By establishing the first registered distillery in the country, Jack Daniel built his success on two fundamental ingredients: identifying a need in the community and crafting a quality process to satisfy that need. Today, Gentleman Jack Tennessee Whiskey honors the makers who follow this time-honored model of finding the sweet spot of where demand and innovation intersect.
Prologue – The Secret Sauce for Successful Start-ups
Kevin Hale is a partner at Y Combinator, one of Silicon Valley’s largest start-up incubators. Even Hale has no crystal ball to foretell which ideas will change the world, but he will predict this with confidence: just as overthinking a business concept can doom it to non-starter status, fostering strong customer relationships can impel its success.
Take his first start-up, an online form-builder and survey tool called Wufoo. Hale ascribes Wufoo’s meteoric rise to the blending of two critical ingredients: loyal customer relationships built through word-of-mouth and transparency, and patience to play the long game from conception through development and beyond.
The Journey –Converting Liabilities into Assets
The Wufoo spark ignited at the surprising crossroads of inertia and inspiration. Hale was doing PR and web design for university scientists when he noticed all his colleagues dreading the same drudgery around creating databases, a necessary but decidedly unsexy task. While an app-based solution would have been relatively easy to design, ease wasn’t incentive enough to entice programmers’ involvement.
Ironically, Hale’s own lethargy around this repetitive work element motivated him to craft a solution, but he had neither programming chops nor capital to create an app singlehandedly. He could see the end game, but the path wasn’t clear.
While attending a design conference, Hale sat in on a lecture entitled “Doing Big Things With Small Teams” where he received the key kernel of new business development advice that charted his course: “Build your audience first before you launch your product.”
Hale and the other Wufoo co-founders followed this guidance to shift a liability (their lack of skill in app creation) into their greatest strength. They created a blog as a platform to talk about gaining that skill. The blog, in turn, built them a following and a presence.
Their only asset was the solid readership of developers and designers, built over time, but with it they had captivated a market without spending a dime on formal marketing or advertising. Capitalizing on their blog audience, they bootstrapped their launch, relying on their followers to generate referrals for their product.
Hale explains “referral commodity value” in this way: “Paying for advertising or marketing is a ‘tax’ for those who haven’t built something by word-of-mouth or something marketable.” With a strong consumer base already identified, their “growth strategy” was not to increase subscriptions but to reduce churn and satisfy existing customers, even in moments of significant challenge.
Challenges – Where Transparency Turns Mistakes into Growth Opportunities
Start-up glitches illustrate how Wufoo rose to overcome snafus with its overarching pro-customer ideology. Wufoo was so popular out of the chute that website traffic crashed the server, causing some data loss. In face of potential disaster, and in response to negative comments on Wufoo’s site, early fans and longtime blog followers stepped up and extolled the company’s virtues, becoming cheerleaders and stemming backlash. Wufoo admitted its mistake immediately and proactively offered refunds to all accounts affected by the data loss. Rather than hiding or manipulating mistakes, Wufoo’s dedication to straightforward dealings with customers paid off in spades. Its momentum continued unabated, and it didn’t lose a single customer.
This same pro-customer ideology enabled Wufoo to minimize dramatic momentum shifts during its early years. For example, it was one of few companies that referred customers to competitors when those customers wanted features it didn’t offer. This type of service, and a commitment to long-term relationships over quick financial gains, bred a customer loyalty that allowed Wufoo to ride waves that might have pulled other companies under.
The Road Ahead – Playing the Long Game with Accuracy and Dedication
Reflecting on his first start-up, Hale recalls some important lessons. “Wufoo taught us a lot about not following the “growth-at-all-costs” start-up mentality. Instead, we learned to invest in our customers and our users.“ This strategy informs his role of advising and nurturing other start-ups at Y Combinator.
A new publishing start-up Y Combinator is incubating operates with a similar mentality. In face of a mainstream publishing model that pressures authors and pushes short-term gains, Hale encourages this new start-up to capitalize differently on its writers and authors. Simply put, this investment looks like finding the best talent, treating them well during their advancement, and empowering them in the longer term.
“For us, the best kind of growth is through word-of-mouth, where people love your product.” Hale has proven that, by doing right by customers, businesses can earn brand loyalty with a kind of staying power they could never have achieved through short-term gains.
Visit The Pitch Distilled to read more inspiring entrepreneurial stories and learn how distilling your business model can lead to success.
This article was produced by WIRED Brand Lab in partnership with Gentleman Jack.