Tools for Buzzword Compliant Business Models

Written by Sean Murphy. Posted in 1 Idea Stage, skmurphy, Tools for Startups

First there was Dack Ragus‘ (@dack)Web Economy Bullshit Generator.” He started with sketches (“Kinda like Da Vinci’s sketchbook, except for bullshit”): “I made this massive list of potential bullshit terms while sitting on Miami Beach in January, 2000. Add a little JavaScript and it turned into the Bullshit Generator.” The archives of dack.com are also worth a peek.

At about the same time 37Signals launched with a manifesto and the e-NORMICOM parody site of the dotcom branding process for naming, logos, and taglines.

Then Stavros the WonderChicken (@wonderchicken)–no I cannot find his real name–did the “Web 2.0 Bullshit Generator™” noting that ”Profits for your Web 2.0 company are not guaranteed.” It’s funny how that has not changed with firms like Box and Dropbox competing in some oddly configured on-line potlatch designed to provided services at a loss in exchange for new investment at ever increasing valuations.

Andrew Wooldridge launched Web Two Point Oh! to help with naming as well.

Stavros later lamented in “Lomans not Shamans” at what the Web had become: “My god, it’s full of ads!” Here I think his anxiety was misplaced: most new media is advertising supported; the original newspapers were simply classified ads that gradually added news items to differentiate themselves.  Stavros references “What Puts the ’2′ in Web 2.0” by Brandon Schauer who was inspired by “Design Patterns and Business Models for the Next Generation of Software(2005)” by Tim O’Reilly and John Batelle. They followed up in 2009 at the Web 2.0 Summit with  ”Web Squared: Web 2.0 Five Years On” (see also the white paper: “Web Squared: Web 2.0 Five Years On” [PDF]).

Next in 2010 the Lunatech Ventures team launches  PlanCruncher as an attempt to compress a business plan into a single page using a couple icons. From their About Page:

“Plan Cruncher creates a standard one-page summary of a business plan for a start-up company that is looking for external investment. You do this by choosing icons that represent some of the standard answers that a business plan must provide.

Why investors want entrepreneurs to use Plan Cruncher:  Plan Cruncher saves investors’ time. To investors, business plans all look more or less the same, which is not necessarily a bad thing, and they are always too long, which is. Before an investor decides to wade into your ten or twenty-page document, he wants straight answers to a few basic questions about your plan.

Plan Cruncher generates a standard one-page summary that investors can use to screen business plans and compare them to each other.”

I don’t believe Plan Cruncher is a parody site, I listed in in my roundup of Business Model Canvas tools.

And in 2012 Norman Clarke (@compay) has launched Bullshit 3.0: Bleeding Edge Bullshit Generation in the Cloud which embeds the ability to launch a Google search for your tagline to see if it’s already real.

I still find the 1999 Clue Train Manifesto a useful guide to marketing: it’s argument for real conversation between individuals is as compelling now as it was 15 years ago. Business models have changed with the advent of new technologies and many of these sites are parodying two real needs that every entrepreneur must satisfy: a succinct and comprehensible explanation of their product benefits to customers and a compelling description of their business model to investors.

 

 

 

John Gardner: Leaders Detect and Act on the Weak Signals of the Future

Written by Sean Murphy. Posted in 1 Idea Stage, 5 Scaling Up Stage, skmurphy

Some excerpts with commentary from “On Leadership“  by John W. Gardner.

There is such a thing as the “visible future.” The seedlings of [future] life are sprouting all around us if we ahve the site to identify them. Most significant changes are preceded by a long train of premonitory events. Sometimes the events are readily observable.”
John W. Gardner “On Leadership”

Marcelo Rinesi advised “the future is an illusion, all change is happening now” and Peter Drucker told us to “systematically identify changes that have already occurred.” From an entrepreneurial perspective you can often transplant a solution from one industry to attack a similar problem in another: as William Gibson suggests, “the future is already here, it’s just unevenly distributed.” This model for innovation brokerage requires that you be open to new solutions to old but pressing problems and that you scan more broadly to find them. Gardner offers his own explanation for why opportunities are overlooked:

“…the future announces itself from afar. But most people are not listening. The noisy clatter of the present drowns out the tentative sound of things to come. The sound of the new does not fit old perceptual patterns and goes unnoticed by most people. And of the few who do perceive something coming, most lack the energy, initiative, courage or will to do anything about it. Leaders who have the wit to perceive and the courage to act will be credited with a gift of prophecy that they do not necessarily have.”
John W. Gardner “On Leadership”

There is always a value in closing the deals that are in front of you and making this month’s payroll. But there is a risk in getting caught in the treadmill of the urgent. Gardner offers a prescription for leaders and leader/managers to differentiate themselves from managers trapped in the immediate crisis.

  1. They think longer term—beyond the day’s crises, beyond the quarterly report, beyond the horizon.
  2. In thinking about the unit they are heading, they grasp its relationship to larger realities—the larger organization of which they are a part, conditions external to the organization, global trends.
  3. They reach and influence constituents beyond their jurisdictions, beyond boundaries. In an organization, leaders extend their reach across bureaucratic boundaries—often a distinct advantage in a world too complex and tumultuous to be handled “through channels.” Leaders’ capacity to rise above jurisdictions may enable them to bind together the fragmented constituencies that must work together to solve a problem
  4. They put heavy emphasis on the intangibles of vision, values, and motivation and understand intuitively the non-rational and unconscious elements in leader-constituent interaction.
  5. They have the political skill to cope with the conflicting requirements of multiple constituencies.
  6. They think in terms of renewal.

John W. Gardner “On Leadership”

I think this is a good list, even for bootstrappers who are worried about keeping the lights on this month. You have to devote 10-20% of your time to problems in the longer term, and connections and initiatives that may not bear fruit next week but perhaps in three months or a year or two. The last suggestion, to consider how to renew skills, relationships, and shared values, is also a critical one for the long term.


More on Drucker’s suggestion for sources for innovation:

“Innovation requires us to systematically identify changes that have already occurred in a business — in demographics, in values, in technology or science — and then to look at them as opportunities. It also requires something that is most difficult for existing companies to do: to abandon rather than defend yesterday. ”
Peter Drucker in “Flashes of Genius

Successful Bootstrappers Are Trustworthy Salespeople Committed to Customer Satisfaction

Written by Sean Murphy. Posted in 1 Idea Stage, 2 Open for Business Stage, Funding, Sales

Start with what you’ve got: you have an insight into an opportunity, a marketing edge, a particular problem where you’re going to bring distinctive value.

Don’t wait to get started until an investor tells you there is a market and they will invest. An investor cannot validate whether there’s a market or not. Worse, the process of seeking investment rarely teaches you more about customer needs.

The converse is even more important: don’t be dissuaded if an investor does not believe that there is a market.

It’s OK to ask your friends if it’s a good idea. But sometimes they will tell you they like the idea just so that you will stop talking about it and get out of their living room or office.

And again, if they don’t think it’s a good idea you should weight their perspective by whether they are a prospect or not.

Which ultimately means that you have to build a minimum viable product and start selling.

When a prospect tells you that they have problem that you want to solve for them, that’s good. When they write a check or give you their credit card, that’s validation.

But just because they have quantified their love for your idea it doesn’t mean that you are done. You need to follow through and see that you delivered the benefits that you promised to them.

More bootstrappers go wrong by not conserving trust than not conserving cash. Cash is important, but if you don’t keep your promises you cannot bootstrap successfully.

It’s primarily about selling and customer satisfaction. There may be challenges in building the product or getting it to work reliably when it leaves your hands. But the primary challenge is building something that people will pay for and order again (or extend their subscription) because it delivered the value that you promised.

Many of the people who are attracted to startups are drawn to a technology or a craft or the idea of being their own boss. Those are great reasons to bootstrap.  But success requires developing an empathy and rapport for your customers and delivering value.

