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Because when you follow this path, you start with the problem and then you validate the perception of the problem and then you go and build the solution. If your solution works, it’s guaranteed that you are creating value.And at the end of the day, the journey of business is about value creation. If we create value, we will be successful.
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How to y’all, I’m Elizabeth Gore. Welcome to the Big Idea from Yahoo Finance, the show that navigates the world of small business and entrepreneurship. All businesses start with one light bulb moment, and I’m going to take you on a journey with America’s entrepreneurs. As the co-founder of theSmall business funding platform. Hello, Wallace. It has always been my mission to help ensure entrepreneurs have the tools they need to live the American dream. We’re going to get between the spreadsheets with these operators to flow from their smallest failures to their biggest successes. So let’s cowboy up.Today’s big idea question is how do I start a business by solving a problem? Our industry focus is tech. Earlier today, I had the huge privilege to talk to Yuri Levine, author, serial entrepreneur, and co-founder of the driving traffic and navigation app Waze. He also founded Ponterra, the FinTech that’s helping you manage your 401 cases. Yuri has helped.Over a dozen companies throughout his career, two of which have become unicorns. He’s a problem solver at heart and has built a career in creating businesses to do just that. There is no one better to answer the big idea question, how do I start a business by solving a problem? Here’s my conversation with Yuri.All right. Yuri, welcome to the Big Idea. It means the world to me that you’ve joined us today.
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Thank you, happy to be here.
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Listen, um, I was in a lot of traffic on the way here this morning to the studio, and it’s so funny cause I always go to ways and I just think about you are the person who always is smiling about the problem, not the solution. And I mean, you’re an entrepreneur, you’re an author, you’re a professor. How did, how did, how did you sit and think, OK, I gotta solve this problem with ways?
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So, so, you know, the, the reality is that um in general, I would say when I run into a problem.I, I used the frustration as a trigger, as a triggering point to basically start to think about what if we can change that right. Now with traffic, the realization was only some years later once I realized that all I need is to have someone ahead of me on the road to tell me what’s going on. So the magic of ways is that we crowdsource everything and the result is that we can tell you what is traffic like or if there is a speed can, right, or whatever it is.Um, and this is coming from other drivers. Um, and so this is the magic of ways turns out to be very powerful. The reality is that this is an all goodness system because you, when you drive with Wazes, you create more value to the rest of the drivers than the value that you actually get out of the system. So we are doing everything in order to get the value ourselves, but we, while doing that, we create more value to the other people, so it’s a paid forward.
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You know, every time I talk to you, um, you seem to receive great joy andGiving value to other people. We were just talking about your professor in Madrid and you love teaching, and, you know, we’ll talk about your next company in a minute where you’re giving back to people’s retirement. Um, so, you know, ways is so interesting to me because how, how, how could you pull that off? Because suddenly you got to go from zero folks on this app to thousands to make it work. I mean, how do you foster a community?
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So, so in general, I would say, and this is always at the beginning, um, the most important people at the beginning are the enthusiastic amateurs. They are the people that care about your mission. They are the ones that are going to help you to become successful.
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Enthusiastic amateurs.
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Enthusiastic.I love that.
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I want that on my business card. I’m an enthusiastic amateur.That’s awesome. Go ahead.
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You know, the beauty of that is that they care, right? They care more than the other people because the people are not amateurs, right? And they, they care because they’re enthusiastic. So, so the reality is that what happened is that they are going to be the first one that are going to use any product.And they are the ones that uh want you to be successful, and they are the ones that are going to help you to become successful. Um, and so these were the first users, right? And later on, once we started to create some critical mass in some places, then obviously all the driver came on board as well.
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And how did you, how did you initially fund the build of ways?
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So we raised capital in in we started in Israel, we raised capital from 3 different venture capital firms and obviously that was awesome deal for them. They really hit that the fund maker for all of them.Um, and they have a hard time at the beginning to believe that we are going to pull that off, but, uh, um, but the reality is that traffic is a big problem and commuting is something that we are doing a lot of harm every day and it’s a challenge and, uh, in general, I would say if there’s a problem that uh it’s reoccurrence is every day, it’s definitely worth.
