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Kirk Wayman 0:07
This is the Startup Redding podcast created by a group of founders, funders and entrepreneurs who believe you can have a thriving startup ecosystem in any city in the world. So they created one in theirs; Redding, California.
Hi, it’s Kirk. Today we’re going to talk to Lauren Jerome, co-founder of Mindbox Studios. She came down to Redding to be a mentor at our last Startup Weekend, and we got a chance to talk about innovation. She had recently presented a keynote at a conference on this subject, and I wanted to share that conversation with you. So we actually snuck away from Startup Weekend down to the studio, aka my office, and recorded this episode so that you could share in what we’d been talking about.
But before we get started, I want to give you a few cues on how to listen to this episode. Or at least pull out a few things that I think might be interesting for you to consider.
Many people seem to think that startup culture and the practices that we engage in is all about technology. Startups are tech companies or so people think. Lauren happens to be a developer and Mindbox Studios actually builds software, so they are a tech company. They help tech startups get going, and get off the ground and get their ideas to market. So you’re going to hear a bunch of stuff about tech in this episode, but I don’t want you to listen to it through that lens. Because while Tech has led the way in helping us understand what startup is, I want to suggest that the processes of innovation transcend the tech space; it’s really a new way of being in the world. It recognizes that we’re in a new world, in a new economy. Innovation, or all this stuff we’re going to talk about, is a necessary process of engaging this new economy. And it’s the way that value is being created in a wide array of industries, maybe even most at this point.
So if you’re not looking to build the next software company, you can and should apply the understandings and the practices that Lauren is going to discuss in this episode, in whatever you are going to build. So no matter what this episode is for you, and I really hope you enjoy it.
So you recently were invited to be the keynote speaker at an event. What was the event? What was the context of this keynote?
Lauren Jerome 2:32
There was a conference in Springfield, Oregon on “Embracing Technology”, and they asked me to be the keynote and talk about innovation, to share a little bit of the Mindbox story.
Cool. So I heard a little bit about this yesterday, as Lauren and I were chatting over a cup of coffee. And I wanted to give Lauren an opportunity to share some of these ideas and learnings that she had in preparation for this keynote. So we’re going to talk about innovation. And we want to start by setting a little bit of context: What is innovation? How does it work? And what are we seeing going on inside of our current economy? Because innovation is one of those things that’s part of the human experience, but it changes as economic conditions change. And there are periods of time when things are relatively stable, the pace of change speeds up and we find ourselves in times like this, that are probably better identified as turbulent. And so what have you learned about the context that we’re living in right now?
My takeaway from the last 10 years or so of working with Mindbox and doing all the research that I did to put this keynote together is that innovation is something that is so prevalent today. Because of technology and how far it has come, I think it’s actually becoming something that we’re excited about, and seeking, which is different. It’s like the average person is accepting of innovation in a way that I don’t think we’ve always been.
One of my favorite quotes about change is – this is a Mark Twain quote, and anytime something is attributed to Mark Twain, that just means we don’t know who said it, actually – but he said that the only person who actually likes change is a baby with a wet diaper. But what I hear you saying is that actually, the conditions have caused us to accept change.
Yeah, I’d say certain kinds of change, because I definitely work within organizations and change can be a difficult thing for groups of people to usher forward. At the same time as consumers. I think we’re expecting things to change: we’re expecting the newest app, the newest TV show, you know, what’s new! Right? Why are we always looking for the new things when the human condition is that we like our habits.
Right. So, some of us still might have an ineffective short attention span? But some of us might just be anticipating, adopting and accepting that things are going to only last for a period of time. Then we’re looking for the next thing because that’s the environment we’ve become conditioned to expect. And there’s a benefit to that. What are some examples of this that you have seen?
Music revenues for the last few decades adjusted for inflation
Music Revenues From RIAA (2018)
Well, in my own life, I grew up loving music and sitting there with my cassette tape queued up to record as soon as the radio hit came on, and trying not to get the end of that commercial and then putting together the mixtapes manually from my mom’s stereo.
And when I turned 18 and went to college, and my parents helped me get a computer and I started exploring the world of digital music, mp3s. I got to college and learned what peer to peer sharing looked like on campus, which was exciting. And then I got out of college, started exploring Pandora, and seeing what that’s like. How exciting!
