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I have an idea – where can I get advice?

The 7 virtues of idea validation

  1. The absolute very first people you go to, are your potential customers. Listen very carefully what they say.
  2. Never ever fear that anybody can “steal” your idea. This is a myth that seem to never go away under first time entrepreneurs. That fear, by the way, is the no.1 reason why millions of great ideas vanish away and never see the light of day. Don’t bother your future clients with NDAs or other legal confrontation. This makes no sense.
  3. Interview your target audience BEFORE you spend a single penny or minute in prototyping or writing your first lines of code. Everything you do prior to speaking with them is pre-conditioning your thoughts. That bears the risk that you may start arguing with your contact.
  4. Structure the interview around 3 strategically craft questions:
    a) “How would the proposed idea help you?” Let them tell you their possible story, don’t “sell” your idea.
    b) “If you would build it, what would you charge, where would you see a good price point”. Find out what value they see.
    c) “What would you do 9 month later, if I would tell you the product is no longer available. What would be your alternative?” Find out if you have just a nice to have or it would be a serious problem when your idea is not maturing.
  5. Put yourself in a state of “very awake meditation”. Meaning you are hyper carefully listen, you never argue even a tiny bit, and you document not only what they say but also the emotions you noticed. Consider yourself an emotionless AI based Robot. When they don’t get what you say, make a note and trim your presentation.
  6. Don’t ever bother ‘potential customers’ with any type of faceless survey.
  7. Make sure you speak with at least 42 people. That number is important:
    – it has some undocumented statistical value
    – it forces you to find enough potential customers to start with
    – if you find only less than 42, it indicates that it will never warrant a business
    – you get the necessary feedback to decide your MVP functionality
    – it helps you understand how much time you spend to find, reach and talk with your audience – first indication for customer acquisition cost.
    – if you can’t get at least 20 positive feedbacks, continue until you have 20,

This is called idea & first market validation and is a key process in every top notch startup – BEFORE it was a real startup.

Most people just go and run. They fail but fail far later and have a 90% failure rate. Even though every startup entrepreneur today knows, that they ave only a 10% chance to win, they are sloppy right out of the gate :)

I get about 5 questions like that every day. And since I’m rather lazy, I wrote this post :)

Hope it’s helpful.

 

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Who should build the MVP

I’ve been asked so many times that I felt it would be good to write a blog post.
Obviously there are many consulting services, software developer and others who could built your MVP in a rather short period of time. Then you get what you asked for and can enter the market. If customers report bugs, you go back to your developer. And you hire them again and again – or you ignore the requests for now until you get more funding. It sounds totally logical. However reality tells a very different story:

Your MVP is a barebone minimum solution. It is supposed to be up rather quickly and your customers tell you what they experience, what they like and what they don’t like. If you have a CTO, it is not just taking the bug reports but carefully listening to each request. Each discussion with a customer contains a wealth of insights about how they use the product, what key benefits they have or want to have, how it is or should be integrated in other technologies and so forth. From that moment on you get probably daily requests for changes and more important lots of tiny little cool ideas that your developer or developer team can implement. I remember we received 1,400 feature requests, update requests and bugs within the first three month. You can’t pay your outsourcing organization to handle that.

Moreover our CTO saw what directions this will take and prepared the platform a bit differently. In the first six months, he was involved in almost any customer discussion. He needed to know and feel where this is going. More importantly he sensed functionalities based on the customer stories that led to functionalities they didn’t dear to ask but made a lot of sense and was no problem to do. The CTO is the one person who shapes the product, the future technology decisions and the technological direction of the company like nobody else. This cannot be outsourced – not at reasonable cost.

On top of all, the CTO does not try to build an MVP that meets the specification you gave them. The CTO is building the foundation of a solution that will change the world in the future and crafts an MVP that acts like the first cell of an organism.

