The Lean Startup Coach

I started this post with a clear objective: explain what is my idea of Lean Startup coaching. 

Since Lean Startup is a radically different approach to business creation and development, I believe that also the related coaching must be radically different.

First of all, what is business coaching or more generally “coaching” after all? The term coaching stems from “coach” which is about transportation. A coach brings or helps you getting somewhere you want to go. In business terms, it brings you to your goal.

So, what is the goal of a startup? Here opinions might diverge. 

Someone would say, it is raising investors money. Some others would say it is about execute a business plan. Lean Startup simply puts it: TRACTION (or in other words: Product-Market Fit).

Hence, a Lean Startup coach should bring you to finding your Product-Market Fit, with all means. 

But what are these means? Here are 5 aspects on which the Lean Startup Coach should push the startup team to focus:

1. Challenge the Business Model before the Market will do it (publicly and with no-mercy). The coach should show no-mercy to a crappy business model trying to find all possible way to destroy it. The coach is not there to please the team, but to help the team to build a robust and profitable company through the validation of business model hypotheses. 

2. Measure what matters. The coach should make a real difference here and push the team to measure only what really matters in order to achieve product-market fit. The teams have to trust the coaches and follow their advices, strictly, as they would do for physician when ordering to do medical exams (e.g. X-rays, blood check, IMR, etc.). See it as a baby who need specific care for growing strong: in order to know what is missing, you need to measure all the growth metrics and act when necessary with the right actions.

3. Help to pivot. The coach can deconstruct and challenge your unfeasible and unrealistic business model, but they should also help you in making bold decisions by changing your strategy. I would say that they should help the company to do this as fast as possible, without wasting too many resources. Usually, startups don’t recognize quick enough that things are wrong and wait too long hoping that “tomorrow will be better”. Good things happen fast. When validating one business model assumption, not only set the target, but also deadlines. Don’t wait too long, because time is the ultimate resource and you don’t want to waste it.

4. Help with networking. The coach should facilitate contacts with either customers and partners. A valuable coach will tell you who to contact for validating the business model assumptions and possibly introduce to them.

5. Provide courage and optimism. The last but not least contribution of the coach is to reassure when everything seems to go wrong. Startups should never loose faith in their vision, product, technology and human capital. These are their assets and they should only build on them, not destroy them. When everything goes well, everyone is happy and we are all friends. When issues arise, people tend to blame each other. The coach should bring peace and help the team to understand that in the startup phase, there are no failures: there is only learning. I think this is where most team (and coaches) struggle most. On the one side, the founders are driven by their egos. On the other side, the coaches don’t push the founders enough to challenge their models. The coach is like a doctor: must be factual and realistic, but must also have “tact” and favor cohesion of the team. As in health, the first thing to do in fighting a desease is believing that the desease can be defeated. 

I am trying to become a good Lean Startup coach and I am willing to learn more from my assisted startups… Probably, I need a coach myself! Who wants to help me?

Reviving a zombie company: can Lean Startup help?

This might seems an off-topic, but I think it is important to talk about those many startups that keep living in a “zombie” (or “sleeping” or “on hold”) status. Especially in Europe, creating and leading a company is good food for CEOs’ egos, even if the company is not actually running. This is also related to the “perfectionism” paralysis and to the fact that one is waiting for the “right” opportunity to get funded.

All elements that lead to zombie companies, which by the way hide themselves behind the “startup” status: we are a startup, we don’t ship yet, but anyway we don’t consume resources… 

There are also other types of zombie companies such as those “very close to death” described in this Mashable post. This is another story. These companies rather woken up from “coma”.  

In this post I am talking about companies that can exist for unlimited time and they can possibly never die, just because they are not running.

So what? How can Lean Startup help in reviving a zombie company?

Here are my suggestions.

1. Pivot! Yes, if your business is stagnating, you need a shake! The pivot might (and probably should) very radical. You have probably a core technology or competence that has not found a compelling problem to solve and you don’t have customers. Therefore, start looking again for problems. Even if you are very biased by the technology you have, you might discover a new applicability of it to a completely different problem (and sometimes even with minimal adaptation). 

Look at the Groupon case: they were selling a platform for collecting money to support causes. They had their Eureka day and switched to daily deals.

It goes without saying that your pivot will entail an entire rethinking of your Business Model. So, define your new hypotheses and setup the right experimental framework to validate them.

2. Change the team. This might sound blunt, but only who has the determination and the gut to take risks (and do the pivot) should remain in the company. Those who are responsible of the zombie status must leave. No way! I would add one more thing: the CEO of the company (at least in the startup stage) must be the one who invented the product or service (or the technology). Anyone else would blame the product/service/technology if the traction is missing. If you are the “heart” of the company, you must be the CEO. If ti happens that it is not the case, you need to take back this role.

3. Build a new MVP. After the pivot, you had to build something new and test it. That sounds like a no-brainer, but we want to avoid our company to move to a new zombie state after the pivot. Please, don’t fall again into the “perfectionism” paralysis. This time, do it differently. Be minimal and viable and try to get early feedback from customers!

