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Ryan Frederick of AWH: “Negative Validation”

Negative Validation — Doing proper customer/user validation is critical at every stage of a product, but especially early on when so much is still being discovered and iterated on. Most validation is done in the positive which provides a lot of false positives. Most validation looks like…”Tell me how would use the product”, “Tell me what you […]

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Negative Validation — Doing proper customer/user validation is critical at every stage of a product, but especially early on when so much is still being discovered and iterated on. Most validation is done in the positive which provides a lot of false positives. Most validation looks like…”Tell me how would use the product”, “Tell me what you like about it”, “How will this be helpful to you?”, “How will this add value for you?” The way validation questions should be asked is, “Tell me what you don’t like about it”, “Tell me why you wouldn’t use it”, “Tell me how it could be better.” We have to give customers/users permission with to be honest and direct with us about the current state and value of a product. We don’t give them the opportunity to do so by asking positive questions, but we do by asking negative one.


As part of my series about the “5 Things You Need To Know To Create a Successful App or SaaS”, I had the pleasure of interviewing Ryan Frederick.

Ryan Frederick has had the privilege of being part of starting and growing several software and service companies. He has helped companies grow from inception, to viability, through to sustainability. During the evolution of these companies, Ryan has served on company boards and been instrumental in capitalization activities. Ryan combines a unique blend of business acumen and technical knowledge having originally been a developer who migrated to the business side. He now helps companies build great software products and solve data challenges for competitive advantage as a Principal at the product and data consulting firm, AWH. Ryan is an active angel investor, mentors and advises entrepreneurs and startups, as well as corporate innovation leaders. He launched a non-profit workforce development program to train under-employed adults on digital skills called i.c.stars. Ryan has authored two books. The first on increasing the odds of success in creating products, being a Founder, and starting companies called The Founder’s Manual: A Guidebook for Becoming a Successful Entrepreneur. The second, Sell Naked: And Other Advice for Growing and Managing Services Firms. Ryan speaks frequently about the creating software products, building companies, and leadership.


Thank you so much for joining us! Our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you got started?

I started out as a developer and then moved to the business side because I wanted to experience both the technical and the creative aspects of creating products and companies. I joined a startup early in my career and we had a successful run over seven years before the company was sold. I identified another problem that could be addressed, that was tangential to my past startup. The same investors who engaged with me previously funded the new company and we ended up selling within 18 months.

Continuing the trend, I went to work with those investors once again to turnaround another company and launched a few more. Some of those companies worked well and some were abject failures. Proof that success with one company and product does not equal success with a different company and product in a different space. I love the process of solving problems through new products and companies. There is no greater professional challenge than creating something that doesn’t exist and making it viable.

What was the “Aha Moment” that led you to think of the idea for your current company? Can you share that story with us?

We build digital products and solve data challenges for clients ranging from startups to corporates. We engage with several non-profit, services firms, and mid-market companies as well. I’ve taken my experiences and what I’ve learned building products and companies to help others. Many of our clients are inexperienced at creating new digital products or in the data space. Their business purpose and organizational missions are something other than that, so they need our expertise to solve a problem or to capitalize on an opportunity.

I was discussing a potential new product engagement with a prospective client a few years ago and he had very strong opinions on what the product should do and how it should do it. I let him provide his opinions, which were mostly misguided about the way successful software products get built. When he concluded I politely and respectfully, but directly said that because his business was not building software products that he didn’t know and shouldn’t know what the correct way and what the correct principles are to building successful software products. I went to say that this might be the only software product he would ever build, while it was our craft and that we’ve built hundreds of products for all types of clients. He wouldn’t do open heart surgery on himself and neither should he expect that he knows how to build a software product that will give him the return and transform his business the way he expects. After a few more minutes of discussing the point, he agreed, and we engaged to help them build a software product that has evolved their services firm into a primarily product company with recurring revenue and profits that would never have been possible for them previously.

Like most new companies, most new software products don’t work. The odds decrease even more drastically when someone building a software product doesn’t understand the principles that will make them successful. We’ve evolved past the time when writing good code and designing acceptable user experiences is enough to make a successful product. In fact, I would argue that we are over-software’d because too many software products have gotten built that shouldn’t have or were built improperly. The world doesn’t need more software for the sake of more software, but there are still many problems that are best solved through software.

Can you tell us a story about the hard times that you faced when you first started your journey? Did you ever consider giving up? Where did you get the drive to continue even though things were so hard?

