Greg McKeown:
Welcome. I’m your host, Greg McKeown, and I am here with you on this journey to learn.
Many entrepreneurs fall in love with their products, services, their ideas, but according to my guest today, this is wrong. What Uri Levine argues is that you have to fall in love with the problem, not the solution. Uri is a passionate entrepreneur. Unicorns, which are companies that reach a valuation of more than a billion dollars str rare, but Uri has built two. He is the co-founder of Waze, the world’s largest community-based driving traffic navigation app with more than 700 million users to date which Google acquired for more than a billion dollars.
In our conversation today and next week, he reveals the formula that drove these companies to compete with industry veterans and giants alike. By the end of this episode, you’ll be able to be more relevant and valuable to your customers than your competitors. Let’s begin.
If you want to learn faster, understand this formula more deeply, and increase your influence, teach an idea from this podcast to one other person within the next 24 to 48 hours.
Uri Addie, welcome to the Greg McKeown Podcast.
Uri Levine:
Thank you.
Greg McKeown:
So let’s just start at the beginning here. Before there was a book, before you were teaching the world how to become an entrepreneur, how to be able to take advantage of all the lessons that you have learned way back, you started Waze. How did that happen?
Uri Levine:
So I started Waze, the short answer is that I hate traffic jams, right? And when I get into frustrating situations, I will always try to figure out if there is a way for me, to do something to change that. And, it was a long while until I realized that, wait a minute, in this case, I can actually do something. And that was back in 2006 when we were on a family vacation in the northern part of Israel. And Israel is a small place. So essentially, there are only two ways to drive back to the center, or at least back then, that was the case. And there were like ten cars there, ten family members, different cars, and we had four little kids. So it takes us a while to leave. And we were the last ones to leave the place.
And on the way back, I realized that maybe I should call those people up and ask them how is traffic like on their path. Because essentially, there were only two ways, right? And, I started to call them up and realized that there was one that was really jammed and there is another island that wasn’t that bad. And I realized that in order to address traffic, what I really need is someone ahead of me on the road. It was only until 2007, when I met the other two co-founders, that we decided to go into this journey and build Waze to help drivers on their daily commute to find the fastest route.
Greg McKeown:
Now, I’ve used ways, I love ways, and it’s such a simple beginning story. Is that really the story? Is that really how it began, or is that a story that you say now to make it simple for people to get it?
Uri Levine:
So the beginning is easy, right? The journey is the part that is complex. Yeah. And you know, people ask me occasionally to describe a startup journey, and I’ll say, oh, this is really easy, right? I can describe that in three words. It’s a long, rollercoaster journey of failures. It’s long because it’s really long until you figure out traction. It’s a rollercoaster with ups and downs and ups and downs. And I think that I owe the best quote on that to Ben Orbitz from a recent Orbitz. And he, before he was a venture capitalist, he was a CEO for a startup. And he was once asked whether or not he was sleeping well at night as a CEO for a startup. And he said, oh yeah, I slept like a baby. I woke up every two hours and cried. And that’s really the reality of that, right?
And it’s a journey of failures, which is maybe the most important part to realize because I would say two conclusions, right? One, if you are afraid to fail, then in reality, you already failed because you are not going to try. Albert Einstein used to say that if you haven’t failed, that’s because you haven’t tried anything new before. If you’re going to try new things, you will fail. And then there is the otherization, which is really going to eventually make you make or break your journey, right? If you realize that this is going to be a journey of failure, then you have to fail fast because the faster that you fail, you increase the likelihood of being successful because you simply have more time to make another attempt and another try, another version, and try something else until you will find something that works.
But essentially, just imagine the following, right? So, I assume that you’re not a professional basketball player, and if you are going to make a hoop from halfcourt, then if you have one try, it’s going to be very unlikely. If you have tens of tries, then it’s starting to become likely that you’re going to hit one, right? And that’s the number of attempts that you have that essentially increase the likelihood of being successful. And this is why realizing that this is going to be a journey of failures is critical for your journey.
