08
Jan 12

5 Ways to Really Commit to your #Startup

Me, when I got my startup idea

Me, when I got my startup idea

Happy New Year! May 2012 be the one when you commit way beyond your comfort zone. For many, this is a time of reflection and new year resolutions. The question I am raising today is: how resolved are you when it comes to your startup?

Here is an obvious truth that is often disregarded. If you want your startup to succeed, you have to work on it. Even when you’re smart, and carefully chose what to focus on, we’re talking lots and lots of time.

Many early stage startup founders I know break on this one. Or drag their feet for too long. I know I have. Established companies struggle with this one too. How do you create the time you need to work on your new business?

Continue reading →


23
Dec 11

Don’t be the Over-Advised Founder, Enjoy the Ride!

Enjoy the Ride

It's your startup, you're in charge. Finally free! Enjoy the ride!

Startup is all about learning, and asking for feedback and advice is a great tool, but beware of  too much of a good thing. Better ask a few select people, think it through, choose what to focus on, and then do it. And don’t forget to enjoy the ride!

Each of us see our own version of reality. We’re all biased by our experience, character, culture, current events in our lives. And you *will* get different, sometimes opposing advice.

The problem is not to figure out who’s right. Heck, in the early stage there’s so much to do that they may as well all be right. The problem is, you’ve only got a very limited time. So you have a choice: do a bit of this and then a bit of that, or focus on one or two things. My vote goes to the second choice. Continue reading →


26
Nov 11

5 Tips on Receiving Startup Feedback

Giving and receiving open and honest feedback is not really in our culture. And it is an essential skill for a founder to master. It is the tool to use in validation of your business model, and can save you from many mistakes. I was even recently invited to be on an “advisory board” by a colleague searching for a new job. He wants a reality check and to be kept accountable. What a nice idea! For you, the founder, even more so. As a founder, depending on your startup’s stage, you’ll be seeking different types of feedback from different kinds of people. But you’ll always need it.

Let me share 5 thoughts on how to ask for and receive feedback.

1. Ask. You’ll get little feedback if you do not ask for it. The good news is, this is the easy part. People love to give advice. It makes them feel smart and validated. You’ll be surprised how many otherwise busy people will agree to spend some time with you.

When asking, make it clear you are seeking feedback and advice, and respect their time (you’ll get plenty of value from an experienced person in 15-30 minutes time). Make it easy for them – join an event they attend, drop by their office at their convenience or buy them a cup of coffee nearby. If all you can get is a quick phone call, take it.

2. Whom to ask? In the very beginning, ask anyone  willing to listen. Friends, colleagues, your significant other. My first go-to person is my wife.

In the next phase, go for experienced entrepreneurs – people who’d done it before. There are a few events designed exactly for this (e.g. Westartup organizes member’s night events). There are also startup programs employing experienced mentors (such as MIC boostcamp or Founder Institute).

The people from whom you actually want most feedback are your customers. You can also talk to other people in your target market (“thought leaders”, domain experts, consultants, or just people who have been working in the industry for a while).

3. What to ask? In the beginning, you want to get feedback on your idea, so prepare a pitch. A good simple format to follow: “My [company] is building a [product] to help the [target customer] solve a [problem] [with secret sauce]“. Check out Mad Libs For Pitches: How To Perfect The One Sentence Pitch from Adeo Ressi.

You can ask feedback on any aspect of your business model. You can also ask for – and you’ll get – different types of feedback (on your idea, your strategy, tactics, presentation form…).

If you are asking feedback from customers, a good place to start is the problem you are solving for them. Describe the problem you are solving, and ask them if it resonates with them. Ask follow up question (e.g. why is this difficult, how do you deal with it today…). Then ask them to rate the problem on a scale from 1 to 5 (1 being “don’t need a solution for this”, and 5 “I must have a solution to this problem!”). If you see there’s resonance, you can then show them a short demo, or a screen shot and ask if this would solve their problem (test which features are must haves and check for any barriers to adoption). If the solution resonates, you can do a price test. You can a complete interview in 15 minutes. I once done 15 customers in one week. When will you do yours? Seriously, plan it, there is no reason to postpone.

