Posts Tagged ‘Leanstartups’

My Startup lessons learnt

March 1, 2011

After three years, burning through a pile of cash and God knows how many work hours, here is my startup story from:  (1) Finding an idea and sticking to it, (2) Getting a commercial product out the door (3) And  then iterate/pivot to a product-market-fit (a must have product).

This video was recorded during a ‘Opportunity recognition’ lecture at Nottingham University and kindly filmed by my good friends at Skeleton Productions. These video’s are nicely divided into six easily digestible sections. If you only watch one, see PART3 – ‘Finding the perfect new business idea..’

PART 1 – About Nick Barker, Opportunity recognition and a quiz on famous tech startups that pivoted

PART 2 – Overview the three Opportunity recognition and development challenges. About Aware Monitoring

PART3 – Finding the perfect new business idea, lack of time and search for customer value proposition

PART4 – Building out a product, funding and pivoting the service

PART 5 – Competitor differentiation, lean startups and getting to product-market-fit

PART 6 – Continuous process of iterating and pivoting a product. Learn more about Nick Barker

Sales rocks!!

October 26, 2010

In a startup sales is the only thing that matters!! I like this statement:

“In the early-stage days, building top line revenues becomes a nonstop adventure for the CEO; no other marketing plan should be considered. In essence, sales begin with a sales force of one. It is up to the CEO to get on the road and to flush out discrepancies in the business and revenue models. No amount of marketing planning experts back at the desk can possibly conceive what the CEO will discover on the road…. It is the CEO who needs to go out in the field, press flesh, and be the one person responsible for driving like hell to get the numbers up. This task cannot be assigned, cannot be outsourced, and cannot be buried deep in elaborate marketing plans”. Robert W Price of the Global Entrepreneurship Institute in ‘What is a sale crusader? Do we need sales reps?’

Startups know this already – In Stephan Schmidt developers blog post ‘6 reasons why my VC funded startup did fail’, the first three reason given are “We didn’t sell anything”. The lessons keep on coming – “Traction is the only thing that matters”, from Rich Aberman post “5 things I “knew” (or should have known) before starting a company, but didn’t fully understand until now”. Time and time again I hear founders say ‘the product should sell itself..’, and it needs to but no one is listening, no matter how great the product is. “More startups fail from a lack of customers, than a failure of product development”, Steve Blank

We already know the answer to getting sales. “The Lean Startup Entrepreneur looks like a combination of salesman and scientist.”, Kevin Dewalt describes this as:

  1. Curious – an interest in discovering problems and solutions
  2. A Listener – Sales is about understanding customer needs
  3. Skeptical – Start with hypotheses of customer needs and search for evidence
  4. Risk Averse – Risk can’t be eliminated but placing smart bets can mitigate it.
  5. And …optimism, determination, and intelligence to succeed in anything

Good old  Dharmesh Shah (On Startups) even gives us the tip on how to build a startup sales team. So, why do people still fail to sell in startups… Sales isn’t easy:

  1. Rejection – Sales involves lots of rejection. And of course most of us don’t like to be abruptly rejected, over and over again.
  2. Expense – Selling is not cheap. It takes many events, connections and calls to start the sales process. Then a sale requires expensive meetings, which often have to be repeated.
  3. Time – Sales take time. The average sale takes six communications before the sale is made. You have to patient and persistent.
  4. Belief – Money drives salespeople. However in a startup there is no money. The founders have to rely on their faith and belief in their product/service.
  5. Focus – Its much easier to work on a business plan, a marketing plan or develop some code. However there is no escaping the necessity for sales revenues (whether freemium or not!).

There is no choice in a startup, the founders have to be a the fore front of sales and  all staff also have to sell. In a startup you are all selling for survival!! I’ll finish with a concluding quote from Robert W Price post: “Marketing Starts with a Crusader who can lead in the tough times, who can fight the odds and win. They are willing to lay their lives on the line”, Marketing High Technology: An Insider’s View, William H. Davidow

Business plans: Fools errand or building blocks?

April 8, 2010

Conventional wisdom says write a business plan. However, many voices are now saying don’t! As a startup founder what do you do? I’ve written several plans before – at our web monitoring startup, on my MBA and in my past jobs. They take alot of time and effort, which distracts you from the job in hand – making stuff to sell and selling stuff to customers. However plans  have a purpose, but make’em short (one page), make’em short-term (one year’ish) and have a single clear objective. Also, have your hockey stick sales graph, if you have to have one, grounded in reality i.e. based on real customers/prospects (difficult in pre-launched mode).


There’s an increasingly voice in the UK/US for short or even no business plans in a startup. The fundamental idea of a business plan is to help re-risk a venture through pre-examination of a market opportunity. However we all know startups are a full-on risk scenario. There’s no escaping that. And almost as soon as the ink has dry on a plan the market has changed.