Then, I moved on to Last.fm because they had a better selection. Now, I’m on Spotify. There’s Apple Music. What is the next best way to listen to music? How are we going to consume music? And in five years from now, is it is it going to be the same?
So break down a little bit for us what innovation is.
So innovation is so much more than I think people give it credit for. Sometimes people think that an idea can be innovative. Really, when it comes down to it. Innovation is the ability to make that idea actually happen, to change something with that idea.
The example that I gave was that I was walking through the grocery store recently, and I like to go to the grocery store in town called Natural Grocer, because they always have really new interesting products. I like trying new things at the grocery store. So I was walking through the hummus aisle, and I stopped and I looked, and I was like, “Wow, look at this. There’s this new hummus. I’ve never seen this before.” And I put it in my cart. And not thinking about it, I get up to the checkout. And I’m walking through the checkout. And the grocery store clerk is like, “Oh, you picked up the cranberry walnut hummus.” And I was like, “I did. I’m really excited about it.” And she was like, “Oh, well, I don’t think I’m that brave. So when you come back, tell me what you think.” And I was like, “It’s hummus! How brave do you have to be to try a new hummus?” But it made me really think about it. I started going back and thinking, when did I start eating hummus? And when did I think cranberry walnut hummus sounded yummy, because it wasn’t when I was younger? So I went through this process and I was looking up when did hummus, become the hotness that it is now.
’94 right? It was clearly ’94 that we invented hummus.
That’s what it seems like in my memory. So as it turns out, it was in the early ’90s when it started to become what it is in the United States. But it’s an 8,000 year old recipe.
We only have 6,000 years of recorded history, right? So this is the oldest idea.
This is like one of the oldest ideas out there, right? So this guy named Zohar Norman had a business making cold prepared salads and selling them and he decided that he wanted to bring hummus to America and he wanted to bring it to the grocery store shelf. It took him a while. And he brought on some business partners and ultimately founded Sabra, which is just about every grocery store that I think you could probably go to.
Right. That’s what we eat. That’s the hummus I get.
It’s good hummus. And they have a lot of flavors now, but back then it was novel; we didn’t know what it was. And so the biggest challenge that they had in getting this off the ground was the fact that Americans didn’t know what hummus was. So what they did was they started in the communities that had higher population of Jewish or Middle Eastern cultures, and they started there, and they got a foot in the door, and then they they expanded from there. But it’s not that the hummus itself is innovative. It’s not. It’s how they actually change our perception of hummus and made it this prevalent thing that’s in everybody’s refrigerator today.
Right. So the innovation was not actually the idea of hummus. It was an innovation of bringing a story around hummus that became so ubiquitous that we don’t even know how this is 8,000 years old. And we love it. And you actually told me, I don’t know if you’re kidding or not, but it’s on this list of top 140 things white people like, is that what it is?
I’m not kidding. In fact, they have t-shirts, in my presentation I showed t-shirts I had found online. One is, “You had me at hummus.” Another one is, “Hummus is where the heart is.” People love their hummus. No joke. It is projected to be a $1 billion industry by 2022; packaged retail hummus. I think of it as cult classic status. It is number 112 on the infamous blog “stuff white people like”. They’ll talk about how if you’re having someone over for a potluck you can be safe and buy hummus.
You’re gonna be fine and it’s it has a “and-you’re-cool feature,” right? Which, how can something that is a commodity at this point make you cool, but it’s still does.
That’s what’s interesting that I think Zohar picked up on was that there was this sort of trend where people became more interested in what other cultures were doing. And so the timing of what he was doing with the hummus was perfect, because people were branching out.
And now you have to have blueberry, goat cheese, walnut hummus. There is a leading edge of the hummus culture. Apparently you’re on it.
Okay, so there’s a big difference between ideas that are innovative and other things that can be innovative. So the idea doesn’t necessarily have to be an innovation. It’s something around the delivery of the idea, the execution of the idea, the channel through which you’re pushing it that… all kinds of different components to what is innovation.
It’s the implementation.
Yeah, right. Uber didn’t invent the idea of moving people in between two places in cars they don’t own. That wasn’t the innovation.
Right. Just the delivery mechanism.
