Tag Archive for 'lean startup'

Startup Weekend Lesson Learned #2 – Customer Development

Ok…this is less of a lessons learned and more of an outright challenge.

At the last Startup Weekend (#swmobile) the team I joined was called KissMobs. As far as I’m aware, we are the only Startup Weekend team ever to finish the weekend cash flow positive. It could be there are others, I don’t have the stats and I’ll let Franck correct me on this one. We also didn’t pay ourselves any salaries and my dividend totaled enough for a cup of coffee. A bad cup of coffee.

Still, I think every team coming out of Startup Weekend should have this as a goal: A SALE

No Whining Allowed

My challenge relates to some of the snide anonymous comments I saw going across Floughter (I’ll explain later). There were a couple of people griping that the technical demos weren’t cool enough and it ‘looked more like a business plan presentation than a Startup Weekend.’

I half-heartedly agree and you can read some of the ways I flailed on the technical side at our own presentation in my last post. However, I’m am just as unimpressed by a great demo without customer development as I am at a business presentation with no demo. A product with no customers is not a product and it’s not a Minimum Viable Product either (sorry Eric). Regardless of how impressive your 54 hours of hacking were, you have failed.

Get Out of the Building

Steve Blank‘s commandment of “Get Out of Building” is exactly what Katherine Webster from our team did. We had an application designed to promote bars by creating a spontaneous flash mob singles scene. We didn’t have a working product, barely had a landing page with a survey, and no marketing effort. So how could we get a customer? She went over to a local bar and talked them into giving us $50 bucks to promote a Startup Weekend after party on Sunday.

She gave them enough of a pitch that they paid us $20 upfront. After we bought a domain name to put up our basic landing page, we were still up ~$10.

Floughter Wins by a Landslide

I am not saying we should have won the event. We shouldn’t have, we weren’t the best company by far. The company that won the weekend was clearly Floughter. Floughter is basically Twitter but completely anonymous, 70 characters, and local to within 70 meters. (Actually the geo-location didn’t work, but nice fake for the demo anyway.)

While they didn’t get an advertiser to pay for some tweets in their stream, they did rake up about 1500 tweets in the 45 minutes after their presentation. I would argue that those users paid for Floughter with their time, even if they didn’t pay cash. I think 100 of those tweets were Tony, Nick, and myself, but regardless it was very impressive user adoption for 45 minutes of uptime. They weren’t cash flow positive, but they won by demonstrating traction.

It was all the more impressive since the team didn’t have a single engineer among them. They outsourced the entire development to oDesk.

Summary of Lessons Learned

Revenue is Good
Whining is lame
Get out and sell something

Cheers,
Tristan

You should share this post here:

Startup Weekend Lesson Learned #1 – The Pitch

Published on August 3, 2010 in Entrepreneurship, Pitching and lean startup. 0 Comments Tags: how to present, lean startup, pitching, startup weekend.

This last week was crazy, mostly because I spent all last weekend coding, marketing, pitching, and navigating the intense and creative atmosphere of Startup Weekend SF (#swmobile). If you haven’t been to Startup Weekend, you should because it’s the best place to get a quick feel of what it takes to run a startup and one of the best places to find a co-founder for your next business.(aside from startupSQUARE of course!)

One of the great things about Startup Weekend is the amount you can learn in a short time. It’s really a lean startup practicum. So I’ll write a few quick notes about what I’ve gotten out of it, starting with the big pitch at the end of the event. My team was called KissMobs and we made a mobile dating app to create a flash mob singles scene.

Pacing

Some people get nervous and talk fast because they’re trying to pack a lot into a five minute presentation. This can be mitigated by a lot of practice and we did so while timing the presentation. It clocked in at 4 minutes, which should have been plenty of time. But there are always kinks.

I started out too fast, then noticed it by my second sentence and regained the pacing I’d rehearsed. Then I went one step further and slowed down another notch to “compensate” for my nervousness. The result? “ONE MINUTE LEFT!” and I wound up rushing the last part of the presentation.

Another tactic is to have convenient hyperlinks interspaced in the presentation so you can skip sections easily if you’re running behind. I used to do this all the time and completely forgot about it for this one.