4. Define the metrics that matter… and set yourself targets and goals. Don’t enter in the usual mindset: let’s try something and see what happens. If you do something, it must be because you want to achieve a precise goal.

5. Don’t blame yourself and others. You know, shit happens! Of course, there are people accountable for the situation, but you were in a team and therefore you agreed with the overall strategy. If you are the one who will have to take the lead, do it professionally. Be factual and take rational decision, not emotional. This is easy to recommend, but hard to implement. In any case, as I said before, those who are directly responsible of the situation should step back and leave the floor to more motivated leaders.

6. Start to have fun again. Last but not least, you might have faced bad days with you company and you no longer wanted to invest time and money on it. At the same time, you did not want to kill it as it was your “baby”. But now, you have to somehow start from the scratch. It is a sort of rebirth. You will face new challenges and you really need to change the way you work. Meet new people and talk with them about your new challenges and business ideas. Maybe, participate to startup events such as Startup Weekend or LeanStartupMachine to develop your new ideas. Act as it was a new start. In other words, you want to turn your zombie startup into a new thriving company. 

In the hope of seing less zombie startups, I finally recommend to consider failure as part of the game. Remember, that for startups, there is never failure. There are only invalidated hypotheses, which turn out to always be a useful learning.

Let me conclude with this quotation:

“If you don’t make mistakes, you’re not working on hard enough problems. And that’s a mistake.”


― Frank Wilczek

 

Your comments on this post are highly appreciated.

Startup Weekend Teams Review

image

I participated to the Lausanne Startup Weekend that took place at the Rolex Learning Center at EPFL on February 24th. I took some notes during the final pitches that I would like to share with my readers. When possible I will provide links to the presentation and to the website.

1. FavourNow

Mantra: “You are nobody in the world, your someone in your community”

The idea is favor exchange (karma, rating). The service is very education-biased. It exploits proximity and it is potentially scalable. They plan to monetize through targeted advertising and by selling profiles (e.g. history of users needs).

Questions from the jury:

  • How to scale and expand to other countries? Franchise?
  • Where is money in your development?

My comments:

Very good idea that can be extended to Peer-to-Peer funding/helping. They did not look at competition. For instance LocalHero.com. It is potentially scalable, but it has a weak business model

2. Fresh and Ready

The idea is to generate shopping lists from recipes collected from cooking websites. The generate shopping list is sent to an online grocery store and the user will receive ingredients at home.

Questions from the jury

  • Do you have nutritionist in your team? No.
  • Market estimation? Recurrence of sales? 
  • Suggestion of taking care of allergies in the recipes.. (!?!)
  • Suggestion of revenue sharing model with online grocery shops (question not understood by the team). Answer: they think that they would not add any value to online grocery stores.

My comments:

This is a good idea but it is a copycat of Whisk (but with a Swiss French “taste”). The presentation was average, but most of all it was presented as a life-style company. No grand vision.

3. Ignilife.com

ignilife from ignilife on Vimeo.

Healthcare system that foster prevention. The team presented the model where users are asked to fill Global Surveys and they are advised on virtuous behaviors for improving health. In other words they have built an Expert System for diagnostics. They provide Coaching for healthy life

They presented a nice video (made before Startup Weekend).

Business Model: Client = Assurances, Enterprises (customization) Partners=doctors

Market: 700 prospects in Europe

Competitors: coaches

Milestones provided. Expand to Brazil

Team was presented.

Questions from the jury:

  • Client acquisition? No B2C. Work with prescriptors (B2B).
  • Partners already there? Yes since 2 months.

My comments:

This startup is already at an advanced stage and also has some traction. But despite this, the business model is not convincing. The problem is that key differentiation factors are missing.

4. ViDressing

Platform for exchanging second-hand clothes. A scenario was presented with demo. Exchange of clothes with online searching and real life exchange.

Market 20000 people in community for exchange.

Competitors: classified sites

Business Modle: CHF 25.-/day/ad/city

Current state: website and mobile app

Questions from jury:

  • Monetization? Ads through website real estate. Direct marketing of ads.

My comments:

Competitor analysis not done. For instance Upper East Style, a business launched by one of the participant to Startup Weekend.

The site seems to be very much community oriented, but it was not clear how to attract customers. They did not present any Social Media penetration plan or community development plan. The mobile app in in Pinterest style.

5. Communytri

This was the only cleantech startup. The idea is to build a community with the goal to create awareness around recycling problems. They conducted a user survey where they discovered that half of the people in Lausanne would be ready pay to collect garbage.

Karma-based model to help people in collecting garbage.

Business Model:

Market: Lausanne 99.000 household, target 5000 people.

BM: through sponsors (unemployed people to provide manpower) and premium services (Fee-based service for collecting garbage).

Questions from jury:

  • Why should ORP (employment office) support this project? Creation of jobs for the premium services.
  • How to recover some value from garbage? Through events where refurbished garbage can be sold.

My comment:

Nice project, but very weak business model.

6. The fair traveller

They presented an Ecoutourism platform. Why? Demand is high: 5-70 mio of eco-travellers in the world 40% of which book their travels online. They realized that there are 1.5 mio of related Google keywords searches with low bidding (that means that there is not much to offer).