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So interestingly,You, you, you, you always talk about the problem versus solution. It sounds like those investors didn’t necessarilyBelieve in the solution yet, but they believed how big the problem was. Is that a fair statement?
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No, no, they believe in the solution. They believe that crowds will be able to to actually figure that out, right? But um.But in general, I would say, you know, when we started Fonterra, the focus was on um.People are not doing the right thing with their retirement saving, and this is one of the biggest problems in the world and in particular in the US is that we, when we are young, we don’t care. And when we get older, it will be too late, right, and so, and then in general, I would say we, most of us are not doing the right thing when it comes to long plan term uh saving or long term planning even, right? And so, and we don’t do the right thing because uhMaybe we don’t care, maybe we don’t know, maybe we are afraid to make the the decision and maybe we are not disciplinedenough.
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And tell us about Ponterra.
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And, and so this is when we started Ponterra, this is what, wait a minute, people are not doing the right thing when it comes to their retirement. They are not necessarily investing in the right thing, they are not um paying the right fees. They’re, they’re not doing the right thing and the result is that they will not have enough when it comes to retirement. And Ponterra is actually have and and the reality is that what you really need to do.I go to your financial advisor. As simple as that, go to your financial advisor if you have one that is already managing your your brokerage account, then ask them to manage your 401k as well. There are $12 trillion of 401k assets.
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And a lot of folks just click the button and they don’t dig in, right on their 401ks. Sometimes they don’t choose the right thing.
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They are stuck with the default.And to my great embarrassment, I have to say that I, you know, I worked in the company in Long Island back in the 90s and they had over 401K and I signed up to that and I signed up for the default and I forgot about it, right, until 20 years later, realizing that I was stuck with the default account, with the default investment that was in the money market, right? And this is, this is me, right? So if it, it happened to me, it can happen to anyone, right?In general, most people don’t know, and when you don’t know, you’re not going to do it.
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So you’re, you know, again, two huge things that we all impact as traffic and then our financial management for our future. You, you have a book that’s out, um, that is called uh Fall in Love with the Problem, not the Solution. Yeah, there it is. So, so if I’m a small business owner and I see a problem, and I think I can fix that, I can make it better, what are the steps that you would suggest on how to think that through?
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They always start with the problem and then the next question that you want to ask yourself is who has this problem?Look, if you happen to be the only person on the planet with this problem, you know what, go to a therapist way faster, cheaper than building them. But, but if, but if a lot of people actually have this problem, what you really want to do next is go and speak with those people and understand their perception of the problem and only then start to build a solution because when you follow this path, you start with the problem and then you validate the perception of the problem and then you go and build the solution.If your solution works, it’s guaranteed that you are creating value.And at the end of the day, the journey of business is about value creation. If we create value, we will be successful.So always start with the problem. Now what happens also is that um.You know, the problem is going to serve as the north star of your journey. When you have a North Star, you’re going to make best deviation from the course and you are more likely to be successful.And your story is going to be way more compelling. Just imagine that we would have this show in 2007, just before I started ways, and I will tell you that I’m going to build an AI crowd source based navigation system, which is essentially exactly what I did, right? And you’re going to say, oh yeah, very interesting, but you don’t care. If I will tell you that I’m gonna help you to avoid traffic jams.Then you do care. When your customer care, they want you to be successful and they’re going to help you to become successful. So the first thing that you need to do when you’re building business is figure out your value proposition. Who, who would care?When, when you are offering them something, and make sure that you get badly.
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And when you define the problem, let’s say you’re talking to a would-be investor, banker, or the customer themselves, how do you pull a massive problem down into a few short sentences to catch someone’s attention?
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So, so, you know, when you tell a story that needs to create emotional engagement, right? Through a problem way easier to do that because then people if they have the problem or if they relate to the problem, then they already care. And, and what you need to tell them is um is the story that will create that emotional engagement that they would want to do something about it.
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AndIf they don’t understand it or don’t even know that it’s in their lives, so let’s talk about, let’s go back to Pantera for a second. Uh, I think traffic, we get it. If, if, if I’m thinking about my 401k, I’m so busy, I have so much going on. I think I click the button, I’m good. I mean, how, how can
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you one question.
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Yes,
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you have enough to retire.
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No, never.
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You don’t know that,
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right? Right. Well, my fishing hobbies are very expensive, so.