Button Pushing

This one is simple, we had six people in our group but I wound up advancing the slides myself. This locked me to the podium and more importantly, distracted me instead of allowing me to focus on the audience. If you don’t have a clicker, it’s great to have someone else in your team advance the slides for you. It does take a bit of rehearsal because the timing of slides is a lot like the punchline of a joke. Bad timing can ruin it.

Best is to lead into a slide so that the slide augments what you’re saying. If you advance to the “Problem” slide before the speaker has introduced it, the audience isn’t listening to the speaker, they’re reading the slide. That’s not good.

Have a Plan ‘B’

Everything at Startup Weekend is rushed, so it shouldn’t have been a big surprise that our demo went from “almost done” to “totally screwed” to “it actually works!” within the last two hours. But of course, the presentation had to be modified to account for this and I wasn’t prepared. So I spent the last hour or so creating slides to fill in the blanks for part of the demo and then deleting some.

Better would have been to assume that we’d have no demo at all, then just cut out slides depending on what we actually finished. As is, I could have cut a lot more out but got frazzled at the last minute and didn’t adjust properly.

Get a Second Projector

If you’re doing a demo, odds are that you’ve got admin screens, a mobile client, and a ppt. You can’t fit all that on one screen let along one projector. Flicking back and forth between screens is time consuming and distracting. Have a second projector to show the demo while you reserve one screen for your presentation.

Rehearse the Demo

We did rehearse the presentation, but not the demo. Granted, the demo only got finished a couple of minutes before hand but still…big mistake. The demo is the key part of a Startup Weekend presentation and I definitely wasn’t polished enough. We could have shown a lot more cool stuff and as is, I don’t think we conveyed the awesomeness of what the KissMobs development team was able to accomplish in 54 hours.

Leave Room for Questions

Our presentation was funny (or so we thought) and the laughs in the audience seemed to agree. I was flying high by the end of the presentation. Sure, things could have been better, but I was excited for the Q&A since I could elaborate on some of the points I had to rush through. “Questions from the judges?”

DEAD SILENCE.

Silence is the death knell. It says your presentation wasn’t interesting enough to ask more about. We only got one question which was pretty straightforward and had three minutes left which we had to abandon. In our case I think we failed on two points here.

First, our presentation was perhaps too funny. It had stick figures in inappropriate poses and honestly, our business concept was not exactly trying to solve global warming. It was a mobile dating app. So one thing that could have gone wrong is that people thought we weren’t being serious enough.

Second, we didn’t leave any room for questions. We had a solid business model proven many times over (basically we created a flash mob ladies night with a mobile app). We had a very basic customer problem (people are lonely and looking for a date). There was nothing mysterious about it.

A good tactic to avoid this crushing silence is to leave some details out, or better yet, insert a controversial statement into the presentation. You can have a prepared answer to the presentation and if you’re lucky it’ll distract people from a controversial aspect of your business plan that you haven’t quite worked out yet.

Summary of Lessons Learned

Practice, practice, practice… including the demo
Watch your pacing
Get another projector
Be prepared to skip sections
Plant a slide to provoke questions

Cheers,
Tristan

You should share this post here:

Update: How to Make Your Investor Pitch Lean

Published on July 31, 2010 in Entrepreneurship, Investment and lean startup. 0 Comments Tags: angel investor, investors, lean deck clinic, lean startup, sales pitch, venture captial.

Getting lean is becoming essential to all aspects of running a business and pitching is no exception. Here’s a quick update on our original post to the Lean Deck Clinic on Monday August the 2nd. The event is sold out for participants, but you might be able to score a ticket to the final round of presentations if you’re fast. (There were three left as of this post.)

All of the participants will get great feedback on their pitches from the panel (see below) to help them improve their pitch and their business model, but the big news is that there’s a host of great prizes for the participants including one year of free hosting from Media Temple and one year of analytics from KissMetrics.

Special last minute addition is the big grandaddy prize of a whopping 15 hours (~$5,000) of in legal work courtesy of Antone Johnson at Bottom Line Law Group who is himself a lean startup and focuses on providing “lean startup lawyers for emerging growth companies”. That’s enough legal work to get incorporated, deal with patents, trademarks, privacy policies and more. There may even be some more special treats coming for the other participants.