The key differentiators are your ability to sell and ensure customer satisfaction.


Conor Neil has a great quote in “If You Can’t Explain what You do in a Paragraph, You’ve Got a Problem” (great title but he admits he cribbed it from Brad Feld)

“I believe the major risk of early stage startups is getting customers to buy, and showing that you can sell.”
Conor Neil

Ten Principles for Trust and Integrity from Adventures in Missions

Written by Sean Murphy. Posted in 1 Idea Stage, 2 Open for Business Stage, 3 Early Customer Stage, Rules of Thumb, skmurphy

I have come to believe that morale or esprit de corps is the critical resource for a bootstrapping team. With it they can persist, blending freelancing, consulting work, customer discovery, product development, sales, and customer support.

The simple view is that you can just focus on one thing at a time–develop a product, market it, refine it, scale up–and that a few iterations will get you there. The reality for most is that it’s much harder and requires perseverance as a team.

The teams that persevere bring complementary skills and shared values to a common effort sustained by trust, shared vision and joint accountability. The first ten principles from  Adventures in Missions focus on trust and integrity,  offering some useful guidelines for building and maintaining trust:

  1. Integrity in an organization is built by developing trust.
  2. Trust is the glue that enables a team to function well.
  3. Trust is built over time through competence, commitment, and care.
  4. Trust is built as we preserve and build the significance of others.
  5. Trust is built through bearing each others’ burdens.
  6. Trust is built through a rapid response to communication.
  7. Trust is built through humility.
  8. Trust is built through personal contact.
  9. Trust is diminished by sarcasm and criticism.
  10. Integrity means making and living up to commitments.

See also “Entrepreneurship is the Launching of Surprises” which explores George Gilder’s essay “Unleash the Mind” and contains this insight that I think I am building on in my focus on morale as the key resource in a startup:

“America’s wealth is not an inventory of goods; it is an organic entity, a fragile pulsing fabric of ideas, expectations, loyalties, moral commitments, visions.”
George Gilder

D. H. Lawrence’s “Escape” Offers a Vision of the Entrepreneur’s Journey

Written by Sean Murphy. Posted in 1 Idea Stage

Escape
by D. H. Lawrence

When we get out of the glass bottles of our own ego,
and when we escape like squirrels from turning in the cages of our personality
and get into the forest again,
we shall shiver with cold and fright
but things will happen to us
so that we don’t know ourselves.

Cool, unlying life will rush in,
and passion will make our bodies taut with power,
we shall stamp our feet with new power
and old things will fall down,
we shall laugh, and institutions will curl up like burnt paper.

The Complete Poems of D. H. Lawrence

Many will also die of cold in the forest, or look around and decide to go back and live in the cage.

Others will decide to build new cages and squirrel wheels.

Not everything that is old will fall down or whither.

But there is a sense of possibility and self-actualization and revolution in entrepreneurship that Lawrence captures evocatively.

Advice on Crowdfunding from Matt Oscamou, Mark Palaima, and Noah Dentzel

Written by Theresa Shafer. Posted in 1 Idea Stage, Crowdfunding, Startups

Here is some advice from a couple of founders that ran successful crowdfunding campaigns:

Matt Oscamou, CEO of Frontier Bites shared at a recent Bootstrappers Breakfast meeting that he ran a successful kickstarter campaign $30K for pay for new packaging artwork and initial order. He found it useful as a way friend and family could help support his effort but he had little donations from strangers.

Mark Palaima, Distinguished Engineer at Avagent, hit their funding goal in the first 5 hours. Most of their donations came in the first two days and spent a great deal of time on a marketing road trip hanging out at tech bars showing off the product. See more about their campaigns at Avegant Glyph Kickstarter Surpasses Stretch Goals Before They’re Made, Try the Glyph in a City Near You 

At a recent SV Hardware Startup to Scale meetup, Noah Dentzel, CEO of Nomad Goods emphasized the importance of getting the word out on your campaign.  He offered the tip of writing article for press and bloggers.  His goal is to make their job easier for them.  He also took advance of holes in press schedules – no shows or other delays. His biggest piece of advise is to go for it, ask, knock on the doors. His biggest surprise was learning all the logistics about shipping and delivering products oversea.  He knows that shipping to S and Russia cost $0.90-1.10.

 

Without A Revenue Hypothesis Your Business Model Is a List of User Activities

Written by Sean Murphy. Posted in 1 Idea Stage, 2 Open for Business Stage, Customer Development

Q: I am building an app that helps people build nearby interest groups (e.g. local model railroaders, quilters in your town, etc…). I am trying to establish a baseline for my value hypothesis testing and am considering the following metrics:

  • Registration rate of those who come to landing page
  • Rate of registered users who join or create an interest group
  • Rate of interest group members who interact (post etc) in a group
  • Rate of interest group members who log in again after a month

Even if I estimate the each of these rates at 50% I cannot tell what this would mean in terms of validating my business. Also I cannot determine how to use these metrics to determine the features to put in my MVP.

Any advice for where to start in a minimum set of metrics and features for an MVP for this service?

A: For the sake of an initial model let’s accept your estimate of a 50% rate for those four metrics. There are two key sets of hypotheses that you are missing:

  1. What are your hypotheses for how you generate revenue? What will your customers pay for and why? 
  2. What are your hypotheses for the cost of acquiring and servicing a paying customer? How much will it cost to get them to the landing page and to maintain the service?

Your answers to these two sets of hypotheses interact to tell you how long you can stay in business.

Q: Those are great questions but I feel like they are related to growth, something I think I should explore once I have figured out the value testing.

A: Getting paid is proof of your value hypothesis. You need to map your path to revenue. Once you can do that then planning how to do it in a repeatable scalable way is your growth hypothesis. Given that you are zero revenue you need to grow to at least break even to keep running experiments.

Q: OK I understand the importance of the monetization strategy in the hypothesis testing, but I don’t think it’s relevant to my original question. Suppose I added a another metric:

  • Rate of interest group members who convert to a premium account (e.g. for unlimited messaging)

And I assume it costs me $1 to get new visitors to my landing page. So now I have six hypotheses:

  • It costs $1 to get a visitor to the landing page
  • 50% of visitors register
  • 50% of registered users join or create an interest group.
  • 50% of interest group members interact in a group.
  • 50% of interactive group members login after a month.
  • 50% of persistent interactive group members upgrade to a premium account

What does that tell me? I still cannot tell if I have a  good starting point.

A: I think it makes all of the difference in the world, now you are optimizing for revenue in your experiments. The others are all vanity metrics if you don’t have hypotheses for their relationship to revenue and impact on cost.

You can enter whatever you think your conversions will be a priori, and now you can construct a hypothetical business that is profitable.

Without that you don’t have a (profitable) hypothetical business, you have a list of activities that users are engaging in.

Q: Should I Persevere With My Product Or Get A Job?

Written by Sean Murphy. Posted in 1 Idea Stage

Q:  I can’t get people to use my service. For the last 9 months or so I been trying to get it going, trying to validate the idea, but I can’t get people to use it, and I’ve iterated and improved the product multiple times. I can get people to click on ads  and visit the service but no one will even sign up much less use the service.

A:  Whom have you talked to about the service? Have you talked to potential customers?

Q:  Up until now, I’ve only really gotten feedback from my family and friends. I thought that marketing would be enough to explain the idea and convert visitors into customers, but it’s not working, and I’ve tried different methods and messages.

A: How did you come up with the idea for the service?

Q: I got the idea from my Dad almost two years ago and developed the idea into what it is now. I have been into technology for as long as I can remember and I am constantly dreaming of tons of amazing ideas, but most of them are too complicated to create myself. When my Dad came along with the idea I saw it as a chance to start fulfilling my dreams. At the time I thought that idea was simple enough to develop into a product. But I was wrong; it was much much harder than I had anticipated.  