Now, in addition, I would say, the longest part of the journey, the longest part of the journey, is that when you have no traction, you know, you try different versions, and it doesn’t work. You try different things, and you are trying to figure out product market fit, and in that sense, product market fit is about creating value. That means that you create value to your customers or to your users. And if you don’t figure out product market fit, you will die, as simple as that.
Now, to a certain extent, I would say you never heard of a company that did not figure out product market fit. They actually simply died. That’s it. But once you do figure out product market fit, and this is really important to realize, is that you don’t change the value that you create anymore. I want you for a second to think of everything that you’re using every day, right? So searching Google, using WhatsApp, using Waze, user, Uber, Netflix, whatever it is, and ask yourself what is the difference between any of those that you are using today and the first time that you have used it. And the answer is that there is no difference. We are searching Google today the same way that we search Google for the first time in our life. We are using Waze today or Uber or Netflix or whatever it is. So once you figure out product market fit, you don’t change the value anymore. In fact, this is the end of the part of the first part of your journey. Now you bought yourself a ticket to the next part of the journey, which could be about figuring out a business model, which could be about figuring out growth, which could be about going global, whatever it is. But the figure, the journey of product market fit, if you don’t figure it out, you will die. If you do figure it out, you are likely to be successful.
Greg McKeown:
Okay? So let’s dig into that for a second. So product market fit, I mean, what do you really mean when you use that term?
Uri Levine:
So that’s really easy, right? Product market fit is about value creation. If you create value to your users, they will come back. Very simple, right? And so, there is one metric for product market fit, which is retention. Now this is, if this is consumer, right? If this is going to be a B2B offering, they will keep on paying you. If you don’t create value for them, if they don’t use the product, they are not going to keep on paying. If you are b2b, you will be way better off to have a monthly subscription than an annual subscription because, in a monthly subscription, they will need to decide if they’re going to pay you every month again and again and again. And that means that if you don’t create value for them, you will realize that you do not create value way faster. And you will be in a position to fix that. If you have an annual subscription and then they commit to pay, you don’t measure anything because they’re paying a year in advance, or they commit to pay for a year. And the only time that you are going to face the fact that you are not good enough, it’s a year down the road.
Greg McKeown:
Yeah. Okay. I love that. How did you do that with Waze?
Uri Levine:
So, how do you know that you’re not good enough? You need someone to tell me. You need the users to tell you. And in fact, this is exactly what’s the journey of Waze, right? So we started our journey eventually in 2007. We raised capital at the beginning of 2008, and this is where we officially launched the company. The first version, by the way, the first version of Waze was running on a PDA. Remember long, long, long time ago, there were dinosaurs and then PDAs and then Nokia phones. And today, we all have iPhones and Android, right?
So we have raised capital and started to build the first real-time version running on a Nokia phone. And then we changed that into iPhone, and there were still no Androids back then. And we launched the product in Israel at the beginning of 2009.
It was actually pretty good. And then we launched that globally at the end of the year, and turns out that it’s not good enough. And so what we heard is that people would, you know, they like the story, they like the promise. We, the drivers, are going to crowdsource traffic information and help the rest of the drivers to avoid traffic jams, right? Or in simple, we going to help you to avoid traffic checks. Everyone likes that. And they downloaded the app and it was not good enough. And so what they did is they simply churned, that’s it, right? Not good enough, okay? I’m back to wherever I was before. Not a problem. But we realized that we call out the drivers, we spoke with them in order to understand what doesn’t work for them, and they taught us because they really want that to help to work, right?
