5: Pick Your Business Model With Intention – Hien Lam

If you can find a brand outside of the industry that you are you're in and if you can try to like quote unquote replicate their business model and what they're doing then when you're giving like your potential customer something that's recognizable but it's so not out there that are like I don't understand what this is you're just taking from another industry and you're bringing it to you and then you're just kind of making making it your own. This is Finding Your Venture episode number five. Pick your business model with intention. I'm going to start with a very quick story of my own. I was an MBA student at Babs and College very passionate about renewable energy and wanted to start a business. I had a hundred-page business plan to become a geothermal heating and cooling installer. So we went into our final semester and we had a class called Marketing for Entrepreneurs with Bob Casby who you heard from in another episode. Bob listened to our pitch and he said, look you're clearly very passionate about this. You have a great start here. You've done a lot of great research but before you go any further I'm going to make you stop and brainstorm 12 other business models that you could employ to solve this same problem for these same customers. And we just thought there's no way there's 12 different business models for this. We already kind of came up with how to solve this problem and he said just go away come back tomorrow with 12. So we did and it was really hard. Some of them were really out there. So we came back the next day and Bob said this is a great start. So what we're going to do now is test all these different business models. You're going to go out and talk to customers and pitch the concepts and see what kind of feedback you get. And it turned out that the 12th business model idea that we had which was an education and training business turned out to be the best place to start and that was what that was the company that we went with. As a start of getting into the market with a product that people want to buy is the hardest thing to do and you can always evolve the business over time. Problems have more than one solution and so it's okay to take a stepwise approach into a market as a new business. In this episode we're going to hear from Hein Lann with Huck Finch. Huck Finch is a digital branding agency here in Ann Arbor, Michigan. There are lots and lots of digital branding agencies out there and you're going to hear a little bit about how Huck Finch differentiates itself and you're also going to hear about ways that Hein hopes to evolve the business over time. You see they were very intentional about starting a business that was easy to start even though they have a big vision for how the business might evolve. So in this first segment we're going to hear who Hein's customers are and the problem that Huck Finch solves. So our target audience is what we call purpose-driven brand and their core problem at the end of the day is that they want to be profitable but they don't want to sell the sold to company nor to be profitable. For them it's not about making as much money as possible as they can. They want to make some sort of impact either within their local community or in the world or just even with their employees. You know you're giving them a great workplace environment and they want to be able to like solve this problem. It's like how can I profit while maintaining the purpose of this company and without selling the sold. Every company started with a purpose but it could get lost in the sea of things as you figure out your business model, your pricing, who your target customers are, whatever it may be like distinct the seed that started this all can just get lost and put behind like you know fall onto the wayside and as you add people to the company too like they may not understand the core purpose of this company what you're trying to do in terms of a vision for the company because it's not talked about or there's no visual cues or recognition for doing a good job towards fulfilling this purpose and what research has shown is that customers resonate with the brands that are out there doing more than just trying to make a buck. There's a there's a cause of the purpose behind the existence of this business and people want to be a part of this movement. Okay so there's the opportunity companies that want to be purpose driven brands and communicate more clearly to their own employees and to their customers who they are and what they believe. Hindsies and opportunity to help them. So the business models that they considered were starting a podcast, writing a book, starting a digital branding agency and becoming a software company to help them do that with software and based on customer feedback they decided to start as a digital branding agency. Why? It was low risk and it was low cost like me all we had to do really we didn't even have to set up a website like I don't think that was even necessary. We could have just gone door to door or just emailed people and you're like this is what we do like do you need this or we can have started by creating an event like event. Does anybody going to show up to this? So it's the lowest barrier of entry for us like we thought about these other things but we're like well with a book we got to get an ISBN number like like what does that cost? We got a print listing okay that's how podcasts was like okay that's easy enough we can just record people but then we got to get edited I could do it but it's a waste of my time so let's cut that out for now software like neither one of us have a background in that so there's a lot of learning and that's involved there for us. Ultimately like you said we want to evolve the business because we recognize that not everybody not every purpose driven company can afford us and as much as we want to help every one of them we can't based on what we do right now because it's two guys so ultimately we would like to create some sort of software where we take what we do and have validated to our work that's shown to be valuable can we put it into a software form where people can either give it away for free where people to do or they pay like a subscription to it and they can walk themselves through creating a purpose statement to developing who their target customers are what the messaging the core messaging is what their core values are so it is like they can walk through this process so they have it at the end. We've always had intentions of writing a book we had a working title for it the art of awesomeness hopefully nobody's dealing with the title at this point that I've said that on air so that we we do want to write a book we would really love to you whether it's around branding I think what we want to do is take like the lessons we've