When it comes to innovation opportunity, there’s three ways a business can go:
Not notice it till it’s too late
Defend against it
Seize the opportunity and exploit it
Taxis vs Uber is an example of an old school, slow moving industry at first not noticing an innovation opportunity. Protected by their monopoly protectionist government regulation the taxi industry has been slow to catch on to the needs and wants of the market place.
Taxi companies protected by their monopoly enforcing governments have long ignored the customer experience. Uber and Lyft saw an opportunity to provide a better customer experience and their success has has shown they’re providing what the customer wants.
Can someone please explain why govt regulates the #taxi industry? Why not just a simple cheap license and security check for anyone?
But in 2015, Uber and Lyft are standing together with the taxi industry facing another innovation opportunity. The driverless car is not far away and no one is prepared for the societal changes it will bring.
Imagine: you want to go from work to your favourite pub. You pull out your phone, select your pickup location and time, then select your destination. An algorithm finds an electric driverless car that will be available nearby at your pickup time with enough charge to handle your trip. The vehicle arrives, you don’t have to make small talk(perfect for the introvert) and quickly takes you to where you’re going while you read a book on your Kindle. Simple.
Think this is science fiction?
Google’s driverless cars can already handle the driving. It’d be pretty simple to connect the car driving computer to a cloud-based dispatch system.
Uber and Lyft using consumers wouldn’t have much of a problem with accepting driverless car technology.
Tesla already has electric vehicles that can do 300+ kilometres on a single charge and swappable battery packs already exist.
It’s pretty unlikely that people will be buying driverless cars in 5 years. However an innovative start up could team up with a driverless car manufacturer to get on the road pretty soon.
The taxi industry has already chosen innovation option 1 and has now moved on to option 2. Regardless of what government regulators do they will lose! They will lose because they were too comfortable in their monopoly regulations.
The question is will it be Uber or Lyft to first roll out driverless car services or will it be another new company still waiting to be started in someone’s old school garage?
My wife Jacqui and I just attended our first “The Pulse” meetup in Brisbane. The Pulse is a community of entrepreneurs who meet up monthly for expert panels with startup and business leaders. This was our first attendance at one of these meetings, which was held at River City Labs, a startup coworking enterprise in Fortitude Valley. We found it to be a great opportunity to hear a wide range of expert opinions and meet new people in the entrepreneurial start up space.
The session was a fast paced Q & A type format. Here some notes on what I got out of tonight’s session with Steve Baxter(@sbxr), Aaron Birkby(@AaronBirkby), David Eastes and Ben Duncan:
A question was asked on tips for transitioning from 9 to 5 work to a startup:
Do both for a while – working 24/7 as it were.
Try to save capital if you want to take it full time.
Hardest thing you’ll ever do is raise money from an investor – use your customers to fund your business.
If you can’t make a few thousand dollars from your startup don’t leave your job.
Turn first customers into walking billboard.
Sell something straight away. Get customers to bankroll your start.
One thing panelists would do different if starting again now:
Hire staff earlier. One panelist tried to do too much. He wasn’t doing vital stuff because he was too busy working in the business.
One tip was to potentially offer an equity stake to good staff after a year or two.
One panellist suggested being a digital nomad.
Hire more people you really like working with.
Don’t stress out
Which 3 processes most important:
Don’t be too process focused too early – otherwise you can’t move quickly
Need to have processes to track your effectiveness – e.g. Validation of A/B Testing and Conversions
Processes need to come later on as you grow.
One panelist suggested when you get your second staff member you now need processes but you need to be flexible.
Allow everyone to change their processes if they’re broken.
All the panelists stressed the importance of good consistent project management. Base Camp and Trello were suggested tools
Project management important from the start
There was a question about finding angel investors while still pre-revenue:
Panelists suggested use customers as your angels.
If you can’t sell your product maybe there isn’t market.
If no one is investing maybe take a harder look at the idea
Got to be able to sell it.
