In “Our ‘For Impact’ Culture Code,” Possible Health outlined a number of operating principles and cultural values that are also very appropriate for bootstrappers.
Q: When I introduce the idea for my business a lot of my friends are quick to ask: “are you sure there is no one else doing this?” In today’s fast and disruptive business world, I think it is very hard to come up with a business idea that is 100% unique, and utilizes a completely new set of technology features. I constantly find myself arguing that it doesn’t matter if someone else also has the same startup or business idea, it’s how you go about executing your business idea that matters.
What are your thoughts on competitors and how put off should I be when I find out another company has a similar product and mission to my startup?
“Don’t take business advice from people with bad personal lives.”
Frank Chimero “Some Lessons I Learned in 2013“
One of the hallmarks for success in a business-to-business market is the ability to form personal relationships as well as professional business relationships. Both require building trust. I am always dismayed when I read advice that advocates bait and switch or other forms of con games that erode trust and make it difficult for any startup to build relationships.
Some startups just “go for it” and pursue their vision without any real strategy. In the same way that the losers are never interviewed after after the lottery numbers are announced, press and pundits draw startup lessons by restricting their focus to the winners. It’s bullshit.
Feeling Lucky Is Not A Strategy
“Luck cannot be duplicated.” Richard Kostelanetz
Riffing on a Nov-2-2013 TechCrunch post by Cowboy Ventures‘ Aileen 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”
“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” (why not “insanely great” I wonder, why the compromise) 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.”
Ryan’s essay also appeared on LinkedIn and TheNextWeb:
-  http://www.linkedin.com/today/post/article/20140313200244-12962603-there-s-no-right-way-to-start-up
-  http://thenextweb.com/entrepreneur/2014/03/11/forget-know-theres-right-way-start/
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:
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
- When and how to pivot
- Rules of thumb for successful lean innovation
Five serious but avoidable financial mistakes we hear from time to time at a Bootstrapper Breakfast:
- 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.
- 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.
- 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.
- 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)).
- 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:
- “Treat Social Capital With the Same Care as Cash“
- “Keeping Your Customers’ Trust“
- “Conserving Trust In a Downturn“
- “Three Tips For Minimizing Misunderstandings Among Co-Founders“
- “The Business is Everyone’s Business”
- “Experiments Vs. Commitments“
Update Mar 8: this post was included in the Founder Institute’s “Mar 2 2014: This Week’s Must Read Articles For Entrepreneurs.“
Q: We have started selling and are looking for resources for a lean approach to sales, in particular for new product introduction.
Lean Approach To Sales at Lean Startup Conference 2012
Scott Sambucci and I presented a workshop at Lean Startup 2012 on “Engineering Your Sales Process.”
The deck is posted at http://www.slideshare.net/SalesQualia/engineering-your-sales-process
About 70% of the workshop is interaction with attendee on their specific early sales challenges so it’s not something that we video record.
Scott Sambucci has two books out that address early sales issues:
- “Startup Selling: How to sell if you really, really have to and don’t know how”
- “52 Sales Questions Answered: A Q&A Guide to Customer Development & Sales”
Two articles that offer useful overviews for defining a sales process:
- The Entrepreneur’s Guide to Sales by Mark Duncan and Sean Murphy
- The Sales Learning Curve by Mark Leslie and Charles Holloway (2006)
Revised in 2011 at “Sales Learning Cycle“
Other books you may find helpful:
- SPIN Selling by Neil Rackham
- Solution Selling by Michael Bosworth
- You’ll Never Get No for an Answer by Jack Carew
- Secrets of Consulting by Gerald Weinberg
- Getting it Right the First Time: How Innovative Companies Anticipate Demand by Christy and Katsaros
Here is a long interview I gave to Gabriel Weinberg on early stage B2B sales that many entrepreneurs have found useful: Sean Murphy on the first six to twelve enterprise customers
All of these resources talk about a systematic approach to selling for new products. I continue to offer “Engineering Your Sales Process”® as a workshop for early stage teams. Please contact me if you would like to arrange for a workshop.
Let’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
$90 includes lunch
“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
The difference between a hypothesis and an assumption is that the first is normally explicit and the second implicit. 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.
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.
Entrepreneurship Requires Perseverance
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“
Slack: Speed Difference Between Prudent and Breakneck
Back in the time of sailing ships, going anywhere by ship was a risky business. Going faster increased risk (more sail kept aloft in high winds, more changes taken in unknown and shoal waters, more fatigue and more human error). In such a time, the naval forces would instruct their captains to “proceed with all prudent speed” to arrive in a timely manner at an engagement. Prudent speed is something other than breakneck speed. It’s slower. We have to learn to move our knowledge endeavors “at all prudent speed.”
