Entrepreneur Spotlight: Building A Great Product Is Phase One In Building A Successful Business

Few things are as encouraging for an aspiring entrepreneur than to meet someone who’s been through it all and made it. And there are few people out there who made it as Steve Fanale. We sat down with him to chat about his newest venture, Drive Yello, but also to try and understand the challenges today’s entrepreneur has to face.

Steve started out his career as a professional sportsman who could code. He built his first app when he was 19, a payroll programme he sold to the bar he worked for. He has been part of Australiaʼs digital industry for over 20 years and started his digital agency, MassMedia Studios, in 2000.

MassMedia grew to over 60 people with offices in New York and London selling Traction, an enterprise marketing platform conceptualised by Steve and sold to Global businesses worldwide. MassMedia Group sold to Bluefreeway in 2007. After leaving the Massmedia Group in 2010, Steve has been an active mentor to several Sydney startups and founded film production company FeverPitch Entertainment and App incubator AppVillage.

At the start of 2015 Steve made the decision to focus on his next venture and partnered with Johnny Timbs to create Drive Yello, a last mile logistics platform supported by a driver/rider marketplace.

Tell us about DriveYello, how you started it and what your plans are for it for the future.

I started DriveYello with my co-founder Johnny Timbs just under 4 years ago. We saw a gap in the market in the way restaurants and cafes struggled to manage their deliveries and delivery personnel. We wanted to provide innovative technology to help them deliver their food and to help them find drivers and riders to deliver, whether they needed them for a shift or for single delivery.

We initially started the business to target the Quick Service Restaurants space. But in the last 12 months, we’ve diversified into the broader retail space, to help retailers actually compete with the likes of Amazon Prime here in Australia.

When you started, did you have any competition or was it a more fragmented market and every business looked after their own delivery?

When we first started, most businesses were looking after their own delivery, employing their own teams and had very little tech. There were a couple of software-as-a-service plays, where the likes of GetSwift were involved. But it wasn’t long till Deliveroo, UberEats and the full-service on-demand food companies were launched here in Australia. We don’t consider them to be direct competitors as our offering is quite different. In fact, they’ve helped us grow our business because they not only increased the uptake of technology in the industry but also grew the market of drivers and riders who were looking for work. Overall I would say it helped us more than hindered us that other bigger players entered the market.

Do you feel the market growing for the drivers and riders meant you had to compete for them?

To a degree there is competition, in the sense that we have to offer a similar if not better value to the couriers. But when you are driving around for Uber or Deliveroo, you are not working exclusively for them and they also able to work for Drive Yello at the same time. So from that perspective, competition may have increased but so has the market.

You know we work with many founders who are working on their first product. Do you have any lessons or challenges you’d like to share with them?

Running a startup presents many challenges. As for a new person coming into the startup world, the traits you must possess is persistence and grit to get through the hard times. Most of the time, success comes from being able to survive and not necessarily from having the best product, or the best service, or the best team. It’s really about ensuring that you find a way to make it work. The first stage is to ensure you’ve got a product-market fit. The only way to really test this is to develop a minimum viable product. It helps you test the market not just through surveys or focus groups, but to actually launch something and see how many people are willing to pay for your service. That’s the hypothesis that is critical to test in the early days. It’s important to focus on a particular value proposition, achieve some success and build from there as opposed to trying to be everything to everyone.

What about raising capital for your idea?

It all depends on the business, not every busy needs raise capital. Initially you may have to do a seed round to get the MVP off the ground but traditionally that is provided by the founders or friends and family. Some businesses can continue to grow organically from day one, but other businesses, like DriveYello, need to raise because they need to develop the technology. That’s where the MVP becomes critical to the process. By proving and validating your assumption that people actually want your product or the service you’re offering, you can go out to market and use that as a selling tool for investors. You can say ‘I’ve proven it, I’ve got 50 customers in 2 weeks’ or whatever the number is. If you show growth, you’re demonstrating interest in your product. Having that increases the chances of investors backing you and your product or service.

Obviously your team members are important as well. Having experienced entrepreneurs gives investors more confidence and makes your pitch stronger than having two founders who have never run a business or worked in similar businesses before. So initially focus on an idea that suits your skills and your industry knowledge.

And of course, the market size is another one important element investors assess. There has to be potential to go BIG and Global. Remember most investors are trying to make 10x the investment, particularly in Australia. So unless you are dreaming big this is near impossible. This can also be validated through other types of similar services that already exist in the market and are successful.

