There are many beneficial factors I could write about when it comes to why Silicon Valley (or more specifically, San Francisco) is awesome for starting a company. The reality is that there are very specific business benefits that I’ve experienced over the past 5 months in launching a business and seemingly popular product in SF. The strongest of all of those benefits is the value of customer forgiveness.

In the first 2 months of UberCab being live in the app store, we’ve seen tremendous *but early* growth. We went from doing 5 rides in a single night, to nearly 50 rides in a single night. Bam! We’ve gotten here quickly because we’ve made our product easy to use and awesome to talk about, and the organic word of mouth that everyone covets so dearly is exactly what has driven our growth. But greater than the value of social web word of mouth is the fact that customers are using these channels to help us improve, and we’re listening.

About a month ago we went through a relatively small stretch (a few days) of wacky billing. 1 of 3 trips had a completely wrong total fare and we decided, because we’re a lean & scrappy team that we were going to go face down on fixing the issue and combat the potential bad press with PHAT customer service. It worked. We found that if approached head on, the problems of inaccurate fares were actually an opportunity to expose ourselves to our surprisingly forgiving customers in our most vulnerable state. For that, they loved us. We solidified a number of customers that I suspect we’ll have for a long time to come just because we honestly explained our error, hooked them up with Uber credits, and sincerely said, Thank you.

Launching products in New York, Chicago, or wherever else, I’m convinced that you wouldn’t have the same customer forgiveness as you’d see in the Valley. People here understand product infancy, they understand under resourced teams and they generally respect the sheer man hours and passion that goes into making a product work even half the time. It’s truly been mind boggling the amount of love, forgiveness, and sharing we’ve seen around UberCab over the past 2 months being live.

All I can say now is, thank you dear clients for sticking with us. We won’t stop busting our ass, being PHAT on customer service, and generally working hard so that you keep saying, WOW…and forgive us from time to time.

**value of customer forgiveness might be coin-able, if so feel free to quote ;)

I’ve been thinking a lot about customer development over the past few months. It’s a new way of thinking as a company, it’s a new way of approaching marketing, product building, and customer service. It’s changing, or maybe already has changed, the way companies think about the relationships with their customers, and it’s never been easier to employ this strategy than in early stage technology companies. And that’s exciting.

One of the smartest pieces of startup advice I’ve heard in a while was Andy Rachleff of Benchmark Capital saying, “The most important thing to look for in a founder: Authenticity”. (thanks to @TristanWalker for pointing me to this quote) The same goes for evaluating a startup as a whole, is the corporate philosophy of the company true to it’s actions? Is the company authentic about what they tell customers and partners? Take Comcast for example: They say they are listening to customers, they have a large team scanning twitter to make sure that customers voices are heard, but they sure as hell don’t seem to be listening to customer feedback about their phone support, or cable and internet packages. In short, it’s terrible. They’re not using customer development to drive their product offerings. True customer development focused startups make this a priority, and that helps them brand themselves as authentic.

Companies that that make learning a priority are exciting and they’re the type of companies I want to work with.

Today I was in a mtg about how GE will work to reach out to potential job candidates. Surprisingly, the recruitment practices are on the cutting edge of listening and reaching out to candidates and meeting them on the platforms that they use. They’ve abandon the “they’ll come to us” mentality that will fail every time. I don’t care if it’s a 2 person startup or a Fortune 2 behemoth, you have to listen and engage in customer feedback at the customers level or you will no be able to accurately road map your product.

Similarly, with the work I’ve been doing with Foursquare the team is very interested in the user feedback. To the point that they are intimately aware that the game must develop with user feedback in mind for it to remain compelling. With the recently inclusion of deals ‘in-game’ it’s only become more valuable for users. In the past it was just fun, now Foursquare is benefiting users financially, and that has staying power.

LEARNING companies solve problems quickly while remaining true to their strategy. LEARNING companies keep users and customers happy even when they don’t give them everything they want. LEARNING companies focus on long term value and they don’t let their products get stale. LEARNING companies measure the metric of user/customer engagement and realized that there is valuable data to be measured there. LEARNING companies listen.

If there is one thing that will be consistent with my career, I want to work for LEARNING companies.

image via flickr

In a recent project, I’ve been doing customer development here in Chicago to help out Foursquare. If you’re not familiar with customer development it’s gathering feedback from potential customer on what they’d like to see from your product in order for it to be of value to them. It’s been a fun experiment in biz dev and a wake up call to the difficulties of door to door sales pitches, but I’ve received a lot of great feedback. Below I’d like to share more of the findings of the experiment. Here’s post 1 and post 2.

Restaurants are scared of new

The overwhelming theme in speaking with restaurateurs is that ‘new‘ is scary. The reason why new is scary is because new costs them time. Time seemed to be their most valuable asset and learning takes time, changing takes time, adopting new takes time. In the tech world it may even be our business to know what the next trend will be, that doesn’t matter in restaurants.

Problem: I’ve found that only savvy business owners get the benefit of online. Forget iPhone apps and mobile social computing, they may not even have a web enable device in their restaurant at all. A few solutions to these problems rose to the surface in my discussions that I think will ease the adoption issue of a new technology.

Solution: Remove the need for opt-in participation. This at first might sound scary but hold on. This isn’t a “we’re going to force you to participate” play, it’s a “we’re going to help you whether you like it or not play”. If foursquare found existing deals that bars and restaurants were running to pull into the system they wouldn’t need to convince bars/restaurants to opt-in. If you know Thursday is $1 beer night at the local watering hole because of the drink specials app, post that deal within foursquare. Then when the user goes, they’ll say to the bar tender, “I found this deal on foursquare, this is awesome”. The user becomes the sales rep, and the bar becomes intimately aware of the value foursquare provides.