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OK, and then which is awesome, right? So, so, but in general, what I would say is that as soon as we answer ourselves no or we don’t know, that means that we actually do have a problem here.And the thing that you would like to do is, is ask yourself, OK.Can I answer that right?And what do I need to do in order to actually retire with more, right? So, so I would actually have better life or I can retire earlier or which I can actually do what I want to do.Because the reality is that in many cases, we, you know, you just click the button on your 401k, right? You don’t know if you have the right investment there, you don’t know if this is going to yield the right results for you.And and if you don’t know, then trust me, it’s not the right thing.
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Yuri, hold that thought, we have to take a quick break and we’ll be right back with a big idea.So if I identify the problem, and I stick to that as my north star, um, is it OK that I’m iterating solutions over and over till I get it right?
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Of course, it’s not just OK. This is exactly what you need to do because the reality is that we are not going to get it right for the first time. So we will need to iterate and iterate and iterate and iterate until we get it right. And uh um and, and look, at the end of the day, this is a journey, right? So, so building.A company building a product is a journey, right? And this journey have ups and downs and this journey have a lot of mistakes that we are making and we will need to fix them. And it’s also a relatively long journey.
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Well, you, I think you said it’s like riding a roller coaster in the dark.
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Um, that’s about fundraising, yes.
13:22 spk_1
So tell me more about that. Tell me about the fundraising side of this.
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So, so look, if you need funding for your business, then by and large,You go to a different ball game, you don’t know what’s going on.And, and just imagine the following, right, think of football.I’m right now in my grade. It’s a different football here. It’s a different ball game. If you don’t know the rules, there is no way that you can understand that. And so as soon as you understand the rules, then you can play right.Uh, and usually when you’re an entrepreneur and raising capital for the first time in your life, then you don’t know the rules and then a roller coaster in the dark, you don’t even know what’s coming.
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And I, I love that, uh, feeling. I love roller coasters, so I love that feeling when suddenly you don’t know what’s coming in you drop, and you’re scared to death, but suddenly you make it and you go through the other side, right? I mean, that’s the thrill of entrepreneurship. I mean, you make, I love that visual. Um, I, you know, we, we’re talking about iterations and there’s mistakes, and here on the show we talk about dirty unicorns as some of our biggest business mistakes. Can you share one?Uh, with us that you’ve learned from.
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So, so the first thing that I would like to say is that I haven’t made my biggest mistake yet. Oh trust me, I will. Call me back. As long as you keep on doing, you will keep on making mistakes, right? And uh, and as long as you have higher aspirations to change the world and make it a better place and keep on building, then you’re probably going to make even bigger mistakes.Um,
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Ilove that twist, by the way, sorry, I, I, I just have to say, um, I love that twist because I think new entrepreneurs think, oh, that’s behind me.And if you keep trying, you go bigger and you go bigger, your mistakes are bigger, right? I mean, it’s just part of it.
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It’s part of it, right? So the realization that this is a journey of failures, it is what it is, right? So, so we, you know, we’re trying to build something new that no one did before, right? If you take Fonterra, there is no one else that is building a platform that allows financial advisors to manage your 401k. There is no one else, right? And as we move along, it’s not that we can learn from others, right? There are no one else. There is no one else out there, right? And so we, we try.And today, most of it is working, but sometimes it’s not, right? And sometimes we, we actually need to reiterate and iterate and it. So the reality is that once you realize that you are going to build something new that no one did before, then you need to accept that there will be things that don’t work and uh and this is part of the journey. And so what you really want is uh is two things. Number one is don’t be afraid to fail, right? Because if you’re afraid to fail, then in reality,You are not going to try and therefore you already failed.Uh, and the other one is that you want to make those experiments fast.Because when you do be fast, you still have plenty of time to make in her approach, right? If this is about building ways then another version of the product, another version of the product, another version.Until we finally got it right. Uh, if this is uh um about go to market strategy, then you try one target audience and turns out that there is no value for them, and then you try another target audience and there is no value for them and eventually you will find your target audience. Can you
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break down failing fast because I, I think it’s important. Can you just spend a minute longer on that? You know, when do I let go of something? And I, I know we all have our sacred cows andUh, when do I just say, hey, that didn’t work. I gotta move on. And what do I say to my team? Because people get a lot of heart into their builds.