They, everyone wants to avoid traffic jams. And so we built the next version that we know that addresses all the issues and we know that this is it and it’s not. So we are doing it all over again, right? Another iteration speaking with the advisors, they tell us what doesn’t work. We build the next version to address all the issues that they have told us. We know that this time it’s definitely going to work. And it’s not one iteration after another, one after another, one whole year of iterations until it’s starting to become good enough. Now, it was reflected very well in the metrics, right? So people would try the app, it’s not good enough, and this is it. That was the first and last time that they have used the app. And, and these were exactly the people that we wanted to provide us with the feedback, what didn’t work for them. Because if it was working for you, then you’ll keep on using it.
It was only until the end of 2010 or maybe the beginning of 2011 that it’s starting to become good enough. And then you actually see this flywheel of, you know, the more users that we have, the data become more accurate because we crowdsource everything. The more accurate the data becomes, then more users are actually joining and staying. And that was, you know, happening in LA first and then in San Francisco and, uh, in Atlanta and Washington DC and in Miami and New York and Chicago. But one metropolitan after that in Europe, that was actually one country after that. Italy first, and then the Netherlands, and so forth.
Greg McKeown:
Let’s time out for a second. I want to hear about that momentum story. But before that, when you say you called up the drivers, tell me about that specifically. How many drivers did you call up? We talking about 10, a thousand?
Uri Levine:
It was tens, right? So every version was like 30, or 40 until we get consistency in the answers. And if there were different answers all over, then we will keep on, because then you don’t know what is that you need to address, right? But what usually happened is that the first 20 or 30 will be enough, because if there is a consistent problem, then it’s going to repeat itself time after time. If there isn’t a consistent problem, then wait a minute, you don’t even know where to start.
Greg McKeown:
Yeah. In, terms of research, we would call that saturation, right? As soon as you’ve got to saturation, you know that you are, there’s no real advantage in going to 50 and a hundred and so on because you already understand what the problems are. How many times did you do the iteration? It was over a year, but did you do ten iterations? Was it 20, 50?
Uri Levine:
It it was somewhere, I think it was more than 10, but less than 20. Maybe it was 12 or 14, or I don’t remember to be frank. But that was a lot of iterations. Now the challenges are following, right? In some of those, you are making baby steps, you know, progress. In some of them, you are actually ended up to be, to have a worse result. And before, there were only a few that you actually made a leapfrog, and you don’t know which one is which, right? If you would know, then you will do only the leapfrogs, right?
Greg McKeown:
That’s so interesting. That comes back to the idea of the basketball. And you just have to try rapidly to innovate by trying out the feedback that you got. Did it work? Did it help? And to not guess what your customer wants, but to do it and see how they respond.
Uri Levine:
Exactly. And that’s the fastest way to make a progress, right?
Greg McKeown:
So after you’ve done these iterations, based on these conversations and rapid cycles of innovation, you suddenly reach a tipping point that you were just describing, and suddenly it works. And by works, people are staying with you, but they’re also presumably recommending it to other people as well because it really works and really addresses the problem itself. Am I hearing that? Right?
Uri Levine:
Exactly. And, what is really important is that Waze was on the daily commute, and the beauty of the daily commute is that it happens twice a day for you. And so you ended up having multiple opportunities to tell someone else. And so a lot of people are expecting that eventually, their growth strategy is going to be based on word of mouth. Word of mouth is based on the frequency of use. That’s it. If you have a product that is absolutely amazing to make cruise travel arrangements, then obviously, after your return, you’re going to tell some people, you know what, I’ve used this platform, and this is awesome, right? But the next time that you’re going to go on a cruise is hopefully next year, but okay, maybe, in five years from now, right? So the frequency of use is low, and the result is that no one can rely on word of mouth to become meaningful for them in their, in their growth strategy, in their go-to-market strategy.
Greg McKeown:
I love this idea of frequency of use. We hear often about the net promoter score and how important it is to create an experience that’s nine or 10 out of 10, but it’s much less often that you hear entrepreneurs and innovators say, will tap into a problem that is daily ritualized tangible problem, like Waze tapped into. Did you know that that was the problem upfront, or did you figure out as you went along that that was the most precise ritualized problem that you were going to solve?