A: As Paul Saffo advises, “Never mistake a clear view for a short distance.” I can sympathize with the challenges of having too many ideas and ideas that are too complex to make viable. It doesn’t hurt to write them down and in the case of the more complex ones also try to break them into phases or steps and see if you can create a building block that might then enable a second step etc..  How long have you been working on this particular idea?

Q: I took me about a year to develop a minimum viable product. About halfway through I dropped out of college to focus on it full time. It has been rough but I have finished developing it. I don’t know what to do and I can’t keep wasting my time and money on something that’s not working. My parents were supportive at first, but now they are saying I need to get a job. What should I do?

A:  A year ago if your parents had said we will support you for a year but if you have no customers then you have to go back to college or get a job would you have agreed? If not, how much time would you have asked for?

You have to treat the friends and family who are supporting you just as you would an investor and give them visibility into your plans and results. It’s also not fair to ask for a blank check: you have to have a stopping rule.

Experienced investors, whether Angel or VC, will impose one on you. But friends and family may find it harder. That’s why you have to agree up front on the limit of investment you are asking for.

You don’t have to give up on your vision, but you need to either earn enough to become self-sufficient to pursue it on your own, or go back to college to finish your education. Here are a few questions you can use to measure your progress and navigate your way forward:

  • What have you learned in the last six months that’s made you more effective as an entrepreneur?
  • In the last three months?
  • What do you hope to learn in another three that will allow you to gain customers?
  • Before you start a new project you need to define your stopping rule or you risk going bankrupt or you force the people who are supporting you to define it for you–or you bankrupt them as well.

Here are “Three Questions to Ask Before Quitting” from pages 66-71 of Seth Godin’s “The Dip

  1. Am I Panicking? Decide in advance when you are going to quit.
  2. Who Am I Trying to Influence? A person or a market? Markets value persistence far more than an individual.
  3. What Sort of Measurable Progress am I Making?

Q: What do you think of the advice a friend gave me: ”You’ll never fail if you don’t give up.”

Be very careful of this advice:  if you keep doing the same thing expecting different results you won’t succeed either. Take a long-term view for a moment. Looking back from 30 or 35 or 40 it’s unlikely you would regret finishing college and perhaps even working for five or ten years to get some real world experience before starting a company.

If your goal is to be an effective entrepreneur then you may learn faster in other situations than by continuing full time on your startup today. Despite what you read on TechCrunch and similar sites very little success is overnight.

Related

Feeling Lucky Is Not a Strategy

Written by Sean Murphy. Posted in 1 Idea Stage, 2 Open for Business Stage, 3 Early Customer Stage, skmurphy

“Luck cannot be duplicated.” Richard Kostelanetz

Riffing on a Nov-2-2013 TechCrunch post by Cowboy VenturesAileen Lee (@aileenlee) “Welcome To The Unicorn Club: Learning From Billion-Dollar Startups” Ryan Hoover suggests that you should ”Forget What You Know: There is No Right Way to Start Up”[1][2]

“They didn’t talk to people. They didn’t do market research. They didn’t create a landing page to see if people would enter their email. They just built it. For the past year, they invested in the team and technology to prioritize speed of iteration with disregard to traditional methods of customer development and company building.”
Ryan Hoover in “Forget What You Know: There is No Right Way to Start Up”

This is not a methodology, it’s hoping to get lucky. The article cites several startups that may have gotten lucky as proof of…I am not sure, I guess that it’s possible to get lucky.

“Lean methodology and the startup community at large, espouses customer interviews, landing page tests, concierge experiments, and other tactics for testing hypotheses and measuring demand before building a product. In many cases, this is good advice but sometimes it’s a waste of time or worse, directs entrepreneurs away from something truly great.”
Ryan Hoover in “Forget What You Know: There is No Right Way to Start Up”

For every team that gets lucky I wonder how many thousands run through their savings in search of the truly great without talking to customers or testing their hypotheses. Perhaps a more careful and detailed analysis will uncover ways to duplicate the success of some of these startups but I worry that it may be like trying to select the winning lottery ticket: the fact that some people do it does not change the fact that on average it’s a terrible investment strategy.

“Diligence is the mother of good luck.” Benjamin Franklin


Ryan’s essay also appeared on LinkedIn and TheNextWeb:

I don’t think this “Forget What You Know” post is representative of the quality of Ryan’s insights. Here are three blog posts by him that I have found very useful and recommend reading:

 

Video from Lean Innovation 101 Talk at SF Bay ACM Nov-20-2013

Written by Sean Murphy. Posted in 1 Idea Stage, 2 Open for Business Stage, 3 Early Customer Stage, 4 Finding your Niche, Events, Lean Startup, skmurphy, Video

The video from my “What is Lean–Lean Innovation 101” talk is up:

Here is the description for the talk

“Lean” provides a scientific approach for creating a product and developing new businesses. Teams can iteratively building products or services to meet the needs of early customers by adopting a combination of customer development, business-hypothesis-driven experimentation and iterative product releases. This talk covers:

  • Why more and more companies are using Lean
  • What is Lean, what it is not
  • Key concepts
  • Get Out Of Your BatCave
  • Use an initial product (MVP) as a probe to explore the market
  • Build-Measure-Learn
  • When and how to pivot
  • Rules of thumb for successful lean innovation

I want to thank Alex Sokolsky for his outstanding effort on behalf of SF Bay ACM doing the video capture and editing.

IEEE-CNSV Panel Explores Engineering in Japan vs Silicon Valley Mon-Mar-3

Written by Sean Murphy. Posted in 1 Idea Stage, Events, Silicon Valley, skmurphy

I am helping to moderate a panel 7pm Mon-Mar-3 at IEEE-CNSV on “Innovation: Work and Life of the Engineer in Japan and Silicon Valley” The event takes place at Agilent Technologies, Inc. in the Aristotle Room, Bldg. 5 located at 5301 Stevens Creek Blvd., Santa Clara, CA 95051. There is no charge to attend and the event is open to the public.

The event is organized by Takahide Inoue, the Global Outreach Director for the Center for Information Technology Research in the Interest of Society at UC Berkeley.

The panel members are:

  • Takashi Yoshimori, Toshiba Semiconductor
  • Laura Smoliar, Independent Consultant, Signal Lake Venture Capital
  • Tom Coughlin, IEEE Region Six Director-Elect, CNSV member and Independent Consultant
  • Kim Parnell, Past Chair, IEEE Santa Clara Valley Section, CNSV member and Independent Consultant
  • Brian Berg, Past Chair, IEEE Santa Clara Valley Section, CNSV member and Independent Consultant

Here are some of the questions I hope the panel is able to address:

  • What are innovation lessons from Silicon Valley?
  • How does Silicon Valley do so many innovations?
  • What are innovation lessons from Japan?
  • How do Japanese engineers sustain their interest in a topic to achieve mastery instead of moving on to the “new hot thing” or next “bright shiny object?”
  • What makes an innovative culture? What can other areas do to create an innovative culture?
  • In Silicon Valley, we tend to celebrate the individual over the group. For Silicon Valley engineers how do you give back to your  community?
  • The Japanese say that “the nail that sticks up gets hammered down.” For Japanese engineers, how do you disagree constructively with your peers to foster innovation?
  • What advice do you have for engineers for finding an idea that can inspire them to work on for several years before it becomes a reality?
  • How do you see the work of the engineer changing in the next five to ten years?

I hope you can join us tomorrow night. Here are some background material on Silicon Valley’s innovation culture you may find relevant.

Here are five related blog posts about Silicon Valley it’s entrepreneurial culture

Finally Tom Wolfe wrote “The Tinkering’s of Robert Noyce” about the founding and early culture at Fairchild and Intel for Esquire in December of 1983 and updated it for Forbes ASAP fourteen years later as “Robert Noyce and his Congregation.” (Aug-25-1997).