One of the things I found fascinating that we were talking about with this idea is we know, there’s a thing called the diffusion of innovation bell curve, where we get words like early adopter and early majority, late majority, and then laggards and all that idea. If you don’t know what that is, go read about it right now, and then come back.
bell curve showing innovators on the left and laggards on the rightRogers Innovation Adoption Curve. From Management 3.0 by Jurgen Appelo (2010). Source
But we tend to think about those early adopters… Well, it’s something like 10% of population is early adopters. And, and there’s this sort of slope. And it’s how innovations move through culture. But then you started to throw some wrinkles in there that I thought was fascinating. What were those?
Yeah, so I one of the most interesting things about the diffusion of innovation theory to me, is that it’s from 1962, it’s actually one of the oldest social science theories developed to explain how a product or idea gains momentum. So this is not new, either. But it’s an important thing for innovators and startup founders to understand because the early adopters and the innovators are the ones who really like change the most. And the majority of people, they don’t want to have to be creative about what’s happening. They just want to do it, how do you do this, show me how to do it. Beyond that, technology adoption, the influence of technology on our culture, I think is changing how we see innovation. Back in the day, landlines, electricity, radios, autos, those things took a while to become as popular and prevalent as they are.
Generations. Right? It would take decades, in some cases.
A long time. And, so now we have, smartphones, social media, having a tablet at home, a cell phone, etc. The curve of adoption for those things is still on a curve, but much flatter. And it’s happened over the course of less than a decade.
Yes. steeper. Exactly.
So, the adoption period is happening fast, which means there’s room for the new thing also sooner. If we’re having a major revolution in technology that shifts how we consume media, for instance, (which is moving from TV, radio, those sort of platforms, to phones or tablets) and that happens in a decade or something, that really means that the next thing can happen in the next decade. If you think about TV adoption that happened over the course of a generation. And then what we started to do was iterate on TVs. So we went from black and white to color, to widescreen to high definition curve to 3D. All those things are happening, but those aren’t innovations.
Right. I think it took at least 60 years to get landlines to the point of adoption that smartphones got to in like five years or something. It’s just crazy.
Okay. So one of the ways that you’re able to demonstrate your claim that we are more accepting of innovation is through this bell curve idea; that the curve of the adoption of innovation is actually getting steeper and more and more people have been moving through the early adopters into the early majority fast on a lot of stuff. Does that mean people who are normally more risk intolerant are grabbing hold of a product within just a few years?
I think it’s that and it’s also that we’re getting better at getting things to the point where they feel mainstream. Probably both sides of that. I think people are more accepting that things are going to change and that they’re going to need to try new things. I mean, I think about the fact that I don’t have an Amazon Alexa, but I know a lot of people that do, and I consider myself an early adopter for most things. So, just the home AI market…
I’m 48. So I’m at an age where I could say I’m done accumulating things. I could sort of ride this for a while. And I’ve watched other people who are older than me do that and then 10 years later it’s over, they’re done. They can’t catch up again. And so about 10 years ago, I recognized I am going to keep buying new things because I don’t want to be 65 and lost and like I can’t even engage the world anymore. And so I have articulated a strategy now that says, I will buy, I will buy just for this reason. So I don’t have Alexa or any of those devices yet, but I’m constantly talking to people. “Is it ready? Is it ready?” And actually, this weekend, I heard someone describe it and I’m like, “okay, it’s time!” Same thing that happened last week with wearables. I haven’t been ready. I don’t think they’re quite there, but I’m paying attention.
Okay, so, now we get to talk about one of the one of the primary fuel sources of the startup ecosystem. They say startup ecosystems are driven on coffee and beer. Tell me about beer.
Well, so beer. You think beer and you’re like that’s not innovative, it’s beer.
They built the pyramids on beer.
It’s as old as human civilization. But the interesting thing is that craft beer has made this incredible resurgence in popularity. There’s a lot of forces involved in why that happened. But for a 200 year old industry of just the craft brew industry, it’s sextupled its number of establishment and more than doubled its workforce in less than a decade. The interesting thing about that is they did that even as overall beer sales were declining. So that’s interesting. The craft brew is growing, and overall beer is declining.
Yeah, we’ve seen Anheuser-Busch has had to diversify their product offering.