Early Adopter Customer

If you have a sensational new application, you won’t get typical customers. Those ask you who else is using it, how many customers you have, are you funded and so forth. And so you have to look for early adopters. Thos premium customers are willing to check out new things because also they want to lead their market. BUt if you tell them that the technology was done by a freelancer, outsources, service organization or a like they get less motivated. They are taking a risk, dealing with a ne technology – but far less so when there is no CTO.

With all that said, there should be no reason to hire a consultant, rather than involving a top notch technologist.

Hire or Co-Founder?

first: as a startup you just cannot hire a top performing developer. No matter what you offer to pay. Therefore attract them as co-founder. Yes, they are hard to find and you want to start. But there is no shortcut what so ever. If that technology is a core element and differentiator of your business, than the person that builds it and develops it further over the next 10 years should have a seat on the founders bench.

As an investor

I would never invest in a company that outsources their development. It’s too clear that there is no technological focus or the technology doesn’t play any important role. It also shows that the founder could not attract any co-founder and I must ask: can they attract customers?

All in all the number of reasons for a co-founder CTO outweigh the short term benefit of getting a MVP slapped together for a demo.

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Starting a startup in 5 steps

When you start your business, you don’t need anything other than your brain and working through the following 5 steps. If there is anything unclear to you, use Google. Finding your own way is part of this exercise. You will do that for the next 10+ years – finding your own way. If you are not 100% if entrepreneurship is even the right thing for you, check out the 10 most relevant founders traits – and also here find your own way to get there or chose something else.

1) IDEA STAGE
You have an idea and you are excited about it. Often times young entrepreneurs would like to get a validation from some experienced entrepreneurs or investors. Validating your idea is a great first move. But instead of talking to other entrepreneurs or investors – talk to potential customers. Do that before you even invest time and resources in building prototypes. However, if you feel better to make sure your idea works, it is OK to invest in a prototype.CHECK LIST
1) Did you speak to at least 10 potential customers to verify that your idea is solving a real problem and providing a much-needed solution.
2) Use a presentation or document to share your idea

 

2) ASSEMBLE YOUR TEAM, FIND CO-FOUNDERS
Before you do anything other than writing down your idea, attract at least another co-founder. Our world is too complex to do everything alone. And more importantly, our world is moving too fast for a single human to start a successful business and grow it fast enough before others enter their space. None of the top investors will ever invest in a solopreneur, no matter how cool the idea is.If you are a business person, find the technical co-founder. If you are an engineer find a business co-founder. If you can’t attract another entrepreneur, consider your idea is either not good enough or your skills and personality is not well enough developed to attract others which will always be necessary as you need to attract talents, customers, business partners, investors and more. Only two engineers or two business people is no better than a solopreneur – it’s all about the diverse skill set on the business leader bench. Be committed to give your co-founders at least 20% of your company and stay away from being the dominating “main” owner.CHECK LIST
1) Do you already have a diverse founders team with business as well as subject matter expertise?
2) Did you make well documented arrangement between founders regarding the equity ownership distribution.

 

3) DEVELOP YOUR SOLUTION CONCEPT
You and your co-founder will now want to develop the whole concept of your company – together. This includes defining the problem you are solving or the need you are fulfilling. It determines who your target audience will be and what you are bringing to your market. Describe what’s unique about you and your solution and make some intense research who else is offering similar solutions. Research other potential companies in the US, all over Europe and Asia. Define what the SINGLE most important function of your business is. If you have a list of important features – select one. If that one is too weak, strengthen that feature instead of growing a list. If the unique aspect of your solution is that you offer a complete suite of features while other businesses deliver only parts of it, re-think your idea as there is almost always some missing aspect of your concept.
CHECK LIST
1) Do you have a written down business concept – not necessarily a fully blown business plan?
2) Have you selected your unique single most important functionality that you want to be known for one day?

