A couple posts ago, I wrote about advice I had given to a wantrepreneur when she asked how to start a business after incepting the idea. My answer was simple: “Do your customer discovery. Consider doing a survey.” However, she didn’t know how to start.
The word “survey” is generic and broad. Every time you ask someone a question, you’re performing a mini-survey. In a true customer discovery survey, you use a structured approach and many respondents.
A few simple survey tools at your disposal (my favorites):
  • Verbal/ Manual. Not always the most appreciated or scalable, but soliciting feedback verbally is a form of direct survey. That is, going door-to-door (figuratively or literally) can be an effective way of getting in front of your prospects.
  • Simple survey apps. Lots of tools here including popular SurveyMonkey, Qualitrics, and, my favorite, Google Docs (Apps). A Google Form can easily be used as a survey with multiple choice, true/ false, free text, etc. It integrates with Google Sheets for analysis, or exported for more. If you have a Google account, it can be free, too.
  • Survey tools on steroids… That is, there are tools that help you distribute surveys to grander audiences and near real-time like 1Q– a direct-response advertising and market research startup in ATL. These services have member pools already where you can choose demographic, geographic, etc. options and send questions with near immediate feedback. Of course, this can be costly – price of a powerful real-time solution.
  • (Note: there are many more beyond these.)

There are a ton of survey tools available, but the tools above have been especially useful for me and what I recommend to others. But the goal is the same: to validate if your idea can be a viable business and get traction at the start.
What tools and methods do you use for customer discovery surveys? How would you perform customer discovery aside from surveys?
Well, that was an interesting start to a first conversation. At first, that may come off as incredulous or even laughable (“j’accuse!” comes to mind).
An entrepreneur recently asked me this after a brief meeting citing he had had always introduced himself, “I have a company called XYZ doing THIS-THAT-THE-OTHER-THING”. I was the second person to introduce myself to him as Entrepreneur recently.
(At the event where we met, I actually consciously chose to introduce myself as “Daryl the Entrepreneur”.)
For months, I introduced myself with “well, I do a lot of different things” and would rattle off “independent supply chain and biz dev consulting, I program in iOS, just started a dev shop” and the list goes on. That took too long and eyes would glaze over.
In fact, “Aspiring Entrepreneur” used to be on my LinkedIn till I was reminded that once I was building my own startup and selling to customers, I was an entrepreneur. I was no longer “aspiring”. I was. That is, I am.
So I told him I had been introducing myself in many ways over the years, and depending on the audience, I would change my introduction to be the most relevant to the listener (okay… “most impressive”). Just so happens “Entrepreneur” also eloquently encapsulates everything I do from business development, to developer, to customer success rep, to bookkeeper, etc.
A couple take-aways here including:
  1. Own what you do. Don’t be shy or think “you’re not worthy” of whatever title or introduction you want to use. Instead of looking for reasons to argue the contrary, find reasons to back up your introduction. 
  2. Know your audience. At the event, it was clear “Entrepreneur” would resonate with others the best rather than “Programmer”.
How do you introduce yourself? What’s your 3-word description, 15-word introduction, and 30-second pitch? How do you modify (do you modify?) your introduction to the audience?