The Deck Clinic is being organized by The Lean Coffee Meetup with Gregarious Narin, Rich Colins, and startupSQUARE chipping in. It’s hosted at the new San Francisco startup incubator Kicklabs. The panel of judges and experts has expanded to include a room of peers, VCs and angel investors :

Sumeet Jain (CMEA Capital)
Chris Redlitz (Transmedia Capital) (Check out our interview with Chris here)
Michael Downing (Transmedia Capital)
Hiten Shah (Kissmetrics)
Thomas McInerney (Angel Investor)
Jai Choi, Partech International)
Debbie Landa (DealMaker Media)
Philip Kaplan (Blippy)

And don’t forget to check out the NYC Lean Coffee if you’re in New York!

Good luck to all participants!
Tristan

You should share this post here:

How to Make Your Investor Pitch Lean

Published on July 22, 2010 in Entrepreneurship, Investment and lean startup. 0 Comments Tags: Angel Investment, Entrepreneurship, Investment, lean startup, venture capital.

Have you ever needed feedback on your investor pitch? Are you in the San Francisco Bay Area?

If you answered yes to both, we’re helping to promote the Lean Deck Clinic being put on by The Lean Coffee Meetup and hosted at the new San Francisco startup incubator Kicklabs. It’s a chance to present your pitch in front of a room of peers, 3 VCs and 3 angel investors like:

Gregarious Narin, Rich Colins, and I will be judging the presentation decks submitted to participate. So learn more and submit your application now. Below is a bit more information from Gregarious’ announcement:

Agenda

6:00pm Welcome

6:15pm Deck Clinic

7:00pm Welcome All / Food / Break

7:30pm Key Performance Metrics Panel

8:15pm Deck Presentations

Key Performance Metrics Panel

Lean Startups are deeply focused on measuring progress as part of the learning process. In a vacuum, metrics can get in the way of seeing the bigger picture. Our panel of clinicians will speak on the various KPIs they look for when evaluating a business and give some background on why these data points have historically proven valuable / predictive.

Deck Clinic

The Deck Clinic will present 18 startups with the opportunity to present their deck and receive immediate feedback. Startups will be grouped into sets of 3 and paired with a clinician (an angel, vc, or seasoned entrepreneur who can provide measured feedback). Each presentation will last for 15 minutes:

10 minutes to present your deck

5 minutes for feedback

Deck Presentations

Following the private presentations, the winning decks from each group will have the opportunity to present to the whole group for additional feedback. Each winner must make adjustments to their deck based on the feedback they received during the clinic.

When / Where

August 2-3 (TBD)
6:00pm – 9:30pm

KickLabs
250 Brannan Street, SF, CA

Here are the key dates to keep in mind for the Deck Clinic:

07/25 – Submissions Deadline

07/30 – Selections Announced

08/02 – Deck Clinic

You should share this post here:

Parkour for Startups: Conserve Momentum

Published on July 20, 2010 in Entrepreneurship and lean startup. 0 Comments Tags: lean startup, parkour, pivot.

Admittedly, I look like a giraffe. (A handsome giraffe damnit!) So it was inevitable that the universe would take advantage of my gangliness by conspiring to put me into a Parkour class. (Hint: I got a Groupon.)

For those not familiar with it, Parkour is “extreme urban running” as imagined by a crazy Frenchman named David Belle. It’s that thing they do at the beginning of Casino Royale and in those old Nike comercials. Here’s a video if you still don’t know:

Needless to say, I’m feeling tender today. Whole new parts of my body are sore in ways I did not know were possible. And yes…it was damn fun.

Momentum

As I spent the next 24 hours massaging tiger balm into my aching calves, I thought about the class and how much it resembles what we’re trying to do with startupSQUARE.com: Conserve momentum.

Here’s how a typical Parkour vault works. You run as fast as you can towards an object in your way, leap towards it headfirst, then right when you’re about to crash into it, you drop your arms down and push yourself ever so slightly over it. This presents two distinct problems for the novice.

Hurling yourself headfirst towards an object seems inherently unwise.
Using your arms to brake your fall seems inherently smart.

Unfortunately, neither of those insights will get you over the obstacle.

Commitment

Hurling yourself headfirst without thinking things through is a typically entrepreneurial trait. It’ll work. Might be risky, but just do it. I think most entrepreneurs have this part down so I won’t go too much into it. Suffice to say, it is an act of crazy faith, backed up only by a vague understanding of the laws of physics and the belief that the second part of the equation will work. That is…the pivot.

