff Not In The Pod 💡

I spend an inordinate amount of time thinking up what these episodes should be about. It’s always tricky - I need to balance new folks who might’ve just found the pod and the regular listeners who get all the references and jokes. I usually overthink it and try to thread the needle and make both happy. But, for the next few episodes, I’m not. These are for our core listeners, the folks actually working on ideas who want to see one done in real-time.

Today’s episode is the first in a series where we start an idea live on the pod. It comes from a listener and we work with the listener to launch it. It’s in the healthcare space and bumps into a bunch of methods and theory we talk about on the pod, so it’s a perfect test idea.

We start with the idea itself and the beginning of customer interviews. We use the 90% Wrong Principle, we talk about being Worse First, and leverage a Four Question Story framework to pull out initial assumptions so that we can test them.

Over the next few weeks we’ll have more nerdy stuff in this newsletter that matches the pod - landing pages, concierge MVP details, etc. It’ll hopefully be useful.

Pod References

• 90% Wrong

• How to Live an Asymmetric Life

• Tacklebox

• Idea to Startup Newsletter

Timestamps:

00:25 Intro - Starting a Startup Idea Live
02:02 The Idea - Healthcare is changing
05:58 Smooth Jazz
06:30 90% Wrong
07:52 Scary and Hard
09:30 Worst First
10:51 The Four Story Questions
15:45 The Two hero’s
18:38 The End: I Hate Both Customers

Transcript - Feel Free to Read it Like a Long-form Article:

Today is part one of a two-part series where we’ll test out a startup idea live on the pod.

These episodes exist to give you context. It’s unlikely you’ve ever started a startup before, and there aren’t a ton of opportunities to look over someone else’s shoulder while they try, which is a helpful tool for learning anything. It allows you to do the thing humans do best - objectively judge other people, and avoids the thing we do worst - look objectively at ourselves.

These episodes also exist because I know you. Despite the fact that you’ve never built a startup before, you’ve probably put a ton of pressure on yourself to be successful with this idea. You’ll say that you know most startups fail, but I bet if I asked you after a few negroni’s you’d tell me you were confident yours won’t.

Confidence is good, but pressure and expectations in the startup world often aren’t. Because they usually push you to be safe - to narrow the type of work you’re willing to do. They keep you on the well-worn path because you think that’s the best way to increase the likelihood of success but it’s actually the worst way. The well worn path doesn’t lead to a successful startup.

So, these episodes exist to help show you unique approaches, to give you frameworks that’ll let you get a bit riskier - to focus your efforts on maximizing your ceiling, not minimizing your floor.

And, it let’s me test out an idea I’ve been thinking a lot about for a few days and put it on the work tab. It’s my version of when you take your friend to dinner and expense it to your company.

Ok, enough dillying and dallying, we’ve got a business to start.

So, let’s get to the idea.

—

The Idea

There’s a form on the Tacklebox site somewhere that lets people submit questions - I honestly have no clue where it is or I’d tell you how to find it, although we did just finish a rehaul and the branding is looking pretty crispy if you want to head to gettacklebox.com and take a look.

Every day or two a message pops up out of the ether with a pod question or an idea for an episode or a punny business name - last week someone suggested a gluten free bakery called last but not yeast, which is great but I think that person is confused as to what gluten is.

Anyway, a while back I got a submission suggesting we run through an idea on the pod that I loved. The high level problem was one I’ve thought about a lot - basically that doctors, hospitals and general healthcare in the US seems to be… changing.

My perspective is part anecdotal - a number of my doctors leaving practices to move to a concierge medicine model, odd behavior like doctors calling me at 9pm on a Friday night to answer a question I’d put in the portal then telling me they had, quote, easily four more hours of questions to answer that night - and part public data driven - nursing shortages, depression levels for doctors growing - 23 percent of physicians reporting depression now compared with 15 percent five years ago - and increased consolidation and rolling up of practices by private equity shops.

Again, it feels like the tectonic plates of healthcare are changing.

Luckily, the person writing in had something a bit more substantial than feelings and anecdotes to go on. They’re a doctor. And have been for over 15 years.

Here’s the message, with permission, of course:

“Hey!

First time writer, long-time listener (note - again, I must’ve said this in the pod somewhere, but it really warms my heart to get these inbound messages like I’m mike francesa answering listener calls from seacaucus on the Fan). It continued.