Partners: 200k-600k sustainable hotels worldwide that are not very visible on the web.

USP: Portal + Community + Search for hotels with eco-friendliness ranking (assessed through survey).  Hotel profiles with users reviews (à la Booking.com).

BM: 100 visit  => 2 bookings => 1300 CHF => commission. Hokeystick growth hypothesized… (classical).

How to attract hotels? Hockeystick growth also… but they are not online… let’s help them! Create a reference. No competition. Branding needed

Financial Projection provided as a term sheet… Waste of time! Breakeven at year 3 (obviously).

Question from the jury:

  • Customer acquisition strategy? Not clear. Big burden is to bring hotels in the list.
  • Activities? Community building and marketing.

My comment:

The business model is simple because is similar to other hotel booking websites. However, they are targeting a very special niche and therefore community building is necessary. There are many hypotheses that need to be validated, some of which could have been validated during the weekend by talking with people. Instead they preferred to work on the financial projections just to “impress” the jury. What a waste of time!

7. Cyanine

This was probably the project with the most advanced technological IP. They featured transparent solar cells. They proposed to apply the technology for recharging smartphones.

Market: 1 bilion smartphones

Pricing: > 40$

Competition: better transparency, need to improve efficiency which is average.

Scope: target also other products

Time to market: 2 years R&D, 2016 launch

Execution: Partners EPFL and smartphone manufacturers

Financials 2 mio R&D, license per products.

Questions from the jury:

  • Key differentiation? Best transparency, comparable efficiency with competitors.
  • Validation? Not validated.

My comments:

IP protection was not addressed (not even asked by the jury).

I see a big problem: smartphones live in the users’ pockets where the sun does not shine. During the day, smartphone are typically charged and they run out of power in the evening. They need to be charged overnight (no sun) and used during the day in the pockets. They might have discovered this “little” issue if they had just talked to potential customers.

This is a clear example of a startup that focused exclusively on technology risk. They had just an idea of the application, but they did not realized that their product would probably not sell.

8. Project Lokal

This team propose to organize free marketing campaign and fund raising events for local projects with “Pop-up shops”. This is a sort of P2P crowd funding obtained with weeklong marketing campaign to raise funds.

Competitors: off-line crowd-funding sites.

Questions from the jury:

  • What is the Business Model: 10% of the raised fund.

My Comments:

I liked the idea very much, but unfortunately the business model was not fully developed. Besides, they were not able to show the scalability of the business and they were not clear on how the system would work. No customer feedback collected. Not sure if customers would buy it. Too bad because the idea was really promising and I like it very much.

9. Kutsoo (local potential)

The idea of Kutsoo is to mutualize small shops. In other words, users can search for availability of items in local shops.

USP: SaaS for stock management + customized merchant profiles. Social sharing.

Business Model: subscription + ads.

Market: local 10000 shops => 200000/month after 3 years.

Milestones: pilot, branding, maintenance

Scaling considered.

Questions from the jury:

  • What is the USP for users? Local search of products. Time saved. Search of specific items.
  • Are the items information provided? It depends on vendors.

My comment:

Excellent idea, but it already exists: Google Shopper!!!!!

10. MobiPark

This startup proposed a flexible parking solution (for paying with mobile phone). By putting a QR sticker on the car windshield drivers can pay parking through phones. They target external public parking places (not parking lots).

Customers: drivers, cities councils (sell to them).

Competition: in-street parking. They mentioned a brand, but did not tell why they are different.

USP: For cities, reduced costs. For users? Not explained

Business Model (for the cities): Fixed fee or revenue sharing.

The market analysis provided was not relevant as it was more focused on the drivers than the cities.

Differentiation: simple and complementary to existing solution. It would be the only existing one with mobile phones.

Questions from the jury:

  • How do you print the QR code? J

My comments

I think it is only a “nice to have” for cities. Besides, this would reduce the opportunity to earn money from tickets!

11. Hug me if you can

Starting from the meme of Free Hugs, this team proposed an innovative social service. The idea is to post a geo-located request for “hugs” and see if someone around is willing to come and hug the requester. It is a sort of “dumb game” but what is important is the business model behind.

They target young adults as users who are highly connected and sensible to branded products. Also, they propose to activate the service in special occasions such as events (e.g. concerts).

The real customers are the brands that can use the platform to promote their products. Hence is a marketing tool.

Business Model: The Brand pays a fixed fee of 1000 CHF and 0.1 CHF per hug dispensed.

In their presentation they have illustrated how the idea evolved towards the final business model through several pivots.

Questions from the jury:

  • Can be extended to groups? Yes.
  • Can collected usage data be exploited for targeted marketing? Yes, but there are privacy problems.
  • How to detect the transaction? The hugger pays.
  • Can the partner be chosen? NO. It’s like a blind date.
  • Can the Mobile App be Sponsored/branded? Yes, of course.