The text of California Historical Marker 836:

PIONEER ELECTRONICS RESEARCH LABORATORY – This is the original site of the laboratory and factory of Federal Telegraph Company, founded in 1909 by Cyril F. Elwell. Here, Dr. Lee de Forest, inventor of the three-element radio vacuum tube, devised the first vacuum tube amplifier and oscillator in 1911-13. Worldwide developments based on this research led to modern radio communication, television, and the electronics age…California Registered Historical Landmark No. 836..Plaque placed by the State Department of Parks and Recreation in cooperation with the City of Palo Alto and the Palo Alto Historical Association, May 2, 1970

Five Serious Financial Mistakes Bootstrappers Can Avoid

Written by Theresa Shafer. Posted in 1 Idea Stage, 2 Open for Business Stage, 3 Early Customer Stage, First Office, skmurphy

Five  serious but avoidable financial mistakes we hear from time to time at a Bootstrapper Breakfast:

  1. Mistake: using credit cards to finance your startup.
    Fix: Pay cash, trade favors, barter, go without, but don’t let your monthly balance roll over and accumulate.
  2. Mistake: not having a stopping rule for when you need to stop bootstrapping and look for work. This can lead to bankruptcy.
    Fix: set a time limit and an expense limit for getting your new business off the ground. Work part time and work on your business part time to maintain break even cash flow.
  3. Mistake: not keeping your spouse in the loop if they are working and keeping the lights on while you bootstrap.
    Fix: treat your spouse as an investor or a board member: provide ongoing detailed accounting of plans and spending.
  4. Mistake: hiring a full time employee too soon.
    Fix: start with contractors, make sure you can at least break-even on a regular basis with the contribution the employee will make vs. the additional expenses incurred–understand all of the expenses you first full time employee will trigger (e.g. workers compensation, payroll service, fixed salary expense (vs. contractor)).
  5. Mistake:  signing a lease on an office too soon
    Fix: use co-working space, look for an informal sublet, be clear on why you need an office (e.g. just pay for meeting rooms as needed, barter for lab or working space as needed, look at hourly/day rate offices for conference calls or meetings).

#3 got picked up by Entrepreneur Magazine in a roundup of 7 tips: “Funding Your Business on Your Own? Learn From These 7 Entrepreneurs.”  I thought these three from the list were also common and avoidable:

  • “Branding too soon” by Rebecca Tracey of The Uncaged Life
    This is really investing too much in messaging before you know what works. I have made this mistake and I see others do it as a way to make the business seem “more real” or “like an established company.”  Trying things out in conversation gives you the fastest feedback and is the easiest way to iterate if you are deliberate about it.
  • “Idealism about costs” by Tom Alexander of PK4 Media
    This comes in many forms, but the most serious that he touches on is not understanding how long it can take to get paid, especially by a larger firm. 90 to 120 days from invoice has not been uncommon for many of our clients. Small firms tend to pay faster, and getting paid the first time by a large firm can take much longer than subsequently.
  • “Failing to calculate burn rates” by Steve Spalding of Project MONA
    This takes several forms, but one mistake is to pay yourself a salary (incurring State and Federal taxes on the “round trip” from your savings back to your bills instead of putting less money into the business and living off of your savings. It’s also better to provide the bulk of your starting capital as a loan instead of equity, so that early profits can be distributed as loan repayments instead of salary or dividends.

Update Thu-Feb-27 (morning): Elia Freedman offered a common critique of this post, In Getting Good At Making Money by Justin Williams and “How to Get Good at Making Money” by Jason Fried. Writing “The Art of Bootstrapping” he observes

The only thing a bootstrapper needs to know: CASH IS KING. Nothing else matters and every decision needs to be made to maximize cash. The articles refer to revenues, but revenue is not cash. Here’s an example: I do a contract development job today for $10,000. When done I submit an invoice and the company takes 60 days to pay. Yes, I have $10,000 in revenues today but I don’t get the cash for 60 days. How do I pay my bills in the meantime?

I am relentless when it comes to managing cash. I have a spreadsheet that gets duplicated and updated with actuals and projections every month. This allows me to make cash flow decisions months before the negative shortfall actually happens, allowing me at various times in the history of the company to ratchet up spending, lay people off, cut payroll or minimize other expenses. Because of this work, I see the company very very clearly on a month to month basis and can make appropriate choices.

I think it’s a fair criticism. An accrual accounting perspective has too much parallax from bootstrapper’s actual cash position and offers a false sense of security. I tried to sharpen the advice from the Entrepreneur round up on “Idealism about costs” toward this but I would add a sixth mistake to make it clear:

Mistake: Using accrual accounting (ignoring the timing–the real cash impact–of cost and revenue items) will kill you.
Fix: Forecast  and manage the explicit timing of cash in and cash out for your business. Understand that people will cash your checks immediately but be slow to pay your invoices.  Some won’t pay the full amount or even pay at all. Rely on clear understanding and simple plain English agreements, don’t hope that “legal language” in a contract will make a difference to your getting paid (assume any contracts you sign will be enforced against you by larger firms.

I think trust is as important, if not more important than cash. Bootstrappers who focus exclusively on cash without also managing trust and social capital will often fail to prosper as well. Related blog posts:

Update Mar 8: this post was included in the Founder Institute’s “Mar 2 2014: This Week’s Must Read Articles For Entrepreneurs.

Getting More Customers Workshop on March 25, 2014

Written by Theresa Shafer. Posted in 1 Idea Stage, 2 Open for Business Stage, 3 Early Customer Stage, 4 Finding your Niche, 5 Scaling Up Stage, Events, skmurphy, Workshop

Getting More CustomersLet’s face it, finding customers can be quite a challenge. In this interactive workshop, we will cover a variety of proven marketing techniques for growing your business: attendees will select one or two that fit their style and develop a plan to implement them in their business in the next 90 days.

  • Speaking – small groups, large groups, conferences, …
  • Writing – blogging, newsletters, articles, …
  • What Other People Say About You – referrals, testimonials, case studies, …
  • Getting Found When and Where Prospects are Looking: adwords, Craigslist, trade shows, SEO/SEM, …

March 25, 2014 9am-12:30pm
Sunnyvale, CA
$90 includes lunch

Register Now

“This workshop provided great material to bounce off of. SKMurphy created a fertile space for me to think about my business and plan a concrete step forward. Thank you.” Paul Konasewich, President at Connect Leadership

Real Prospects, the Simplest Functionality They Will Pay For, and Team Members Who Can Help

Written by Sean Murphy. Posted in 1 Idea Stage, 2 Open for Business Stage

Q:  I have worked as a manager in corporate IT for many years, saved my money, and now have an idea for a new product. I need a plan to go from essentially nothing but the idea to building an organization that can support a service-first or  concierge MVP and the metrics in place to enable migration to a full product and profitable business.  Getting off zero seems to be my problem.

A: There is a temptation given you have a good idea and money to last for a while to go into execution mode: writing code and hiring staff. but there is probably very little risk that you cannot get the code developed and if you have some experience in hiring to bring reasonably talented people on board. The risk is in building–or offering in the case of a service-first MVP–something that people will pay for.

At a subconscious level this may be why you are having trouble getting off zero. It’s also possible that after many years in corporate IT you may be more energized by a career than a startup: in either event you should pay attention to your lack of energy.

I would suggest that you do not force yourself too far into execution mode until you were confident that you had identified a problem that people would pay you to solve and that you knew how to find people or firms with the problem.

One way to start, which you can do without quitting your day job, is to make a list of a dozen to three dozen people you can talk to about the problem you plan to solve and contact them.

See if they have the problem, what their view on what a solution might look like, and what the value of the solution would be to them.

