47. Quick Thinks: How to Use Storytelling to Be a Better Founder
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Hi, Matt here. I invite you to look into Stanford Continuing Studies. For over 20 years, I have taught in the program. Discover a diverse range of courses available both online and in person to anyone, anywhere in the world. Classes cover everything from fundamental business skills to the fascinating world of AI. This fall, join me for Communication Essentials for Work and Life, a new course designed to enhance and hone your communication skills in various situations.

Each week, guest speakers will join me for interactive lectures and Q&A sessions on topics like persuasion, storytelling, nonverbal presence, and reputation management. The course starts September 24th, and registration is now open. Learn more at continuingstudies.stanford.edu. Hello, I'm Matt Abrahams, and welcome to a special Quick Thinks episode of Think Fast, Talk Smart, the Podcast.

Our recent episode on entrepreneurship received such positive feedback, not just from Think Fast, Talk Smart listeners, but also from listeners of the GSB's Grit and Growth podcast that we wanted to share even more from my interview with Stephanos Zenios, who is not only a GSB professor, but also the faculty director of the Center for Entrepreneurial Studies and the main architect of the GSB's Startup Garage program.

Enjoy this QuickThinks episode where Stephanos describes the steps involved in bringing a successful entrepreneurial venture into being. So we begin with the premise that I explained earlier, that a new venture is a set of hypotheses. And every founder and every founding team needs to do two things. Formulate those hypotheses and then test them with real data.

It's only then when you can go to investors and can credibly seek funding.

So we structured the course around two methodologies. One is design thinking that has been introduced by my colleagues here at the design school. And the other one is lean startup. And what we recognize is that you need the design thinking methodology to help you formulate your hypothesis. And then you need the lean startup methodology to test the hypothesis.

So, first of all, what is a hypothesis for a new venture? A hypothesis for a new venture is who is your customer? What is the pain point you're going to solve? How are you going to solve it? What is your solution? How are you going to go to the market? And how are you going to make money? So you need to be able to answer those five questions. So first, you need to come up with a hypothesis of what your answers to those five questions are.

So we begin by having our students immerse themselves in the environment of who they think their potential customer is going to be. We give them an assignment that lasts for four weeks. Talk to as many future customers as possible.

Ask them for what their pain points are. And then at the end of this four-week period, come up with a summary description of who is your customer and what is the pain point that you want to address. And on a weekly basis, we ask our teams to tell us how many interviews they have done, but more importantly, what have they learned from those interviews. At the end of the four-week period,

The students have an answer to the question, who is the potential customer and what is the problem they have? Then we teach them how to use brainstorming to generate alternative ways of addressing that problem, to develop low resolution prototypes that they bring back to their customer and get feedback, but also to develop the business model for the venture.

how you will make money, what is your go-to-market strategy. For that, we use a widely popular tool called the Business Model Canvas. We also ask them at that point to come up with an estimate of what is the total market size and to figure out whether the market is big enough to justify the capital necessary to build a venture.

By the end of the fourth quarter, this is a two-quarter class, by the end of the fourth quarter, the teams are ready to make a presentation in which we ask them to answer the following question. Have you found a need that is worth addressing? And do you see a viable path forward? Do you believe you can build a venture around solving that need?

The teams that decide to continue winter quarter, the winter quarter, they end up designing experiments. Experiments for their go-to-market strategy. Experiments for their unit economics. Experiments for product market fit. We ask them to develop minimum viable products and test them with customers and get feedback and iterate based on that feedback.

We also teach them how to evaluate term sheets that they would get from early stage investors. And then finally, we prepare them for a pitch presentation that they would give in front of investors.

We give them some of the nuts and bolts of how you pitch in front of investors. But more importantly, we tell them that what they did fall and winter quarter was gathering the evidence to put together the story that they will share with investors. And that brings them to the end of the quarter with an investor pitch in front of a group of investors.

Wow. So everybody, you just heard in a few minutes what takes two academic quarters to get to launch a new venture. I find it really interesting and should resonate with people who listen to this podcast frequently that a lot of time, a lot of time in your model is spent really understanding the potential customer. And we talk a lot here in communication that it's critical to really understand who your audience is.

And so it's nice to see that that's super important in launching a new venture. And I liked how you ended as well with something that we often talk about, which is you have to be able to tell a good story. It's not just to have the evidence, but you have to put that evidence and do a good story. Yeah. Great founders are great storytellers. Mm.

And they have to tell different stories. They have to tell a story to their customer so that they can inspire them to test and use their new product. They have to tell a story to their employees to inspire them to take some risk. And then they have to tell a story to investors and their board. And what happens

What I found from my experience teaching Startup Garage is the closer you can get to your customer, the deeper you can understand your customer, and the more authentic as an entrepreneur you are about addressing the need, the more compelling your story is going to be, both for customers, investors, and employees. So that relevance can really help make it resonate. Thank you.

Thanks for joining us for another episode of Think Fast, Talk Smart, the podcast. For more information and episodes, visit gsb.stanford.edu. Hi, Matt here. Quick question for you. When was the last time you took a step back from your daily life and took the time to invest in yourself and your education?

For a lot of us, it's been a long while. But here's the truth. Great leaders never stop learning. If this sounds like you, I encourage you to explore Stanford Executive Education Programs. These programs are jam-packed with insights from Stanford GSB professors and bring together top leaders like you from all around the globe.

Explore Stanford Executive Education programs now at grow.stanford.edu/learn.