Minor Adjustments

The second part is where you touch your arms down ever so slightly. The trick here is that you’re going to put your arms down after you’re over the object. So you’re actually not pushing down off the object, but more away and behind you. You’re just adding a little extra boost to which pivots you from a painful headfirst collision to a badass monkey style dismount.

If you put your arms down too soon, you’re actually trying to stop your fall with your arms, which is not going to happen. If you don’t believe me, imagine catching a 185 lbs torpedo (my weight) with just your arms. Yeah…doesn’t sound pretty.

This is a typical situation in a startup. You’ve invested a tremendous amount of time trying to build up momentum, calling all friends to try your product, handing out flyers, coding coding coding, and pimping yourself to every VC with a checkbook….then all of a sudden…an obstacle in front of you. What’s to be done?

Sanity

The sane thing would be to stop and go around it. Or pick a different direction.

But we’re entrepreneurs, so let’s get past the sane stuff. We want to conserve momentum. We keep going forward, hurl ourselves violently at the impending doom of a metal barrier, and then make a slight midair pivot and keep going.

This series of minor pivots allows us to keep going and avoid the stop start of a big company. That’s the type of start and stop where projects get cancelled, execs get fired, budgets get swallowed by financial crises,etc. We know that if the company grinds to a halt, it will be incredibly difficult if not impossible to get going again. Our finances will run out, morale will deteriorate, and our financial backers will be unlikely to invest another round in a “new direction”.

What we really need is not to stop. Any obstacle can be overcome and it doesn’t mean the vision is wrong. We need to be lean and nimble, pivoting as we maintain momentum. We need to be graceful. In the spirit of l’art du déplacement We need to…and this is the only time you’ll hear me say this…be a little bit more French.

See you at Parkour class,
Tristan

P.S.: If you’re in San Francisco and would like to go to a class, let me know. I need someone more gangly than me at the class for encouragement.

You should share this post here:

$3.95? We’re Rich! First Revenue During Alpha Testing

Published on June 1, 2010 in Customer Development, Entrepreneurship, Sales and lean startup. 0 Comments Tags: affiliate marketing, Customer Development, Entrepreneurship, lean startup, revenue.

On Friday, I received this welcome email:

Subject: Sale – Entrepreneurs Guide to CustDev- ID:5777670 Entrepreneur’s Guide to CustDev eBook

You have earned an affiliate fee of 3.95 USD for the sale (ID:5777670-686=
2856) of Entrepreneur’s Guide to CustDev eBook on Thu May 27 2010 23:52:3=
9 MST.

Sincerely,
Entrepreneurs Guide to CustDev

startupSQUARE, having not yet progressed to beta testing, now has revenue! Granted, a very small amount of revenue. Why?

Confirm Every Hypothesis

After enjoying the Startup Lessons Learned Conference, we decided to simplify yet again and try and figure out how we could test every hypothesis, no matter how silly. One of those hypotheses was, “We can earn sufficient revenue from affiliate marketing to offset operational expenses.” (Translation: That we’ll make more money than we spend per customer.)

That hypothesis is too complicated to test right now and we actually hadn’t planned on testing anything until September or later. So we tried to pick something simpler we could test today. We settled on, “Entrepreneurs will click on affiliate marketing links.”

So we picked a couple products that we think are genuinely useful to all entrepreneurs and that we actually use. Then we threw a couple of links into the right hand column of this blog for “Four Steps to the Epiphany” by Steve Blank and “The Entrepreneurs Guide to Customer Development” by Brant Cooper and Patrick Vlaskovits. Result? $3.95

Get Rich Quick

Ok… $3.95 isn’t really a huge success story and I’m certainly not going to retire on it. (In fact, split three ways I was only able to buy a bagel with my share.) I’m just happy it only took two clicks to get a sale. Regardless, it does confirm that it is at least possible to make some money off a very specific target market (entrepreneurs) without charging up front.

We’re a long way off from really confirming that we have a viable business model with a revenue per user higher than our customer acquisition costs. However, it was important to us to develop a business model which helps entrepreneurs start their businesses. Charging entrepreneurs up front for the service seems…well…off.