The difference between the time it takes you to arrive at “all prudent speed’ and the time it would take at “breakneck speed” is your slack. Slack is what helps you arrive quickly but with an unbroken neck.”
Tom DeMarco in “Slack“
Tom DeMarco on Leadership, Trust, and Training
He offers insights on leadership, trust, and training that I found very applicable to entrepreneurs managing startups.
Leadership: there is no easy formula for real leadership (if there were we would see a lot more of it), but it seems clear that the following elements always need to be present:
- Clear articulation of a direction
- Frank admission of short-term pain
Deciding what you will sacrifice or forgo to meet your objectives is a key element of developing realistic objectives and actions plans to support them. Adjusting your plan in light of intermediate results is also required. This same model also applies to any installation and bring-up plan you offer to prospects considering your offering.
“Trust: always give trust slightly in advance of demonstrated trustworthiness. New leaders acquire trust by giving trust.”
I think these rules apply to co-founders, employees, prospective customers, and partners. Trust but verify. Trust is the real currency of early customer relationships.
“Training is practice doing a new task much more slowly than an expert would do it.”
The concept of a learning curve or experience curve is that an individual or team’s proficiency at task is a function of their relevant experience doing it. You cannot be working at peak efficiency and peak learning at the same time. And you need to allot more time for rehearsal and reflection. Startups can outperform established firms by refusing to stall at an acceptable level of performance, instead continuing to refine their approach through mindful execution and deliberate practice.
Learning is faster and more effective when there is a facilitator or expert and peers or co-learners. Committing to learn as a team and seeking out or recognizing those with expertise are two elements of more effective training.
These are not the only insights in Slack, which anticipates the value of a flow based focused over resource efficiency and suggestions for change management and risk management.
The key tools of management in the knowledge organization are the tools of change management. Instead of authority and consequence (the management staples of the factory floor), the best knowledge-work managers are known for their powers of persuasion, negotiation, markers to call in, and their large reserves of accumulated trust.
Tom DeMarco in “Slack“
Don’t Miss DeMarco’s Peopleware and Waltzing With Bears
Tom DeMarco has two other books that are definitely worth reading:
Overview: This MVP clinic helps 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
- Mon Dec-16-2013 10am PST https://www3.gotomeeting.com/register/228324222
- Fri-Jan-17-2014 10am PST https://www3.gotomeeting.com/register/251287126
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:
- Howard Silverman http://solvingforpattern.org
- John Smith http://Learningalliances.net
- Sean Murphy https://www.skmurphy.com
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/
- Blog: www.thoughtfordevelopment.com / twitter: @thought4dev
- 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.
- 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)
- 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.
- 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 interactive form
- 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.
- 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 dog food 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:
- 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 disruptor, 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?
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:
- synergy with local centers
- more interest/ signups for advanced programs
- local centers
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)
- Advertising 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
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.
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:
- 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.
I love this ad for the 2012 re-launch of the Dodge Dart. It captures an engineering team’s desire to build a kick-ass product, unconstrained by financial compromise. We all want to work on a team that’s following Edwin Land‘s motto:
“Don’t do anything that someone else can do. Don’t undertake a project unless it is manifestly important and nearly impossible.”
- Date: Wed-Oct-23, 2013 10:00 AM – 11:00 AM PDT
- Reserve a seat http://www3.gotomeeting.com/register/548538222
Our two panelists:
- 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.
- 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 and his work has been used by both Fortune 1000 businesses and international analyst firms. Today he writes at CompetitiveThinking.com.
Each panelist will outline a significant growth challenge related to the social/community aspect of a new offering, describe hypotheses they plan to test, and explain how they will assess the impact.
John and I will ask clarifying questions about the learning happening in target market/ community of interest and suggest experiments / probes. The audience is also welcome to take part in asking questions or making suggestions.
Interviewing experts requires you to respect their time, doing basic research in advance to prepare a clear agenda and avoid unnecessary questions.
Whether you call it the status quo, the current order, the way things are, or vested interests, the present arrangement is what entrepreneurs strive to obsolete by offering something better, faster, cheaper, or just different.
Q: We are preparing to enter a B2B market where the potential buyers are high-value but relatively few in number and close-knit. I am concerned that they will have a low tolerance for a minimum viable product (MVP) approach; much less pre-MVP research that misses the mark. How do we preserve our credibility but take a scientific approach?