All these things are critical to telling a story that an investor wants to hear. To provide the confidence and validation of your idea and your ability to execute and grow the business.

You mentioned in an article I read that you felt some startups today are completely focused on the product and not thinking enough on how to market it. Would you expand on that a little and say how you see marketing and sales in the life of a product, especially in the early stages?

My experience as a startup mentor found that a lot of tech companies are started by smart technical people. Not always the case, but a valid generalisation nonetheless. In many cases, these founders have no experience in actually marketing or selling a product. So they default to what they know best and focus on building a great product. They don’t pay enough attention on what generates revenue – customers. They may be great in building a great solution, but that’s only half the job. It’s important that at least someone in the team is not technical, but a salesman and ideally a marketer as well. There’s plenty of good products that don’t succeed and a lot of the time, that’s due to the inability to actually take something to market. There’s many different components and phases of a building a successful business and developing a product is only one component of the business. The ability to go and sell it and make money off is critical to the success of a business and ideally a person with this skill set is part of the founding team.

Do you remember when you started DriveYello, did you think about branding early on?

Yes, absolutely. Branding is really important to think about early because you want to make sure you can protect that brand and that it stands out and is unique. These days it almost all starts with a domain name availability, a business name availability, making sure you’re not competing from a name or brand perspective with any major companies or any business that might be a competitor in the future. It is important to consider brand and branding and business names from day one, just to ensure you identify and position yourself correctly. Its also good to trademark early so you can not only protect but find out early if there are issues you may need to deal with. Rebranding can be a costly exercise and may even be the death of your business in some cases, so it’s important to spend a bit of time early on to get it right.

What do you enjoy the most about being an entrepreneur?

The challenge, absolutely. I get a kick out of solving problems with technology, that’s what I do. When I ran my digital agency, we used to do that for companies on a weekly, monthly basis. There was a whole team working to solve a problem, whether it was a marketing problem or a sales problem, or even an operational problem. Being an entrepreneur gives you the ability to solve big problems and provide a great new service and it gives you so much satisfaction when you come up with an innovative solution solving issues or develop a new idea. I’m sure traditional homebuilders and other people who create things get a similar creative satisfaction. It’s a big plus for any entrepreneur: building a team, building a company, building a product that people want to buy, that’s the buzz that keeps you going.

In your agency work, you’ve worked with many companies, helping them to solve their problems. Do you feel that having that type of industry knowledge and becoming an entrepreneur after you’ve worked in companies with other clients is something that was useful for you?

I think it was critical to my understanding of how to run a business, how to position ourselves from a branding perspective. My whole life experience has contributed to my ability to do what I do today. That can be said about most people. I think that I was lucky I was exposed to different industries when I was running my agency. One of our big clients was Audi, so we were exposed to the motor vehicle industry. Another big client was Quantas, so I got exposed to how the travel industry worked, then retail companies and so on. Every brand that we worked with, we got to learn how it is they marketed themselves, what products they sold, what technology they used. It was very educational and inspiring.

And I think it’s important to realise there’s this perception that to be a tech entrepreneur, you have to be 22 years old, be straight out of university and come out with a great idea and you’ll make it. I don’t think that’s what the startup world looks like in reality. I think if you look at successes, the majority are older entrepreneurs. And the reason I think that’s an important point to raise, is because it’s not just about coming up with a very good idea, or building a cool product. Succeeding as an entrepreneur is also about knowing how to run a business. I think it’s important that anyone going in realises that a successful business is more than just a good idea.

When it comes to running businesses, how do you feel about change?

As an entrepreneur, you better be used to change, and you better enjoy it, because that’s what it’s all about and failure is also part of the gig. It’s not unusual to constantly change. The norm is constant change, so it’s really important to get used to it and be comfortable with it. You have to be comfortable with change. I think if you weren’t, the likelihood of you having the desire to be an entrepreneur is pretty slim.

What about facing failure, did you get better at it with time?

I think every failure hurts, but with every failure comes a lesson. I don’t necessarily look at it so negatively, to be honest. Everyone knows you have to fail to learn and grow. If you’re not failing you are never putting yourself outside of your comfort zone. I don’t think you should focus on it as a failure, it’s important to just continue to strive towards success. Failures are just stepping stones and are part of the process. You should expect to fail at times. If you think you can start a business and have zero failure rate, make zero mistakes, then I think you’re dreaming. In the end, it all depends on how you react to that failure and tomove forward with the new lessons you’ve gained.

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