…then fix it
Recently, my colleagues and I have found ourselves discussing some of our favorite start-up success stories. One of mine is SeamlessWeb. I got to meet co-founder, Jason Finger and hear the story first hand back in 2003. The company was founded roughly ten years ago by Jason and a small team. At the time, he was a newly minted attorney working in a law firm in New York City. He saw an inefficiency in a widely accepted and adopted business process, created a new solution and built a company with enviable stats and accolades such as: 40 consecutive quarters of growth, named as one of America’s 500 fastest growing companies by Inc. in 2004, the top of Deloitte’s New York Technology Fast 50 in 2004 with 25,855% (yes, that’s the right number) over five years, and one of Time Magazines 50 Coolest Web sites of 2006.
For young attorneys, investment bankers, consultants and the like, a late night dinner allowance is a job perk. When I was working as a corporate finance analyst on Wall Street, we had a cumbersome process of ordering food, submitting expenses and being reimbursed.
At our firm, an employee would order dinner and pay for it with a corporate credit card the balance of which was to be paid by the employee each month. After submitting expenses, the employee would be reimbursed. However, the timing was not always exact and one was usually reimbursed after paying the credit card bill.
The process began with the first challenge, digging through a pile of paper menus in one’s desk to find out which restaurants were open and would deliver food. On the administrative side, once every two weeks, the employee would have to collect all of his or her receipts, write a client number on each receipt so that the expenses could be billed appropriately, create an expense report, deliver the pile of receipts and reports by hand to the accounting department and wait for the funds to be reimbursed and direct deposited into his or her checking account. This process was inefficient and subject to mistakes and delays. Sometimes, receipts would get lost or the wrong client number would be used. It could take weeks to get everything sorted out and, in the meantime, the employee had to pay that credit card bill and could be walking financial tightrope.
Jason took a look at the established and never improved process within his firm and thought that there had to be a simpler way to find restaurants that would deliver, access menus, pay for the meals and manage the expense reports. He and his team devised a process, and then found tech savvy people who could translate his idea into a technology based solution. SeamlessWeb did not tweak the old way of doing things, it created an entirely new process flow. Now, all the late night workers would log on to a web based platform, order their food, input client information, eat dinner and keep working. The SeamlessWeb platform captured the data that the accounting departments needed and created monthly invoices that showed who ordered food, when they ordered it, how much it cost and to which client account it should be billed. Brilliant. Many of my coworkers and I were frustrated by this process, but none of us did anything about it. After learning about SeamlessWeb, I certainly wished I’d thought of it. Nonetheless, there are a few important lessons to be learned from this success story.
7 lessons you can use while brainstorming about a start-up or improving your operations
- Low start up capital requirements. This ideas got off the ground with minimal capital investment. There may have been some friends and family dollars contributed, but for the most part, the idea was solid and had a short time frame to revenue generation followed by positive cash flow. Sweat equity was a big ingredient provided by founders with relevant experience
- Find a way to simplify a process. Look at how a process works, zero in on inefficiencies and find a way to streamline it and remove wasted time and energy. Even if everyone is content to keep doing things the way they have always been done, doesn’t mean the status quo has to stay. It might not be broken, but you should “break it” by uncovering its shortcomings, then “fix it” by providing a better way of doing things.
- Pre-sell. In the early days of SeamlessWeb, they approached potential clients as if they already had the product build. They did not. When they were asked about functions and features of the product, they took careful notes and incorporated those into their development process.
- Know your customer segments and craft a unique communications strategy for each. SeamlessWeb sells to two very different customer bases. They have different value propositions for each one. To service companies with employees that order food, the value proposition is saving time and money. To restaurants, the value prop is new business and access to a lucrative, repeat customer base.
- Make sure there is a crystal clear revenue stream. In this case, there are two. The firms pay a transaction fee for each order and the restaurants pay a marketing fee based on business referred to them.
- Listen to your customers and keep innovating. Be obsessive about gathering customer data. Listen carefully to any negative feedback and be nimble enough to keep providing solutions to new problems. Don’t think you are finished after your initial product roll out. If you do, someone will find the inefficiencies in your operation and innovate right past you. Strive to keep improving your product or service and to amaze your customers.
- Just do it. It’s one thing to have a great idea. We all have them all the time, right? If you think you have a winning idea, take the risk and execute.
When you are ready to make the leap, check out Shifting Gears from Employee to Entrepreneur.
To read more from Jocelyn, view: 12 questions to ask yourself while planning your 2011 marketing strategies.
