Monthly Archives: January 2013

A Method to the Madness

When you’re starting up a new company, a great deal of advice tends to come your way. People will tell you to contact some well-known local entrepreneurs and investors, to attend start-up events and gatherings, to join a co-working space and to get a coach.

Some people warn that you shouldn’t discuss your ideas too openly, lest someone should steal it. Others argue that you should gather as much feedback about your idea as possible, and hence pitch it to everyone you meet.

As to where you should start, some people (including government officials in charge of supporting local entrepreneurship) will press you to write up a detailed business plan, a financial plan and a marketing plan. Not only is it critical to have these documents properly written up, they say, but the process of thinking them through is at least as important.

You will hopefully also meet people who are genuinely interested in what you’re trying to do, and who will ask about the specifics and challenge your thinking in constructive ways. One question that will inevitably pop up is where do you start? And, once you’ve started, how do you know you’re going in the right direction?

I recently read The Lean Startup by Eric Ries, which attempts to define a general methodology for budding entrepreneurs. While I think the terms ‘methodology’ and ‘scientific’ are perhaps a bit overused in the book given the rather high-level nature of the prescribed framework, I think that Ries succeeds in detailing an approach and a thought process as a guide to decision making in the context of a smart-up. Since the term was coined in 2008, the Lean Startup movement has gathered an impressive following.

The Lean Startup finds its origins in lean manufacturing techniques and agile software development, which most software engineers are familiar with these days. The author lists many examples of how the approach was followed successfully – knowingly or otherwise – in diverse companies including his own, although one can always argue that he spins a compelling narrative around a theory that is yet to produce well documented success stories in large numbers.

One of the Lean Startup’s principles is that Entrepreneurs are everywhere, which means that you don’t need to look for two-person start-ups to find entrepreneurs. Ries speaks of intrapreneurs in large companies and government positions trying to innovate in highly unpredictable environments. This got me thinking that I have probably been something of an intrapreneur these last three years working as a junior executive at a large consulting firm. I might say a bit more on that in an upcoming post.

The Lean Startup states that the first thing a startup should work on is a Minimum Viable Product (MVP) – an initial iteration on its envisioned product. The MVP must be released and put before real customers as soon as possible so as to collect feedback related to the initial assumptions underlying the business proposition. The author mentions two main assumptions which must be validated (or invalidated) in the early stages of a start-up’s existence – the assumption that customers will be interested in the product, and the assumption that the company will be able to grow its user base to achieve the desired scale. This should protect the company from a common situation in which the team works on a polished first release for months or even years, only to find that the market is not interested in the product it offers and the start-up is doomed to fail.

After the MVP has been released, data is collected and decisions are taken as to how the product should evolve in the next iteration. The idea is to collect actionable metrics which can help determine whether the team’s innovation efforts are actually paying off and leading the start-up to systemic growth rather than the land of the living dead (where the start-up survives but is unable to achieve any significant growth). What he calls vanity metrics (e.g. total number of registered clients at any point in time) should not be taken into account for decision-making.

The resulting Validated Learning enables a start-up to decide whether it should persevere in a certain direction or pivot away no progress can be measured. The start-up will have kept the focus solely on learning to know its customers and finding its product, and not spent any of its limited time and resources working on features that do not contribute to this learning process (hence the term ‘lean’). Ries claims that information gathered in this way is much more valuable than any prior market research can hope to achieve.

The book was thought provoking and I definitely have a number of takeaways. Obviously the Lean Startup methodology is still in its infancy – it will surely be fine-tuned and further detailed in years to come. This year it seems that Eric Ries has been focusing on getting venture capitalists on board the Lean Startup bandwagon in addition to entrepreneurs.

One criticism I’ve heard levelled at the Lean Startup is that it’s better suited to web-based or at least software-based startups, whereas physical products and truly innovative technologies required much more up-front investment (maybe this just means longer MVP lead time?). What’s also been interesting to find out is that even though the theory is still not widely known on the old continent, some of its concepts are already considered clichés and some of the terms employed above are seen as hackneyed in Silicon Valley.

I guess makes Lean Startup attractive to entrepreneurs is that it purports to protect against one of the leading causes of start-up failure, which is lack of product-market fit, at least if applied correctly. Let’s face it, if you’re starting your own company the odds are stacked against you. As I mentioned in my previous post, you need to be ever so slightly unhinged to make such a career move. It will take up all of your time and your chances of succeeding are slim, so anything than can decrease the risk is welcome.