We work primarily with bootstrappers who have deep domain knowledge, typically a team of 2-5 engineers, scientists, or other experts. Our focus is on B2B markets with a hundred to a few thousand thousand firms. If you are solving a hard enough problem or just talking about a need that’s a real pain point they are more than willing to have a conversation and consider an your MVP. Here are a few rules of thumb for preserving your social capital in B2B niche markets:
- Actively Manage Expectations With Clear Communications
- Always Assume Everything You Do Will Become Public
- Listen For What Isn’t Being Said
- Predictable Behavior Inspires Trust
- Trust Doesn’t Scale, It’s Knit by Aligning Actions With Prior Commitments
One example of a product we are helping a team launch is BeamWise, a design and simulation too for biophotonic systems that may have a total market of a 250-500 organizations that might purchase it.
I like these markets because they often have an expertise barrier that makes them harder to penetrate. If you act in a trustworthy manner, are easy to do business with, and deliver value these customers tend to be loyal–they don’t treat your offering like a commodity but look at you more as a partner than a supplier.
These niche B2B markets require more discipline that consumer markets. You have to approach each customer in a way that you preserve your ability to do business with them: you cannot do anything that communicates a lack of respect or indicates you are merely using them as an experimental subject or “target practice.” People in these markets know each other, reference each other’s purchase decisions, and a poor reputation can travel faster than your ability to message.
This does not mean that your product has to be perfect, only that you are committed to acting with integrity and providing value. Seth Godin had a great blog post on “A Hierarchy of Failure” that’s relevant to your market exploration and MVP strategies. Here is his hierarchy:
- FAIL OFTEN: Ideas that challenge the status quo. Proposals. Brainstorms. Concepts that open doors.
- FAIL FREQUENTLY: Prototypes. Spreadsheets. Sample ads and copy.
- FAIL OCCASIONALLY: Working mockups. Playtesting sessions. Board meetings.
- FAIL RARELY: Interactions with small groups of actual users and customers.
- FAIL NEVER: Keeping promises to your constituents.
I think he gets it exactly correct. And I think a number of entrepreneurs, in particular in the early market, get it almost exactly backward by
- Putting up a landing page that promises a capability or extra feature that doesn’t exist.
- Focusing more on a potential solution when talking with prospects–using them to prototype– instead of ensuring that they really understand the prospect’s perspective on the problem.
- Looking for funding before they look for customers, using investor interest as validation for their business concept.
Most organizations do precisely the opposite…They rarely take the pro-active steps necessary to fail quietly, and often, in private, in advance, when there’s still time to make things better.
Better to have a difficult conversation now than a failed customer interaction later.
The foundation of a successful business is the ability to make and meet commitments to customers, partners, employees, suppliers, and other stakeholders. If you inform them in advance, “we are going to try the following experiment” they may or may not take part, but they can offer informed consent. I see too many instances where founders undervalue a relationship with a customer based on mutual trust and commitment.
Here are some related posts on managing trust and expertise:
We use this definition in our “Engineering Your Sales” and “Validating Your MVP” workshops and our MVP clinics. Our focus is on developing and selling products to businesses so that biases the definition a little bit but it’s important to remember what’s under your control in crafting your MVP:
- The particular type of customer: you can select who are you targeting and messaging. In many B2B markets the best message is a dog whistle: highly appealing to your target and of little interest to those who are not.
- The specific problem or need your focus on: it’s better to pick a very narrow pain point initially so that you maximize your chances of providing value.
- What you provide: the feature set and packaging of your offering.
These are normally the three areas that you tinker with during marketing exploration and MVP introduction. It’s also important to understand what’s not under your control:
- The customer decides if the need is important enough, or the problem severe enough, to devote any time to conversation or learning more about your offering.
- The customer decides if your solution offers enough of a difference over the status quo and other alternatives available to them to actively consider. Value is in the customer’s mind and it’s created in the customer’s business when they successfully deploy your offering. Your MVP is not valuable in the abstract; it must always be evaluated in the context of a particular customer. It does not matter how much time and expense you have invested in creating it, it’s the effect it will have on the customer’s business.
- The customer decides the nature and size of the initial purchase. You can decide not to pursue an opportunity that is “too small” but if the customer wants to pilot in a team or one department before deploying your solution more widely it’s often better to take that deal and get started than continue to argue for a larger initial deal. Breaking your offering into phases and smaller components will always make it easier to digest.
The following chalk talk illustrates this last point in more detail:
See “Chalk Talk on Technology Adoption” for a transcript.