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Entrepreneurs will never give up.That’s part of their DNA, right? This is part of what makes them successful is to never give up attitude. It’s the perseverance, right? It’s the combination of passion and perseverance that we all, that I will define greed as as that combination, right? And uh and so they will never give up. If you want a good reason to give up, if the problem disappears.
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So only give up if the problem disappears.
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Because then the the the essence, the reason for your existence, your mission.Is no longer relevant.
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You know, you, you focus on so many problems to solve and adding value to the world, but are there ones you just gotta let burn and let go?
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Probably no, right, the fact that I was unsuccessful in doing something and the problem still exists does not say that I’m not going to come back.Um, and so in general, I would say if the problem is still there, then um I would try to come back to it.
18:18 spk_1
Is there, um, I have to ask you, Yuri, is there a problem that you haven’t tackled yet that you that you stay up at night thinking about that might be next on the radar?
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You know,The good news is that there are a lot of problems, bad news, but there are a lot of problems, right? I’ll give you an example, right, a very simple example. And, and by the way, I’m just going back into this uh retirement savings. This is $12 trillion problem, right.Um, 100 million Americans are not doing the right thing, or maybe some of them do, but many of them are not.But think about medical services.You know, services in the US are 5 times more expensive than they are in Germany.Now it’s not that they’re better, they’re simply 5 times more, more expensive.Then obviously there is something broken here.And uh and so this is a big problem that I would like to think that maybe I will address. Well,
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welcome.
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Thank you, thank you.
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I, I, I, uh, I, I again, I that your sense of optimism just comes through every time I talk to you, and I, I love thinking of um the fact that there’s an infinite amount of problems is also an infinite amount of opportunities to build businesses. I, I love that, that whole concept is quite beautiful.
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You know, for me, it’s really simple. At the end of the day, I have a very simple life because I have a purpose.My purpose is about value creation.I’m lucky that I have multiple ways to create value, right? I can build companies that helps a lot of people and I can um I can teach, I can, I wrote a book in order to help entrepreneurs to become more successful. So for me, that’s my mission. It’s about value creation.I want to believe that Fonterra is way bigger in its impact um than than ways. Wow,
20:16 spk_1
wow. So close this out withYour number one piece of advice.To solve a problem.
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Speak with the people that you believe have this problem or validate and understand their perception of the problem. Because at the end of the day, there are problems and their perception of the problem. People are going to take action.If this is, if their perception is that there is a problem. No, never, never tell anyone that OK, there is a problem in the market. Tell you the truth, the market does not care. People
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care. People care. The market does not care, people care.
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Wow. And so speak with those people and understand their perception of the problem. Not only then start to think about the solution.Albert Einstein said that um you know, if I would have 1 hour to solve a problem, I would invest 55 minutes thinking of the problem and 5 minutes thinking of the solution.
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Wow. Well, on that, Yuri, thank you for coming on the big idea. Um, you’ve totally flipped the way I’m going to look at the world. Anytime I’m frustrated in traffic, I’m going to think of your huge smile and how you brought us all together to solve this problem andI just appreciate you so much for coming on the show.
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Absolutely happy to be here.
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At the end of each episode, I like to give a shout out to a small business who is doing amazing work. So today,I’d like to shout out to Open House Home and Gift, a gift and home goods store in the center of Philadelphia created by Valerie Safron and chef Marcy Turney. Open House is one of 9 boutiques and restaurants started by the Power couple in their entrepreneurial pursuit to reinvent the city’s 13th Street. From jewelry to home goods to gritty and Dolly Parton prayer candles, Open House has everything you could possibly need.I think I need all that in my house. Check them out at openhouseliving.com. Thank you to Yuri for coming on the show and thank all of you for joining us. We hope you’ve learned a lot. This has been the big idea from Yahoo Finance. Please make sure to scan the QR code below to follow.Yahoo Finance podcast or check us out at the Big Idea wherever you get your podcasts. You can also come see howdy to me at any of my social channels at Elizabeth Gore USA. I’m Elizabeth Gore, and as my grandmother always said, hold your head up high and give them hell. See you next time.
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This content was not intended to be financial advice and should not be used as a substitute for professional financial services.