Tag Archives: Lean Startup

Found a technical co-founder

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So I have been a little light on the blog posts of late but that is because I have shifted more from thinking and theorising to doing, which is no bad thing. Since I last blogged there has been some significant progress.

I spent last weekend locked up in a flat in sunny Largs with a potential technical co-founder. While I wasn’t actively looking for a technical co-founder-I have previously blogged about the issues of being a non-technical founder- I was very much open to the idea. Michael approached me after reading this blog. Michael had been working on a similar project assessing how the internet could be used to deliver learning and teaching resources to teenagers studying biology at school. When Michael read the blog he was coming to the realisation that the market was too small to build a sustainable business on.

When we initially met for a coffee it seemed that it was a good connect and there was definitely potential for a partnership. I am not precious about my idea and my mantra has always been that I am happy to include anyone in the business if they can add real value. However, no matter how technically incompetent I may be I was in no rush to go jumping into bed without doing some personal ‘due diligence’. As such we went away for the weekend to discuss the idea in more detail but ultimately to establish if we could work together over the long-term. As Michael so succinctly articulated it- “It’s my objective to find out if you’re a cock!”. No doubt there will be some challenging times ahead but ultimately we got on really well and have a shared passion for delivering on the idea and now have a clear idea of what we need to do in the early stages to make this a success

What all this does mean is that work on the Minimum Viable Product can really start to ramp up and we should have something up by the end of next week at the latest.

I have spoken to numerous people who have had both successful and unsuccessful experiences of getting involved with co-founders that they don’t know. In my experience there are so many unknowns in the business at this early stage and rather than trying to work out everything at the start the most important thing for me is to ensure that there is alignment over the key issues. Thanks to Peter Jaco at Cloud Tomo for his advice to write everything down and agree on everything that has been discussed (you should see the size of the mind map from the weekend!). Another key learning point is don’t make quick, easy decisions at the start because you don’t want to rock the boat…eventually these will come out and when they do there will be a lot more to lose. Face any difficult issues face on from the start- whether these be around equity, roles and responsibilities.

I have heard many people comparing the process to finding a ‘lover’ or a marriage  but since we have just been away for the weekend together I decided to steer clear of this analogy!

If you are going through similar process I would highly recommend reading the relevant chapters in The Founder’s Dilemmas by Noam Wasserman, it really opened my eyes to some of the problems that can occur later on in the business based on decisions made at the very start.

Now to get back to some real work….

How this blog can help test some assumptions

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When this idea started out it was very much focused on delivering personal development to individuals. As I have spoken to more people I have recognised that it is about effectively changing behaviour and habits in our daily lives across a wide range of areas to try and reduce the gap between what we set out to achieve and what we ultimately end up doing.

I have started to think that this blog offers a great opportunity to test some of the theories I have around the delivery and implementation of theory and concept. I still need to think through a few of the points but think of this as an early stage test of the theories and some of the delivery methods.

Even among those who are aware of the theory behind the Lean Startup movement there is poor implementation of the basic principles. I have lost count of the number of startups who have told me they have spent the past x months (or sometimes years) developing a product without so much as discussing it with anyone never mind customers or “I know it is a good product but I just don’t know who for…”

The way I see it is that I am already writing the blog and I have wanted to tidy up the delivery any way, so it makes sense to try and add a little structure around it and hopefully increase the value delivered to readers. When I look back on this blogs short history and my experience of implementing the principles I can see that there has been a lot confusion around what exactly it all means.

This is still a massive learning experience for me and I don’t pertain to be an expert by any means and I welcome as much input from readers as possible. I truly believe that we will be more successful if we work together. Hopefully we can continue to change the conversation both among founders and between investors and founders.

I will explain in more detail tomorrow what I am looking to achieve and how I will go about doing so, until then…..

What Investors Really Want

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As someone who is new to the startup scene in Scotland it was very interesting to head along to the iVentures talk last night on ‘What Investors Really Want’ with representation from the Angel Community in the shape of John Waddell of Archangels and Sandy McKinnon of Pentech Ventures LLP in the blue corner for the VC’s.

I thought I would share a few of the key points as I saw them and offer a little opinion:

BUSINESS PLANS

There was a general agreement that a business doesn’t need a fully formed business plan to secure funding. What is important is that there is some degree of momentum and product/market fit. Sandy suggested that he’d much rather see a business model canvas with everything laid out on one page than a 60 page document. According to John the most important (and often overlooked) element is: what is the problem you are solving and what will it allow the customer to do? This is a sentiment hammered home by Dave McClure (and he’s seen a pitch or two in his time).

