MBA2441 Q&A Wednesday: Do I need to pivot and add AI in my business?

0:09Heyo! Welcome to the$100 MBA show, the place to be to build a business you want with our practical business lessons. I'm your host, your coach, your teacher, Omar Zinhome. Today's episode is Q &A Wednesday, where I answer a question from one of you, one of our listeners. If you've got a question you want to ask, go ahead and email me over at omar at 100mba.net. Today's question is from Chester. Chester asks, do I need to pivot and add AI to my business? I have a tech startup, and I am struggling with getting traction, especially when it comes to funding and getting investment. I see that AI is a new trend that's a big wave that's in our industry.

0:48Sometimes I have these feelings and thoughts that I should jump on this trend so that my business can have better traction. Would love your thoughts. Thanks so much in advance, Chester. This is a very solid question because it touches on a few things. Number one, it talks about pivoting your business so that you can get better results. Two, it's talking about trends and should you jump on the wave of a trend and write it so that you can get that momentum. And then he's also talking about AI, incorporating AI into their app or their software. So there's a lot to discuss. There's a lot to share.

1:20And there's a lot for you to learn in today's lesson, because I'm going to answer Chester's question. I'm going to go through the details of how pivoting a business can be helpful, but it also could be hurtful or harmful to you and your business if it's done for the wrong reasons. I'm going to help Chester and everybody who's listening with a solid focus, understanding what your real goal is here and how to achieve it. So let's get into it. Let's get down to business. Chester's in a little bit of a dilemma because he's not getting a lot of traction with his tech startup. He feels like maybe if I pivot to AI, I'll attract more investors, I'll have more money, and I'll be able to develop a better product.

1:57And I'm going to give a little tough love today because that's not how business works. That's not how a successful product gets made. Just because you have funding, just because you have money, doesn't mean you're going to build something great. There are plenty of businesses that go out of business after their seed round, after their Series A, because they really don't have product market fit. That's what really is important. It sounds like to me, Chester, because I've been around enough tech startups in my time, our offices in a tech startup business in Sydney, and I ran a tech company for over nine and a half years.

2:31So I can kind of see the signs. It sounds to me you do not have product market fit. And product market fit is just not going to happen by force. It's not going to just happen by adding a feature or adding a functionality or adding the next buzzword. Today it's AI, tomorrow it's going to be something else. What you really need is you need to understand what problem you're really solving. And once you identify it, you have to get brutally honest with yourself and ask yourself, is this a painful problem? Is it painful enough for them to pay for this solution? And more importantly, are they even aware of this pain?

3:04Because they might be going through something, but they're not aware of it. And therefore, they're not willing to pay for it or pay for a solution to that problem. Product market fit is all about creating the perfect product that fits your market, your ideal customer. Think about the products that you absolutely love and why you love it. A lot of people get asked this question, what is an app on their phone that they can't live without? On the top of many people's list is Spotify. They love Spotify because they love music and they love to have access to all the music that has ever been created in the world pretty much at any time.

3:41One fee once a month so they can have access to that. Also, discovering new music, all kinds of stuff. So try to examine things that you love and why you love it and you'll understand how product market fit works. Now, when it comes to your business, you need to create that same kind of relationship with your customers. And when it comes to tech startups or any business that is starting out, it's very important to go niche. It's easier, actually, to have product market fit when you are in niche, when you actually do a specific thing for a specific crowd. For example, Amazon now sells everything under the sun.

4:15You can buy a house on Amazon now, right? But when it started out, it only sold books. And specifically to people who are comfortable buying things on the Internet. people that are tech forward and are comfortable putting their credit card online. These people loved Amazon because they got their books delivered to their house. And as soon as they thought of buying a book, they could just order it right on their phone immediately. So having said that, if AI is going to improve your product market fit, your customers are asking for AI in your product, or your product would be easier for your customers to use, or would add real tangible value, then yes, it's worth pursuing.