Does anyone gain funding after proof of concept?
It was agreed by some panelists that you do hear of companies gaining funding in this way a lot.
It was suggested it’s still better to try to get customers to fund the idea.
Talk to customers find their pain point. Ideas from customers can be of varying value though.
Biggest challenge for the panelists?
Having total confidence in your product.
Suppliers being skeptical.
You need to talk about it like it’s your firstborn even if you don’t believe in it to begin with.
What do you tell people who don’t believe in you?
If you can’t push through that messaging you’re not going to make it
Prove your idea by getting a customer to pay you something for it.
Do startups need to look to Silicon Valley?
It helps to look at whats happening in a successful place.
US Market is huge in comparison to Asutralia.
The USA is an easy place to get to as an Australian.
Good Australian ex-pat community in Silicon Valley you can connect with.
Struggled with self belief?
All the panellists said yes!
Don’t wait till your ready. Just do it!
Was success a series of events or just one or two big things?
Panelist David Eastes said that for him it came down to two things:
Getting into good rankings with Google
Investing time and money into customers
Other good points:
Advertising waste of money. All money on word of mouth. Make them want to tell their friends
Do things that customers don’t expect – travel mugs, key ring bottle openers, etc.
There was a question about time management and commitment:
If you have an ability to work full time on your startup don’t waste it
Be sure to manage your heath and family time however
Put a high value on your time – $500 per hour for instance. Would you be doing a task if that’s how much your time was worth?
There was another question about quickly validating start up ideas:
Use the Lean Startup formula and customer validation.
If you can’t make something work, give up, move on.
How do you pitch your idea without losing IP?
NDAs are worthless and investors won’t sign.
Do your research on the person you’re pitching. Find out if they’re trustworthy. Have they invested in a competitor?
You’ve got to share your idea
Someone asked about the best methods of selling to your customers in the early days:
Direct mail. Get in front of them 3 times and they’ll remember you.
Think outside the box.
Advertising expensive hard to get good ROI
Conventional media has a lot of power in USA
A question was asked about outsourcing an online app startup
The panelists thought it was important to hold Intellectual Property tight and not outsource your core team.
One panelist said your startup is broken if you can’t build it yourself
There was a question on how to keep momentum and enthusiasm
Find a problem someone will pay to fix
If you’re not naturally passionate about what you’re building there’s a problem
Keep a good balance. Recreation helps with inspiration. Get away from desk.
At what point should you become a company?
The panel was unanimous that you should be a company from day 1 of your startup.
The last question was on the difference between an entrepreneur and a “wantrepreneur”:
An entrepreneur doesn’t die wondering
An entrepreneur is constantly thinking about doing things better
An entrepreneur take risks
Get s*** done
Fail a lot
There was also a suggestion to check out the Dan Norris 7 Day Startup.
I thoroughly enjoyed my evening at The Pulse and will definitely be going again. It was great to meet a positive group of people trying to achieve success. I hope some of you find these notes useful.
My busy schedule over the past week has given me an interesting case study in customer experience. As a I’m hoping to one day be an entrepreneur I’ve been a keen student of business practice and theory. These days we don’t just talk about customer service, we talk about customer experience. How does it really feel as a customer to experience your product or service and how does that affect whether or not I buy again or recommend you to others. As noted in Forbes, ‘Customer Experience’ is today’s business benchmark.
In the past seven days, I’ve flown three different Australian airlines over four different flights. One flight was on Qantas, the next on Virgin Australia, and the last two on Jetstar. It’s been a good opportunity to compare and contrast the service offerings of the three. I didn’t get a chance to try Tiger Airlines, but then again I prefer my pilots be qualified to fly, so probably best that I didn’t.
Qantas still has it’s old fashioned approach to customer service. It’s good – a bit dull, but good. Everything works the way you expect although there is a big push towards self service everywhere.