Grit has gotten more attention since Angela Duckworth’s book, Grit, came out, but very few people actually have it. Angela’s definition of Grit is, “passion and sustained persistence applied toward long-term achievement, with no particular concern for rewards or recognition along the way.” I have grit. I describe it differently as intention and discipline, but most people would summarize it as grit. And I think the most successful entrepreneurs have grit. Grit is what keeps you going through the hard times and the dark times. The dark times for a startup, and I think the same holds true for a new product, is referred to as “The Valley of Death” in startup lexicon. The Valley of Death is the period of time when nothing is going well, and the company/product isn’t going anywhere. Customers are not signing-up, money is tight or non-existent, and the team is losing confidence and belief. Not packing it in during The Valley of Death is critical for anyone building a product or company.

Alongside the successes I’ve had, there have been many, if not more failures. I’ve lived both experiences. Even when you make what you believe are the right decisions there can be numerous factors and forces working against you. I learned the product and company creation existence is as much about enduring than it is about being right. Being right becomes subjective and not objective while creating something to become viable and sustainable. Enduring the ups and downs becomes the only constant.

I have a friend who is a long-distance cyclist. The 100 miles in a day type. I asked him how he can ride that many miles and he said, “Just don’t get off the bike.” This might be the simplest and best reference I’ve ever heard around grit and endurance. If you just don’t get off the bike, irrespective of conditions and circumstances that are less than ideal, you give yourself a shot to keep going and to accomplish what you set out to achieve. What I’ve learned and what I would advise other entrepreneurs and product creators to do is, don’t get off the bike.

So, how are things going today? How did your grit and resilience lead to your eventual success?

Grit allows you to not be defined by your success or failures. Per Angela Duckworth’s definition, grit cares less about rewards and recognition than continued progress. We are never as good as our best moments and accomplishments and we’re never as bad as our worst ones. Do the outcomes matter? Sure, they do. It is how we keep score and whether we know we are progressing or not. But how the outcomes happen matters even more.

I now have the good fortune to be a two-time author, to speak at events and on podcasts about building products and companies, to angel invest, and to have launched a non-profit. These wouldn’t be possible without the grit and determination to stay on the bike even after things didn’t work. We have no idea what is going to work and isn’t. There are too many unknowns and things that can’t be controlled. What can be controlled, though, is whether or not you keep going.

Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lessons or ‘take aways’ you learned from that?

I learned a valuable lesson early in career about not falling too in love with your own vision and being open minded and willing to listen to customers. We had built an online service that provided immediate access to public records. This was before things were widely accessible on the internet. We were convinced our product was most valuable and useful to attorneys, so we targeted law firms. We were kind of a mini–Lexis Nexis for law firms. We figured if it worked for them it would work for us. It worked okay at first. We signed up some attorneys and entire law firms. We were growing. Not crazy growth but steady growth. Then we got hit in the head with a brick that changed the course of the product and company for the better.

We were exhibiting at a legal conference, you know so we could get more law firms to become customers, when a guy walked up to our exhibit asking about what we did. He turned out to be the head of security for The Limited. The Limited was one of the largest apparel retailers at the time. I gave him a demo of our system and he was blown away. But not in the way I anticipated and that normally happened. He said he could use our online service to perform pre-employment background checks for The Limited across the footprint of the company. I initially said, “Well that’s not what our system is used for.” He said, “Why not?” I said, “Because it is used by law firms.” He said, “Is there any reason we can’t use it to do pre-employment screenings.” I said, “I don’t know.” He invited me to his office two weeks later and asked he subscribed. We had our first pre-employment screening customer. We then redirected our marketing and selling to primarily focus retailers and other large employers like staffing firms and temporary employment agencies. We still marketed and sold to law firms as a secondary customer group. The company tripled in size within in six months of this change in customer targeting.

The above story is a prime example of how you can be doing most things right and things can be okay, but that we can also be blinded by our own beliefs and biases. It took Jerry from The Limited hitting me over the head with a brick to realize how much more potential our product had because we built it for a low value problem had by attorneys rather than digging deeper to find the high-value problem had by human resources and security professionals at big employers. We were satisfied initially with the low-value of serving the law firms when should have kept digging to finder a more valuable problem to apply our product to.

What do you think makes your company stand out? Can you share a story?