I’m an MD - an internist - and have been for 15 years. I still love being a doctor, but it’s not what it used to be. I spend at least 75% of my time in the portal answering questions and maybe 15% of my time with patients. The actual answering of the portal questions is a pain, too, as I have to track down patient information and most questions can’t be answered well over email. But if I call people, they usually don’t pick up so then I leave a message and it’s phone tag. It’s as bad for patients as it is for me.

Practices are also being rolled up by private equity firms, which means we end up with more patients and it kind of feels like we’re at a widget factory trying to crank out an extra 10 widgets each day rather than helping people. It’s not uncommon for doctors to have over 5k patients these days, which makes the care worse and the portal even more difficult to manage.

So, here’s my idea.

Some doctors are considering moving to the concierge MD model - where patients pay an annual retainer and doctors have fewer patients. Others are thinking about leaving the field altogether. And as I talk to more of my peers, I realize they’re all trying to figure out what other doctors are doing - they want to see how they’re handling this.

So, I want to start a coaching service slash community for doctors. I’ll help them decide if concierge MD is the right route, then help place them if so. If they want to go work at a healthtech startup, I’ll help them do that. And, I want to have a community component so that they can learn how other doctors are being successful.

There are over a million doctors in the US - the market for this sort of product, assuming it’s a monthly fee, is actually quite big. And I think it can scale.

So… my question is… how do I start?”

And what a question it is, my doctor friend.

And we’ll get to it - we’ll talk about the 90% wrong principle, the four big questions for ideas, and we’ll figure out how to start running tests to see what we’ve got.

After…

A little smoooooth jazz

—

—

Where You Start - 90% Wrong

The most famous marketing quote of all time has been attributed to John Wanamaker and Henry Ford and JC Penney and a bunch of other people and it goes like this: “Half the money I spend on advertising is wasted; the trouble is I don't know which half.”

The startup version of this is that 90% of the assumptions you start with about your idea will be wrong. I first saw this theory from the founder of Anchor - I’ll pop it in the show notes - and I’ve watched it play out hundreds of times since. The problem is, you don’t know which are the 90% you need to drop, and which are the 10% you need to triple down on because they’ll anchor your business.

For our purposes at Tacklebox and on the pod, we have a specific definition of an assumption - it’s a thing that you believe about the business that you’re going to start, and if you’re wrong about this thing, the business doesn’t work.

So, if you’re starting a publishing company that’ll work exclusively with chatbots that write books end to end, one of your huge assumptions is that people will buy books written by robots.

For your business to be different, your assumptions need to be unique or counterintuitive. Things you believe that others don’t.

Back to the 90% of your assumptions will be wrong thing.

This is scary and hard for first time founders to swallow.

It’s scary because If 90% of your assumptions are wrong, it’s likely that a core belief - maybe the core belief that spurred you to start this thing in the first place - is wrong. Actually, it’s probable.

And it’s hard because you need to find objective data on these assumptions to decide which are in the 90% and which are in the 10%. Meaning, data that isn’t influenced by your current assumptions. So, you need to interact with potential customers before you’ve got a product.

If I look at the founders that have been successful through Tacklebox, each one has these two capabilities as superpowers.

First, they’re comfortable - usually excited - to find out what they’re wrong about. They don’t hold initial beliefs as precious - they see them as a starting point that needs to be pushed and pulled to get somewhere useful.

And second, they’re able to quickly find objective data from customers to help them know which assumptions to tweak and which to hold on to. They make sure it’s easy for them to access potential customers to bounce their assumptions off. It never takes a month to get something in front of a customer - it takes a day. So the feedback loops are fast. Something we’ll talk about in a bit.

This is where every entrepreneur needs to start. With a hypothesis that they acknowledge will likely be 90% wrong and 10% promising and a system to quickly figure out which is which. And that’s where we’ll start today, after I note one more thing.

The 90% wrong thing can be daunting, because it feels like you’ve got more work to do than you thought. Maybe you thought you could just build the thing that’s in your head. But, in the words of Graham Weaver in a terrific commencement speech I’ll pop in the show notes, nearly everything good in life will be “worse first.” Meaning, sure, it’ll be harder when you start if you’re 90% wrong because you’ll need to shore up those assumptions and maybe find some new ones. But, your growth curve, after that “worse first” period, will be sharp and up and to the right. Once you’ve got the right assumptions, the business will go like it’s got one of those NOS canisters from the fast and the furious on it.

Worse First works with most things worth doing. In a relationship you’ve got to get out of? It’ll be worse first, then much better once you do. Want to learn Spanish? Same thing. And on and on.