Mastering the mechanics of starting a company don’t represent a risk reducing milestone; here are three critical near term risks to focus on instead:

  1. Finding real prospects who acknowledge they have the problem, want to talk about it, and believe that it’s a critical business issue for them.
  2. Finding early team members who are energized by the problem and not a paycheck and can contribute relevant skills and/or domain knowledge.
  3. Understanding the minimum functionality or result you need to deliver to get paid.

You can work on all three of these without quitting your day job. Keep saving your money, you’ll need it once you start bootstrapping. And managing the conflicting priorities of a day job and a bootstrapped startup will be good practice for managing the conflicting requests from early customers and early prospects.

Difference Between a Hypothesis and an Assumption

Written by Sean Murphy. Posted in 1 Idea Stage, 2 Open for Business Stage, 3 Early Customer Stage

Q: What are the key hypotheses you need to address first getting your startup off the ground? What is the difference between an assumption and hypothesis?

When you are looking for early customers the value hypothesis is critical. You may reach them using non-scalable methods that don’t address your first real growth hypothesis.

My take on the distinction between hypothesis and assumption, your mileage may vary:

A hypothesis is what is being tested explicitly by an experiment. An assumption is tested implicitly. By making your assumptions as well as your hypotheses explicit you increase the clarity of your approach and the chance for learning.

The two things that can trip you up most often is an unconscious assumption that masks a problem with your hypothesis or an unconscious bias in who you are testing the value hypothesis on. In particular you may have defined your target customer by certain selection criteria but your actual choices for who to speak to (or who will speak with you) are not sampling from the full spectrum of possibilities.

See also


Update Wed-Jan-29-2014: Tim Allen left a great comment that elaborated on the need to focus on value first even if your methods don’t scale:

There was a bit of a light-bulb moment for me what I read the line:

“When you are looking for early customers the value hypothesis is critical. You may reach them using non-scalable methods that don’t address your first real growth hypothesis.”

I feel this is so often forgotten, especially in the situation of legacy systems and trying to execute lean product design within larger organizations. One example that I have been involved in, and which I regret not pushing back harder, was a requirement to use some legacy data services.

This meant that we couldn’t initially execute a hand-cranked, non-scalable solution to data storage and retrieval that our product required, which would have been better as it would have enabled us to get to customer quicker and get real learnings about how they are using our product.

At the time it didn’t seem like a big deal, but in the end it was, and continues to be an issue and an impediment in getting to the customer quicker. Likewise, any real growth hypothesis, results will most likely be skewed by the performance of systems that are not in your control.

I want to thank Tim for offering a practical story that elaborates on the principle of confirm the value before worrying about scaling. When I was at Cisco the focus was always on “will it scale,” as in we shouldn’t do something because “it won’t scale.” This sometimes led to us releasing a product that could have been more valuable if we had proceeded a little more thoughtfully and incorporated early feedback before rushing to launch. Techniques that work “in the small” to gather insight have their place even inside of large firms.

The Likely Consequences of Entrepreneurship Require Perseverance

Written by Sean Murphy. Posted in 1 Idea Stage, 2 Open for Business Stage, 3 Early Customer Stage, 4 Finding your Niche, Rules of Thumb, skmurphy

Justin Kan (@JustinKan) wrote “Startups Don’t Die They Commit Suicide” in 2011″ (mirrored on his blog here)  reflecting on what he had observed and learned as a serial entrepreneur. It was reposted on the Philly Startup Leaders list earlier this week which led me to write the following comments mixed with excerpts from Kan’s post.

Startups die in many ways, but in the past couple of years I’ve noticed that the most common cause of death is [when] founders/management kill the company while it’s still very much breathing.

I think this is right, two key requirements for building a business are team morale–shared vision, enjoyment of working together, hope for the future–and cash flow. And morale can get you through periods of poor cash flow  more than cash flow can compensate for poor morale and team dynamics. I think a lot of teams lose their “gumption” and give up.

Long before startups get to the point of delinquent electricity bills or serious payroll cuts, they implode. The people in them give up and move on to do other things, or they realize that startups are hard and can cause a massive amount of mental and physical exhaustion — or the founders get jobs at other companies, go back to school, or simply move out of the valley and disappear.

I think bootstrappers are in some way at less risk for this because they know it’s going to be hard, although perhaps not how hard.
A lot of times the founders don’t maintain their health and energy and cannot weather a setback or analyze their situation with enough emotional distance: debugging your startup requires peace of mind

Often the root problem can be traced back to a lack of product traction — it’s rare to find people willingly quitting companies with exploding metrics. But one thing that many entrepreneurs don’t realize is that patience and iteration are critical in achieving product market fit.

Keeping a ‘captain’s log’ or other journal can give you a place to vent your frustrations–and let them cool for later analysis–jot down your fragmentary insights for later revision and recombination, and allow you to look back at earlier crises you have managed and problems solved: record to remember, pause to reflect. We have worked with a couple of Finnish teams and they have a great word “sisu” that is the Arctic version of gumption.

Overnight successes might happen fast, but they never actually happen overnight.

I think a lot of the desire for overnight success  is driven by trade press accounts of young millionaires who clean up the real story to make it seem simple and inevitable. I have met a number of entrepreneurs who think that one deal or one relationship will be the point of departure for a rocket trip to the stars. That’s always the way the success narrative is cleaned up and presented, but the reality almost always–barring a few lottery ticket winners–involved a lot more hard work and the slow accumulation of many small insights, decisions, and advantages.

On the other hand, happy people don’t normally start new companies: as Sramana Mitra has observed, startups are founded by mavericks, iconoclasts, dropouts, and misfits.  In fact, I think Barry Moltz is right: you need to be a little crazy.

Still, I think morale at an individual and team level is a key resource, and the teams that persevere seem to be more driven by the thought of proving a new idea right than proving  former co-workers, bosses, or  relatives wrong. While 0roving folks wrong can be the start–bold action coupled with frank expression has inadvertently launched many a deeply felt entrepreneurial career–it’s rarely what sustains an individual much less a team.

“It’s only after you fail once or twice and learn to rely equally on thought, analysis, and anticipation–in addition to speed, talent, and execution–that you can really call yourself an entrepreneur. ”
Barry Moltz in “You Need to Be a Little Crazy

Recap From Nov-20-2103 MVP Clinic

Written by Sean Murphy. Posted in 1 Idea Stage, 2 Open for Business Stage, 3 Early Customer Stage, Audio, Community of Practice, skmurphy

Overview: exploring how to identify some key problems in communities where the presenters members, trying to understand how to research them, and how to contribute to solving those problems.  Two very different people facing analogous situations: one is a researcher looking for action research topics in the KM4Dev community, the other is an entrepreneur who wants to make athletic contests more engaging for contestants and the audience by providing more information that is mobile device friendly.


