Plus profitable niches and trends to look for . Read it up to the end to see why you should start thinking reversely and notice things that you did not notice before
They say “build something that doesn’t scale”. They say “do your user research before developing”. Patrick Collet and his 14 years-old daughter had done none of these. However, their winter educational project on the basics of entrepreneurship turned into a startup profitable from day 1 and brought them over 1000 paying customers within 2 months after the launch. What was the “secret sauce”?
Why better is sometimes worse
The idea of building a startup popped up 100% by chance. Patrick’s daughter was playing around with her cell phone camera and suddenly asked:
— Look, Dad, I’ve heard in olden days people used films to take pictures. And they could not see the result until they got the prints. Is this true?
Patrick, who knew very well what his daughter was talking about confirmed that this was, indeed, the case. There was a time when making a picture did not mean instant gratification of your curiosity and you had to wait for weeks to see the result. But it’s good that progress allows us to get what we want straight away without spending weeks in anticipation.
Or is it?
— It’s sad that we don’t do it anymore, — offered a surprising come back to Patrick’s daughter. — I wish we get back to this practice again, if not always but at least occasionally. Anticipation makes things more valuable for us.
Woah! This unbelievably deep insight coming from a 14 years-old girl made her father’s active entrepreneurial mind rush. Next comes the idea of building an app that will allow young and no so very many customers to tap into the old-fashioned practice of making pictures without receiving immediate access to the result.
— Unlike 99% of existing camera applications that focus on offering customers more and more tools for editing pictures, we decided to make an app that will do just the opposite: ban all the editing completely, — says Patrick.
As soon as the user snaps a shot the image is removed from the user’s app and gets uploaded to the cloud. Photo printing facilities receive access to the set of pictures made by the user as soon as they make 24 or 36 shots (which corresponds to 24 or 36 virtual film rolls users are allowed to choose from). Users can’t see the end result until they get a set of printouts in an old-fashioned way: in an envelope, by mail.
Patrick admits that the initial idea was not to build a successful business but to teach his daughter what startup is about. What is MVP? How to limit features to the absolute core? How to build a distribution?
However, Pokadota.Photos app turned out not only to go against most common customers’ expectations of immediate gratification. But also, against the commonly admitted rules of building sustainable startups. Let’s see:
As we can see, Patrick and his daughter went against all odds. Sounds like they were destined to fail? However, just after 2 months after a launch they had: over 1000 paying B2C customers, and a dozen of B2B contracts (travel services providers jumped on the idea to offer this service as a part of their luxury tour packages). Any ideas why this worked so well despite the unpopular approach? There are several ingredients to Pokadota’s success, as far as I can see:
1. “IKEA Effect” or Betty Crocker Effect
In the 1950 US food company General Mills launched a perfect new product, as they thought — Betty Crocker brand of instant cake mixes. All necessary ingredients for perfect pancakes were already there. Customers were supposed to do just one little thing — add water. Unfortunately, sales did not go very well. So General Mills management invited psychologist Ernest Dichter — the “father of motivational research” — and put him on the case. Dichter ran focus groups. And offered to change the recipe. Remove powdered eggs in the cake mix. And add the requirement on the package to add fresh eggs.
— All-instant cake mix makes baking too easy. It undervalues the labor and skill of the cake maker, — concluded Dichter.
Ironically, the answer to the sales problem was not to make a mix better but to make it worse. Make customers work a little — and it will give them more ownership in the final result. Later, the same psychological trick was used by IKEA that made customization and customer contribution into the assembly process the core concept of its business. That’s why this effect is often called “IKEA Effect” in marketing literature. Sometimes, it’s even referred to as “a cognitive bias”. Anyways, the idea is simple and proven by studies and numerous successful businesses: consumers place a disproportionately high value on products they partially created. By banning Pokadota users from editing shots they’ve made, Patrick and his daughter created an additional value of an extra effort. Unlike with regular camera apps, Pokadota users have to make some extra efforts to make a better shot — check out the light, choose a better angle, etc. It’s not a snap-and-forget experience anymore. It’s a tangible amount of work that should be done to get a better result.