After the numbers the most important thing is the chemistry of the team involved. Do they have passion and belief with real clarity of what can be achieved?

Sandy suggested that there is a real lack of ‘hustle’ and passion manifests itself in a fear of failure among many Scottish startups. Startups need to get out there and move quicker, there is a general reluctance to get a product out into the market and into the hands of potential customers.

While skills such as accountancy can be learned by attending a course, you can’t buy passion and a relentless drive to make your vision a reality.

A SCOTTISH GOOGLE?

The question was asked whether a giant company was possible in Scotland and secondly whether it was actually desirable.

Sandy believed that it would be more advantageous to have many ‘large’ companies than one behemoth. Whereas John believes that it has already happened just not in the tech sphere and pointed out a list of very successful Scottish companies such as The Wood Group, Clyde Blowers (Jim MacColl will be speaking at the next iVenture talk), Aggreko and Stagecoach.

I think a large win in the Tech space in Scotland would provide an increased amount of ‘have a go money’ as Sandy referred to it. There is no denying that there are many successes in Scottish business but are the companies and the money that flows from them the right people to be investing in tech startups?

The question of why Scotland hasn’t seen the uptake in tech companies was raised and skirted around but not really answered.

There is no denying that there is a degree of friction between entrepreneurs and the investment community but as with most things in life there are always two sides to every situation. Scott Allison in Forbes stated that:

“The problem with building a startup outside of Silicon Valley is that the further away from startup culture, the less this is understood, by founders, investors, or any other stakeholder. Probably 99% of books written about business are addressing the issues of scaling, managing, and building an established business. As well as that, education and business support services are generally skewed towards that understanding of traditional businesses.” 

However, all too often I hear startups in Scotland talking about investors and the investment community not getting them. While the Lean Startup movement is very trendy at the moment and most startups (particularly in the Tech space) are aware of the concepts, I just wonder how many startups are rigorously following the principles laid out?

While there are a lot of things still to be done to realise the full potential that Scotland has to offer, there was a general optimism about the future of Scottish startup scene. There are lots of great things happening in Scotland with Entrepreneurial-Spark on the West Coast and TechCube launching soon in Edinburgh. While the increasing number of startup incubators and accelerators in North America is seen by some as a sign of a bubble, it can only be seen as a positive thing in Scotland.

I know that I am excited about what the future holds and although I am not 100% sure why, I left the event last night committed to dreaming bigger!

In search of a business model…

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The next step for me is to spend a little time brainstorming my business model. This is where the business planning comes in rather than a traditional business plan.

To do this I will be following the process initially laid out by Alexander Osterwalder in Business Model Generation. This is a great book but the process by which it all came together is more interesting, it is a crowdsourced book written with over 470 contributors in 45 countries. In fact I will be using a slightly modified version of the original aimed at startups that was developed by Ash Maurya that he has named Lean Canvas.

The aim of using a ‘canvas’ is to get an overall view of the business in one place and to encourage and challenge you to focus and distill your proposition on to one single page. You can see a picture of a blank canvas below but I will be experimenting with the best way of writing this up and sharing it.

In the first instance I will throw down everything on the one canvas and then break it down into an individual canvas for each customer segment.

The sections of the plan are as follows and I will proceed in this order:

PROBLEM (AND CUSTOMER)

Highlight the top 3 problems

What are the existing alternatives that people are using to solve this problem?

CUSTOMER SEGMENT

Make sure to break it down into users and customers.

Continue to break it down to customer segments with shared behaviour and common needs

UNIQUE VALUE PROPOSITION

What problem are we solving and what value will we provide?

SOLUTION

Highlight the top 3 solutions

What is the simplest Minimum Viable Product that can test the problem and my assumptions.

CHANNELS

One of the key areas to establish that is often overlooked in the early stages of a startup is how do we get the product to the customer segments highlighted above?

REVENUE STREAMS & COST STRUCTURE

Will someone pay to solve the problem that we have highlighted? This is an area that needs to be addressed in the customer interviews.

What is the revenue model?

How much will it cost to carry out 30-50 customer discovery interviews?

How much will it cost to define, build and launch an MVP?

What is the burn-rate? Fixed and Variable results.

Once all this information is gathered it will give an idea of both the break even point and the runway.

KEY METRICS

What are the key activities I will measure to judge progress?

A common set of metrics used is Dave McClure’s pirate metrics: (Can you work out why they are referred to as Pirate metrics?

