Gate 3: Who Cares About the Problem?

It took me 35 years to discover these five simple principles, or gates, to becoming a successful entrepreneur. If you enjoy this series, share it with a friend. To catch up, go to paparelli.com.

“I am here to talk to you about your fax problems,” said the sales rep for AudioFax.

“I don’t have a problem with fax. When I want to fax a document to someone, I put it in the fax machine, enter their phone number, and hit Send. No problem,” answered the prospect.

“Really? Are you sure they received the fax?” asked the sales rep.

“I get a confirmation from my fax machine which tells me the document was received by the other fax machine,” he answered.

“But did it get to your intended recipient?” the rep pressed on.

“I guess so. I call him to confirm,” answered the now frustrated prospect.

There is a problem, but who has it?

Mark Bloomfield, an amazing entrepreneur, is an inventor at his core. He patented a process called “Store and forward fax” in the early 1990s. He started a company called AudioFax to commercialize the idea.

He saw the problems with current fax technology. It was being used as a critical communication tool in business, but it was limited to physical devices. All you could do was send a document from one fax machine to another fax machine. It was a discreet point to point communication.

But this wasn’t how the world of business worked. People traveled. Their office received the important fax, but there was no easy way to get it to the traveling executive. The executive would have to call his voice mail, and the guy who sent him the fax would have left a message saying, “I sent you the document we talked about.”

The exec would locate a fax machine in the office he was visiting. He would call his secretary and ask for the fax to be sent to the machine he was sitting next to at the time.

Hopefully his secretary was available, could find the fax, and could send it to the machine the exec was near.

It all had to happen real time.

Everything I just explained was the main problem Mark saw with fax. As he started thinking more deeply about it, he came up with other ideas like voice mail notifications for faxes received, address books for fax machines the exec used frequently, send and receive logs, etc. Every feature he added to the software made fax easier and more effective as a document communication tool.

Store and forward fax solved real problems. As part of the patent, Mark figured out all the technology necessary to virtually eliminate the problems with fax.

Here’s what he came up with.

The exec’s fax number was really a computer which would receive the fax. The computer would then call the exec. If he answered the phone, he would get a computerized message telling him he had a fax. If he didn’t answer, the computer would leave a voicemail message.

He could then enter the phone number of the fax machine which was nearby or call back later. This was the store and forward nature of the patent. Mark designed the computer board and the software to do this…right down to the professional voice prompts and notifications. Brilliant.

Mark brought me in as the President of AudioFax. We raised the money we needed to get out of the ground. We had the product completed. I hired two really experienced sales reps. We were going to blow this thing up.

We started by making calls on big companies. We discovered these companies had fax machines in strategic locations throughout their offices. Wherever there was a network printer, a fax machine would be sitting right next to it. This was even before fax technology was embedded in printers.

So you can see the problem, right?

When our sales reps called on the heads of administration of these big offices, the reps were met with, “Fax isn’t a problem.” Sure, they would admit it wasn’t perfect, but it wasn’t a problem big enough to do anything about.

Then we called on lawyers. Fax was critical to their success. They said, “My legal secretary handles all of that.” They weren’t ready to address the problems either. They simply delegated the problem to their secretary who saw fax as her job.

We bounced all around looking for the person who had a big enough problem with fax that they would do something about it. We went to different markets and talked to hundreds of people who used fax machines. It was so frustrating. After making this enormous investment of time and money, we finally figured out who had the fax problem.

It was the traveling sales executive. He needed to solve this problem. He wanted to know he had a fax from his client the moment the fax was received by his fax machine. He lived by the truism “Time kills all deals.” He wanted his fax document the moment it showed up. It was a big enough problem to do something about it.

It was bigger than sales reps.

The people who needed to solve this problem were individuals who relied on the instantaneous communication of documents and traveled a lot. It wasn’t a corporate problem. It was an individual’s problem, and this individual had to solve it.

With a few hundred thousand dollars and lots of effort, we found the owner of the problem. Now we needed to determine how much they would pay to solve their problem.

That’s the next gate in getting your startup out of the ground. You’ll love how Mark Bloomfield eventually made millions from his patent. But that’s another story and the next article.