2. “The Pandora effect”
Pokadota’s workflow results in creating intrigue. As users can’t see their shots until they get a set of printouts they become curious about the result. And human curiosity is an extremely powerful motivator and driver of human actions. At an early age, we fulfill our sense of curiosity on the highest level — everything around us is unknown and we can explore away. As we grow older we encounter fewer and fewer things that look unknown to us. We become more risk-aware, more cautious — as a result, a natural way of releasing millions of endorphins and feel total happiness through exploration is almost lost to most of us. In their study entitled “The Pandora effect — The Power and Peril of Curiosity”, the American scientists Christopher K. Hsee and Bowen Ruan demonstrated that humans are willing to research new things, even if they can expect negative consequences. To give an example, test subjects voluntarily subjected themselves to electric shocks in order to satisfy their curiosity. Well, in comparison to electric shocks Pokadota’s offer — Every shot is an intrigue. Wait several weeks to find out the answer! — seems like a great deal.
3. Strong Product Management
Patrick Collet admits that despite all the right psychological “buttons” their product pushes it would not probably work if not for his experience in managing complex projects. He did not work with mobile apps before but it doesn’t matter, he insists. Basic business rules are universally applicable. Nor he, nor his 14yo daughter were able to build the app on their own, so they had to hire an agency. How did it go?
Timeline — the project shipped in 4 months. As expected. No delays
Budget — spot on. No spending over the limit.
Patrick says he used all well-known PM techniques to achieve these amazing results:
✅ Invest lots of your personal time in owning the product (set guidelines, specify the requirements, set priorities)
✅ Daily meet-ups in agile style “What are you going to work on today and is there something that’s blocking you?”
✅ Retrospectives that helped to improve overall velocity
✅ Being reachable 24/7
But he is sure what worked better than a net of controlling and pushing activities was the idea behind the app.
The agency team was so impressed and captivated by the idea itself that they had no problem working long hours and at the weekends. Passion turned out to be the key ingredient in Pokadota PM practices.
4. Focus on the business side
While agency devs were coding away, Patrick and his daughter focused on the distribution: they reached out to the B2B segment (tourist agencies, hotels, event venues, wedding services) and offered integration with Pokadota. For B2B customers it was a great way to improve their value proposition and raise margin by offering a unique service. For Pokadota — a solid deal flow.
Also, Patrick’s daughter took on herself a launch campaign and despite her young age managed to arrange several publications in the local (Montreal) papers and even a TV episode covering new service.
Finally, Patrick personally went to pitch to the largest in Montreal printing service provider and managed to get the best prices possible for their printing services. It was the most important part because the Pokadota business model is extremely simple. No monthly/yearly subscriptions. Customers only pay for virtual film rolls (9.99 CA$ for 24 shots and 12.99 CA$ for 36 shots). Pokadota, on the other hand, pays provider + delivery fees. Therefore, the better the printing rate — the better for the business.
By now, 2 months after the launch Patrick says that they started getting returning customers. And this is another piece of idea validation. Because for him and his daughter, despite the business success, it is still an educational project. A hands-on approach to learning startup business. Probably, it’s an old-fashioned way, no online lessons included. But as we can see, remaining old-fashioned sometimes might prove to be the best strategy.
3 takeaways from Pokadota case study
There is no recipe for a successful startup. Even a recommended framework might lead you to failure. But the opposite is true too: going against the rules doesn’t promise certain death to your business.
With crazy tech development the niche for “old-fashioned” products is also growing. Partly, not all users want to rush with the tech progress (and keeping in mind that the average age in the EU and US, as well as Canada is growing because of the global population ageing effect, the number of users who belong to this category will only increase). Partly, because apps in general are getting worse. Here’s a great article by Tim Bray that explains this phenomenon. Basically, because there’s no PM in the world who’d say “Looks like it works just fine, let’s leave it as it is”. Result — apps get more and more complicated and tougher to use. Thus, the need for simpler, back-to-basics apps grows.
Managerial skills are more important for building a successful business in tech than coding. You can hire an agency for technical tasks. But you can’t hire a founder for your startup.