(You can also download from http://traffic.libsyn.com/skmurphy/MVPClinic131120.mp3)

Next two MVP Clinics


Commonalities between the two cases that were presented on November 20, 2013

  • Challenges in understanding the embedded (often invisible) interests, incentives and assumptions of different groups
  • Assumptions about boundaries of organizations that interact with those communities
  • Change management perspective is necessary but is challenging to apply in a community context — it is more of an organizational term, based on a high degree of control
  • watching a school of fish trying to determine how they decide to change direction
  • both were familiar with communities but may not have appreciated impact of incentives

Panelists for today:

Presenter #1: Phillip Grunewald

  • PhD student researching how knowledge exchanges can be best facilitated in the international development sector.
  • Have been working on this for 1.5 years now and have another 1.5 years  left to conduct studies
  • Before starting this PhD, worked in in various organisations  on Marketing, Corporate Communications, Monitoring and Evaluation and  customer relationship management.
  • Hold a bachelor’s degree in corporate communications and a masters degree in international studies.
  • LinkedIn: http://uk.linkedin.com/pub/philipp-grunewald/6a/4ba/82/
  • Blog: www.thoughtfordevelopment.com / twitter: @thought4dev

Situation: 

  • Attempting to find a mutually beneficial way of facilitating researcher-practitioner interaction.
  • Usually a (social) researcher  (from an external institution) is perceived as an “outsider” that sees  his collaborators as either “means to an end” or as the objects of the  study.
  • This is due to a generally perceived separation between  researchers and practitioners. In this model the practitioners usually  deliver or are themselves the data for analysis.
  • The findings of  research then either stay within the realm of research or are  distributed back via, for example, reports.
  • This not only makes learning  cycles very long but also means that there are things the researcher  “is blind to” by not being closely embedded in the context that is being  studied (this has its advantages and disadvantages).
  • In  the particular the present situation involves a community of practitioners in a collaborative manner.
    • Have  offered 2 hours a week until next May to spend on research projects of  their choice.
    • An initial survey (http://www.allourideas.org/grunewaldtopics/results ) was used to generate and poll ideas. This generated considerable interest and a surprising list of ideas that  the community is interested in.
    • However, since then discussion on the  most popular topic started and participation rates have been low.
    • Part  of the reason might be the internal dynamics of the community, which are hard to completely understand but there are many other potential issues.

Ideal outcomes:

  • High levels of engagement on both sides
  • Mutual learning about content and process
  • Continuous feedback to the research process so that further research can incorporate (reiterative process)
  • Personal development of researcher
  • Basic research – exploration of impact of academic work
  • Experimenting – developing experience for questions that are motivated by practitioners concerns

 Criteria for acceptance of a project

  • Poll the community for popularity
  • Within the KM4Dev concerns (broad thematic area)

Alternative frames:

  • Researcher has to be in both worlds
  • Researcher has to be intimately involved with the research subjects
  • Framed within the KM4Dev topic

Alternative next steps:  

  • Abandon the whole idea as “too difficult”
  • Make questions more specific/have a clearer thematic focus
  • Have more explicit objectives
  • Make people aware that there is a free resource that they are not using
  • Ask people if they question researcher’s ability/capacity to come up with valuable contributions
  • Ask community members if they have no capacities to dedicate to the process (mainly time)
  • Ask why they do not prioritize this activity vis-a-vis their other activities
  • Drive  topics that have been chosen and only have low levels or participation  constrained to specific points in time (rather than ongoing)

NOTES Not much response after the initial survey.  Lots of ideas and votes in the survey, but the social network site (Ning) has had little or no participation Sean: offering service at no charge, letting them set the agenda. . Howard: trying to get an understand what an ideal research project be?  what kind of research design? Philipp: participatory action research.  looks at matter, gathers data, comes up with findings, brings it back. assess changes.  Then the cycle repeats. John: what does research mean to this community, 2-3 hours a week for 6 months may not match their expectations for a project, consider offering a research-related task (as opposed to undifferentiated “research”) e.g. data cleaning so that you avoid the challenge of not matching expectations or running up against problematic ideas of “research.” Sean Is there a concern about asking for credit in results? There IS a problem on the academic side with a self-assessed view of academics that are irrelevant. Sean: making a comparison with Eugene’s case: trying to make things easier, but not changing behavior. Assessing speed. making things go farther. Philipp: KM4Dev is focused on practice; other communities dominated by academics.  Research might be out of the norm; people are oriented toward peer-to-peer exchanges. Using Barb’s question: why should people change?  is there a clear blockage or missing piece that research can address? Originally this was just a probe: “what would the reaction be?”  So far: any outcome is interesting.  but not prepared to give up. Payoff given the challenge of understanding Philipp’s process. How do open source management of volunteers? Is there a pattern for organizing volunteer labor that could be harnessed / re-purposed for KM4Dev? Challenge of figuring out how to leverage 2-3 hours a week may mean focus don’t invest effort in engaging if payoff is small/problematic Howard: in a nonprofit where GIS data described a watershed that was intact in BC.  Tried to engage community around protecting the watershed.  When leaders from the nonprofit traveled there and met with community representatives, they found potential interest, but more interested in issue of teen suicide — a much more immediate threat than the logging companies coming in.  That was a real learning experience for the non-profit.  Shifted the organizations focus to partnering with them through a focus on their issues. [Added post-call: My quick summary of this nonprofit experience glosses over the fact  that, for the nonprofit, the discovery that community members had  completely different priorities represented / might have represented an  enormous challenge for the organization. The nonprofit had no expertise on the issue of teen suicide, and this issue could easily have been seen as beyond the scope of the organization's mission, which was at the time more environmentally oriented. It was the willingness to listen to community needs and to be flexible in responding that enable the organization to move forward.] What does the community view as a key problem ? Where are KM4Dev’s priorities and how does Phillip’s expertise and experience align for best contribution.  Philipp’s  feeling of pain and surprise means he has learned something. Complexity of the KM4Dev ecosystem that Philipp is working with.  same thing for Eugene.  In both cases, people see the offer through very different lenses.  How open up receptivity to alternative ways of working together? The challenge is getting a group of people to change.


Questions from the audience : First question is what’s research in many organizations where KM4Dev members work research is a restricted activity takes a certain status and has some inherent separation from “work in the field.”  So the first suggestion is: how about offering elements of research but not calling it research?  That could include data gathering and analyzing data, or a literature search or many many other bits or pieces that would be useful but are dis-aggregated. Second suggestion is that: KM4Dev members come from many different organizations and they play different roles in those organizations.  Getting them to agree on one research agenda or on one perspective going forward is an impossible feat.  The community will never “agree.” So what’s behind both suggestions is the idea of dissolving as a strategy: to breaks down research tasks into elements on the one hand and to break down the KM4Dev community into sectors with distinct interests.


Presenter #2: Eugene Chuvyrov

  • Have 14  years of  programming experience, with 3.5 of those being an independent   consultant.
  • Built many web-based and several mobile products – love   technology, not just programming, and I can see myself programming robots or wearable devices just as eagerly as I do mobile dev.
  • Ran a Software Architecture group in Florida and I help organize a  cloud  computing group here in the San Francisco Bay area.
  • http://www.we-compete.com/

Situation: 

  • A  year ago, Eugene and two former colleagues from Florida broke  ground on what I wanted to be a new way to engage the competitors and  fans in amateur athletic competitions.
  • As a bodybuilding competitor of 6  years, it always bothered me that:
    •  the process of registering for  competitions was archaic,
    • there was no way to see who was competing beforehand, and that sometimes competition results would not be posted for weeks.
    • I also thought that the competitions were boring for the  audience, since many were not familiar with competition rules or competitors.
  • I wanted to start with the sports I am very familiar with  (strength events) and expand into other sports from there.
  • I showed a  simple prototype of my mobile app to one of the more prominent  competition organizers and he stated they’d use it. (Face palm) that was  all the validation I needed to get going on executing the idea.
  • It took us 6 months to build a website and a mobile app, and I have been promoting it for another 6 months now.
    • I promoted http://we-compete.com  via contacting competition organizers who I knew directly, or via  friends who are also competitors.
    • I also contacted many competition  organizers whom I didn’t know, after noticing that
      • they still had either  .pdf files to download for competitor registrations,
      • or they tried to  integrate EventBrite/other ticketing software into their offering with an iform
    • I established contact with heads of federations that have 50-100  competitions each year and solicited their feedback.
    • I also invested in  Facebook and Google ads, but those generated close to 100% bounce rate.
  • We had half a dozen competitions created on the  platform. Since we waived all fees for the initial batch of users, I  cannot reliably say people would use us  if we had charged them our 2.5%  fee per registration/ticket sold.
  • I expected our offering to go viral  after the initial batch, but that did not happen.