4:56But if not, and if you're not even sure, it's not worth the bet of you investing in AI now, just so you can slap the AI label onto your business, onto your software. Why am I talking about this? Because it's actually about the customer. It's actually about you making money through an exchange of value. You're giving value to the customer and the customer gives you money. If that does not exist, investors will not invest. That's the bottom line. I've been around the block for 20 years. I have spoken to many investors. I've been advisors to companies. I've been to countless pitch nights. Investors only care about making money.

5:34And if you can't prove you can make money with product market fit, then they're not going to invest. That's the bottom line. They're not just going to invest because you have AI there and they want to invest in any AI startup. They're going to do their due diligence. They're going to look at your numbers. They're going to look at your trends. They're going to look at how many leads you got. If you remember that investors are professionals, they know what they're doing. They're not just going to throw money at anything. But what's most concerning to me about Chester's question is what's underneath the question and this sense of desperation.

6:06Now, I want to first say that we've all been through that. I've been through that several times in my career as an entrepreneur, where you're just desperate for this thing to work. You're desperate for a win. You're trying, you're trying, and it's not working. You're spinning your wheels. And there's a sense of desperation of like, let me just try this, and then I'm hopeful that everything will just all of a sudden fix itself. As somebody who's been through that several times, this is not the answer. It's very, very dangerous to make decisions out of desperation. I've never made a decision where I was in a situation where I was happy about that decision.

6:39And I know that's hard to hear because right now you're trying to make things happen. You're trying to pivot. You want to do things and correct things as fast as possible. But the best thing you can do is to remove that desperation from the equation and don't just try new things or different things for the sake of them being different, like throwing them at the wall. Hopefully they stick. No. What we want to do here is be strategic. We want to try things out with some thought, with some strategy, and with some experimentation. For example, why don't you survey your current email list or current customers or current users if they'd like AI to be implemented in the app?

7:18And get specific, because if you just say, would you like AI in our app, your customers are not going to really know how to answer that. So you're going to want to get specific about, would you like the assistance of AI to help you with these tasks or these features inside the app so that you can do XYZ? Get some feedback. Get some data. Talk to some customers. Get on the phone. Get on a video call. In these situations, hunches are not a good idea. You want to get information that you can rely on. Based on that information, you can start making some decisions, some solid decisions, whether you want to move towards AI or maybe that's not the answer.

7:51And if it's not the answer, then I highly encourage that you get on some calls with your customers like I mentioned. Have some chats with them. figure out what they're struggling with in their business, in their life, in their workflow. Put your app aside for a moment. Put your software to the side for a second, because you want to learn from your customers about the whole picture. Why? Because they might tell you something that you are not expecting. They might say something like, I really hate this part of my job. I really hate this part of my workflow. This is a real struggle. This is a super annoying thing.

8:26And you're going to just make notes. You're going to transcribe that call later on. Of course, ask them if you can record it. But the point here is that you might discover a better way to serve your customers once you talk to them. A lot of people don't want to do this work. And this is actually the solution to your problem, is talking to your customers. You want to do this as much as possible. I say minimum get on 10 to 12 calls. If you can get on more 20, 30, 40, that's even better. They're not customers than potential customers, email list subscribers. This is uncomfortable for a lot of people, but it's the actual solution is learning from people about how they work, how they live so that you can solve those little problems for them because if it's painful enough, they'll pay for it.

9:12I want to take a moment to say that, you know, artificial intelligence, AI is not a bad thing. Okay. It's pretty incredible what it could do. And yes, it could be the future and it could be part of our lives in a big way. But if you're not clear, like 100 % crystal clear, how AI will be implemented in your product to help your customers in a clear way where they have validated, yes, they want to be helped in this way. And you can monetize that addition to your app or your product or service. Then you're just really doing it for the buzz. And buzz has a shelf life. You know, it might get you some traffic a day or two, but that's pretty much it.

9:48It's not going to really convert into customers. I subscribe to a lot of software, a lot of apps to run our business. And a lot of these apps have incorporated AI into their product. And to be honest with you, I hardly even use it. It's kind of nice to have, but if they didn't have it, I probably would still pay. Because my core problem is being solved, not by AI, but what they actually do for our business. I also want to say that this struggle that Chester is going through, that he shared, of wanting to pivot, wanting to add AI, wanting to do something, want to attract investors, that kind of wrestling with themselves, trying to make things happen, the spinning the wheels, all that kind of stuff.