If you know me, you know for my love for soccer, startups, working out, and meat. Beautiful, red, rare meat… so when Fogo de Chão announced its intentions to raise about $91M through an IPO, I have to study its S-1 Filing for my Finance for Startups series – see link for the S-1 Filing.
Note: this write-up is actually a little late as Fogo went public on Friday, June 19th opening at $20 and raising $88M vs. the $18 as purported in the S-1.
A quick intro, first, of Fogo de Chão (“Fogo”)… Fogo is a Brazilian churrascaria restaurant chain serving all-you-can-eat cuts of various meats including beef, lamb, chicken, etc. The restaurants are famous for their servers (“gauchos”) who walk around the restaurant serving meat via skewers. Gauchos visit tables where patrons have “medallions” flipped to their “green” side meaning “keep ‘em coming”. If a patron wishes to defer gauchos (pause service), patrons simply need to flip to the “red” side. I’m reciting this from my own personal experience as it’s one of my favorite restaurants.
Okay, so here are some notes from the S-1…
  • Proposed offering price per share of $18.00 at 5,073,528 shares = $91,323,504 aggregate price
  • Restaurant metrics include: average unit volumes (“AUVs”) – average sales of all restaurants that have been open for a trailing 52-week period or longer; restaurant contribution – revenue less restaurant operating expenses (COGS, labor, etc.); restaurant contribution margin – restaurant contribution as a percentage of revenue; cash-on-cash returns – for an individual restaurant, ratio of restaurant contribution to initial investment (net of pre-opening costs and tenant allowances)
  • First restaurant opened in Porto Alegre, Brazil in 1979 à36+ years since. First restaurant in the U.S. was in Addison, TX in 1997
  • 26 restaurants in the U.S. alone, 10 in Brazil, one in Mexico
  • FY 2014 – $8.0M AUV with restaurant contribution margin of 32.5% (FY = fiscal year)
  • YTD 2015, opened restaurants San Juan, Puerto Rico, Rio de Janeiro, and Mexico City, Mexico (a joint-venture)
  • FY 2014, average per-person spend was $59. As of today, the dinner cost (includes the Market Table) per person is $51.95
  • Guachos are both chefs and servers, and are mainly focused on a specific cut [of meat]
  • Mentions simple, space-efficient cooking technique which reduces the kitchen footprint; thus, maximizes space for tables for guests àdrives up revenue per square foot
  • FY 2014, ~137,000 guests per restaurant (~60% higher than competitors)
  • Since 2007, restaurants open for at least three years have average third-year cash-on-cash returns in excess of 50%
  • Prospectus cites further growth in the U.S. (100+) and Brazil, but also beyond
  • $4.5M investment per restaurant net of tenant allowances and pre-opening costs with average restaurant size of 8,500 sq ft, AUV of $7.0M and 40%+ cash-on-cash return by year 3
  • Aim to increase per-guest receipt through initiatives like Bar Fogo… FY 2014, alcohol accounted for 16.7% of sales… introduce small plate foods at the bar
  • Thomas H. Lee Partners, L.P. is the private equity entity with 96% ownership of Fogo’s common stock (~82% post offering) – acquisition occurred in May 2012
  • FY 2014: Food and beverage costs = $78,330K with 34 restaurants at year-end. Let’s make an assumption the 34 restaurants were open the whole year. So cost per restaurant ~2,303K. At 137,000 patrons per year per restaurant, that’s ~$16.82 of cost per patron
  • Estimated the World Cup of 2014 which was held in Brazil positively impacted Fogo to the tune of $5.0M FY 2014 additional revenue (~11.4% growth for comparable restaurant sales of Brazilian restaurants)
  • Fiscal quarter comparison (ending 03/2015 vs. 03/2014): $1,903K increase, 68.9%. $4,665K or 7.2% net income Q1 2015
  • Food and beverage costs decreased from 30.6% (FY 2013) to 29.9% (FY 2014) as a percent of total revenue
I was recently approached by a wantrepreneur asking how to start a company. She was paying developers to build an app around her idea, but otherwise, she was secretive about the whole business.
I ended up giving her my general first step in any idea – find out if the idea is even a good one. Translated: Do your customer discovery. Consider doing a survey.

I’m a fan of surveys for a number of reasons (assuming your survey is well organized):
  • Who is your market, really? Is this a market of 1? She was convinced EVERYONE in the world would use her app. Yet, she mentioned she needed to get approvals to work with the government, DMV, etc. Well, the DMV requirement just excluded 95% of the world.
  • Is this a real problem? Asking your friends and family questions about your idea is a good start, but can be biased with people of similar backgrounds (education, geography, income, etc.) who may not be as critical as you need them to be.
  • What’s the product development roadmap look like? Speed is key in startups to not only get traction, but to get the right traction. To do so, it’s important to build products quickly, learn, and iterate. Surveys allow you to consider what pain-points (àfeatures) are highest priority.
  • How do you market to your audience? Survey questions about social media usage, device usage, etc. help paint the picture of what consumers interact with; thus, helping you most effectively market later.
  • Now, you have marketing ammunition. As K.P. Reddy cites, “great CEOs know the numbers of their businesses. Surveys give you stats you can cite in pitches, marketing collateral, etc.

When starting a business or thinking about an idea, customer discovery should be one of the first things you do.