Yep. And you’ve seen them buying the smaller brewers.
And they own waters and they own sports drinks, and they’re moving all across this platform. And in that environment, the craft beer industry has been growing dramatically. So what is the innovation there?
Well, the interesting thing is the craft brewing market focused on an underserved niche. As it turns out, there’s a lot of consumers that don’t like mainstream beer. And so they focused on creating these different niche types of craft brew. And even in Oregon, we’ve seen some really weird beer. I mean, you probably have it here too. But Rogue, for example, they partnered up with Voodoo Doughnuts. They have a line of donut themed beer flavors that people go wild for. I’ve never tried them.
And Voodoo Doughnuts is notorious or famous for putting fusions together that you don’t think about in terms of what a donut is, in terms of flavors and styles and even shapes. And, so here we have a highly innovative donut company now merging with innovation and beer. And they’re fusing that together to create additional innovation.
And part of this is because craft brewing is now saturated, right? So in Oregon, one of the interesting stats is that in 2016, 23.3% of the beer consumed in Oregon was made in Oregon. And so now we’re at the point where craft brewing is so prevalent, everybody has craft brewing in their town and so then they’re innovating on flavor. They’re creating these little niche flavors that hit these niche target audiences that feel underserved. But that obviously has its challenges too for the bigger craft breweries that got their start 10 or 12 years ago. Like, let’s say Ninkasi up in Eugene, who has been distributing microbrew across the country for years now. How do they compete when every town now has a microbrewery?
So, they’re a microbrewery that has become somewhat of a mid brewery. We redefine micro by niche and so now they’ve been left behind. Are they too big? What do you do with that?
They’re going through some changes. And it’s an inevitable as these markets get saturated and there’s all the competition. But they have been published as recently saying that they’re making sure to focus on their entrepreneurial spirit and continuing to innovate, because that’s what the industry needs.
Yeah. So even companies that have grown to the point where they could, or they feel like they’ve got this sense of security, or we’ve got market share, or we’re big enough to actually exhale and relax, are discovering that that’s not the world we live in.
Yeah, and I’ve heard that part of that is, Ninkasi has a great beer, don’t get me wrong, but because of all these little weird niche beers now, the craft brewing scene is changing. What people want out of their craft beer is changing. So you can focus on creating the thing that works that you know has been working, but if you don’t pay attention to the buying trends of: What’s happening in craft brewing? What are these different flavors? What are people buying? And how is that changing?
You can become stagnant and you’re done, right?
Or you have to make a big pivot late in the game, because right now, we’ve got, I think the stat is, 83% of drinking age adults live within 10 miles of a brewery. And, in Eugene, I think that number seems low.
We heard this story at Startup Weekend, Jeff from Wildcard, one of the co-founders of Wildcard Brewery came in and told this very story. They are Redding’s first brewery and they were actually going to the distribution channel. And then they completely shifted that and they got localized, which actually created all kinds of benefits for them. And we now have, I don’t even know, four, maybe five breweries that have popped up since then. So we’re seeing this exact trend here. And that’s one of the fun things of going down to the Tied House; the beers are always changing. And I never have the same thing there. I’m always looking at: What’s he doing now? And I want to experience that new beer. That’s the fun of going to the Tied House. Well, and it’s great beer. You can’t get away from quality.
Yeah, I’m looking forward to Redding’s first hard cidery. We’ve got Wildcraft up in Eugene, which I love. And so knock on wood, we’ll get that going down here too.
So what are the implications of all of this. So you’ve made the case that the consumer is more willing to accept innovation, that innovation is happening faster, that you can get left behind if you’re not paying attention in just a couple years.
What do you do with that?
Well, I think that for anyone who’s trying to innovate, to actually implement something that’s not happening now, and make that leap you have to be very aware of that. And you have to follow these principles that startups tend to prescribe to, to help make sure that you’re paying attention and continuing to be relevant. And so that’s an area that my experience with Mindbox over the last 12 years has given me a lot of time to dive into. We’ve built a lot of products for startups and innovators and we’ve seen all different sides of success and failure within that and we’ve really crafted our process to help more startup founders succeed.
Yeah, because there is a way to do innovation.
There are definitely ways to approach it, that will lead to more success.