When you’re trying to start a business, you’re short on time, money, and people. Charging $15-20 or more a month to offer a co-founder dating service is not a lot of money and people have largely indicated that they’d be willing to pay it if it works. Still, we’d like to do one better. We’d like to offer a free service to entrepreneurs and get paid by the people already in business.

Adblocker

Clearly we’re don’t want to run a site plastered with Google ads and certainly we’ll work hard to develop our premium model like everyone else. This was just a small test to recommit ourselves to the customer development and lean startup philosophy.

We’re still alpha testing and we’ll keep testing both our product and our hypotheses until we’ve created something that will sustain itself by helping entrepreneurs build businesses. I’m happy that we were able to take that first step towards real revenue now.

Now…off to earn another bagel.

Cheers,
Tristan

You should share this post here:

Customer Development with Network Effects

Published on May 11, 2010 in Customer Development, Entrepreneurship and lean startup. 0 Comments Tags: Customer Development, Entrepreneurship, lean startup, network effects, pivot.

How does customer development differ with regards to products which require a network effect to be useful? Short answer: No one knows.

Companies offering services such as Skype, eBay, Facebook, and others have cannot really test their value proposition without having a critical mass of users. A telephone with only one person on it is pretty useless. Yet these are some of the most lucrative inventions ever. So how do you apply the principles of customer development to these situations?

At the Startup Lessons Learned conference, I asked a panel of people far smarter than myself this question and Sean Ellis‘ response was, “It’s a modified approach that really hasn’t been defined in a structured way as Four Steps to the Epiphany lays out.” He then invited anyone who can figure it out to write a blog post on the subject.

Well, I haven’t figured it out. I will however throw out some suggestions for testing and I’ll let you know if they work later.

Narrow the Market (Sean Ellis)

Sean Ellis did turn around and make at least one good suggestion such as, “The value proposition is a moving target.” He suggests trying to narrow the target market so you can test networking effects with less risk. For example, eBay could have tested auctioning in the pez dispenser market instead of allowing any product to be sold. (His example, not mine) Under Eric Ries‘ terminology, this would be a Zoom-In Pivot and it’s something we’re also trying with startupSQUARE.

We started out letting all sorts of people into our site in alpha state to test it out. However, we found that the level of interaction (people posting ideas and profiles) was very very low. Far lower than our conversion rate and customer interviews would predict. When doing follow up interviews we found that people would look for other users in a very small niche industry (we have an overly large industry list) and find no one there. With no one there, it sent a clear signal that posting a profile wasn’t worth the effort because no one else would read it.

Our solution to this is two fold. First, our industry list is horrendously complicated. Although some users have indicated they would like a more detailed list, we have to start with a simpler list. When the list has broader categories, users will be find more people in each category and thus have a higher level of social proof.

Second, we’re modifying our signup process to collect more information when signing up, including industry interests. This will allow us to let in critical mass groups from each vertical we want to target. We’ll also be able to test the size of the group necessary for the network to have value and better analyze any behavioral difference between users of different industries.

Test Interaction on a Smaller Level (Brant Cooper)

Brant Cooper offered the example of Jeff Smith from Sonicmule who built products to test specific things such as social applications. Behold: the SonicLighter. Without hearing the specifics from Jeff, it’s tough to discuss this. Still, sounds like a great idea. Try to simplify the amount of interaction necessary, potentially in a different context. If anyone has thoughts on this, I’d love to hear them.

Funniest Answer (David Binetti)

David Binetti had the funniest answer. He just shook his head with a grimace when Sean asked if any of the panelists had an answer.

There is Still a Problem

Although no one really has a definitive answer, I would propose that the general customer development thesis can still be tested, even with network effect driven products, for a simple reason: The customer still has a problem.

The telephone allows people to communicate. Ebay allows people to sell things in a marketplace. OkCupid allows people to get laid…err…I mean meet people. All these companies target established customer needs which have clear analogies in the real world. Facebook was based on…well…a facebook of people on campus. In many ways, customer development should have been easier for these companies since the customer problem was really already established. “Who was that hot girl in class today?” (Facebook’s initial customer problem.)

Nothing prevents you from establishing your hypotheses and verifying them with customers outside of the building via a good old fashion customer interview. “Do you have a lot of old junk you want to get rid of? Would you like to sell it? Where have you tried to sell it? What would make it easier to sell it?” Tada! eBay.