Humans shy away from worse first, but you shouldn’t, because everything interesting is on the other side of it. Worse first is a phrase to live by.

Which brings us back to our Doctor friend.

I reached out to get the assumptions that he was relying on at the moment for his business because we’d need to test them and see which were part of the 90 and which were part of the 10.

But, just saying “let’s test your assumptions” is about as helpful as saying “go write a book.” Sure… but… how?

You need a framework to surface, organize and test the most important ones - specifically, a story framework.

Which brings us to The Four Story Questions

—

The Four Story Questions

There’s something most new entrepreneurs need to learn the hard way: no one makes decisions based on numbers.

Here’s an example.

Let’s say you’ve got a loyalty SaaS tool you built to get customers of local coffee shops to come back an extra 5 times per month and buy coffee, and those returns will help most coffee shops increase revenue by a thousand dollars a month. And, you’re only charging $50 for the service. So, it’s just free money, right? Every coffee shop will join immediately?

But, this isn’t how it works, as you can sense from my sarcasm.

We had a startup that was able to deliver on that exact promise, and nearly no coffee shop was interested in the numbers pitch. Because people don’t make decisions on numbers. This founder went from coffee shop to coffee shop, owners nodded and said yeah sure this is a great product, then said “come back in six months or so, we might have time then.”

Because humans make decisions based on stories, not numbers.

Numbers can sometimes support that story, but they’re, at best, one leg of the table. The decision to buy from you or not will be made solely based on how well you can tell the story your customer is currently the lead character of.

And that’s where our assumptions come in. They’re the facts in our story.

Practically, there are four parts to every story - these are our core assumptions.

• First, who’s the hero?

• Second, what do they want?

• Third, what’s holding them back?

• And fourth, what, exactly, does it look like once they’re wildly successful?

In the coffee shop example, the hero of our story - the owner - would probably love an extra thousand dollars a month. But, adding in a loyalty product might not be part of their current story. So, the thousand dollar carrot won’t matter.

At any given time, your customer will have a hierarchy of problems they’re actively trying to solve. At most, they’ll have the cognitive space for three. It’s usually two or one, though.

Meaning, if the biggest problem a coffee shop has at the moment is that there are droughts in Kenya where they source their beans and so the cost has doubled and they don’t think they can pass it along to the customer, they might be doing a bunch of things to solve the problem - testing other suppliers, negotiating with their current supplier, testing higher prices, testing baked goods - they just won’t have the bandwidth to think about a loyalty program.

It’s like if you’ve ever gone fly fishing during a caddis hatch. Fish will key in on all the caddis floating down the river, and anything that isn’t a caddis they’ll ignore. You could put a big juicy grasshopper on their nose that would be objectively better than eating 100 caddis but they won’t touch it. It’s not what they’re looking for. People are the same way.

The way you might **sell your loyalty program is to tell the right story. To walk into the coffee shop and say “hey, we know the drought in Kenya has jacked up bean prices. We know you’ve probably tried talking with other bean suppliers, but MOQs are high and your customers are used to your current beans and it’s risky. You probably also thought about bringing in a panini press but you’ve never served lunch and don’t know how it’d impact your coffee customer. We’ve seen this happening with tons of coffee shops and found the best way to weather this pricing storm is to lean on your best customers who love you already and are willing to buy more. We built a loyalty tool that’ll get the best customers in an extra time each week. We’re getting most shops an extra thousand dollars in profit a month, which will give you some buffer while you figure out the bean situation.”

Tell the story they’re in, because decisions will be made in the context of that story. Not outside of it.

When our founder told that story, they sold their loyalty tool.

Back to our Doctor friend. I reached out after the email magically appeared from wherever it comes from and said I loved the start but had a few questions. I wanted to hear his assumptions.

I asked the four big ones:

• Who’s the hero

• What do they want

• What’s holding them back

• and What’s wild success look like,

He responded with a question - I’ve got a bunch of use cases, he said, which customer should I choose as the hero?

Which is the first part of value this process creates. To describe your hero’s situation, you’ve got to pick a hero. So, even if you haven’t done a bunch of customer interviews, you’ve hopefully done enough to pick someone to represent each story.

Our doctor friend responded with two stories representing two customers he knew closely. Two heroes.

The first was the hero for what he called the “Change Jobs” story. I’m quoting from the email:

• The hero is Dave (not his real name), an anesthesiologist who’s completely overworked because he works at a hospital that was bought and rolled up with a few other practices and now he has 3x the surgeries he used to.