I know many people that I’m working with, whether they know it or not, they were raised by or mentored by, or started their careers in environments that were more influenced by a period of time when this was not true. And so the way that they think they try to bring new products to market is connected to a process that’s very out of date. And it can be very shocking when you put them in environment. You say, “Okay, we’ve got to do this completely differently.” So what is that process? How would you break that down?
On the business side, when we have a founder or a business leader come to us and ask us to build something, it’s really important as the first principle to try to always focus on starting with the why, which is Simon Sinek’s philosophy. If we don’t understand why we’re building the software, what the business case is and what the goal is with that software, it’s hard for us to make the judgment calls that we need to make along the way to help make sure that we’re going to be successful together. So that’s the first one; it’s really understanding. We have some different processes that we will take customers through if they aren’t ready to answer that question when we first talked to them. Including, understanding the business model, understanding who the personas are, understanding some of the core use cases. So that we can make sure that everyone on our team understands that, and can make the little tiny judgment calls we have to make along the way, and have that be as close to what the client would want as possible.
Because there’s 1000 no’s, but only a couple yes’s, right? You have to keep that in mind. We’re going that direction. So okay, start with why.
And that idea is now something that a lot of people have. We seem to understand that. But the implementation of that question is still incredibly difficult. So I hear people talking, they’ll say, “Well, what’s your why?” as though, “Hey, I got the right idea, right?” And it’s like, “Yeah, but can you implement that? Can you actually answer that in a useful way?” And it turns out, that’s real work. And so you guys have a process of helping innovators walk through that process and come to something. And I would guess that many people walk in not having asked that question, so there’s a process. But, I bet there’s people who walk in with an answer to that question that walk through that process and discover they came in with the wrong answer.
That’s true. That’s a big part of what I think people get out of Startup Weekend, too. It’s the whole learning to listen and learning to be humble. Learning that you might not be right. And getting people to tell you what it is that their problem is, so that you’re solving it.
One of the leading myths of problems in entrepreneurship is that that founders know what their customer want. The answer is, no, you don’t. No, you don’t.
Cool. Okay. So you walk them through a process of getting to a why, where do you take them after that?
Once we understand what we’re trying to build together, then we borrow heavily from Lean Startup methodology and help them craft a minimum viable product plan.
So, you start just by making a plan? Coming together with what is the idea? You haven’t actually built anything yet. Just can we have a conversation around minimum viable product?
Right. Because that conversation is going to evolve too, and when the customer we’re working with understands minimum viable product, it helps us with prioritization. Because let’s face it, software’s expensive to build and budgets are almost always limited, or at least there’s some concept of how much someone wants to spend. And so, it helps us have that conversation of what are the resources on the table? And how can we make sure that at the end of what you spend, you get something that actually takes you to the next level. And, most of the time that involves us cutting a lot of features that, really, we’ll discover together aren’t needed yet.
Okay, so they’re not bad features, they’re features for the future.
Right, we have to do the work to discover it.
Most of the time, it’s just putting it down farther in the backlog. Sometimes we can decide together that this is just not needed. Sometimes, when it’s a down the road thing, we can find a way to prototype it, or get around it, or something. In the meantime… we can find a manual process to do that until it can be built.
So, the challenge, the tension in this idea to me, is always around the idea of minimum, but also viable. And then the word product means a consumer could actually engage it. You could actually sell this thing that is a minimum, but only viable. This is a product in the ICU in some respects. It’s there, it’s alive.
It’s not necessarily scalable, though. This is to just continue validating and to get to the point where you can prove that this is gonna be monetizable the way that you expect it to be.
Alright, so, minimum viable product is step two. You build a plan, then you start building the thing. I mean, if it’s software, you give that to the developers?
So that plan does typically end up in production, to some extent, we have a backlog.
What do you mean by backlog?
A list of what’s next in order of priority. And so then the production team will follow a process that borrows from the Agile Manifesto, once we get into production. And so that’s the third piece once we’re in development. If you haven’t looked at the Agile Manifesto, and you’re thinking about building software, it’s a great way to get to know how developers think. It also has a bunch of principles that I think startup owners can learn a lot from. One of the things that they mention is that discovery is inevitable and that iterative development is necessary as an approach to that. And so we have to get on with our client on the same page, and say, “We’re going to start building this, we’re going to show you something every, let’s say, two weeks, for feedback. And then we’re going to talk about it together. And we’re going to re-prioritize the backlog because you’re going to tell us things that we didn’t know before, and you’re going to learn new things from your customers, hopefully, because you’re showing it to them, hopefully! and even if it’s just a controlled group of people that you’re getting feedback from. But either way, there’s going to be a feedback process, and our plan is going to change.”