My comments:

Fantastic! That was by far the best idea of the Startup Weekend. I loved everything of it. The presentation, the Business Model and the possibilities. Also, the team demonstrated a big maturity and the ability to pivot when necessary. I expected them to win. It was a no-brainer for me. Contact me if need some help…

12. Ed-Fund (Shape Futures)

This startup proposed a crowd funding solution for study loans. They presented the project very well with Personas and Story telling. The idea is to collect loan applications from students and create a “fund” to invest in education.  The procedure is education project submission -> selection -> loan, which will be refunded during the first 3 years after graduation. The company would retain 5% commission on the loan.

Questions from the jury:

  • How to manage risk?  After the study they will work in Switzerland. They sign a contract.
  • Sponsors? Private university.

My Comments:

I am very interested in this project because, as the Associate Dean of a private business university I was looking at opportunities to provide loans to students who apply to our programs and cannot afford the expense. Unfortunately, there are no ways to overcome this problem in Switzerland. The crowd-funding model can represent a viable solution.

The team was a small one, but very effective. The presentation was quite good but I think that the jury did not get it. Crowd-funding is a paradigm switch like Open-source in software. The business model behind it is not easy to grasp, but there is one.

I personally invited the team to visit my university and see if we could find some ways to collaborate and launch this new service together.

13. TawiPay

This is another very nice social project. They addressed the problem of high cost of worldwide money transfer. What they propose is the “ebookers” of money transfer.

The problem is that best-known services are very expensive. For instance, Western Union charges a 13% fee per transaction.

The solution they offer is a comparison of money transfer companies and a service to make the transfer with the cheapest service (broker site).

The market is huge: $500bn/year of money transfer.

Targeted Customers: African workers at International Organizations in Geneva

Business Model: 1% commission fee on the amount transferred.

Expected Revenues: 100.000 Euros in first year

Impact: saving for users.

Questions from the jury:

  • When do you start? J
  • How to be sure that the money transfers companies will join the program? Target the smaller companies and bring new clients.

My Comments:

This was another impressive project and I was pretty sure that they would win. They made an impressive presentation and guaranteed at the same time both social impact and earnings. But unfortunately they did not make it. I believe the problem was that they did not clearly state how the business could scale.

14. Cushear

This team pitched a very simple but smart idea of a product. They did in a funny and catchy way. They propose noise canceling ear buds with an integrated alarm that can be programmed wirelessly through a smartphone. The ear buds can be recharged by induction in a small bag. It was one of the four hardware products and it won the first prize.

From their survey 2/3 of surveyed people were interested.

They need 1M investments for R&D and promise a product with 73% margin, with big returns from 2015.

Questions from the jury:

  • What is the battery life? 1-3 months

My comments:

Nobody in the jury addressed the IP protection aspect. This is very important aspect, in my opinion, for such a type of product.

My feeling is that it is a “nice to have” product but it might sell very well. It seems very strange that they need such a long R&D time frame. Since the basic technology already exists, I would consider a shorter period of R&D (months, not years).

I would even eliminate the wireless programming by a micro plug with a cable. Putting the necessary radio technology in the ear bud just to program it once in a while is not necessary and would consume battery.

The jury appreciated the simplicity of the idea and the branding. In my opinion, they were not the best team, but I am happy for them that they made it to win the first prize.

15. Fully Charged

That was mind blowing! At least for who understood the idea. Even the jury admitted that they did not get the idea.

Fully charged is a new concept for marketing campaigns where the idea after the “recharging” process something will happen.

They used the sex metaphor (i.e. recharging after the last time one had sex) and applied for a marketing campaign of a condoms brand. Probably, the jury misunderstood and thought it was the only possible application of the concept.

The business model is simple as it is based on branding a mobile application or a web application.

Questions from the jury:

No questions

My Coments:

I was very enthusiastic of this project, which I supported, from the very beginning. My friends Othman Tajmouati and Antoine Mathys made a great job and crafted an impressive presentation.

The only weakness was that they assumed that the audience (and the jury) would understand marketing concepts, which was not the case and they went too fast on the presentation of the business model.

16. Beetle Box

This team presented a product that I thought it existed already, but I was wrong. They proposed a “Private cloud box”. A network storage that turns into a cloud storage service (e.g. like dropbox) with zero configuration. This was one of the four hardware project.

Their presentation was brilliant with 3D animations and use cases. They showed a nice video and their Business Model was very clear.

Questions from the jury:

I stopped taking notes and I don’t remember the questions very well. From my memory, I remember that it was about the fact that they proposed small size storage (e.g. 250Gb) compared to the network storage that is currently available on the market.

My comments:

My feeling is that the jury saw the product as hardware and in reality it was software. What is missing in the market is software that can provide the same synchronization features of Dropbox or Box.net for local network storage. However, the bad news is that product is already on the market: http://www.netgear.com/landing/personalcloud/

As a general remark, a mentor could have easily realized by searching Google that that product was already on the market and advise the team to change strategy.

17. TempMonitor

This team proposed a very simple to understand product with an industrial application: A very accurate temperature sensor with alarm. It was one of the four hardware projects and it won the third prize. The presentation focused much on technical details and the roadmap for product development. The business model is very simple as it is intended to be a technology to be integrated in refrigeration appliances.

Question from the jury:

  • It seems that in the jury there was someone with big expertise in that domain who started talking about details with the team.
  • No one asked about business model issues.