Fake It

Another tidbit that I think is valuable is faking data. That sounds bad. Let’s say, “Bootstrapping Data”. When you do your mockups, don’t use “Lorem Ipsum blah blah blah”. But in real names, real text, and real data. Get your friends to post things in your alpha. Post 100 times yourself. Farhad from Atracted.com bootstrapped his first few video personal ads by throwing a party, inviting a lot of cute girls, then sticking them in front of a computer to introduce themselves. Brilliant! Plus he got to have a party with a lot of cute girls!

The Real Video

In case you wanted the full video, here’s the embed starting Cindy Alvarez, Product Manager, KISSMetrics * David Binetti, Founder and CEO, Votizen * Brant Cooper, Principal, Market By Numbers * Matt Johnson, Grockit * Moderator: Sean Ellis. My question appears around 28:00

Watch live video from Startup Lessons Learned on Justin.tv

Cheers,
Tristan

You should share this post here:

Top Takeaway – Startup Lessons Learned

Published on May 6, 2010 in Customer Development, Entrepreneurship and lean startup. 2 Comments Tags: Customer Development, entrepreneur, lean startup, startup lessons learned, steve blank.

On April 23rd I was able to go to the Startup Lessons Learned Conference and had my world rocked. I thought I was lean, I could be leaner. I thought I had a minimum viable product, I could have built less. Although Steve Blank, Eric Ries, Dave McClure, David Weekly etc. etc. all have written and spoken prolifically about their methods and thoughts, there is a powerful feeling to being the the same room as a thousand other people drinking the same kool-aid.

Sponsorship Helps

First off, I should mention that I wouldn’t of been able to go at all without the sponsorship of the Microsoft Bizspark program. Usually I’m not one to thank MS except sarcastically for bricking my hard drive, but there’s no way a bootstrapped company like ours could have gone. So special thanks to Adrian Perez, Joel Franusic, and Bizspark!

Top Takeaway

There are a number of great summaries, videos, and more like Steve Blank’s Keynote. I don’t think I can add much to that and plenty of people like Sean Murphy are already on the job so I’ll skip that and talk about teams.

We’re a team of three people. We agree on somethings and disagree on others. Fortunately most of our disagreements are the productive kind where we come up with a third, forth, and fifth solution through discussion and brainstorming. Still it takes us time to get in sync.

We’ve been talking about being a lean startup and customer development for months, reading and talking about Four Steps to the Epiphany. So I thought we were on the same page. Still, I was struck when Marcel turned to me in the middle of the conference and said, “So that’s what you’ve been talking about for months.”

Reasoning via Social Proof

Now, let’s be fair, there is a significant portion of the time where I’d describe myself as unintelligible. That’s my failing. However, I think there is always an element of social proof to reason. No matter how many times you might hear a cogent argument, it’s only when another guy chimes in with “I heard 2+2=4 as well” that we’re prepared to believe it. It’s true with facts and it’s more true with a paradigm shift.

Customer Development is a serious paradigm shift, especially for people who have been slugging away at product development in a big company like Manuel, Marcel, and myself. I may have gotten off the easiest since my last company was largely run like a startup (in the chaotic sense) and it has still taken me months to get into the spirit of lean. It takes a serious amount of un-indoctrination for us to even consider something as radical as questioning our own assumptions.

There is a value to sitting in a room with 1000 of your colleagues and realizing that you’re not the only one nodding in agreement. It’s a powerful reinforcement that is programmed into us by thousands and thousands of years of evolution. That’s a genetic trick that we need to take advantage of.

Of course we have to be careful that we’re not just monkey-see monkey-doing the latest business jargon and saying “out of pocket” like it not an incredibly idiotic phrase. We have to approach these things carefully and with thought. Still, we can take advantage of the great resources like the Startup Lessons Learned Conference and use our wired biology to our advantage.

We’re charged up. We thought of several ways we can chop functionality out of our product. We can test hypotheses that we thought we untouchable. We can explore revenue options months before we even considered it.

So my top takeaway from Startup Lessons Learned? Be a team.

A team working and thinking together under the same methodology can be efficient, learn faster, and achieve more.

We can make more value by building less. You can too.