Uri Levine:
When we started the journey, we basically say traffic jams is a, it’s a problem that you face every day, and you get frustrated with that every day, but you only get every day if you are going to work or running back to the office, right? If you are, um, traveling someplace that you don’t know, then you are less concerned about the traffic and more concerned about getting there. And we want the day every day. That was critical for us. And the reason that it was critical for us is we wanted to help drivers to avoid traffic jams by crowd-sourcing traffic information. So we need to have a lot of users that are using it every day in order to collect the information, in order to gather the information and become valuable. So the essence that this is going to be every day was with us on the first day. For a second I would say net promoting score is, is misused, right? Because if you don’t have a lot of opportunities to tell other people, it’s not going to happen, right? Even if you would really like the product and you would definitely recommend, you are going to recommend someone when they ask you, and they don’t.
If you’re using something every day, then, you know, occasionally you drive with someone in your car and then that, then you invoke the ways application and they ask you, what’s that? Right? And then you have an opportunity.
Greg McKeown:
This new book that you’ve written has a title that speaks volumes. It’s called Fall in Love with the Problem, not the Solution. Can you expand on that concept and explain how it applies to entrepreneurship and innovation?
Uri Levine:
So let me suggest the following, right? If you want to go into a journey of entrepreneurship, then I would say start with a problem. Think of a problem, a big problem, something that it’s worth solving, and then ask yourself, so who has this problem? Now if you happen to be the only person on the planet with this problem, then I would say go to a shrink. It’s way cheaper and faster. But if a lot of people actually have this problem, then what you need to do next is go and speak with those people and understand their perception of the problem and only then go and build a solution.
Now, if you follow this path and your solution works, it’s guaranteed that you’re creating value because you’re solving a problem. If you start with the solution, you might be building something that no one cares, and that’s really frustrating.
Now, the two things that are going to happen if you follow this path, number one, is that you validate whether or not the perception of the problem is, is worth solving. Number two, if it is, then those people that you speak with are going to send you on a mission to solve that problem for them. And this is where you fall in love with the problem. Now, once you do fall in love with the problem, the problem serves two purposes. Number one, it’s becoming the north star of your journey. And when you have a north star, then your likelihood of actually reaching your objectives are way better. And the number of deviations and the durations of deviations that you’re going to make from the main course are ways lower. And the most important part is that the story that you’re going to tell is way more compelling.
Look, if I will tell you in 2007 that I’m going to build an AI crowdsource-based navigation system, then you are going to say very interesting, but you don’t really care. If I will tell you I’m going to help you to avoid traffic jams, then you do care. And this is where the story becomes way more compelling when we speak about the problem because then you speak about the value that you’re going to create for your listener. And so in many startups, if I would hear them starting saying by, you know, if I would hear them start by saying my system is, or my system does, then they focus about the solution. If they will start their story with this is the problem that we solve, or this is the value that we create for you, then they speak about the problem, and they’re going to get way more attention and increase their likelihood of actually becoming successful.
Greg McKeown:
I love how clear you are in the way that you just explained that. Let’s go back to step one, the big problem. How do you identify the right kind of big problem to solve? There’s loads of problems in the world. How does a person listening to this identify the right problem to be able to take on either as an entrepreneur or perhaps as an internal entrepreneur at a company or just in their own family? Like how do you define what the right problem is?
Uri Levine:
End of the day, you are looking to create a lot of value, right? The entrepreneurship journey is about creating value. And usually, most people will start with their own problem, right? So something that they face or challenge or have seen, and they would tell themselves, no, no, this is something that I would like to change in. For me, in many cases, it’s about frustration, right? I will go into something that I ended up to be frustrated with, and I’ll ask myself better or not, I can change that. But if you are in an insider corporate, then it may be about innovation, improving processors within the corporate, or maybe you figure out that your customers actually have a different problem, and it’s worthwhile to address that way. And then, the next thing that you would like to do is validate that if you are the only one that has this problem or would cause you frustrations or this is the only customer with this problem, then it’s not worthwhile.