My comments:

I prefer not comment on this project because it is not clear for me where the innovation component is. However the project has won the 3rd prize. Congratulations!

18. Memodrill

That was the last project presented and I was a little bit tired. However, the team succeeded in waking up the audience with a very energetic presentation. They presented a mobile application for learning by repetition.

Their mantra was “Repetition is the mother of all skills”. Yes, in the sense that even dogs, monkeys and parrots can repeat things. Without going into polemics, the problem here was the business model. Mobile App with freemium and mobile ads? Yes, it might work… but did they make some surveys with potential clients? For me the model would be B2B selling the platform to create learning experience for brands or institutions. Difficult to say if it might work. They had the opportunity to poll 140 people, most of whom were students…

Conclusions

I believe that it was a fantastic experience and all the teams were great! The mentors were all great and the organizers were extraordinary! The atmosphere was quite energetic and stimulating and I had the chance to meet many interesting people. 

My mission at the Startup Weekend was that of observing and learning how to help the development of the young entrepreneurial Swiss ecosystem. For that I learned a lot. 

I released also an interview to Mazala (one of the organizers) about my commitment in providing a follow up for Startup Weekend by organizing the first edition of the Startup Weekend NEXT program in spring 2013 in Geneva.

Can entrepreneurship be taught?

I participated to the Startup Weekend Lausanne last week and I joined a team of young entrepreneurs. We eventually won the 2nd prize!

I was very excited to work with them and I had big expectations. All teams was made of very nice people, full of energy and enthusiasm. Some of them had very technical skills. Some had also some entrepreneurship experience. Most of them also attended entrepreneurship training program.

However, I felt that it was not enough to manage a startup project.

What was missing were not technical or business skills. It was more about mindset and vision. Here is what I noticed about the participants.

1. They are not familiar with business model patterns. This means that they try to rediscover business models that already exist in industry and waste a lot of time on reinventing them.

2. They don’t think global and scalable. They are afraid to have big vision and try often to build lifestyle businesses.

3. They do not think “out of the box”. They see things in a stereotyped way and mostly frame their business idea in a “standard” way. They are afraid to dare with crazy things. Creativity is channelled mostly in logo design.

4. They don’t like to abandon their comfort zone and don’t like to be pushed by others in doing so. This is mostly because of oversized egos of leaders and because of lack of courage by followers. In particular, followers are not passionate enough to dare challenging the leader and create tension in the team. Unless the leader is a true visionary, this leads to poor dynamics in the team.

5. They focus more on details than substance. Yes, in implementation details are king, but not in the customer discovery stage. They are irrelevant if the business model is not viable and scalable.

6. They don’t like to go out of the building and talk to people. And when they do it, they use biased techniques to gather customer data. To one extreme, I heard someone proposing to fake some results just to please the founder… :-)

Some mentors also have their limitations.

1. Most of them don’t push the participants to go beyond their limits. They are very polite and just provide very general advice (which most of the time is not followed).

2. Some of them also tend to focus on details and see things from a narrow perspective. No mentor addressed scalability issues. They are fine if the founder want to start a business just to pay themselves a monthly salary of $5000. 

3. Some of them also are not able to think “out of the box”. They accept that the team replicate existing models and they are uncomfortable if they are shown something really different. They most have the “it will never work” attitude. That is sad…

4. Some of them don’t understand the business ideas. You can tell this by the questions they ask. It is clear that they did not get the ideas at all (always with some notable exceptions of very smart mentors). Sometimes this can be frustrating for the team, but eventually they are kind enough to make an effort and try to get a better grasp of the business idea.

5. Some of them don’t know the market and technology. Even those who claim themselves specialists, have limited knowledge of the market and technology (with some notable exceptions, of course). When they know about the area of the team they supervise, they might spend some time in researching… Easy no?

Let’s be clear, the mentors did a great job and in no way I am undervaluing their contribution to the success of Startup Weekend. In most of the cases, they helped the teams in sticky situations. They provided the teams with encouragement and support.

All in all, it was a great experience, but it made me think about learning and teaching entrepreneurship. Most people believe that you can only be born entrepreneur and there is no way that you can learn it from others. I disagree.

You need a talent, that is obvious, but also some good training. Most of the above issues do not come from lacking of talent, but from lacking of skills, experience and mindset. Of course, we can learn from own experience, but why wasting time when you can accelerate the process and learn those skills from training professionals?

You can learn only if you practice, that is true, especially for entrepreneurship. But practicing alone is not enough. You need supervision.

Let me tell you a short story. I only took a ski lesson and then I learned by myself trying to imitate other skiers. The result is that i learned the “wrong” way that prevented me to develop a nice style and skiing smoothly in every conditions. I acquired the wrong “fundamentals” and it was then too late to correct them.

You get the message.

Don’t waste time and learn the fundamentals of entrepreneurship. This is my best advice.

Pivot is hard, but must be done… when necessary!

Last week I participated to the Startup Weekend in Lausanne, Switzerland and I joined a team made of young students. I was, of course, the oldest, but regrettably the one with the youngest mindset.

image

We eventually won the 2nd prize with the Pickl.li team mostly because I “forced” the team in pivoting several time in the business model development process.

