I wish I could tell you who was the first smart guy that spouted this advice. I think it’s the best rule I know to help entrepreneurs steady their focus and hone their entire business plan and not just their pitch. Recently, I attended the Mobile Payments Tech Meetup in New York City held at the Entrepreneurs Roundtable Accelerator for a lively dialog between Derek Webster, CEO of Cardflight, host, and organizer of this meetup and keynote speaker Ryder Kessler, CEO and Founder of DipJar.
Ryder’s company has a great mission. As stated on his website [DipJar is] “enabling cashless generosity for those who love to give.” More succinctly DipJar is trying to Make Cash Donations in America Great Again.
Donations from individuals to non-profits is a $240 billion dollar industry in the United States. Ninety percent of those donations are made offline—through in-person cash giving, checks in response to annual mailers, and paper pledge cards at in-office campaigns. Tis the season for giving. In 2015, The Salvation Army’s Red Kettle Campaign, that ubiquitous army of santas ringing their bells so that you will throw your loose cash in the kettle, raised $144.7 million in donations. The problem is fewer people walk around with cash anymore. You can’t give Santa your credit card. Wait, actually, now you can. DipJar is doing business with the Salvation Army and according to Ryder, six of the ten largest non-profit organizations in the U.S.
So what is DipJar? As I told my 84-year-old Aunt Esther (she is my grandmother proxy) while driving home from the event; DipJar is like the coin jar for specific charities and causes that sat in the kitchen or store counter. We always used to put in our loose change, except now the jar accepts credit cards. Wow, Esther got it and said: “that’s great, it makes sense because I don’t carry much cash anymore.” So, Ryder, you have a happy consumer waiting to use the service.
The beauty and impact of a simple elevator pitch go much deeper than being able to effectively communicate your company to investors, prospects, or partners. It forces you to state this is the problem; this is why it matters, and this is how I am going to solve it. It has to make sense and be obvious to everyone, not only to VCs and professional investors. Chances are your initial investors will be friends or family or angels that may not be experts in your specific industry. Also, they will want to know a few specific things about you and your business.
Correctly defining the problem, means you understand who has the problem. Is this a problem for the consumer or the charity. Is it even a problem? Meaning, are you selling a vitamin that may make you feel better or a cure to a known pain that businesses or people want to get rid of. Finally, can you fix the problem? Is your solution too complicated, unobtainable, or not likely to work?
Answering all these questions will do much more than give you a two sentence spiel to impress friends at cocktail parties. It will force you as the founder and CEO to answer the same questions every day. It is so easy to lose focus and stray from your mission. Smart investors will tell you that you should focus on a different problem or customer pain. Ambitious sales people or interested potential customers will lead you to solve related problems or expand to new markets. They may be well-intentioned or even right. But chances are if your company does not yet generate enough cash flow internally to fund operations and hit specified growth targets, you are not ready.
Back to DipJar and Ryder. I was very impressed with the fact that the keep it simple philosophy is intrinsic to the design and use of the DipJar product. He confessed that building the hardware was not as hard as he expected. However, Ryder grossly underestimating the “Kafkaesque” labyrinth of payments rules, FIs, and those wonderful interchange tables. Welcome to Fintech. The secret sauce of DipJar is that they have a product that is as easy to use as it is to understand. You take it out of the box, plug it in, set the donation amount and start letting donors dip their card. Like Stripe, Venmo, and other payment companies, DipJar insulates non-profit organizations and their customers from all the payment ecosystem complexity to make donations convenient, easy and fun.
A final footnote that highlights a trap that entrepreneur’s face, especially when they have a product that gets a lot of attention from national press right out of the gate. Ryder admitted that early on he spent too much time chasing different markets and different use cases. Specifically, DipJar pursued the food service and café industry to enable electronic tipping. It may be a big pain and problem for your favorite barista that sees less and less cash in the tip jar, but not so for the management of Starbucks. It always pays to stick to our core mission. Keeping it simple is hard work.
Image Credit: CC by Jessica Merz