We’re fortunate to work with many clients whose mission and work is to make the world a better place and to improve people’s lives. We’ve helped them to increase their impact with new award-winning and successful digital products that have done everything from raising over 68 million dollars in non-profit funds, to preventing suicide leveraging machine learning, to helping people with physical limitations to be able to exercise and stay physically healthy via an IoT platform that has won 26 international design awards beating the likes of Apple and Nike.

Which tips would you recommend to your colleagues in your industry to help them to thrive and not “burn out”?

Creating anything is hard. Creating digital products and solving problems through technology is no different. We’ve evolved and changed the way we solve problems using technology which in some cases has made the process faster and less expensive, but creating is still creating, and it’s hard.

The best way I have found to avoid burnout is to stay grounded in the problem and the impact you want to make by solving it. The problem gives you purpose, and purpose will carry you through the ups and downs of creating a new product.

None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story?

The first startup I joined changed CEO’s early in my tenure. The departing CEO was a Founder of the company, but the company was not doing well, and the Founder/CEO’s skill did not match was required for the position and company. The board made a change and the new CEO started shortly thereafter. The new CEO and I developed a good working relationship and mutual respect. He had helped grow several companies over time in different industries and was an officer in the Air Force. I was a young lad trying to figure out who I was and how to make my way in the world. He taught me a lot about remaining calm and to be emotionally controlled when making business decisions. He also taught me how to be decisive when it appeared all of the information that was going to be readily available to make a decision was already known. He also helped me to stay grounded. I went to him once with an idea about a new product and he said to me, “Ryan, you have a lot of ideas. Some are actually good. This isn’t one of those. Stay the course.” He later fully supported me spinning out a new company and product when the opportunity was warranted.

Ok thank you for all that. Now let’s shift to the main focus of this interview. Approximately how many users or subscribers does your app or software currently have? Can you share with our readers three of the main steps you’ve taken to build such a large community?

We’ve built software products with clients that now have over 10 million users.

Communities around products and companies don’t just happen, they are cultivated. Every community is essentially a bunch of individual relationship threads sewn together to make a larger fabric. The more you understand the problem and the user value the easier it is to initiate and cultivate individual user relationships around the product and then to bring the users together in a community. Communities for products are a choice by the members of the communities. Unlike a physical, geographic community that we are all defaulted into based on where we live, product communities are the outcome of enough users valuing a product to then come together in a shared interest and support of the product and each other. In some ways this makes product communities even more powerful and meaningful than physical communities. Product communities are user opt-in. Great products make it easy for users to opt-in by providing enough user value that users willingly join and participate in the community.

What is your monetization model? How do you monetize your community of users? Have you considered other monetization options? Why did you not use those?

Monetization should be directly linked to understanding the problem at an expert level and the associated user value for solving the problem. Product teams who find themselves guessing about monetization models and levels haven’t spent enough time understanding the problem and user value. They also haven’t likely done validation around the value and pricing well enough. Customers will tell you the proper monetization model and levels for a product if you talk to enough customers and have analytics built in the software. They tell you through what they are doing versus what they are saying. If the monetization model and levels for a product are unclear spend more time with customers on the value of the problem being solved.

Based on your experience and success, what are the five most important things one should know in order to create a very successful app or a SaaS? Please share a story or an example for each.

Successful software products have some attributes in common and leverage some foundational principles (and a few bonus ones):