The founder (i.e. the one who had the original idea) got stuck with his original revenue model and struggle in revising it even when customer data had shown that it could not work.

Anyway, in a short time frame such as that of the Startup Weekend, it is nearly impossible to fully validate assumptions directly from the customers. However, the team mates can always act as the devil’s advocate and challenge the business model with some arguments. And that is what I did.

When this happens, the team reacts in a defensive way (with an intensity that depends on the stage of the process: the later, the harder to accept criticism). If it happens towards the end (close to the final pitch) any pivot seems impossible. For some, it is better to focus on creating a nice flashy presentation with a faulty business model rather than try to change it in “extremis” at the expenses of the presentation flashiness.

This behavior is what I call the “not ready to throw away any work done” syndrome. In other words, accumulated work should be saved at all cost, even if reality has proven that is useless. This kind of attachment prevent pivoting and it has an extremely negative impact to the success of the company. This is also the sign of the oversized founders’ ego as they cannot accept this kind of failure. 

Going back to my team of Startup Weekend, my team spent a lot of time selecting the features of the application and very little to the implications on the business model. We did the canvas as a “necessary exercise” but it remained just hanged on the wall and nobody dared to touch it, let alone challenge it.

image

I realized that our revenue model was not the right one as it would not adequately differentiate ourself from the competition and I urged to fix it. The team reacted that it was not a necessary move and that in any case the Majority of the team had already agreed on it. In their view, we should have focused on the presentation.

Well, eventually I succeeded in convincing the team to revise the revenue model and I believe that was key for our success. (I am sure that they think differently, but anyway…).

What I learned from this experience? Here are my 3 takeaways:

1. That pivoting is very hard to accept, especially by founders with big egos. Pivoting is seen as failure as it corrects a “mistake”. Actually, there are no mistakes in startups but only hypotheses that are validated or not. Pivots are the natural decisions when an hypothesis reveal to be false. This appears to be a big shift in mindset and hard to understand.

2. Pivot can happen at any stage of the process and the later they occur the harder it will be to accept them. Therefore, it is better to test hypotheses earlier than later. Teams should learn that before starting working on product’s development, they should have made everything possible to challenge their business model and fix its problems. Once the business model is stable and robust, then they can start working at the product (of course, minimal and viable).

3. The quality of the pitch is a myth. We made a very simple, minimal pitch and we won the 2nd prize. Most of the teams made impressive presentations and did not win. What counts is the Business Model and its strengths or weaknesses can be explained in very simple terms.

Nonetheless, the Startup Weekend experience was fantastic and I really enjoyed my team. Well, they need some good coaching, but they are young and they can learn fast. I wish you to thank them heartedly and I wish them the best for their future challenges. Hopefully our roads will cross again.

Here is a picture of the Pick.li team who won the 2nd prize at the 2013 Startup Weekend in Lausanne.

image

Where are my early adopters? Facebook graph search can help you in finding them…

image

(Picture take from this blog post)

Facebook announced the launch of Social Graph search where you can query, for instance, who likes wine in Switzerland. If you are starting up a company in the wine sector in Switzerland, this tool would help you in finding enthusiast wine tasters who could potentially become your early adopters.

When I advise my startups, one of the big issues is actually this: where do I find early adopters for a given customers segment.

Sometimes this is just an excuse to not getting out of the building and do reality check. But often it is a real issue because the founders don’t know where to search.

Early adopters are present in every market but in a small proportion (estimated as of 13.5%). But the good news is that they are so proud of being pioneers that they tend to talk about their early experiences with their communities. Therefore, it is crucial to enter those communities and listen to what happens there. This might be a surrogate for “getting out of the building” strategy by “getting at least out of your favorite community on the Internet”.

Going back to Facebook, social graph search might become the essential tool for customer discovery. Another way is to join groups, but this might require a greater effort than just doing a search. Besides, with a search you might find out which groups you might want to focus to.

So, you no longer have excuses to refuse mining the communities for early adopters because you now have the right tool!

How does it feel like to have 1000+ connections on LinkedIn?

Ok, I agree it is an off topic. But I wanted to share with you my feeling about being “connected”. 

First question you might ask is “Do you really know all these people?” The answer is yes, most of them. I would say that I know personally 99% of all my connections, but sometimes I accept invitations from “interesting” people. Also, I invite people I want to meet on LinkedIn. If they accept, there is a high chance that we’ll meet in person (or on Skype).

The reason why I have so many is that I changed my professional life many times. I am a kind of “professional pivoter” :-) 

If you ask me “why do you want to connect with so many people from your past”, my answer is that you never know what might happen in the future and past acquaintances might become very relevant in future situations.

I have more connections on LinkedIn than Facebook (only 540). I only use these two social networks (well Twitter also to spread the news, but I have only a few followers ~130).

Do I like LinkedIn? Yes, I do! It is very well designed and feeds me with relevant news shared by my connections. It is also very focused on business and it helps me in maintaining an up-to-date professional résumé.

However, there are a few things I don’t like:

1. Limited numbers of groups membership for free accounts. This should not be considered as a premium feature… However, if I need it, reasonably LinkedIn considers that it is a must have for their customers… Business is business, after all.