• He wants to leave medicine, but he wants to stay in the healthcare field. Specifically, there are a bunch of cancer screening and treatment AI startups that he’s fascinated by, and thinks his background would be useful for.

• He’s held back by the uncertainty. He makes a lot of money and has a lifestyle he enjoys because of it. He’s never worked at a healthcare startup, or anywhere that isn’t a hospital. He’s terrified of what he doesn’t know and the monetary risk. He’s also not sure he can actually give it up, when push comes to shove.

• Wild success is him moving from the job he has to a high level role at a cutting edge business helping people navigate cancer.

OK - that’s customer one. The business assumptions around the story are now easy to pull out:

• Anesthesiologists have transferrable skills

• Businesses are interested in these skills

• There are more people like Dave

And, the huge one for me, that Dave will actually leave even if you set him up to. So, the goal would be to recreate this story for Dave and see if he’ll take action.

Here’s the other hero our doc friend focused on. He called this person the “Concierge Defector.” This person he called Mary, which also wasn’t her real name.

• The hero is Mary, a Rheumatologist who’s overworked and wants to work with fewer patients but spend more time unwinding their complex issues to get to the root cause.

• She wants to stay in medicine but not have thousands of patients. The autoimmune cases she works on are tricky and require lots of tests and patient interaction. They also take time. Fewer patients, more interaction, will lead to better results.

• She’s held back by… uncertainty, again. She doesn’t know if concierge medicine is as financially stable, and, she’s not sure how she feels about refusing lots of patients. Which is a contradiction, but she’s aware of it and it does hold her back a bit. She just needs info and wants to speak with more people who have done it.

• Wild success looks like a smooth transition - she takes the patients she wants, has a high salary, has deeper interactions and less paperwork.

Alright, that’s customer two.

Here are these assumptions:

• Rheumatologists have the option to transition to a concierge medicine model.

• Doctors like Mary believe that more time per patient leads to better results.

• Doctors will actually be willing to trade higher patient numbers for more in-depth care.

• There's a market for concierge rheumatology services.

So, those are the customers he sent. One leaving to join another field, one transferring to a concierge service with far fewer patients.

And, let me tell you. I hate them both.

The end of part 1 - I hate them both - Commitment and Pro’s.

We’ll wrap up part one before we start testing these customers in part two next week with a sorta bold statement. I hate both of these customers.

And there’s a very simple reasons why. They’re both on mile 0 of a marathon. They’re on their own one yard line and have to go 99 yards to reach the endzone. If sports metaphors aren’t your bag, they’ve never written a book before and we’re trying to help them sell their third novel.

When we look at the assumptions we’re making - the things we need to be true for the business to work - we simply cannot have one of those assumptions be that the hero of our story does something completely new that they’ve never done before.

ESPECIALLY if that thing is emotionally loaded, like, leave a job they’ve been planning to do since they were 13. You cannot bet your company on that magnitude of behavior change.

Even the concierge customer is a huge bet.

For your business to be successful, you need to guarantee you can make your first customers wildly successful. So, that last part of the story you tell - that needs to be something you’re confident you can deliver. Even if you haven’t built the product for it, it shouldn’t be something that requires massive leaps on the customer side.

The key for a product is for us to do the work. So, the customer runs into a problem, our product solves that problem with nearly no effort on their end, and they move forward.

But if our product for someone considering leaving medicine is a way for them to find jobs or speak with doctors who have done it, what does that actually do? It sure doesn’t guarantee they’ll leave and be successful outside the hospital, which is success.

I’ve said it before and I’ll say it again. For our first customer, we want someone committed. Someone who’s fallen into a well and we’re throwing them a rope.

Someone who’s on mile 25 of a marathon and has a horrible blister in their heel and we’re selling them a bandaid they can put on quick to keep running.

Neither of these customers is committed. So I don’t trust either.

Now what? Do we give up? Are we discouraged?

Oh hell no. Everything good in life gets worse first. This is a massive opportunity.

We just need to talk to more customers like this, we need to understand the story they’re in, we need a tighter view on a hero - what are the main problems they’re actively trying to solve? What behavior have they shown that guarantees they’ll solve them? What’s success?

The problems for doctors are solid. We just need to dig in more. We need Brute Force Customer acquisition, delta four, the apartment gym, and concierge MVPs.

And we’ll do them, after….. a week of you twiddling your thumbs or listening to guy raz or whatever goes on in-between episodes of idea to startup. See you soon.