  • Problem understanding — Know what problem you are solving, for who, why it matters, and how valuable it is. A product that is built on top of shallow problem understanding has very little chance of succeeding. We have a client that created a generic product for a generic problem. The product was performing poorly, and the company was struggling. We engaged with the client initially to help them figure out what was happening. We discovered that they had taken a product intended for one problem and target customer and tried to apply it to a larger problem and group of target customers. They didn’t change the product to align with the new problem and customer needs they just changed their messaging and marketing efforts. We have since engaged with them to redesign and develop the product focused on the original problem and target customers and they are already seeing improvement in new customer signups, use, and retention. If you don’t understand a problem to an expert level — which means at least as well, if not better than your users — then the chances of you creating a product the users finding valuable is highly unlikely.
  • Friction — The best software products meet the user where the user is, and the product doesn’t ask the user to move too far from their current state. Software products that require a lot of user behavior and process change to get value from the product are creating a lot of user friction that is likely to derail users from using or continuing to use a product. Something as simple as an extra button click, or other interaction can be enough of a friction point to keep users from using a product. ROOT, an auto insurance company that tracks your driving habits to provide an insurance rate based on your actual driving versus demographic information, went public recently. They are by most accounts a successful product and company. But it almost didn’t happen because of friction. In the early days of ROOT not enough potential customers were actually taking a new policy offered by ROOT because of one small bump in the process. Potential customers didn’t want to take the time to cancel their existing auto insurance. A brief call or login to their current insurance companies’ website to cancel their existing car insurance was keeping potential customers from becoming policyholders with ROOT. ROOT realized what was happening and what was causing the lower than expected policy conversions. They figured out they could add a button that would give ROOT the ability to cancel customer’s existing auto insurance on their behalf. After adding this button and removing this point of friction, ROOT’s new policy conversions soared. This is how impactful friction can be in products.
  • Analytics — Every product needs to have analytics built in from the first version of the product that users can navigate on their own. This is critical because the validation that has happens early on with users is mostly verbal and anecdotal. Users theorize about what they want and how they would like it to work. Wireframes and flows get drafted to be reviewed by users and they mostly confirm what they theoretically thought and said, with a few tweaks here and there. The challenge is that users don’t know how something should actually work until they are actually using it and until users are actually using a product it is hard to see where the gaps are. The only way to transition effectively from what users say to what they actually do is by having the analytics to see what they are doing and where that aligns with what as expected and is misaligned. The analytics also allow for roadblocks, gaps, and points of friction to be identified. So how did ROOT, in the example above around friction, discover where users were getting tripped up? Through analytics. ROOT could see where users were getting hung up in the app because they had analytics built into the app that not only allowed them to track and analyze a potential customer driving but also their use of the app.
  • Negative Validation — Doing proper customer/user validation is critical at every stage of a product, but especially early on when so much is still being discovered and iterated on. Most validation is done in the positive which provides a lot of false positives. Most validation looks like…”Tell me how would use the product”, “Tell me what you like about it”, “How will this be helpful to you?”, “How will this add value for you?” The way validation questions should be asked is, “Tell me what you don’t like about it”, “Tell me why you wouldn’t use it”, “Tell me how it could be better.” We have to give customers/users permission with to be honest and direct with us about the current state and value of a product. We don’t give them the opportunity to do so by asking positive questions, but we do by asking negative one. Too many products get built based on false positives from improper validation. We often speak with potential clients who created a product based on what they thought was good user, problem, and process validation only to realize users don’t want to and aren’t using the product once it is available. We started working with a large insurance company to help them figure out what product they should build to engage with a segment of customers they didn’t do much business with. We worked to change their thinking from doing validation in the positive to doing it in the negative and they were surprised by the difference in the feedback from customers. We also worked with them to help them understand the value and importance of asking users questions of value via different mediums and within very specific timeframes. In one case, we asked users in interviews to rank which new products they would get the most value from if the product were available tomorrow. We then followed-up the interviews within 24 hours with an email survey asking the same users to rank the same products based on which product would provide them with the most overall value. The results were completely the opposite. The verbal rankings and the survey rankings flipped with the highest ranking verbally becoming the last one via the survey. So, what changed in 24 hours? Did the users all change their minds overnight? The users actually did something quite predictable. Verbally they told us what we wanted to hear, or least what they thought we wanted to hear, and via the survey they ranked based on what they actually believed. If we had told the client to proceed based just on the verbal rankings they would have built the wrong product first.
  • Distribution — The software graveyard is full of promising products that although well designed and developed never materialized into commercial or operational successes. The culprit is often distribution. The case could even be made now that distribution is as important as the product itself. How customers/users will become aware of and get access to a product is a craft unto itself. Product Led Growth has just become part of the product lexicon in the past few years. Product Led Growth is essentially distribution. The more a product supports sharing, inviting, and collaboration the more likely the product is to be able to support a product led growth approach and to have adequate distribution.

You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂

We need to have more people become creators as part of the digital economy in addition to being consumers of it. The digital divide is increasing along geographic and socio-economic lines. There are 10’s of thousands of people that have the aptitude to participate in creating digital products, but they don’t have the awareness and access to take of advantage of it. We need to be much more intentional about training under-employed people in digital skills that are well monetized to change their economic trajectory as well as generationally. We need to find a way to do digital skills training and then to provide the students with access to company seeking the skills at scale.

How can our readers follow you on social media?

https://www.linkedin.com/in/ryangfrederick/

This was very inspiring. Thank you so much for joining us!

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