As your product goes live with real users, you will make it easy for them to provide feedback, and use actionable metrics as a form of objective feedback. Before the site goes live, you can also play with Google Ads – where you can A/B test different value propositions.

4. Listen, don’t convince. You are asking for feedback to learn. You want them to be honest and open. And in turn you have to open yourself up to learning. Most of us seem to have a big difficulty with this. One sure way to immediately block learning is to start defending your idea and arguing. Instead of arguing, probe deeper, make sure you understand what they are saying and why they are saying that.

I know it’s your baby, but just because you want it to succeed, listen. Market will be much less forgiving and nice to you than your adviser. You are too attached, too close, it’s normal you don’t see everything. Prepare mentally to hear stuff you don’t want to hear and get in the mindset of learning.

5. Apply. What is the smallest actionable thing you can do to put what you’ve learned in practice? Go ahead and do it. That doesn’t mean blindly following what people say. You are in charge. Think critically about the feedback. But also about your idea.

In the quest for feedback, you will inevitably meet the non-believers. This is a special breed of people who had seen too many well-meant but poorly executed and short lived initiatives, and have learned to be skeptical.  They will live among your customers. They will have difficulty envisioning a solution and believing in your vision. Take them for what they are. Listen to them too, as they are typically very smart people with lots of experience. Let them point out errors in your reasoning and obstacles you will need to overcome on your path to customers. Consider their feedback a challenge to your creativity.

But also acknowledge you are a different breed – a dreamer with a vision on a quest to make this world a better place, with an innate ability to ignore the facts (“reality distortion field”). I need you to stay this way, just also be smart and take every opportunity to learn.

 

 


03
Nov 11

The Illusive art of Focusing

A focused cat

A focused cat

There is so much to do in a startup. Day in, day out, over a long, long period of time. And just because there’s so much to be done, a danger is ending up running around like a headless chicken.

So, on a kind request from my dear friend @blueclock from techbrew and Search Cog, for me a very timely answer to this challenge: focus.

There’s so much written about the importance of focus for startups. Do one thing and do it well. Focus on your core business and outsource everything else. My colleagues from Sirris dedicated a whole chapter in their book to the “The Art of Focusing”.

But it’s easier said than done. There are so many things you simply must do. How do you choose between drafting up an urgent partnership contract, supporting your customer, and preparing tomorrow’s sales meeting?

In an early phase, when many things are still open and everything needs to be done, it seems even worse (although it really isn’t). So what do people do about it?

  • Join a program. In Brussels we have Founder Institute and MIC Boostcamp. They break down the startup process into a series of malleable steps. You build your startup by following a prescribed process.
  • Ask mentors for advice. Experienced people are good at seeing through your idea and judging your strategy in minutes. They are able to see the most gaping holes in your business model, and tell you what you need to solve first.
  • Focus on the riskiest part of your business model first. In his post on startup risk prioritization, Ash Maurya even gives you a hint: start from (1) the problem, (2) channels, and (3) revenue

Nice. I did all three. And then messy reality kicks in. One mentor says do product, and he’s right, the other points to holes in the revenue model, also rightly, the program wants me to think about branding… And I guess I will simply have to do everything, and that’s my reality.

So as important the focus is, I’ll leave you with a couple of thoughts on that:

  • Do focus, but do not loose sight of the bigger picture. Take a step back often to gauge where you are. Don’t miss opportunities, just because of the strategy du jour. Things change rapidly in a startup, and you need to follow up.
  • Focus AND do all the things you must do. Find balance, and let go of perfectionism. Do stuff good enough, and move on.
  • Watch out for bias: when setting the focus, we are good at distorting reality and avoiding what’s out of our comfort zone. That’s why is good to often do reality checks with experienced entrepreneurs and mentors.

To stop just below 500 words: I would really love to know, how do you set your focus?


02
Oct 11

Techies vs. “Industry” Founders: who’s Right?

I once talked to a dozen startup founders about getting out of the building to validate their startup idea with actual customers. About half of founders were techies and half non-technical industry people. I’ve played both roles in the past, and could understand where each get stuck.

For techies, getting out of the building often falls outside their comfort zone, and they rather focus on building their product first. Unfortunately, the longer you wait to ship, the more you postpone learning. Shipping sooner is better, but is not a panacea.