Cost of current coupon system

As a part of this round of feedback, I spoke with a marketing professional who sells to restaurants often. I wanted to know what his challenges were and how he overcame them. As always, if you’re doing something tough you might as well get smart experienced folks to give you advice. Why bang your head against the same door they did?

In this conversation I learned some techniques to make my pitch ‘sexy’ to bar and restaurant owners.

Showing them their costs. By figuring out what they were already spending on coupons, deals, and existing promotions it was very easy to show them the value of foursquare. Many restaurants spend $500/month or more on ‘Money Mailer’ and other coupon systems, and they have metrics on the amount of people that actually take advantage of the deals. Well guess what, with foursquare the cost of distribution (virality) is significantly lower, thus inserting foursquare as your promotion system returns a much higher ROI. It’s simple, bar shares a deal with foursquare, foursquare share the deals with users, users come to your bar. 1, 2, 3. Cash money.

Limiting the downside of excess coupons

One thing I found when talking to bar/restaurant owners is a fear of the downside. I think maybe they’re pessimists by nature, not sure. Either way, a common concern they had with the foursquare model is, “what if too many people come in for the deal, how can I control it?” They were worried that the Mayor would change everyday and they’d be stuck giving out tons of freebies. A feature that was requested more than once is the ability to record the # of times a person takes advantage of the deal giving them the ability limit abuse. Whether by limiting point incentives or other “in-game” techniques, I don’t see this as being a long term problem.

I’m sure I’ll have more in a couple weeks…

image via flickr

I’ve done surveys in the past but I was always able to provide categories that I wanted feedback and on, now I’d like to ask for your feedback in a more open form. My friends (and I really consider them friends) at Rypple have released an embeddable widget so that you can ask for feedback directly on your blog/website. The widget above, which will also stay in the blog sidebar (down and right), will hopefully collect your ideas and feedback on what you like and topics you want to hear about most from me! If this is your first time on the blog or if you’re a regular reader I’d love for you to drop in a quick idea (almost as short as a tweet) about what you enjoy reading most, or things I can work on! It’s anonymous and quick, and I’d really appreciate the help.

Thanks guys, and great job Rypple!

I have a widget on my site that hasn’t been working properly. It’s called Blogrollr and it’s supposed to be a dynamic blog roll, which is an awesome idea, when it works. I realized that over the past month or so my blog reading has changed quite a bit. I’m doing less Google reader and more Twitter as my RSS. I also have found myself just going directly to the sites that I want to read, sometimes there is a new post and sometimes I have to dig to the archives just because I want more. (Wonder if anyone does that on this blog) I’ve also been following certain startups that I really like, and their founders, a lot closer. I like to have my finger on the pulse and following the founders on blog and twitter is a very easy way to do it.

I looked into what sites I was reading most and here’s the list. There are 3 distinct groups. Investors that I’ve been following closely, who are also extremely accessible (kudos to them). A few stud entrepreneurs, including the founders of foursquare, because I’m kind of obsessed with it right now. And finally, the gurus of customer development.

Investors

I’ve come to the belief that the community in startups often follows the investors. If a community has a solid investor presence entrepreneurs get excited about building ideas that could actually get funded and they build. Example: Boulder, CO can almost single-handedly credit Brad Feld for creating a community there. With his help, the TechStars organization got started and now it’s the 2nd most popular startup incubator in the country IMHO. The investors on the east coast seem, to me, so much easier to access and communicate with than their west coast counterparts. Not sure why this is but I’m pretty confident that it’s going to have a positive affect on the NYC web startup community, in fact it’s already happening. This is the main reason I’ve been reaching out to so many VC’s here in Chicago recently. I want to see the web startup community here grow and I really believe it will start with them.

Fred Wilson
Bijan Sabet
Bryce Roberts

Stud Entrepreneurs

The next group is stud entrepreneurs. Gary V is down right inspiring and I really don’t miss one of his video posts. Sometimes I’ll read his blog not for inspiration but just for a laugh, he’s hilariously motivated! Even if it’s not entrepreneurial advice I think that following and reading what’s going on with startup founders is cool, and worth while. These are people who are doing big things and that I have a lot of respect for, why wouldn’t I study how they think and what they’re thinking about. Like I said, I’ve recently been evangelizing foursquare to friends so in turn I’ve been following Dennis and Naveen’s blogs a bit. Both super smart guys and entertaining blogs. Charlie writes from both sides :), he’s a talented entrepreneur who very recently took a position as an EIR at First Round Capital.

Gary Vaynerchuck
Dennis Crowley
Naveen Selvadurai
Charlie O’Donnell

Customer Development Gurus

Lastly, the customer development guru’s all happen to be out of Silicon Valley. Eric Ries of startuplessonslearned has become a must read for anyone starting a company. After realizing the obvious fact that the product development cycle of the late 90′s early 00′s is broken, Eric began sharing his experiences at IMVU in the customer development process. In short, you can have the best product in the world but if nobody is buying it, it’s worthless. It’s more valuable for an entrepreneur to spend time identifying an appropriate market then build a product, rather than the built release process.

Eric Ries
Steve Blank
Sean Ellis

After writing this post I realized that every blog mentioned here is an individual, I’ve moved away from religiously watching techcrunch and mashable. I think it’s more important to me to know how things get done rather than what’s being done. Enjoy the links!

What have you been reading?

image via lomokev