  • Acquisition
  • Activation
  • Retention
  • Revenue
  • Referral

UNFAIR ADVANTAGE

This is the thing that sets you apart from the competition, it is something that can’t be easily copied or bought. It is also one of the hardest sections to fill in at this stage and often only makes itself known in the face of competition.

While many people think the approach is ‘to simplistic’, I have shared this model with startup business and walked through the process with a few and every time I am amazed at its power.

A few pointers that I have to be cognizant of:

  • Do this in one sitting
  • At this stage it is ok to leave sections blank, this in fact can help highlight the potentially riskiest areas of the business and focus attention.
  • Be concise
  • Keep Ideas moveable- using post-it notes
  • Tell a story
  • Use colours and draw

I am hoping to have the initial draft of this completed tonight and then I will share with you where I am up to tomorrow. Wish me luck!

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What’s the difference between a startup and starting a business?

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We know that a startup can existing in a large corporations and we know that Lean Startup can be applied to non-web based business, a great example of this is Eric Reis’ work with the US Government. However, what is not so clear is how Lean Startup principles can be applied to starting up a business. As I have been going through the Lean Startup process and discussing it on and off-line I have been asked this question.

I may have lost you a little- the difference between starting business and a ‘startup’ is subtle yet often overlooked. I had already been thinking of this based on conversations with friends when I read Scott Allison’s first blog post for Forbes.

To re-iterate, the two most common definitions of a startup are:

“a human institution designed to deliver a new product or service under conditions of extreme uncertainty.”

“a company in search of a repeatable and scalable business model”

While Scott Allison focused on the difference between the two, particularly focusing on what a startup lacks compared to a business- certainty and a repeatable, scalable business model.

All this week I have been focusing on the one thing they most definitely share in common- they are both based largely on assumptions.

All decisions one makes in the early stages of a business are based on assumptions- the biggest problem is that most businesses don’t have a process in place for highlighting and testing these assumptions and too often businesses don’t find out their assumptions are wrong until it is too late.

As with uncertainty the presence of assumptions is only more apparent in startups because most of the time nothing has been produced. It is a deadly trap for businesses to get into to think that because they have a ‘proven’ business model, some degree of product market fit and some paying customers that they have everything sorted.

Luckily I have had the chance to sit down with an early stage (off-line) businesses run by a friend of mine this weekend and get some first hand experience of this problem.

This business would not fall into the descriptions of a startup above but it is definitely facing uncertainty and was in danger of making significant and as it turned out incorrect decisions based on assumptions masquerading as facts.

By questioning the reasoning for actions, the assumptions these decisions were made on and how to test these assumption it allowed us to gain perspective.

I have far from gotten my head around this subtle but important distinction but this week has been really enlightening as it put a whole different perspective on my business outlook. This is an on-going project and I will continue to work with my friend and her business and as I start to shed some light I will share my experiences and learning.

I have found that this is a topic that generates much debate and discussion and I would love to hear your thoughts and opinions.

C-P-S Hypothesis Part 2: Customer

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So in the second part of the series of posts on my C-P-S hypothesis I am focusing on the target CUSTOMER. If you have missed the previous post you can read about the process I am following here.

So I have been spending the last month talking about this business idea with friends, family and business associates and through these discussions the idea has morphed and changed and I hope that it continues to do so.

One of the most common pivots in Lean Startups is the Customer Segment Pivot- where after some investigation you find out that you have a solution that is solving a problem but not for the customer segment you initially thought.

As I mentioned briefly yesterday my initial focus was on individuals. Particularly those who are passionate about  personal development and are willing and keen to improve elements of their lives; but who are frustrated at both the resources available and who are frustrated at spending money on resources that are not delivering results.

At the first Lean Startup Meetup in Edinburgh on Monday two main points came up when we were discussing the idea:

The first was whether there was actually enough people who are interested in improving their lives? Granted this was coming from a self-confessed cynic of self-help but this is definitely something I would like to quantify. My gut says that while there is a lot of apathy out there, there is also a lot of very driven and passionate people (many of whom I am glad to call friends). Not to mention that Heidi Grant Halvorson recent blog post Nine Things Successful People Do Differently on Harvard Business Review is the most viewed blog in HBR’s history. This blog post speaks very much to my target audience.

The second point that was discussed was the needs of businesses and the particular problems they face with training and development of their staff- this is something that I have to review and get out there and speak to businesses.

As I was reading Running Lean and contemplating the often overlooked distinction between a customer and a user it got me into thinking.