10:28This is normal. Every entrepreneur goes through these phases. This is the struggle that you need to go through and you got to do the miles, the yards so that you can be able to learn what your company needs, what will work and that will take talking to customers like I mentioned. But the point here is that don't get upset. It's okay. This is normal. And most people quit here. And what you can do so that you can, you know, differentiate yourself from the quitters is to do the hard work of talking to your customers, of learning what they need and coming up with a better solution. Sometimes the solution is actually very simple and it's not that complicated, nor is it high tech.

11:08I'll give you an example from my experience. When I was running Webinar Ninja, our software company for over nine years, in the early years, we had a complaint from customers that we're not getting back to them fast enough. They wanted a faster response. At the time, we had a very small customer service team in the first few years, and we were getting back to people within a few hours. And we've thought about getting into bots or even automation or AI to learn how we can maybe automate some of this and help customers faster. But what we found was the solution that we came up with was far superior.

11:45And it was just setting up expectations. When they sent an email or went and submitted a chat, we would respond and say, hey, thanks for sending this message. Our team will get back to you within 24 hours. So in their head, they're like, okay, they'll let me know by tomorrow what my solution is, how they can help me out. Internally, we knew we were going to get back to them in an hour or two. So that when we did get back to them in a couple hours, they were pleasantly surprised. We over-delivered. They're like, wow, that was fast. It's all how we framed it. It was fast because they're comparing it to 24 hours and two hours is much shorter than 24 hours.

12:21So sometimes your solutions are simple and don't require a lot of tech. One of my other favorite examples is Otis Elevators. When Otis Elevators started producing elevators across these major big buildings and skyscrapers, a lot of people were complaining that this elevator was slow. It's taking forever to get to the ground floor. You know, it's going through 40, 50 floors. And Otis at the time didn't have the technology to speed it up without being unsafe. So instead of trying to throw tech at the problem, they just put up some mirrors inside of the elevator, which is commonplace now. But they notice that when they put mirrors in the elevator, people feel like the elevator is going faster because they're more consumed at looking themselves at the mirror.

13:08Time is going faster. Their perception of time changed. And therefore, they stop complaining. Wow, this elevator got to the ground floor pretty quickly. Nothing changed other than they just put up some mirrors. So when you talk to your customers, when you do your research, when you take down your notes, you might find some simple, elegant solutions to improve your business, improve your product, and solve problems in a creative way. There's no way around this. You have to talk to your customers. Thanks so much for listening to the show, guys. Thanks, Chester, for asking this question. If you've got a question you want to ask, just go ahead and email me over at omar at 100mba.net, and I'll make sure to answer right here on Q &A Wednesday.

13:44I'll give you a shout out for sure. Before I go, I want to ask you a quick favor. Me and my team work super hard to produce this podcast, and you can help us grow the podcast even more, make the podcast even stronger, create even more compelling, better episodes. All you got to do is hit follow or subscribe on your favorite podcast app. By subscribing to the podcast on Apple or on Spotify or on any podcast app, you support the show and show the algorithm that you love this podcast. I promise you I will give you everything I got to build a great podcast and every episode will be as amazing as possible.

14:22Thanks in advance for supporting the show. Before I go, I want to leave you with this. When you have product market fit, when you create a solution to a big problem that people have and they're happy to pay for it, business is easy. Everything else just becomes so much easier because you don't have to beg for sales. They just come in. People love it. You have high customer satisfaction ratings. There's word of mouth. People are going to want to invest. People are going to want to get involved. People are going to want to work for you. It's just so much easier. If you get this right, this is really what matters in business.

14:54This is what matters to make your life so much easier as an entrepreneur. So take the time to invest in learning how to get product market fit for your business. Thanks so much for listening, and I'll check you in Friday's episode. I'll see you then. Take care.

15:14Thank you.