Cheers,
Tristan

P.S.: Go buy Four Steps to The Epiphany if you haven’t read it yet.

You should share this post here:

Pay No Attention to the Man Behind the Curtain

Published on May 4, 2010 in Customer Development, Entrepreneurship and lean startup. 0 Comments Tags: Customer Development, lean startup, Minimum Viable Product.

Wow I’m tired. Tired and energized. In the past few weeks we’ve had the typical ups and downs of every startup. We’ve let in a number of alpha users, got another hundred signed up thanks to a very minor TechCrunch mention, and realized our Minimum Viable Product wasn’t minimum enough.

We started building our site with a basic premise that entrepreneurs were willing to post their pitches to attract co-founders and investment. We confirmed this hypothesis through numerous customer interviews and surveys. We test drove our site with a limited number of alpha users and despite the clunky interface we were pleased by the results. We pushed people through a rather long survey and got an 82.9% completion rate, far higher than we would’ve thought. So we knew that people were willing to fill out some forms.

So you can imagine our surprise when our first chunk of 50 alpha users decided not to post any business ideas or pitches. Oops.

Behavior Matters

We now realize that social proof and user experience is going to be more and more critical for us. Without a few hundred people posting ideas and pitches, new people to the site won’t be bothered to post their own. A classic chicken and egg problem which makes our alpha testing more difficult. Also a classic confirmation of the behaviorist maxim: “I don’t care what you say, I care what you do.”

So aside from pondering whether or not our minds are epiphenomenal to our behavior (yes, I’m a philosophy geek), where does that leave us? Without getting a basic sense of how many people are willing to put in data, we can’t adequately test our other assumptions regarding interaction with the website. So we need to get more basic.

Pay No Attention

Aardvark allegedly ran for 9 months in Wizard of Oz mode (see their video at the Startup Lessons Learned conference here). Meaning that there were a number of employees sitting around looking up answers to questions manually and punching in the answers. A number of other services seem to do this as well using Mechancial Turk or a small army of outsourcers.

The point of doing things that way is to see if someone is willing to use or pay for your service before you waste a lot of time building something obscenely complicated. We thought we were doing that by testing our assumption with customer interviews, mockups, and alpha testing. We could have done less.

So we’ve decided to try and simplify even more and focus on the most basic type of co-founder matching. We’ve got a few hundred entrepreneurs. We’re going to match them up one by one. It may take a while.

We’re doing this to test out a basic assumption that we skipped before. We always asked if entrepreneurs were willing to post their ideas. What we forgot to ask is, “Is anyone willing to read them?” So far I’ve got a 90% “Yes”. Still, “fool me once…”

We’ll test behavior instead of survey responses by sending out pitches via email, directly to people who’ve expressed an interest. We’ll be measuring how many people open the mails and how many people actually click through and read the full story. We hope we’ll find the unsubscribe rate is as low as our monthly mailer (<1%).

I’ll settle for <10%.

Got a pitch? Want in on the action? Go to our home page and signup now!

Cheers,
Tristan

You should share this post here:

The Taxonomy of the Lean Startup Pivot

Published on April 13, 2010 in Customer Development, Entrepreneurship, Strategy and lean startup. 2 Comments Tags: Customer Development, lean startup, pivot, Strategy.

(warning: this post may be highly theoretical / geeky)

Last week I was planning for the worst. Having gone through 51 iterations of my mockups and gathered as much as feedback as I could with our primitive alpha, I feel confident about our basic customer problem hypothesis. Still, I play a lot of chess and like to think at least five moves ahead in the five most likely futures. So I decided to make a list of my potential pivots.

(note: For those not familiar with the term, pivot is a lean startup vocab word that states in it’s simplest form: If your business model isn’t working, change something. More on this below.)

To do this, I started making a list of questions I could ask of my product/market to brainstorm other ideas. In the process, I wound up breaking up my list of pivots into categories based on the questions and posted the list to the lean startup google group. I was wondering, “is anyone else doing this? Is there was any established taxonomy for pivoting or any template? Are there other questions I should be asking?”

Here was my original list of questions and their associated pivots:

Product Pivots:
- Can we solve the problems of our target market with an partly or
entirely different product?

Use Case Pivots:
- Can we use the same tech for a different use case with the same
target market?

Market Pivots:
- Can we apply the same product / tech to a different market?