Rather than thinking of the business as a provider of content to individuals what about providing those with content-trainers, coaches and even businesses- with a platform to more effectively deliver and track the implementation of the training. The customer will be the content provider who will bundle it into their offering and the user will be the individuals who are going through the training.

I am looking forward to lining up some formal Customer Discovery interviews across all three customer segments: individuals, coaches/trainers and businesses. As I work through the Customer Discovery process and establish the customer this will have big impacts on the business model and the solution that we provide.

There is no doubt that I have had the best conversations with those who don’t know me. While speaking to friends and family is great for support and motivation very rarely do they challenge you and ask the hard questions that need to be asked.

If you fall into one of these groups and you are interested in getting involved in this process I would love to hear from you.

Tomorrow we will be looking at the SOLUTION to the problem.

A Problem Focused Startup

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I was reading Running Lean by Ash Maurya while sitting in a coffee shop in SoHo in NYC when I realised that I that I was falling into a trap that catches out a lot of startups and I was starting down a path that was increasing my chances of failure.

Mauraya recommends identifying the greatest risks in the business and reducing the riskiest first. The book forced me to look at the business idea from a difference angle. The biggest risk in the majority of startups lies in developing an offering that nobody wants and this is one of the biggest reasons for the failure of startups.

I instantaneously recognised that I have been focusing too much attention on the solution and not enough time on the problem I am looking to solve. This is a sure-fire way to develop an offering that nobody wants.

I can attest from personal experience that this is a very easy trap to fall into. It is far too easy to get carried away once you realise that you can build a solution to a problem that you have identified, especially when a few people have validated the idea. This is not enough. With enough time, money and effort most things can be built. The question is no longer can it be built but rather should we build it, and can we build a sustainable business around the offering.

I can also see why many founders resist getting out and speaking to potential customers as that will inevitably result in many of the assumptions being challenged that will impact the solution and this isn’t always an easy thing to accept

While I was annoyed at myself for falling into a very obvious trap I am very glad that I recognised it early on as it allows me to take action.

Over the next week or two I will outline the business idea in more detail and the Customer Development process I plan on following and I welcome all your input, feedback and comments.

What is all this Lean Startup business about?

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Good question. This blog post started off life as a brief foundation of The Lean Startup principles,  with the aim of giving everyone an idea of what I am talking about. As with most things in life the original thought grew arms and legs and it has caused me to re-assess my approach.

When I first read The Lean Startup book it wasn’t so much the individual steps that hooked me but rather the over riding philosophy.

This philosophy runs through three books at the core of the Lean Startup and is more than any one book or author:

  • The Four Steps to the Epiphany by Steve Blank
  • The Lean Startup by Eric Reis
  • Business Model Generation by Alexander Osterwalder

At this stage, rather than focus on the individual steps laid out in one book, I want to look at the common themes across the movement.

The one unifying theme among all proponents of the movement is to re-assess how we approach startups in the business world with the aim of increasing the success rate. We have all heard the statistics around the failure rate of new businesses the world over, clearly there is something wrong.

 The one point that really hit home for me was the realisation that startups are not simply smaller versions of large corporations- often referred to as the dollhouse fallacy. Once we accept this we realise that the tools and procedures for measuring and monitoring the success of established corporations are not suitable for startups. The Lean Startup philosophy tackles this in an innovative way.

In the process of writing the post it became very apparent to me that while I have read The Lean Startup by Eric Reis I needed a better understanding of the wider process. This insight has prompted me to create and share a reading list to broaden my understanding and ensure that I have the right process in place for when the business launches. More on that to follow!

I am currently at the theoretical stage of starting the business and ultimately the real learning will happen when I start to implement the principles but it is imperative that I have a strong foundation to build on. I’d rather be spending my time doing this than a traditional business plan trying to guess my turnover in 1,3 and  years.

I apologise if you were looking for a more comprehensive answer to the question of title but I promise that this approach will be much more beneficial in the long-run!

The journey continues…. 


 

The Plight of a Non-Technical Founder

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As you may already know it is my intention to start a web-based business but there is one potential sticking point-I am anything but technical. Setting up this WordPress blog has seriously highlighted my inadequacies.

This raises the question- Is it possible, or desirable to start a web-based business without basic programming skills? Is it possible to develop and iterate to get to product/market fit without being able to personally bring your idea to fruition?

It is fair to say that I have been a little naïve when approaching the technical side of the business up until now. I had always thought of it as a decision with two main variables- time and money. I could either spend some money outsourcing the development and get an MVP to the market ASAP or I could look to bring on a technical co-founder which would take longer but cost less money. I had completely ignored the wider impact of this decision on the future of the business.