But if you speak with a lot of people that you think have the same problem, they will do the validation for you. Then you go into try to define, so how big is the market, right? And how big is the market is essentially, for a second, I would say it’s a two-by-two matrix. And, you look at two dimensions, right? The first one will be the addressable market. So how many people or how many businesses is that relevant to? The second one, which is way more important, is how much value do I create if I solve that in value? You can measure by whatever measure value, right? You can measure that by money, you can measure that by time. So if you’re going to save a lot of people a lot of time, then they definitely like that, right? You can measure that by frequency of use, which is another way of saying, okay, you know what, if they’re going to use that that often, that means that this is going to be valuable for them.
It’s harder to measure it by softer values, right? So if I will tell you this is going to make, uh, make it easier for you, easy is hard to measure, and then you will need to go back into the frustration and eventually figure out. So making things easier, how much does it worth for them? I mean, in either saving the money, making the money, saving them time. Empowerment is very powerful but very hard to measure. And so you will end up with trying to measure that by, by few dimensions and, and they all reflect the value. So now I would say if you have something with a very big, very large addressable market and creates a lot of value, so creating a lot of value to a lot of people is definitely going to be a winner.
Greg McKeown:
Is there a single question someone can ask to really cut through in their search for the right kind of problem?
Uri Levine:
Speak with users. That’s the only way. You have to speak with them before you go into your journey to understand that you are not delusional, that you are not the only one that actually have this problem.
Greg McKeown:
How do you know when you have found the right problem? Is it just that it meets all that criteria you described, or is it something else? A moment when you go, we know it.
Uri Levine:
Look, in many cases, when you speak with enough people, you would know because they will start to tell you their version of the problem. They will send you on a mission to solve that problem.
Greg McKeown:
You’ve used that phrase before. Can you describe more what you mean by it? They will send you on a mission. What does that look like?
Uri Levine:
You will ask them questions, and then they will either tell you their version of the problem, but in particular, they will ask you, can you solve that for me? They will simply ask you, can you solve this problem for me? Or what do you mean is that you’re going to solve this problem for me, and this is where they get excited, and this is where they sent you on that mission.
Greg McKeown:
And that’s a delightful moment, surely, because now you know that there is someone who feels this pain and is excited for you to go and innovate and solve it and come back to them. So it’s a lovely thought that you are really getting that mission from someone who’s experiencing that difficulty rather than just generally solving a business problem or starting a business. This is for someone, particularly.
Uri Levine:
So not someone, but many someones, right? A lot of them. But even if you go on a business, right? So, you’re offering is a, is, you know, you have customers, and you realize that they have a problem, and you ask them about this problem, and they tell you, can you do that for me? And, and, and then you go to more customers, exactly the same types of customers, and there are keep on telling you the same thing. Can you solve that for me then you know that you have the right mission.
Greg McKeown:
Is there a difference between falling in love with a problem and just thinking about the problem you’re trying to solve? And if yes, what really are you trying to get at with that phraseology?
Uri Levine:
For a second, I would say most entrepreneurs will start with their own perspective of the problem. Only when you speak with other people, you will fall in love with the problem.
Greg McKeown:
Okay, explain that to me because it becomes more exciting to solve it because you know there are all these people that are experiencing it and want you to get it done? Is that what it is?
Uri Levine:
That’s exactly what I refer to when I say they are going to send you on the mission.
Greg McKeown:
What is one idea you heard today that caught your attention? Why does that matter so much? And who is one person you can share that with within the next 24 to 48 hours?
If you found value in this episode, please write a review on Apple Podcasts. The first five people to write a review of this episode will receive free access to the Essentialism Academy. For more details, go to essentialism.com/podcastpromo. Thank you. Really, thank you for listening, and I’ll see you next time.