Next Steps:

  • Currently, I resorted to more traditional  marketing.
  • I am organizing a competition myself in June in the East Bay  area, and will use http://www.we-compete.com  exclusively.
  • I am helping a few competition organizers pro bono with  basic web/technology stuff. I sponsored bodybuilding federations,
  • I am  getting more active on social media and doing promotions in e-mail  newsletters/magazines.
  • I am also weighing executing on a consumer play  related to We Compete via creating mobile apps for competitors, and  having those mobile apps feed data into the centralized database (if  competitors choose to share the info, of course).
  • I am also evaluating  partnership with competition content creators (video, photo, general  information) and seeking ways to get on podcasts and YouTube channels.
  • I  am very passionate about this space and would love to continue  executing on my ambitious vision, but not if I have to live under the  bridge while doing that.

NOTES Sean: does the app enrich the experience for an audience.  (business model would have to follow) Eugene: lots of pictures as a form of engagement, no centralized location.  Notice LOTS of mobile devices at any event. The idea is to function like a meetup. Competition is emotional experience… Eugene is connected in the competition space…  direct approach response has been good.  But so far people won’t pay. Business model is like http://eventbright.com

  •     the price/payment is before
  •     the benefit comes afterward

Consider attending a high school re-union to compare behaviors, rituals, and business models for somewhat different kinds of events. The app is really changing some of the dynamics of competition – knowns and unknowns for participants – what is the value of changing that, how to position it going forward and eat own dogfood in organizing a competition – that might be a business How to characterize users / clients

  • heads of established federations and contests – they may not be in much pain (yet?)
  • people considering a new contest for fun or profit – organize a competition “in a box’ similar to how Meetup lowers cost of coordination
  • Notice the monopoly structure of the business… populated by people that are not very tech-oriented

What is the mobile app about:

  • pictures?
  • stats?

Typical event:

  • 90 competitors
  • 500 fans/participants

Barb: I’m also thinking that this needs some change management theories applied to it… I think that Eugene is right in showing the benefit  Why should people change the way they do things, when they work so well so far? Sean: more like meetup than eventbright. Can you provide unique or more curated content?  or just additional content? …so that profiles persist across competitions… Could competitors be encouraged to pay for the profile? What’s the value of a profile to other competitors? Can other sites be integrated?  Do those other sites support the mobile side?  And what are their business models?  and do people look at those other sites during a competition? status quo; organizing iframing eventbrite. in some ways we-compete is a threat, in others a collaborator: complex ecosystem of organizers, athletes, audience Howard: “Create a competition in a box” may be inadvertently taking position of disrupter, so a threat. What you are hearing is that you should continue to explore, more by making offers than writing code


Questions from the audience: ? unique content vs. basic mobile app with pictures ? transition from “probably not a good idea” to “late” Philipp: What about assessing information needs ground up?

The Illusion of Omnicompetence: Smart and Competent Are Domain Specific Adjectives

Written by Sean Murphy. Posted in 1 Idea Stage, 2 Open for Business Stage, skmurphy

“Smart, competent people” are not a generic quantity; they’re incredibly domain-specific.”
Megan McArdle in “Obamacare is no Starship Enterprise

One of the secrets to building a successful technology startup is to attract talented people to your mission who share your values but bring diverse skills and perspectives. Innovation is very hard and successful sustainable innovation is a rare outcome. There is a tendency for the “suits” to look down on the “propeller-heads” and the “pony tails” who of course reciprocate this lack of respect. The green eye shades and the grey hairs view the rain makers with some suspicion, who in turn mentally assign them and others to the “committee to stop sales.” No one cares much for the shysters until the fine print sprouts teeth.

You need people who enjoy sweating the details and others who don’t lose sight of the big picture. You cannot talk your way out of an engineering problem, but if you take the time to listen to prospects you may find a way to reframe the problem to one you can solve. Computing systems tend to be rigid and unforgiving, rewarding those who understand the need for an exacting specificity. People are much more complex and ambiguous and resist debugging. You need people on the team who can plan the work and work the plan, and at least one or can push the reset button at the right time for the right reasons before things go too badly off track when the map does not match the territory.

I don’t have any magic formula for how to identify–much less attract and retain–the right set of talent for your team. But I do know it’s important to recognize that you need folks who have deep domain experience and at least a few who are good at spanning domains. Recognizing that you need a requisite variety of skills is a good start, and being cautious –difficult for some entrepreneurs–in areas you are unfamiliar with is another good practice.

The technocratic idea is that you put a bunch of smart, competent people in government — folks who really want the thing to work — and they’ll make it happen. But “smart, competent people” are not a generic quantity; they’re incredibly domain-specific. Most academics couldn’t run a lemonade stand. Most successful entrepreneurs wouldn’t be able to muster the monomaniacal devotion needed to get a Ph.D. Neither group produces many folks who can consistently generate readable, engaging writing on a deadline. And none of us would be able to win a campaign for Congress.

Yet in my experience, the majority of people in these domains think that they could do everyone else’s job better, if they weren’t so busy with whatever it is they’re doing so well. It’s the illusion of omnicompetence, and in the case of HealthCare.gov, it seems to have been nearly fatal.

We like to think that being “smart and competent” makes you less likely to make mistakes. But when you’re out of your element, it may merely enable you to make more — and larger — mistakes.

Megan McArdle in “Obamacare is no Starship Enterprise


See also Clay Shirky’s “Healthcare.gov and the gulf between planning and reality.

Audio and Notes from On-Line MVP Clinic Oct 23-2013 on Social Software

Written by Sean Murphy. Posted in 1 Idea Stage, 2 Open for Business Stage, 3 Early Customer Stage, Audio

John Smith and I did an MVP Clinic for Social and Community Apps on Oct 23. We took notes live in a PrimaryPad (an EtherPad derivative application). What follows is a cleaned up version of notes that we took and the audience contributed to. You can see MVP Clinic for Social/Community Apps Wed Oct 23 for more background information.


Or download directly from http://traffic.libsyn.com/skmurphy/MVPClinic131023.mp3


Terry Frazier is Principal and Senior Competitive Analyst at Cognovis Group. He has been studying, writing about, and consulting on competitive and industry issues since 1998. His work has been used by both Fortune 1000 businesses and international analyst firms. Today he writes at http://CompetitiveThinking.com. He offered the following as background for the discussion:

  • Situation: I am working on a structured service/educational offering to create lasting competitive advantage and reduce competitive risk for the mid-size enterprise. The offering takes proven principles and techniques that have been used for decades by the Fortune 500 and packages them into what I call the Competitive Management Process which makes them accessible, affordable, and attractive for smaller companies.
  • Challenge: The best source of competitive information any company has is its own middle management and field staff. Yet very few companies have any structure for harnessing and directing this resource, much less channeling it into long-term competitive advantage. In most companies competitive strategy and competitive decision making are deemed to be the sole responsibility of senior (usually C-level) management. There is reluctance, on both sides, to engage lower-level managers and staff in an ongoing collaboration that challenges assumptions and feeds real-world perspective into the process. This barrier to meaningful ongoing exchange is something I need to overcome with almost every prospect.

Notes on Terry’s Discussion Plus Audience Questions

Change within a company required to use competitive tools. Technology as enabler and hindrance to improved competitiveness? Two kinds of tools:

  • technology for data collection, feeds, screen scraping, etc
  • conversation for contextualizing, sense-making (the challenging.part; Human intelligence is lacking. )

Sean: companies see it too much as a data/technology problem, not enough as a conversation, inquiry problem Lack of structure in conversation is a problem so “war games” strategy helps organize thinking. Role-playing in a game forces people to adopt a perspective. Example: Michelin Run Flat tire failure due to channel / ecosystem from “Wide Lens” by Ron Adner Key hypotheses -

  • How can I explain to firms what effective competitive intelligence looks like?
  • What is the smallest possible intervention (a taste of the experience)?