2. The pricing plan could be improved. For basic premium users $20/month is too much for the features provided. I would suggest having another lighter premium account at $5/month with enhanced visibility and unlimited number of groups.

3. This is something I really don’t like: if you state that your country is not US (e.g. Switzeralnd) it changes the profile URL from www.linkedin.com/in/vincenzopallotta into (for Switzerland) ch.linkedin.com/in/vincenzopallotta. I think that everybody should have the general one and not the country-specific one. This also reflects on the ranking in search results as ch.linkedin.com has a lower PageRank.

4. Last thing to be improved: well, when you reach 1000 connection you still have the label 500+. It should be turned into “1000+ connections”. Forgive me the vanity… 

I warmly recommend LinkedIn to everybody who is looking for an effective tool for personal branding. To date, it is for me the most effective one as it provides the right features and it does have a critical mass.

Besides, networks such as Xing or Branchout did not convince me from usability, scope and reach. What about Facebook? Well, it is getting better, but still too wide scope to be used as professional repository of information. I rather see LinkedIn and Facebook complementary, sometimes they overlap, but in Social Networks overlap is very welcome!

New business models of education

image

(my daughter replaced a missing rail by cutting her bathrobe’s belt)

I was thinking about my job as a professor in a business university and I asked myself what is its business model. 

A University (and most educational institutions) are Marketplaces, i.e. organizations that provide best matches between offer and demand. In the specific case of universities, the demand is that of students seeking for high quality knowledge and skills and the offer is that of professors who are supposed to transfer that knowledge and skills to students.

Hence, university are intermediation companies. We all know that the Internet has contributed to the removal of several intermediation steps in the value chains of some industries such as travel agencies, music retail stores, video rentals, bookstores, just to mention a few. However, Internet enabled different forms of intermediation through e-commerce (e.g. Amazon, eBay, iTunes).

Will it be the case also for education sector? Are universities destined to disappear? Will Internet radically transform the education sector? And how?

The process is already happening somehow. Some of them that are capable of reinventing themselves are becoming the platform for distance learning such as Stanford with its online programs. There are new educational companies pushing to the extreme the concept of online learning such as Udemy, Khan Academy, Insegnalo. Some others are using Internet to promote their on-ground education just by distributing video recordings of on-ground courses online, for instance on iTunes U, Coursera and Udacity.

But most universities in the world are lagging behind the digital revolution of education. This will lead to a natural selection process where those institution who fails in adapting to the new media and technologies will simply disappear.

However, universities are not just marketplaces. They can indeed provide a local social and cultural role. Learning is not just about knowing something. It is also about doing something well. Learning is an experience which can be provided both online and on-ground, but the challenge is how to make these to types of experience complementary and not one just the mimic of the other.

The point is: what the student are supposed to do in classes. Do they have just to listen the professor or should they perform some other types of activity?

Flip Teaching from jjoslin on Vimeo.

One (partial) answer to the above question comes from the “flip teaching” model. In this model, the roles of homework and lectures are reversed. Students attend the lectures at home streaming videos from the Internet (and therefore when they are ready and at their own pace since they can start, pause, replay the video whenever they want). In class, they meet with students and mentors to do practical work and discuss. 

I believe that universities have a fundamental rôle in society namely that of  creating leaders. But leadership is not about knowledge and skills, it is about Mindset. Some say that leadership cannot be learned as it is innate and therefore cannot be taught. You might agree on that or not. The point is that there might be many potential leaders who cannot become established just because they are turned down by “managerial” educational settings.

One thing among others that distinguishes leaders from non-leaders is that they are able to set (ambitious) goals and get things done. They are both open-minded and “action” people.

In contrast, standard education does not push people to action unless it is restricted to the “predictable” (read “assessable”) domains. They discourage creative thinking and challenging the “status-quo”. In order to be a good student, one has to learn the standard way of doing things. It might be reasonable as a first step, but not in the long run especially for those institutions that are expected to train leaders (e.g. as business and engineering schools).

What has this to do with Lean Startup?

I noticed that the main obstacle in starting businesses in a lean way is mostly about mindset. People are always fearful of failure and struggle to see it as a mean for learning. They are paralyzed and their ideas tend to remain on paper (aka Business Plans).

Failed attempts are just seen as bad, while they should be considered valuable because of the learning feedback. Especially where there is a lot of uncertainty, eliminating it through experiments is extremely valuable. Learning that something works is as valuable as learning that something does not work.

But unfortunately, people are conditioned by an educational system where failure is ALWAYS stigmatized. If a student completely fails gets an F which is much worse than a C- where a student passes with low performance. Maybe, next time the student who got an F has learned and will outperform everybody else. But the damage is done. He is already stigmatized as a “looser”.

That is the problem: in learning there are no Losers or Winners. In learning everybody win as long as they try something. It is the commitment that should be assessed. The eagerness of learning seems to be a more appropriate metric for learning in education.

But this is hard to change. Professors are at best lazy and not willing to challenge the standard schema of top-down (ex-cathedra) teaching. Showing powerpoint slides and assigning homework is much easier that create a stimulating learning environment which fosters creativity and divergent thinking.