 

4) MARKET VALIDATION
Now put together a short presentation deck with no more than 10 slides. Create a list of 50 individual people who are potential customers (people not companies). Then try to make an appointment to present your idea. When you meet them – we highly suggest to NOT argue with them – just listen super carefully. Make notes what they don’t like, did not understand, did not need, and what they liked. IMPORTANT: Ask what of their current problems you would solve. Ask if they would buy your solution and what they’d be willing to pay. Make sure you end up speaking with at least 23 relevant people who are interested in your solution. If you don’t have the 23, ask more people. Document each and every interview. You may notice that you do not need a product to do any of the above.CHECK LIST
1) Did you speak to at least 23 people who have been willing to explore your solution for their business or individual use and it at least ort of solves a problem they have?
2) Is the feedback motivating enough to begin investing serious time and resources to build a first prototype? If not go back to step 3.

 

5) BUSINESS MODEL
With all the feedback you received, you may now develop a concept how you will produce, market, sell, deliver and service the product. All overall: How are you going to make money and compete with others. Then ask yourself if there is any way to make the engagement between you and your customer especially attractive – more attractive than your competitors. Determine the cost of building your solution and the price you like to sell it for. Consider a margin for distribution channels if you are addressing a large market (B2B or B2C).CHECK LIST
1) Do you have a written down business model that includes a possible pricing, a concept how to bring it to market and how you service customers?
2) Do you have an idea how you will compete against similar solutions or educate customers about your solution that has no competition?

At this stage it makes sense to look for a successful entrepreneur as a mentor, an office in a co-working space and others to connect with. Too early to discuss with investors. Forget seeking for an investor to build the business. Find some capital and seek for investors when you are ready to grow the business from a few early customers to a real company.

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MVP, Minimum Viable Product

There is a concept called MVP – Minimum Viable Product.

Even though the name kind of says it all, the concept “MINIMUM” – “VIABLE” – “PRODUCT” indicates that there are as few features as possible, it must kind of work and it is a product – most entrepreneurs interpret MVP as the early iteration of a product they want to build. But that is definitely not the case. Let me explain it in more details:

1) MINIMUM VP
An MVP is supposed to demonstrate your core functionality that shows how your product is different from others. And as such focus exclusively on the core mechanism and process of the new solution. If you build a self driving car, it would be perfectly OK to use an old VW beetle that may have no lights and only one seat. But if it is perfectly self steering – you made a great MVP. Try to implement as little features as possible. Every “nice to have” feature destructs unless it is absolutely necessary to show the core idea.

2) M VIABLE P
Be aware that the MVP will only be used by early adopters and need to be seen by investors and other key people. They are typically smart enough to abstract the concept and imagine where you want to take it. It just needs to show the core feature in a very solid way. It need to work over and over again. The function needs to be robust enough that anybody can envision you build the whole concept in a beautiful way later on. Equally important, let the users experiment with it BEFORE it is ready. You will want to learn as much as possible from those users to build the final product after their feedback. Redoing a product is not only much harder but a rather “ready” product may mislead users to a behavior they may not be able to articulate their pain – rather leave it open in an MVP.

3) MV PRODUCT
Make sure that you have a well thought out business model that is actually the disrupting part of your solution. EVERY business model is reflected in the MVP. If the business model is lame, your MVP will not be too catchy wither. Make the PRODUCT reflect your business model.

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A day of a startup ceo

You have only 24 hours a day minus 10 to sleep, eat and recharge makes it 14 hours.
I assume you are tackling a large market and want to conquer the world. I also assume you want to have about 30% market share of whatever billion dollar market with roughly 20 Million potential customers.

This post was inspired by a question on Quora: As CEO and non-tech co-founder, what should I be doing before we launch while my tech. co-founder is coding?

The 14 hour day of a startup CEO

1) List building 1 hour
Start spending an hour a day to extend the list of potential customers who should test, use and buy your product once it is ready. Make the list a simple spreadsheet with first name, last name, company (if B2B), linkedIn profile, twitter name, location, interest (B2C) or title (B2B). Try to get 50 names a day (so work fast).