learned from the podcast that we started a life on brand and just kind of like pull them together and just show like how people can live a life on brand whether it's starting a business being creative or just whatever it may be to kind of write a book around that and hopefully it's going to be the same lessons that we try to impart in the work that we do anyways like having a purpose having a vision you know treating people well and like utilizing social capital and like recognizing the importance of it so it's all the same kind of things so just because Huck Finch started as a digital branding agency which is kind of like a somewhat of a boring business model it doesn't mean they can't do those other things in the future and it also doesn't mean that they have to be a boring company you can have a boring business model that's tried and true but then differentiate your products and your services and your company culture all of which are things that Huck Finch has done really well so now let's hear Huyne talk a little bit about how they have differentiated and done some non-traditional things with a very traditional business model so the typical agency model of we go fill out like RFPs we pitch to agency to to potential partners telling them like this is what we're going to do this is how much it's going to cost and we have to sit there and develop like a full on proposal for things and when we didn't want to do that model because neither one of us like pitching we don't like the idea of pitching for me personally it feels like you put the customer in a in a bad position because like the whole idea of a pitch is like you want to like wow the potential customer so much that they get excited about this thing that they they're gonna hire you when like I rather collaboratively work with you to figure out like what do you actually need again if I can't solve that problem for you well I'm not the right person then I'm not the right person like I don't want to do a dog and pony show and or try to get you to like work with me we should want to work together because we both agree this is the right thing to do so we developed a concept called a joyride where we're going to give you a taste of what we do and we borrowed this from going to we love food so we go to restaurants or go to bars or whatever like sometimes you're like oh we wonder what this beer tastes like and the first thing that happens is they they give you a sample right like here's right out so you don't want to waste nine dollars on a beer if it ends up tasting terrible and so then that's basically what we try to do with our joyride is like let's give let's give you a taste let's bring you in for an hour show you what it's like to do this foundational workshop that we do you know it costs five grand but we're gonna give you an hour for free based on our discussion that we've had we'll get we'll go right into the part that's most critical to you to see if that's helpful and if you love it then you'll sign you on and you already know the price so we don't have to pitch it now at this point and if you don't then you walk away with an hour of value now like if you didn't know your your target customer is you're gonna walk away with a initial part of a customer profile now you can go fire higher another agency to like do whatever you want with this so just thinking about like what we don't like about these other eight these other models what frustrations about it and then how can we do that differently was kind of how we thought through our approach every startup has different types of risk associated with it there's market risk there's product risk there's execution risk and I just love the idea of starting with a non-risky business model something that's well established as a starting point and in fact this is a concept that Huckfinch introduces to their clients they're also advocates for picking a business model that people know and understand and then differentiating based on that one of the very first questions we have for them is like what are some brands that inspire you like brands that you love and we we agree handi-cap it by saying like you can't pick Tesla you can't pick Apple so now your four is a big brand outside of this and the reason I like to bring I brought this up is that what I found to be very valuable and useful is if you can find a brand outside of the industry that you are you're in and if you can try to like quote unquote like replicate their business model and what they're doing then when you're giving like your potential customer something that's recognizable that's so not out there that are like I don't understand what this is you're just taking from another industry and you're bringing it to you and then just kind of making it your own. For anybody that's interested in this topic of branding and purpose-driven brands and the work that Huck Finch is doing, I recommend their Life On Brand podcast and Hines got two book recommendations for you. There's a great book that I've read. Book is called "Win Without Pitching" and this really kind of like this is really helpful because when I read it, it made me realize that I don't want to pitch. I don't like pitching because of all the things that he wrote about in here. So I thought that was a really good book to read. Another one that comes to mind is a book by a friend called "Ely Alman" he owns a creative director for a enaming agency in Berkeley called "100 Monkeys" and the book is called "Run Business Run." Run Creative Run, one of those two. I'm sorry, Eli, I forget the name of your book. This is Brian. The book he's talking about is called "Run Studio Run." But that was a really great book too because he wrote it because he was trying to run his business as Bessesee could but realized there's not a lot of books out there written for creatives on how to run a creative agency. And so there's a lot of great lessons in there around how to create a business and he says there's three things you have to focus on and number one is profitability. What does it take to be profitable? Because at the end of the day, if you're not bringing in more money than you're investing, then you're going to go out of business at some point. So really starting there, what's the profitability? And creating a model for profitability? Those are the top two things. You can't figure those two out and you really probably should stop where you're at. Hi, and you killed it. Thank you for joining me on the podcast and sharing your story. A quick recap of where we've been so far. We have identified a great customer. We found a good problem to solve for that customer. Now we've picked a business model. In the next episode, you're going to hear from Matt McQueen. We're going to talk about user experience design and building a product that your customers actually want. (upbeat music)