Paul Polak, a Pop!Tech 2008 featured speaker, has been starting businesses since he was 15. He’s now 75, and says he has succeeded — and failed — with more ventures than he can count. Polak’s first was a strawberry distribution operation in his hometown of Millgrove, Ontario. Later Polak prospected in real estate and oil and made millions. In 1981, he invested the proceeds into a nonprofit incubator of sorts called International Development Enterprises.
Most of the ventures Polak has debuted out of IDE have one thing in common: They specialize in delivering low-cost engineering solutions to “micro-businesses” in the developing world. The most famous is the $25 treadle pump: a simple, foot-powered irrigation system that millions of farmers in India, Cambodia, Ethiopia, and Nepal have used to bring themselves out of poverty. Irrigation allows farmers to grow crops irrespective of season. When they can diversify, they are no longer subsistence farmers. They become businesspeople.
Since his customers are the poor, Polak is called a social entrepreneur. But he’s hardly the sort to sacrifice profits for “do-gooder-ism.” In fact, Polak won’t invest in a venture that can’t pay for itself in a year. One year! It’s a high bar by venture capital standards, but Polak says a one-year break-even is one of his top three “don’t bother” rules, along with a market opportunity of at least 1 million customers and having conversations with at least 25 of those prospective buyers.
Polak knows a lot about building successful businesses in dire economic circumstances. It’s a skill set in high demand these days, and Polak often lectures at Harvard’s and Stanford’s business schools. In addition to his three “don’t bother” rules, Polak points the way to success using 12 Steps to Practical Problem Solving, “because business is problem-solving…no matter what market you’re in.”
This week Polak shared his ideas with hundreds of business elites at Pop!Tech. He also sat down with Found|READ to flesh-out his wisdom, tailored to startups. It’s below.
The 12 Steps to Practical Problem Solving:
1. Go where the action is. “Spend significant time with your customers. This is how you learn what they need,” he says. Not hours, days. Polak lived with his farmers for 6 months.
2. Interview at least 100 customers a year. You do it. Not an employee. Listen to what they have to say. “Too many entrepreneurs build the product they want to build — not the one that’s needed.”
3. Context matters. If your solution isn’t right for the context, for example, if it costs too much for the customers you’re trying to serve, you won’t succeed.
4. Think big. Act big.
5. Think like a child.
6. See and do the obvious. Others won’t, which is opportunity for you.
7. Leverage precedents. If somebody has already invented it, don’t do it again.
8. Scale. Your business must have potential to scale. Remember, your market must include at least 1 million customers.
9. Design to specific cost and price targets. Not the other way around. (Celeste: it means — Do not price to your design, design to the price you need to hit to make your product appropriate to your customer.).
10. Follow practical three-year plans. Two years is too short. Ten is too long.
11. Visit your customers again. And again. “Any successful business in this country is based on talking to your customers all the time. A good CEO spends half his time ‘in the field.’”
12. Stay positive. Don’t be distracted by what other people think.
You can read more about these rules in Polak’s book, “Out of Poverty: What Works When Traditional Approaches Fail.”