A few great blogs by Scott Allison and Jason Freedman have recently prompted me to discuss this matter in more detail with business owners who are further down the entrepreneurial path and has made me re-think my options.

I have always believed that I should focus on my strengths and leave the technical side of things to others. However, I have to accept that I cannot effectively manage a process that I don’t understand.

As I see it at the moment, I have few options:

1.       I can spend the next couple of years learning the technical knowledge to bring the concept to life myself.

I will never be, and have no desire to be, the CTO of the business.

2.       Bring on a technically minded co-founder to work with me to develop the idea.

This will need to happen, the question is just when.

3.       Outsource the development of the product offering

If I do this I need to think a lot more about how this affects the potential growth plans of the business. Maybe a technically minded advisor/mentor would be the best option here.

No matter which option I take; in the end the chances of success will be significantly increased by my improve knowledge of the technical elements of the business.

I am currently in the early stages of working with Zendit to get a Minimum Viable Product to take out to the market and start testing.  At the same time I am working on developing my own programming skills through Tree House and Codecademy. I like Jason Freedman’s approach to finding a technical co-founder. It is not something that is just going to happen, I must earn a technical co-founder.

Before even starting on the technical development I have a few critical steps I need to go through that will have a bearing on the direction of the product. Hopefully some of the principles of The Lean Startup will help address these issues and by working closely with the team at Zendit I can be successful in bringing a product to the market place.

As with all things in life the more I investigate and discuss the more I realise I don’t know and the more complicated the decision becomes. Whichever option I decide to pursue will have its advantages and potential pitfalls and no one path is right for all businesses. Maybe I should listen to Pinterest co-founder, Ben Silbermann, who recently told the audience at SXSW not to take too much advice from others. Ultimately I must forge my own path and yes I will make mistakes and there will be a lot of uncertainty ahead but isn’t that all part of the fun.

If nothing, I am always up for a challenge and I love learning new things. Who knows I may actually enjoy coding, stranger things have happened.

If you are involved in a startup who is going through or has gone through a similar experience I’d love to hear from you.

Be sure to sign up below to be notified of the next blog post- ‘What is all this Lean Startup business about?’ or as we say in bonnie Scotland ‘Whits aw this Lean Startup aboot?’

Challenge all assumptions in business

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I read an interesting article by Alex Cheatle (The Founder of Ten Group) in the Entrepreneur section of the Financial Times this weekend that warns business leaders to be wary of old business axioms.

I could not agree with Alex more and as someone at the very early stages of a startup (I am still working my notice at my job) I have found the principles laid out by The Lean Startup movement offer some degree of antidote to the malaise. At the core of The Lean Startup movement is the belief that we should challenge all assumptions about business. The whole process revolves around turning these assumptions to facts- or at least to find out that our assumptions are incorrect as early as possible.

The movement has grown in one sense from the response to the question- “Why do so many startups fail?”

The short answer is that companies of all sizes spend too much time, money and effort developing products and services that nobody wants or needs.

The Lean Startup movement offers a framework to allow entrepreneurs to better manage the process as they test their assumptions about their customer offering and the potential to build a business around the idea.

As Reis points out, in this day and age the question is no longer can we build it but should we?

Although it was The Lean Startup book by Eric Reis that initially caught my (and the worlds) attention, the wider movement is much greater than one book or one individual and it has inspired me to read wider and deeper. It is a movement that is gathering pace worldwide albeit with much more velocity in the US than in the UK and is having a significant impact on the whole startup ecosystem.

The words ‘startup’ and ‘entrepreneur’ conjour up many thoughts in people’s minds- both positive and negative. It is important at this stage to state that all the proponents are keen to point out that the terms startup and entrepreneur are not restricted to college students in their dorm room.

“a startup is an organization formed to search for a repeatable and scalable business model.”

Steve Blank

 I am hesitant to refer to the movement as an ‘Entrepreneurial Enlightenment’ as some have done but it is doing some great work in rethinking the approach to starting up in business with the aim of improving the success rate of startups.

If you are involved in a startup or are in the process of developing a product within an established business and you are not aware of The Lean Startup movement then I highly recommend reading some of the fantastic content online as a starting poing. The following websites are a great starting point:

http://theleanstartup.com/

http://www.startuplessonslearned.com/

There are a lot of assumptions out there about startups and business in general, it is imperative that we test and challenge these assumptions, this is how we can truly innovate and succeed.

Join me on the journey as I challenge all the assumptions I have about business!