There are many assumptions we make about the product or the customer problem, which makes us develop solutions that may be really more complicated than required.

A friend and fellow entrepreneur I met on Friday was showing me a prototype (HML mock up with transitions, with some simple functions implemented) of this SaaS application. He had used a developer on hire at UpWork to develop the initial version. After speaking to and confirming the mockup (wireframes) with 10 different users he was off to develop and deliver the MVP. Overall he had spent about $8000 in design and development and had taken about 13 weeks to develop the MVP. Most of the time was spent back and forth with the design team for the HTML / CSS and the development team for confirming features and transitions.

Of the 13 weeks, his development team spent 2 weeks just implementing a sign up process, a user cancellation process, a payment process, a refund process, a login process, a password retrieval process, etc. Which he did not realize was the tax of developing a SaaS solution. Instead he took the 5 step approach to building a SaaS application and followed it religiously.

The critical mistake during customer development that most entrepreneurs make is to lead with the solution or product instead of spending time learning about the current solutions.

When he was showing it to potential customers, he found that most of them liked the product and said they’d use it and pay for it, if they could find value in 2-3 weeks. He was pretty happy given that most users were ready to pay for the product, which he did believe would solve a critical problem for them.

After developing the MVP and letting his users know about the product, he followed up by asking them to start to use the application. The first two days were great, with lots of feedback and improvements that they gave him about the product.

Then for the next 3 days there was radio silence. Even after his prodding and cajoling, most users were not using the application.

Instead of talking to users face to face, he instead decided to spend time with them (3 hours each user), shadowing them to understand why they were not using the application.

Turns out most of the users needed his product, but either A) did not remember it existed or B) were used to using their workaround – largely using a combination of email and cut and paste into Slack.

The biggest barrier to his adoption and usage was their existing process (although inefficient) was something they were used to and so were able to “optimize” it to make it quick and “fast” for their own usage. So much that they felt that using his product (which I can assure you would be vastly superior) would slow them down.

He then pivoted his product (not idea) to implement the one feature they all wanted as a Chrome plugin. Which worked like a charm.

He then had to remove the top 3 features and undo all the user login and management, infrastructure code and other remaining features, just to support the user behavior for their existing process.

The big takeaway for him was that when you have a hammer, everything seems like a nail.

The biggest takeaway for his wife (who is his cofounder) was not over engineer the solution.

The big takeaway for me was the failed customer development process. With all our biases (which all of us have) – we always tend to lead with the solution (“let me show you a demo”), instead of understanding the problem better to focus on delivering the one feature that matters, without all the bells and whistles.

Image From:  http://www.ritholtz.com/blog/2010/05/the-visual-guide-to-cognitive-biases/

Yesterday at the #PreMoney conference the most frequently mentioned strategy for deal flow among venture capitalists was the “warm introduction” from an entrepreneur or an earlier stage investor. Since the easiest filter was someone’s capability to both judge you and your idea, most investors were looking for a “previously vetted” opportunity. That did not mean an automatic investment, just a guaranteed meeting with the investor.

I had a chance to ask Micro VC investors where they felt they could add the most value above and beyond the money. Most were of the opinion that fund raising, connections to potential hires and introductions to new customers were the areas that most entrepreneurs asked for help. There were other areas that entrepreneurs asked for help, but the top 3 tended to be the same.

A typical Micro VC fund investor has more likely been an entrepreneur before or has been an investor at a larger fund, so most of them had raised money before from VC’s or LP’s. They should have a decent network of other later stage investors and some of them have angel investor connection as well, so if you are earlier stage, then they could refer you to them instead.

According to CBInsights’s Anand, there are 1400 Venture firms in the world and 1/3rd of them in the bay area, so between 400 and 500. Each VC firm has about an average of 5 people in their team, of who, 3 would be partners. So there are between 1200 and 1500 partner-level investors. Most of the Micro VC investors I know have good relationships with at least 20-30 investors, with who they have likely done deals with or referred companies to. If they have only met another VC firm partner at conferences or events, or over coffee, it is very unlikely they will be able to give you a “warm” introduction.

When you get your pre-seed or seed round underway with a Micro VC fund or angel group, one of the key questions that will come up is who will be the investors at the next stage of the company. If that does not come up, then you should bring that up as a question. If the VC or you believe that their check or the seed round will be the last money you will ever need, then you should rethink your opportunity size.

If your investor knows 30+ partner-level series A investors, they are likely to filter the right investors by 2-3 primary criteria, and introduce you to them, given that they already know that most series A investors invest largely the same amount and look for the same range of milestones.

The primary criteria would be “domain expertise“, “value add” and “recent portfolio investments“. If a series A investor has expertise in SaaS HR, or SaaS marketing, and they can add value in the area your startup needs the most help with, for example, hiring people from other SaaS companies, so they would be a better fit.

Typically, most Micro VC funds I spoke with said they ended up making an average of 10 introductions, with the “hot” companies needing not more than 5 and the “still looking for the perfect metrics” requiring about 15 introductions.

An average of 6 out of every 10 companies that a Micro VC invested in (for the 13 people I spoke with) actually got to series A in less than 18 months without the Micro VC requiring another investment in the company was the average numbers I saw quoted as well.

In discussions with 5 startup founders last week in the SF bay area, it is clear to me that the “hiring” challenge has gotten acute.

Here are some horror stories:

1. One founder spent time meeting the potential recruit’s at his kids school and swimming class locations so that he could get more time with the candidate. He mentioned he did not actually see his kids, but since the candidate used to come early to the school to pick up his kids, he could spend time with them.

2. Another CEO had his admin pick up and drop a candidates wife (who broke her leg) to the hospital. She was apparently covered by insurance, but not “top of the line” insurance, so the admin they showed them how much they would save if her husband were employed by their startup.

3. A third company has started a “get your spouse trained at work day“, where the significant other would come into work for a day each week (if they were unemployed) and find a way to get trained on a discipline they liked, which might open doors for them to other opportunities.

I often get the question about “What are the best practices to hire great people” more than any other question in the Bay area.

What I know is that a set of “best practices” wont get you the best candidates. It will get you the rest. Why? To attract the best candidates you need to have a unique combination of meaningful work, great package and an irresistible culture.

The operative word on those 3 is unique. You will need to find uniqueness and differentiation on all 3 parameters.

As VC’s are getting picker and going up the food chain in terms of investing in “only proven startups with a lot of traction”, so are candidates.

It would be the case that a few years ago, you could ask a few employees to actively recommend people who they have worked with before and get a bonus for referring them.

Now, it is not unheard of when the hunter becomes hunted.

One of my good friends was looking to hire a colleague from a previous company, but he ended up joining the friend’s startup instead.

Meaningful work drives a lot of technical folks. Meaningful includes challenging, different and new opportunities. Surprisingly, it is also what a lot of non technical people crave.

A great package in itself with unique benefits is becoming table-stakes even for the best people. Now, the intangible benefits that extend to the candidates family are the thing to covet.

Finally, an irresistible culture that not only encourages success and outcomes but also is quirky to attract a specific segment of candidates is gaining more traction. Who knew that most of the people at a startup I knew were all big fans of Mochi ice cream? I did not. Turns out they only attracted rabid fans of that snack, who were also all great developers in a particular technology.

Hiring good people is always hard. I would focus on attracting a segment of people who are good with a uniquely set of tailored benefits, culture and work that makes it a little more easy to have you be self selected.