2) Reaching out to users 1 hour
Try to reach some of those people right away and ask them what they think about the solution you develop. Talk on the phone if possible or online otherwise, Do your very personal market research – but more importantly build connections.

3) Theoretic team building 1 hours
You will need a stellar team when going to market. Look for your best possible marketer, sales people, maybe operations, production…. Make a list, reach out get feedback more on what they think you may need and begin to be in the market. Go through groups, read news, find the top guys and make another list of those people so you can go hire them when the time is right and you don;t need to start looking when you have no more time.

4) Thought leadership building 1 hour
Craft blog posts and answer questions on Quora, write comments on other blogs and become known as a very smart person in your specific field. You may easily extend that to two hours if you have some room for it.

5) Content development 1 hour
You can do that in a few days but exhaust your creativity pretty quickly. Instead you may work a solid hour a day on content creation. Product description, video clips, website improvements, blog posts for the same, industry trends, social trends, product trends….. the sky is the limit – but you have only one hour a day.

6) Operations, processes, pricing
Think through the sales process from soup to nuts. From talking to new customers for the very first time, how they land at your business, what they need to do to buy something from you, how they pay, how you invoice, your pricing model, contracts, services, liabilities, terms of service, privacy, compliance….. an hour a day is only 7 hours a week or some 90 hours a quarter so if you are on top things you should be able to get it done.

7) Company evolution, 1 hour a day
It’s a bit limited but again, you have only so much time. So think through your product road map, bring it in alignment with your vision, weave in the feedback from the conversation with customers (see above), consider the evolution of your competition and think about how your market will evolve in general. Try to write a script book for your business scifi – what will your market, our society, your industry, the technology and your company look like in 10 years from now. Write it down, do a video clip. Solidify your vision.

8) Team building 1 hours
Spend time with your team, how they are doing, what they achieved how the product evolved and bring their work in alignment with your vision – every day. Make sure a Minimum Viable Product (MVP) is a indeed a MINIMUM Viable Product. Don’t allow yourself surprises “I thought you though that we thought we do this….” Know the progress. Have a chat at the water cooler too :)

9) Make yourself familiar with your market 1 hour
Read the news, be in online groups, understand who gets funded in your market, what they do, what new industry regulations may pop up, who gets quoted very often, meet the mover and shaker know exactly what is going on.

10) Prepping for alliance management – 1 hour
Create a list of potential alliance partners, No matter what you produce a new satellite, a mobile app, a new breed of avocados, new diapers or a new pizza shop – you never work in isolation so find out who are all the potential business alliances. Maybe service providers you can work with, interesting suppliers, industry organizations…. you get the point.

11) Finance & Investment – 1 hour daily
You will want to continuously work on your financials, model the future with everything you learned in the other 10 hours each day, “model and tune” it. Then start looking for investors. Make a list where you add at least one investor per day. The day you are starting to go fundraising you will appreciate that advice more than anything else – because it takes time.

12) Meet the industry 1 hour a day
Go to events, share your vision early on, be in the market talk to people. You may not do that every single day but at least twice a week. And as long as they don’t come to your office, you will need to allocate 2-3 hours for those events at least. And most likely you exceed your one hour budget per day very quickly.

13) Meditate, read a book – work out 1 hour a day
You know you will need to feed your mind by shutting completely down other than sleep – and one hour once a day is most likely just perfect.

14) Socialize one hour a day
Have breakfast, lunch, coffee, dinner with somebody from your business world once a day or every other day. Just be there and listen and learn, get feedback – or help and provide insights :)

Well – now there is a ton of other things that people do: taking an hour to read emails, organizing their day, scheduling the doctor and getting ready for the weekend. Oh not to forget movies – unfortunately and as you see above – no time for any of that. Sorry.

As a tough CEO you will not allow your team more than 6 month from start to MVP. You will need to hurry to get all the above done by the time the product can hit the market.

Enjoy the ride :)

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