Q: how can you spend time with key personnel (who are the important actors in the marketplace in the company: suppliers, regulators, customers)

Q: What are instances of effective action / positive deviants already in place you could use as acorns or seedlings?

  • Where is this already working?
  • Are there existing meetings or teams you can focus on for insertion?
  • General pattern not available: so start looking at an individual company to pursue the seedlings to learn about the conversations that exist.

Terry has been looking at existing forums: sales managers (line level up to senior VP of sales). Have not located online watering holes where such people meet. No clear titles / water holes – need an existence proof.

Q: this is a key hypothesis to test – where are some aspects of these conversations already taking place? For example industry organizations or executive offsites. 

Q:  Is the question how to find the prospects? Or how to convince them they need field level competitive data? What are the tools for gathering the field managers’ perspective?

  • Yes: find the prospects (previous work based on job titles, which is not quite the criterion Terry wants). prospect needs to be influencer not so much decider.
  • Yes: convince them that they need this.
  • Launching a new product into a new or adjacent market (with a 70% failure rate)

Terry: Fancy tools not needed for this. E-mail and blogs are enough. Finding perspectives and the people who hold them is the challenge.

Q: Find out the response to the explainer videos.

Q: Sounds like the war games process is the situation when Terry gets to harvest understandings from people across the organization? I wonder how this process might become the basis for a more ongoing conversation?

Q: Consider inviting people from outside the organization as participants in the gaming.

John: In consulting knowledge transfer is often the “afterthought” sacrificed at the end of a project. Companies need to internalize the skills to have these conversations.

Q: Is the question how to find the prospects? Or how to convince them they need field level competitive data? What are the tools for gathering the field managers’ perspective?

Q: Have you considered a short “explainer” video?
Terry: Yes, please see http://competitivethinking.com/

Q: Sounds like the war games process is the situation when Terry gets to harvest understandings from people across the organization? I wonder how this process might become the basis for a more ongoing conversation? It seems like there are community-building techniques that might be woven into Terry’s existing process…


Dixie Griffin Good is director of Shambhala Online, a global learning community connected by the meditation teachings of Sakyong Mipham Rinpoche. For 15 years she consulted with local, state and national education organizations on the educational use of technology. She has a masters in Future Studies and enjoys managing and studying change processes.

  • Situation: We’re developing a series of online courses that I’d market beyond the Shambhala to broader communities
    • The Product: Way of Shambhala Online courses, 8 courses; 5 to 6 weeks long
    • Meditation In Everyday Life, Contentment IEL, Joy IEL, Fearlessness IEL, Wisdom IEL
    • Basic Goodness Series (3 courses).
  • Challenge: Marketing beyond our organization — going out.
  • Context: Shambhala and shambhala online. http://shambhalaonline.org/ many centers of various sizes.
    • Undercapitalized–like many startups.
    • Offering live webinars to online courses beyond.
    • 12,000 members 200 centers or groups

Key hypotheses or criteria.

  • ID Most likely courses (what are the door openers)? Dixie: mediation in everyday life
  • experiment: live event free and recording for a price?
  • Local centers offer the same courses live – so almost competitors
  • What’s the synergy between the local centers and Shambhala Online?
    • Online as Gateway to local center?
    • Criterion: “how far from a local center do you live?” establishing more centers and more members as a desired outcome.
  • Goals/impacts for Shambhala Online going forward:
    • income
    • synergy with local centers
    • more interest/ signups for advanced programs
  • Assets:
    • reputation
    • local centers
    • alumni?

Notes on Dixie’s Discussion Plus Audience Questions

John: is Shambhala Online as a “smart pipe” for delivery or does it contribute to content creation?

  • Could it be an asset for teachers / experts / masters ?
  • deliver feedback on audience reaction to talks?

Sean: consider flipped classroom model: basic tools are available, but face-to-face plays its role. What is the relationship with local centers: how do you create as much synergy as possible and minimize competitive overlap?

John: Who is the voice or carrier on Facebook? who looking for? Role of local centers? minimize conflict or maximize collaboration / mutual support. Dixie’s strategies:

  • Newsletter not just for upcoming programs
  • Meeting of center and group leaders (use 10 minutes to inform and enlist support)
  • Adv’t template carries message

Sean: look beyond “spiritual” aspirations to determine real pain/need. Can you discern patterns in who’s attracted, stage of life, other characteristics.

Current demographic skewed toward elders but  target market is younger professional people in their 30′s or earlier.

Centers on college campuses? May need to use intermediate generations. Look at new members in last 2-3 years.

John: mechanism talk re Facebook is important, but the important stuff is prior experience in growing a community with 12,000 members.

Sean: 12-step programs are worth focusing on if they are currently a source of folks interested in mindfulness and meditation today.

Q: maybe instead of “war games” in Dixie’s context, situation , the metaphor might be “scenario planning”

Greg Heffron (Technology Leader, Shambhala Online): We’ve been looking into Facebook marketing. I’m curious if others have used FB marketing to expand into new markets.

Dixie: great idea about understanding the data we already have. I’ll make a point of searching our database for demographic info on recent members.


General debrief from both sessions in MVP Clinic

  • John: time required?
  • Terry: like format, conversational style. useful to hear questions
  • It’s hard because the early MVP phase is very much about sense-making in a fog, so things tend to ramble a little bit
  • Dixie: surprised that these ideas hadn’t occurred to me before. Very different perspectives. appreciating the questions.
  • Dixie: visual thinker: would appreciate faces, diagrams, drawings.
  • Sean: MVP conversation is inherently tentative and entrepreneurs are at a loss for words. Can’t just calculate the derivative of a formula to find the answer.
  • to audience – if you want to take part let us know
  • consider a repeat session with Terry and Dixie: what have you learned in the last 90 days?

My key take-away from the session: when you are in the middle of defining your MVP things are often very confused. It’s not immediately obvious what insights are valuable. Just because you are wandering around trying to map  a new market does not mean you are lost.

You have a lot of conversations that are tentative and exploratory and you often find yourself at a loss for words. And that’s why we tried this format as a way to walk around the issues. There is not a simple formula for moving from point A to point B with a new product. I thought the session captured the process of groping toward insight.

We have planned three more MVP Clinics for Social/Community Applications

Don’t Give Your Investor Pitch To Customers, They Have Different Questions

Written by Sean Murphy. Posted in 1 Idea Stage, 2 Open for Business Stage, 3 Early Customer Stage, Books, skmurphy

Q: Can you please take a look at this pitch. I have created it as a promo for investors and potential users.

Selling your offering to customers and selling your business to investors requires two different presentations They have fundamentally different questions they need answered before they “buy.”

Customers want to understand how your product will meet their needs. Investors want to know how much their investment will return and why: they may want to understand your customer presentation but only if you cannot offer strong evidence of traction: revenue, signups, etc…They are always interested in what you have learned and what you plan to learn: what hypothesis you need to test using their money.

In B2B markets early business customers may be interested in your investment pitch if they believe you will need investment to be viable but that is rarely the case in a consumer market.

One of the best guides to constructing an investment pitch is “Pitching Hacks” by the Venture Hacks team. Here is there explanation for what needs to go into your elevator pitch:

The major components of an elevator pitch are traction, product, team, and social proof. And investors care about traction over everything else. A story without traction is a work of fiction.

Traction is a measure of your product’s engagement with its market, a.k.a. product/market fit. In order of importance, it is demonstrated through:

  • profit
  • revenue
  • customers
  • pilot customers
  • non-paying users
  • verified hypotheses about customer problems.

And their rates of change.

Pitching Hacks is a slim 83 page book that packs a lot of insight. Many longer books have a good 4-5 page magazine article trapped inside, this book has already been boiled to the essentials.  Definitely worth $20 if you are wiling to follow at least one of the many pieces of advice in the book.

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