So if you’re walking through a development process, and you’re not discovering things, you’re doing it wrong?
I’ve never seen that happen. I would think, yeah. I think you’re probably not getting enough feedback.
You trust your idea too much, right?
Yeah. You’re too in love with your idea. And not in solving the problem, right? And that’s a dangerous place. That’s why we really try to set our clients up with the idea: we’re going to get feedback from you, so you should be getting feedback too! It will save everybody money, and you’ll end up a lot closer to what you’re trying to accomplish.
Totally different kind of relationship in terms of how this process unfolds.
Yeah, and it’s one that’s hard sometimes for people to accept, because it’s not how, like, let’s say, home building goes.
Not at all.
You know, like, I’m going to build for two weeks, and you’re going to come walk through the foundation and tell me what you want to change. No, that’s not how it works.
Not at all. Fascinating. It seems like there’s not very many processes that people typically engage in that are like this. Is that true?
I think so. I mean, that’s what I think people struggle with when they start to go into entrepreneurship. Everything else in our lives are not set up to go through that process of constant discovery, constant learning, constant humility and listening. Really, really, really listening.
Yeah. What I think is fascinating about it is Kevin Kelly, who wrote Inevitable and was editor for Wired magazine does this bit on AI, which everyone should just go read that chapter of his book. Not because he’s right, but because of perspective and mindset, because who knows about AI, right? But the idea is that anything that could be made more efficient is stuff we should turn over to bots and AI. Efficiency is not what humans are actually good at, we’re good at something like effectiveness as a counterpoint to that. And he gives an example of science; it isn’t designed around efficiency. There’s nothing really efficient about the scientific process. It’s driven by wonder and curiosity. And there’s failure all over the place. In fact, they celebrate like, “Oh, look, I prove that that doesn’t work!” And that’s a win inside of science. And science hasn’t produced all kinds of results that we now live with that are amazing. But it’s one of the few places where this process actually has been codified. So he makes this point that we’re afraid of this process. But in fact, it’s the thing we’re the best at. It says, every job that every politician is trying to save from robots is a job that no human has ever actually wanted. Which is a big claim, and you can argue with me online about that later… But, I think that’s fascinating. So what you’re describing is a way of being in the world that we call innovative, or entrepreneurship, but is actually maybe more akin to what it is to be human.
I think we all need permission to fail. You know, I’m an admitted perfectionist.
You an Enneagram 1, by chance?
Indeed, indeed, and so, yeah, it’s taken a long time. And I think people need permission to fail. They need to understand that it’s okay to try something even if you’re not sure if it’s going to succeed, because you’re giving yourself permission to fail. You’re giving yourself permission to maybe succeed, and maybe it will be incredible.
Awesome. Well, thanks for walking us through innovation. I don’t think we can hear this message often enough. More and more of us need to engage in this process, because I think it’s where the economy has gone. It’s how value creation is happening for more and more people. There are people who are sitting at jobs that are disappearing and this is the step they have to make. Now, they don’t have to become developers and they don’t have to be entrepreneurs, but they have to start thinking this way in order to keep up with what’s happening.
Yeah, because innovation isn’t just for entrepreneurs. I was talking about Ninkasi – they’re not a startup. They’re very interested in innovation. And you’ll notice, a lot of the big corporations are looking to startups for cues on how they can stay relevant.
Yeah, so stay relevant. Stay innovative and focus on efficiency. No, that’s backwards.
Focus on effective.
Startup Redding podcast is produced by a group of startup enthusiasts who believe that entrepreneurship is a great way to positively impact their community, Redding, California. Some of these people include Toby Lyles of twentyfoursound.com, Joshua Johnson of mindboxstudios.com, Andrew Hewatt, of blossomlab.com, and myself, Kirk Wayman, of ikoncoaching.com We invite you into the entrepreneurship journey so you can impact your world as well.