If you ship a product to see what happens, you are guaranteed to succeed – at seeing what happens. Something will always happen (Eric Ries)

For industry guys, going out of the building is what they’re used doing. But after probing a bit I realized that most actually either asked their customers what they wanted and brainstormed about product features, or did a sales talk. There’s nothing wrong with sales (I am a big fan of sales myself), and as a founder, you should be your product’s first salesperson. As salespeople however, we are instinctively going for a yes, and especially if we are used to selling a service (as many with an industrial background are), we go for a total customer solution. There’s also nothing wrong with a service business, but  it requires a fundamental mindset shift to go from building a service to a building a product. From building what a customer asks (basically, custom software development),  to building a product for a market (one product for many).

As a founder, you own the solution (vision), and customers own the problem. 

So who is right, the techies or the industry people?

That’s exactly what I like about customer development: it teaches us how to combine the best of both worlds. Did you ever wonder what does it mean to develop customers?

Customer development is about finding a market for the product as specified.

The techies were right about this: you specify your product as you envision it. You even start building it. But so were the industry people, because  then you need to go out looking for customers. You look for a market for the product as specified. When you see something is not working as assumed, you go back, change an aspect of your business model (“pivot”) and go back out to check your new assumption.

In other words, your startup assumptions are an essential tool in your toolbox. Actually, there’s probably no other  way to create something new, something that didn’t exist before. Building a startup requires a huge leap of faith and an ability to envision a brighter future for your customers. Customer development does not remove this step, it builds on your vision as a fundament, adding steps that help you find customers for your product.


12
Sep 11

Pin Down your Startup Hypotheses

As all you really have at the beginning of your startup are a bunch of educated guesses, your highest priority is to figure out what you’re guessing wrong. In other words: can you build a viable business around your idea?

Those coming from an industry will start from verified market insights. However, by definition, startup is a learning organization, searching for a repeatable business model. Unless you are repeating something previously proven, you can never be sure that you have all the pieces right. Coming from a consultancy business myself, and knowing the pain of my customers well, I was really surprised by the assumptions I was making once I put them on paper and examined them with my customers. 

The first step in validating your guesses is to make them explicit, or put fancier: document your hypotheses. I’ll give you some ideas on how you can do this.

In his book Four Steps to Epiphany, Steve Blank recommends you write a number of briefs, each documenting a different hypothesis (about the product, customers, channels, market, etc). Each is described in a subsection of the chapter “Customer Discovery” (the first of the four steps of customer development). They provide useful questions to ask yourself.

But there’s an easier way.

The easier way: business model canvas. If you haven’t heard or used Osterwalder’s business model canvas, I highly recommend to learn more about it (the first 72 pages of Osterwalder’s best selling book are free to download from his website).

What’s cool about the business model canvas is that it collects 9 essential building blocks of a business on a single sheet of paper. Miss one and you got no business. Go on, fill one out. These are your hypotheses.

In addition to being a lean way to document your hypotheses, business model canvas is also a great brainstorm tool. Print the canvas on a big sheet, and brainstorm around it with your team.

Business Model Canvas, 1 page summary of your business

Business Model Canvas, an easy way to document your hypotheses

What to fill in? Steve Blank ran a hands-on customer development course with his Stanford students: the Lean Launchpad. The students had to form teams around concrete ideas, and actually perform customer development of their idea during the curriculum. To do so, they had to get out of the building and talk to actual customers. The students used the business model canvas as a score card, and blogged about their lessons learned in interviews.

What’s cool about this course is the bunch of resources and examples it provides, all free and well documented on Steve’s blog. Each post in the Lean Launchpad series zooms in on a different aspect of business model providing.

  • A theoretical checklist for the specific business model aspect
  • Lessons learned: you get to see how the students put this theory in practice

I collected them for you below.