How would you agree or disagree with customer discovery being the first step of building a business or an idea? What ways have you done customer discovery?
I met a couple entrepreneurs recently through a mutual friend who are building an iOS app. They’ve outsourced development, and have very little knowledge of coding despite being a technology company. (“Uh oh,” comes to mind.)
They were very enthusiastic about meeting, and before entering, I thought we’d talk about their project and what I’m doing… general first-date talk. But instead, it quickly became a “please help fix this bug!” session.
After ~30 minutes of studying the code, I was able to solve their issue. They were so excited because they had been stuck for over a month!
A few details about this that made me shocked…
  • They have an office at Atlanta Tech Village. In a startup co-working space with the tagline “Engineered Serendipity”, entrepreneurs are surrounded by lots of technical talent. Finding help shouldn’t be hard.
  • Of course, you need to ask for help. As entrepreneurs, we have egos; so doing things ourselves can be the preferred route. However, we’re obviously not good at EVERYTHING, and it’s well worth our time (speed is key in startups!) to ask help from the experts.
  • If you’re starting a technology company, know technology; or at the minimum, have a technical team member.Substituting your team with outside, paid resources in lieu of long-term technical talent is a big risk – especially should he/ she leave, like the situation here.
  • Help comes from everywhere, not just the startup world. I met our mutual friend from Starbucks, and she, aside from us, does not have connections to the tech startup community here. Yet, she knew her friends needed help, so introduced us.
Entrepreneurs and others alike would do well to ask for help more often and build up a diverse support network to augment their “shortcomings”.

Where have you received help from someone you didn’t expect? What did you do to get connected with others to either give help or receive help?
As I sat atop Stone Mountain watching the sun crest over the horizon, I didn’t really actually have any points of inspiration other than, “this would be a great photo for Instagram”. *sigh* Instead, it would be on the hike down that ideas started to flood me.
Every once in a while, it’s good to disappear for a few hours to find inspiration. Everyday, I’m stretching myself as I teach myself programming, put together recommendations for a client, meet new people, etc. After a while, I’m stretched out and exhausted… consumed by everyday life, I’ve focused on the tactical and left off the strategic.
A month ago, I hiked up Stone Mountain at 6AM on a Saturday to catch the sunrise. This was me being a “transparent eyeball” searching for inspiration — famous transcendentalistauthor, Ralph Waldo Emerson’s metaphor for absorbing the world and having a deeper connection with people and nature.
Depiction of Ralph Waldo Emerson’s “transparent eyeball” from his composition Nature. Image source: Wikipedia.org.
As I was hiking back down, clear-headed, ideas flooded me. It was like a shot of adrenaline, but for my mind. I came up with several blog posts including The Mountain Biking Lesson That Gets Us Past What Stops Us, subject for my 100thblog post, and this post. I even had startup ideas that I put on my List – ideas to test later.
Otherwise, there was an amazing, rejuvenating feeling not just from the early hike and sense accomplishment, but it was the energy from other hikers. Everyone who passed by smiled and said, “good morning!” There was a sense of connection the community and the goodness in people.
I write this not just as a motivation to find inspiration in simplicity, creativity, and even transcendentalism, but as a realization of the bigger world beyond lines of code and product demos. It’s easy to keep plugged in and plugging away, but it can wear you out. Sometimes, the best inspiration and work you can do is to disappear. You’d be surprised by the results.
How do you find inspiration and motivation? Where do you go when you need to “disappear”?
I just passed the century mark for posts, and I’m interested in changing my approach and writing style. At least, try a more concise writing style for 15 posts.
Scroll through different blogs, you’ll find there are many different styles from long text-heavy posts, story-oriented writing, concise and focused posts, to the list-centric. My style has been an adapted, hybrid approach with lists and examples per bullet. However, my writing can be… long-winded.
I’m changing my writing style for this and the next 14 posts towards a concise format no more than 300 words with short bullets, if appropriate (à la Master Blogger David Cummings). Why? Let me bulletize…
  • I love experimenting and self-improvement. I don’t want to be so rigid to not be open to potentially better, different ways of doing things.
  • I can be a little too verbose sometimes with redundant wording. This is an exercise in staying focused and to the point.
  • I value perspectives. This new approach will give me a new perspective into writing and thinking.
  • Test reader behavior. Shorter posts are more easily digestible for readers. I’ll review Google Analytics, and see if this new approach has made a difference in subscribers, time spent, pages visited, etc.

I’m excited about this, and I’m looking forward to assessing my attitude and perspective to this new style. Depending on how the first five posts go, I may also change my post frequency.
Any other ways you’ve experimented to change some long-standing way you’ve done things? Any tips on challenges or things that helped you sustain the change long enough to gauge its impact?