Virgin Australia has a fresh innovative feel to it, but they do focus on good old fashioned face to face customer service. You can use fancy new mobile check ins and boarding passes, but they don’t make you feel guilty for using the traditional bag drop either.
However it’s Jetstar I really want to focus on as a real case study in a bad customer experience. The first thing you’ll notice when you book Jetstar is their deceptive marketing practices. They have been forced kicking and screaming to moderate some of these by the ACCC, however you will find that in practice the fare they advertise is not the fare you pay.
Fares advertised by Jetstar are advertised as “1 way carry on baggage only”. Carry on baggage is defined as 2 items total of 10kg. What they don’t spell out clearly(sure it’s in the fine print though) is that they can’t actually offer what they advertise. If everyone brings 2 items of carry on to a full flight, they simply cannot fit them on the plane. Not only that, because of the $25 standard extra fee for checked luggage, everyone will be trying to take 2 items of carry on. Therefore they go to extreme lengths to enforce the 10kg rule.
What they don’t advertise is that unless you book the checked luggage in advance, they will check your items with scales in the boarding lounge. It’s easy to have a suitcase well under 10kg. However what’s not so easy is to have a suitcase and backpack or another bag under 10kg. Most of us often carry 4-5kg in our back packs without even thinking about it. Most people on my flight were stung with this. Main bag only 5-6kg. Second small bag 4-5kg.
Now what would be a reasonable cost to check suitcase. The $25 standard checked fee would be good. But no. After baiting people to try their luck with carry on, they sting you $50 if one of your bags has to be checked from the gate lounge. A quick look at how many people they stung, tells you that this is a major profit strategy for Jetstar.
Plus, they won’t let you check your bags until precisely 2 hours before departure. Too bad if you do the right thing by being early and booking checked bags. It’s ok in Melbourne, there’s good facilities outside the secure zone. Too bad if you’re in Brisbane where there’s barely a coffee stand for your long wait to bag drop.
The bad customer service experience doesn’t stop once you’re through security. The terminals, bars and cafe’s in both Jetstar departure lounges were filthy, both times. Ok so maybe Jetstar doesn’t operate the the bars and cafes. However they do set the standards that companies are expected to work by in their terminals. The massive stacks of empty pizza boxes, piles of empty drink bottles and glasses, and food all over floor shows that they don’t care about their customer experience. I don’t expect polished gold leaf, but I do expect to be able to find somewhere to sit without having to move other people’s empty drinks out of my way and having to wipe down the table.
When you watch the tarmac prior to departure you see more of their cut price approach. Instead of professional looking well marked trucks, services are provided by a bunch of people who stuff waste into the back of a bodgy looking stationwagon with a cheap magnet stick on the side. Angry baggage handlers hand carry extra bags to the plane. Not a good look.
On board you’ll find the cabin crew are courteous but short. They combine the lack of formality of Virgin, with the lack of humour of Qantas. Overall it’s a bad end result. Even the food cart practice is worse. Instead of both people operating the cart from both sides like other airlines, one person operates the till(the main focus of Jetstar’s model) and only one person serves. The result is if you’re waiting to get a drink on the plane you’ll be left thirsty for a long time waiting.
So overall Jetstar gives a very poor customer service experience. I can complement them on one thing though. They do have a very good safety demonstration and briefing, particularly for exit row passengers, in comparison to Virgin and Qantas.
I would suggest only flying Jetstar if you only fly occasionally and they have the cheapest fare(after adding all the fees and surcharges). Be very careful and don’t believe the prices you see advertised. I would also suggest the following tips:
Be sure to weigh all bags before leaving home if you expect to use the “2 Carry-On bags, 10kg option”. If you’re anywhere close, I’d suggest book the $25 checked luggage option.
Don’t expect fast service on board – take your own food and drinks.
You can’t check bags until 2 hours of your flight time – find a bar outside the checked area if you can and wait.
Don’t bother with their mobile boarding pass option. It’s a joke and a waste of customer time.