Business Model Checklists Lessons learned
Value proposition checklist, a useful deck urging us to think about the problem statement, technology/market insight (why is this problem so hard to solve), competition and the (minimum viable) product. Lessons students learned by testing value proposition hypotheses
Customer checklist: different types of customers and markets, multisided platforms, different types of customer roles and customer problems. Lessons students learned by testing customer hypotheses
Customer relationship checklist: it’s about demand creation. Lessons students learned by testing customer relationship hypotheses
Channel checklist: direct and indirect sales channels, channels as customers, differences between physical and digital products and channels. Lessons students learned by testing channel hypotheses
Revenue model checklist: what are the customers paying for and how much can they pay, how will you package and price your product, different types of revenue streams. Lessons students learned by testing revenue model hypotheses
Bonus material: a slide deck on 7 different SaaS revenue streams (skip to slide 27 for the juice),  a free e-book on software pricing Don’t Just roll the Dice (disclaimer: still on my to-read list).
Key partners, key resources and expenses: two separate slide decks, the latter by Osterwalder. Lessons students learned by testing key resources and expenses hypotheses

Helpful alternative geared towards customer development: lean canvas. Ash Maurya proposes an alternative version of the business model canvas: Lean Canvas. I find it simpler to use, and a slightly better fit for customer development. What I really like about it is that it has explicit fields for Problem (top 3 customer problems) and Solution (top 3 features of your product). Focusing on your customer, the problem and the solution is a good way to initiate your research. This is what Ash has to say about documenting hypotheses. He also provides an online lean canvas tool, allowing you to share your lean canvas with your partners or mentors.

Go ahead, fill one in. Start from the business model canvas you filled in before. I found that I tend to use the business model canvas as a (quick) brainstorm tool to think up alternative business models. Once I get serious about testing one of them, I will dive in deeper and fill all the fields of a lean canvas.

Lean Canvas, no-nonsense alternative way to document your hypotheses

What now? What you now have is a list of hypotheses about your business. If any of the things on your canvas mismatch reality, there is a chance you don’t have a viable business (yet). So you see why it’s so important to validate the hypotheses.

And you don’t have the answers – your customers do. So you need to get out of the building and get the answers from them.

In the next posts, I’ll write on how to do that.



08
Sep 11

The Startup Guessing Game

It all starts with a vision. You are the startup founder, with this brilliant idea for a new product that will change the way people <insert something painful/inconvenient here>. You build it, promote it, and users flock to you shiny new product. And yeah, you figure out how to make money off of it once you get the users. Right?

It turns out there is a problem with this strategy. The problem is that all you really have at the beginning are educated guesses.

You are guessing who your customers are. Even what your product is.

Flickr started off as an MMO. Photo sharing was a side feature, and started picking up faster than the game. They fought for a while trying to stick with their original idea, but it soon became obvious where the real interest was (founders did eventually decide to come back to the root idea launching Glitch).  

You are making guesses about what your customers value.

IMVU (an online 3D-avatar chat & gaming tool) started off by a 6 month coding marathon to make their 3D avatar chat run on top of existing chat protocols. It was a clever idea. Their initial guess was that people will never want to rebuild their chat buddy lists. So they developed a technology that allows them to hook into existing buddy lists of existing chat clients. 

But guess what: their early users (primarily teenagers), did not want to invite their friends, as they weren’t sure if the thing was cool enough yet. This is what the young lads and lassies value: being cool. So IMVU threw away 40k+ lines of code. They then implemented a feature where the users could invite another random user for a trial chat session. It’s turned into a major feature. Read their tagline: “Play, Meet People, Have Fun”. 

And are you really only building a product, or a complete viable (and hopefully scalable) business around it? And since your product is not the product, you are actually making guesses about the complete business model.

You are making guesses about the whole business around your product

 I borrowed the image above from Steve Blank, the father of of Customer Development. He proposes a different approach, treating entrepreneurship as a science. According to Customer Development, the founder goes through the following steps:

  • Document their vision
  • Identify the riskiest guesses (hypotheses)
  • Define and carry out a series of rigorous experiments to validates the hypothesis outside of the building, with the actual customers
  • Every time a hypothesis is invalidated, the founder goes back to the drawing board to adapt their vision

This process turns the startup into a learning organization. Steve’s definition of a startup:

Startup is a temporary organization designed to search for a repeatable and scalable business model.

The concept is very simple. Applying it in practice requires some creativity, and lots of stepping out of your comfort zone. That is why this blog is started: to share our experiences as we search for viable business models. We’ll try to make it as hands-on as possible.

You can see Eric Riese’s presentation about his lessons from IMVU in an invited lecture to Steve Blank’s students.