Narrowing stance:
- Can we narrow our focus to a smaller/niche market or use case?

Widening stance:
- Can our product embrace a wider market or use case?

I thought this list could be the start of a very rudimentary taxonomy of pivots. However, some of the responses I’ve received so far have tested my understanding of the basic pivot concept and made me realize I had tied the concept of pivot into “product / market fit.” As product / market fit is most basic hypothesis I need to confirm before knowing that I have a viable business, any business changes outside of product/market fit didn’t register as a pivot for me.

Expect the Unexpected

Others seem to have a different take on the term, including Brant Cooper who implied “Everything about your business is a potential pivot” and also Eric Ries who suggested the following types of pivots:

“Customer need pivot: same customer segment, different need/problem
Customer segment pivot: same problem, different segment
Business architecture pivot: ie from enterprise to consumer
Zoom-in feature pivot: remove features to focus on just one key feature
Zoom-out feature pivot: add features to become more of a holistic solution
Technology pivot: solve same problem but with different technology stack
Channel pivot: same problem, same solution, different path to customers
Platform pivot: open up an application to third-parties to become a platform (or vice-versa)”

(emphasis mine)

You’ll note that Eric’s list and Brant’s response both imply or include changes which don’t necessarily apply to product/market fit. In Eric’s list, I’m looking mostly at “technology pivot” and “channel pivot” which have nothing to do with who you’re target with what product, but instead focuses on how to make the product.

There is a lot of overlap between Eric’s list and mine and some of his terms are a lot zingier. moz screenshot The Taxonomy of the Lean Startup Pivot moz screenshot 1 The Taxonomy of the Lean Startup Pivot But for my current purpose of achieving product/market fit I need something combining both elements, so I merged them:

(Please note: I wouldn’t recommend taking my list over his, especially if you plan on speaking the same language as the rest of the lean startup gurus.)

Product Pivots:
- Can we solve the problems of our target market with an partly or entirely different product?

This one doesn’t seem to have a parallel in Eric’s list, which I found surprising. I’m keeping it in mine because I think it’s very relevant.

Use Case Pivots:
- Can we use the same tech for a different use case with the same target market?

This is “Customer Need” in Eric’s list.

Market Pivots:
- Can we apply the same product / tech to a different market?

I would group “Customer segment”, “Business architecture”, and “Platform pivot” under this. All of them refer to who you’re selling the product to. I would consider all of this under the broad category of Market although it’s very very useful to break it down further for brainstorming.

Zoom Pivots:
- Can we narrow our focus to a smaller/niche market or use case?
- Can our product embrace a wider market or use case?

This is a great term from Eric and is better than my “Narrowing / Widening Stance” term. The main difference is that Eric’s refers only to product features and I would also want to address the possibility of widening or narrowing the target market. (Although you could just as easily call those Market Pivots.)

Open Ended Answer

You may also note that in the list above I ditched Eric’s suggested categories of “channel” and “technology” pivot as they don’t help me with product / market fit, but rather refer to marketing and production techniques. That’s not to say they’re not valuable, just they’re not relevant to the problem I’m trying to focus on right now.

As such, I have no firm conclusion to this post. I started the taxonomy as a thought exercise and I’m continuing in that spirit. I realize I may be using the term pivot differently than the lean startup folk and I need to adapt my terminology. Speaking my own language is not particularly useful for communication purposes, although I do find it helpful to associate the term pivot with the product/market fit concept. Otherwise pivoting can be applied to everything and is synonymous with the word “change”.

That’s it for the geeky post. Next week I’ll try and share some of our user behavior maps.

Cheers,
Tristan

You should share this post here:

Tag Archive for 'lean startup'

Startup Weekend Lesson Learned #2 – Customer Development

Startup Weekend Lesson Learned #1 – The Pitch

Update: How to Make Your Investor Pitch Lean

How to Make Your Investor Pitch Lean

Parkour for Startups: Conserve Momentum

$3.95? We’re Rich! First Revenue During Alpha Testing

Customer Development with Network Effects

Top Takeaway – Startup Lessons Learned

Pay No Attention to the Man Behind the Curtain

The Taxonomy of the Lean Startup Pivot

You should follow me here:

You should follow me here:

Recent Ramblings

Categories

Recent Comments