There are two distinct For and Against business plan camps. The anti camp say: “The very idea of ‘planning’ is ridiculous”, Jason Cohen; Brian Halligan argues it’s a fool’s errand” for start-up founders to create a business plan.” And ever the counter culture, 37Signals, are anti business plans – “What’s the point of a business plan if it’s obviously a fantasy that has nothing to do with reality?”. Two guys, David Sloly and Ian Sanders, have even created a website dedicated to the annihilation of business planning.

The pro business plan campaigners say: “A strong business plan is essentially the cornerstone of your business, and yet many entrepreneurs drag their feet when it comes to writing one”, Colleen Debaise, The Wall Street Journal; The goal is not to get a VC to read your plan.  The goal is to get a VC to invest so you can build a successful company.”; people like Tim Berry has even made an entire business our of business plans: Think of your start-up business plan as a matter of blocks; pieces.”

Taking a look back through history including philosophers and the military the value of planning is clear: “In preparing for battle I have always found that plans are useless, but planning is indispensable”, Eisenhower; Prior Planning and Preparation Prevents Piss Poor Performance (time honored British Army saying); and  “Let your plans be dark and as impenetrable as night, and when you move, fall like a thunderbolt.”, Sun Tzu

So, why all the fuss over putting your thoughts down on a bit of paper.. It’s the time, or more precisely the waste of this precious resource which startup are so short of. Our market economic cycles are becoming increasingly rapid, especially in tech. Therefore a young company has to move  faster than ever before and excessive analysis can drain reaction time. The difficulty is acting purely from the hip or gut without much forethought brings a short-term reaction.

I think the Greek philosopher Publilius Syrus (a slave) got it right 2100 years ago when he said It is a bad plan that admits of no modification.” They key is modification i.e. change and adaption. Like evolution – stuff changes. This point meets both  For and Against camps. A plan must change. It is not a static thing, in war or in business.

A complete lack of planning is unwise but excessive long/in-depth analyst is folly. Detailed planning only delays getting into the market and in gaining real insight (tactics) into customer needs. JFDI (Just Fricking Do It)! What really matters is having a grounded insight and measure in the core aspects of a plan within a business case. This detail fits nicely on a napkin or back of a cigarette packet  ;)

Startup Opportunity Identification 2.0

February 18, 2010

The difficulty with customers is that they don’t really know what they want until they see it! This creates a nightmare for any startup or corporation trying to build a new product – What do you make that people really want and are willing to pay for?

To find the answer startups have to commit to an idea and  move quickly, and cheaply  through to a Minimal Viable Product .  You are looking for a ‘must have” product. This  requires continual iteration around customer needs. The ultimate test is  getting customers to profitably pay for your solution i.e. a higher lifetime value of a customer to the cost of customer acquisition.

We’ve had three product ideas in our startup before we found the one we’re working on now. Creating a new startup product moves through three successive stages starting with ideas development and finishing in a successful product/market fit.  Currently our startup is trying to get to product/market fit.

Last  week I gave talks to MSc and  MBA Entrepreneurship students on identifying entrepreneurial opportunities (above deck) based on these three stages:

  1. Ideas development – We spent a  very long  time researching and looking for the killer idea. We were trying to find the perfect opportunitya gap in the market between existing suppliers in a new growth market. We went round and round in circles looking for the perfect opportunity. In the end we ditched our first real idea because the customer ROI was weak in the economic downturn. We then,  much more rapidly, came up with lots of new  ideas and committed to one – external website monitoring. Unfortunately research takes time and as a startup without revenues you don’t have time. You have to commit to an idea even if it’s not perfect –  NOTE: there will always be competition!
  2. Product development & release – Without perfect knowledge on customer needs and competition you have to make many product  assumptions. Right from the  start  we were testing our assumptions with potential customers at network events, in meetings, online and during our Alpha/Beta. It’s not easy to get real answers without a shiny product to sell.  A prototype helps. You have  to rely on your gut instinct. During  this feedback we switched our app from internal systems monitoring to external web monitoring. We found potential customers more receptive to this offering. This early engagement process also helped us to develop our sales messages, sales funnel and  go-to market strategies.
  3. Market/product fit –  If you’ve made it this far the really hard work starts.  You’re now looking to make your product a ‘must have’. The challenge is its very hard to be heard by potential customers. You’ need to get the product in their hands! Only then can they make a true judgment on its value. They’ll also compare your product to  substitutes and alternatives in the market. You therefore need to differentiate and deliver a much better product to get them to change! The sales message and product needs constant refining until you have a measured product/market fit. Only the can you pull the sales trigger.

As startup founders we think we know what customers want and the problem they want solving the most. Unfortunately we’re probably wrong. We then  waste huge amounts of time building a product around that  perceived need. It’s hard for many founders to admit their ideas, product and dreams are incorrect. The ideas which formed the startup were based upon a assumptions.

You have to know when to quit an idea, re-form it or find a new idea as assumptions are tested.  Flickr (started as on-line games), Youtube (Hot or Not) and Blogger (project management) are all great examples of product ideas which iterated to a different final product. As startups we don’t have the comfort of time and must move rapidly through an idea, production and iteration. Unfortunately non of this guarantees success but it sure helps!


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