I understand that changing established learning models is not easy, but academic institutions should adopt a new strategy by investing in (young?) teachers armed with new tools and willing to experiment with them in classes without fear of failure. Of course, there are risks in doing that, but I believe it is the only way to move forward higher education towards new models of learning in order to let students the right mindset to become the new leaders and achieve a positive impact in our society.

Define your Minimal Viable Product with Innovation Games

image

Last 20th December 2012 I facilitated an introductory workshop on Lean Startup at La Muse incubator in Geneva where the Tim Bardet, the founder and CEO of a local startup Up-to-Wine volunteered to play the Buy-a-feature innovation game.

You can find the slides of my presentation and some pictures of the event taken by photographer Samuel Rubio.

One of the most difficult things in designing a Minimal Viable Product (MVP) is to decide which are the “essential” features of a product or a service in its first iteration. Founders have their own assumptions of which features are the most “compelling” and should included in the MVP.

First of all, we need to understand the goal of an MVP before starting selecting the features to include in it.

The goal of the MVP is learning not only what customer want, but also how much are they willing to pay for it.

If including a feature which makes no big difference in what the customers are willing to pay for the product, it should not be included in the final release simply because it would shrink the margins without helping in increasing the number of customers.

Unfortunately, it is not possible to directly ask all the customers what they want and how much they would pay when they will buy your product. Moreover, they tend to see products holistically and might not be able to value features individually. However, we might do a preliminary selection of features in the first iteration of our MVP by assembling a sort of focus group of potential customers to whom we will ask to play a game and “buy features” with play money. 

The rationale of the game is that the founders will express their hypotheses on most sought features by assigning a price to them. If the founders believe that one particular feature is so important, they can assign it a high price (even higher than one single player’s budget so that players will have to partner together if they want buy that feature).

The price also depends on the projected cost to implement the feature. Hence a strategy would be to set high prices to costly features so that the founder can be sure that the effort invested to implemented them is likely to not be wasted (a very Lean Startup strategy, indeed).

At the end of the game, the founders will have a clearer picture of what to include in the first iteration of their MVP based on the top selling features from the game. Of course, this is just a priority list and only real experiments will validate these hypotheses. In other words, this game will help startups in finding a place to start that is more likely to match the market demand and thus speedup the validated learning process.

image

Our volunteer Tim Bardet proposed several features to be included as future services for his startup Up-To-Wine, an exclusive wine discovery service. This company has committed to Lean Startup approach in its development and shown that it can be very effective.

The prices he assigned to his list of features reflected his initial hypotheses, some of which were invalidated by the experiment so that he had to change some priorities he had previously defined. In his own words, here is what he learned through this experiment:

“The lean startup game we played one week after the launch of the minimum viable product for our startup UP-TO-WINE.com was a great deal.

Gathering 20 potential consumer brains on a game about potential new features helped us to learn a lot. I personally was thinking a ‘wine book’ was the most awaited feature that we had to develop soon. However it appears that a ‘social wine community’ was a very important feature for the public.

Indeed people spent half of the virtual money they could bet on the list of 8 features (with different prices depending on the cost and timing of development) on this wine social community. It helped us analyze where we need to pivot in the next weeks.

But above all: we were transparent about the startup next steps to agilely measure the needs, which saved us time, money and nights of work. After all, everything is a question of speed: We launched the up-to-wine.com with a first set of features in 2 months”.

The Buy-a-feature innovation game is included in the activities of the Lean Startup workshop organized by LeanStart.ch. Here is also interesting post on how to Innovation Games can be used within the Lean Startup model.

Who is afraid of the big bad wolf?

source

Hi! Happy New Year! 

Here I am with a new post on copycats of (alleged) good ideas that are disclosed too early.

This post is to show my understanding to those who are afraid of having their business ideas stolen by whom might have more resources to implement it. I have found myself in the same situation and I am still afraid of it.

I had a “truly fantastic” business idea. I have spoken about it to some “selected” (eheh :-)) people and all of them gave me great feedback. Together with some people we also created a mockup of the application and we even took the risk to present it in a innovation competition together with a Business Plan!! (sorry, that was requested: I could not avoid it). 

It was a relative success as we ranked 3rd in the competition (we did not win, therefore no money :-( )

The idea is still there and nobody have copied it so far. There are three possible reasons:

  1. Nobody had the same idea
  2. Those who had a similar idea did not implement it
  3. The idea was implemented by someone else but it was a failure.

What do you think is the most probable situation?

I will not tell you my opinion. The only thing I will tell you is that trying to avoid the risk of being copied might let you miss the window of opportunity because you keep your idea secret and disclose it only to those who could provide you with the resources for implementing it.

I now have this idea in the back-burner and every day I fear that someone will show up having done something similar. If it is a good idea, this will eventually happen. If it is not a good idea, this won’t happen but the fear will not go away.

So what?

My resolution for the new year is: “just do it”. Whatever it takes, I will implement my business idea and at least get rid of the fear of being copied. If someone wants to copy me with better resources, well, be my guest! 

In any case, I prefer being copied for something I have done and not for something I wish I had done.

Top