What is immediately striking with the Lean Startup is that it goes against the conventional wisdom of spending time upfront writing business plans and doing a lot of market research before starting product development. Rather, it encourages you to ‘get out of the building’ as quickly as possible with as basic a product as you can come up with that still represents your vision.

I’m interested to know whether any of you have experience with other approaches that could serve as credible alternatives to the Lean Startup, or whether you have real-world experience of running a lean start-up that you would like to share.

Anyway thanks for reading, I’ll try to keep the posts coming the next few weeks and tell you a bit more about what I’m working on at the moment…

Why I am going into entrepreneurship (and why I am blogging about it)

For those who know me I’ve been talking about this for a little while now. Actually, for the better part of two years.

The way I see it, there are two kinds of entrepreneurs. There are those who are practically born into it, either from having been raised by entrepreneurs or from having picked up this mild form of insanity early in life. Some highly independent people have always been secure in the knowledge that they would eventually make a mark. And in doing so, their upbringing and early successes have made them confident that they would achieve the kind of recognition required to keep doing things their way. So why should they conform to the dreary conventions of formal education and/or a full-time job working at a bank or a government institution when they have been doing fine on their own since the age of 14?

Then there are those who followed the herd through university, job applications, decently-paying jobs offering comfort and security, a company car with leather upholstery, in more than a few cases  a feeling of belonging and self-betterment, and maybe even a chance to climb up the ladder. These people are a little bit at odds with what this way of life is leading them to, and they feel deep down that something will eventually happen to make them change their course and go do something they really want to do. They know they have a rebellious streak that got buried somewhere in the process, and that they aren’t quite living out the life they aspire to.

Depending on motivation and circumstance the latters may never take the plunge, too risk averse or lethargic to do anything about it until it’s too late. But some of them will gradually be pulled in. It’s starts slowly – curiosity creeps up and you start listening to stories of local and celebrity entrepreneurs, you google a couple of buzzwords and end up on sites like Techcrunch and Hacker News, and before you know it, thoughts of entrepreneurship dominate your strategic thinking sessions. You know, strategic thinking – that thing we’re supposed to devote several hours to every week, or better yet every day. It’s during these quiet moments that you take a step back from the messy whirlwind of everyday life to reflect on what you’re doing with your career, what makes you happy and where you see yourself five years from now.

I’m definitely in that last category. It’s been dawning on me over the past 24 months or so that I am not fundamentally a consultant, even though that’s exactly what the opening line of my job description has stated for the past ten years. I’ve been lucky to work at a company that has offered me plenty of opportunities to grow as a professional. I’ve worked on custom developed solutions for various large clients, either programming myself or managing teams of programmers and getting to learn about sales and customer relationship management while travelling the world and meeting great people.

Once you’ve invested a lot of time and effort into your career at a major consultancy firm, it’s really difficult to call it quits. I’ve had several offers to join start-ups as an associate in the meantime but I’ve turned them all down, sometimes after extended deliberation. I guess it was partly because I wasn’t quite ready to shake off my career consultant pretense, but mostly because I had not co-founded any of these start-ups and didn’t feel engaged enough by their plans and prospects.

For the last ten years I’ve been implementing other people’s ideas. Never mind that I had to start on a new project from scratch every two years and with a new team (typically including a number of junior guys), I just found it increasingly unbearable to work on concepts of applications that were not even partly my own. After all the long hours, the effort and trepidation of delivering a large scale application, it’s jarring that the resulting product does not belong to you in any way.

I will concede that in a couple of instances the clients requested my input often when it came to defining the product roadmap, and made every effort to make me feel involved at every stage of the design process. In that respect I felt some small measure of shared product ownership, but nothing close to how an entrepreneur feels about his own creation.

But is that the main reason for leaving a company where I was well regarded and increasingly well rewarded for my efforts? There is something else, altogether deeper and more subtle. Every time I wrap up a project, or at least my involvement in one, and start on something fresh, I know it’s going to take several months if not years for the team to come up with a serviceable application, let alone a polished one. The question that was increasingly difficult for me to answer was what am I doing this for? Am I simply trying to further my career by taking part in another transactional web portal for another large financial services company?

In those aforementioned quiet times of strategic thinking, a little voice inside me whispers that I should be part of something important. What constitutes important work differs from one person to the next, but I no longer regard building another transactional web portal for another enterprise client as important as I used to. I would rather try to find a solution to one of humanity’s major problems or to develop a novel idea with the potential to improve our society. Such lofty goals may sound laughable but after years of working on projects that I feel don’t ultimately matter much, that little voice sounds less comical and more difficult to ignore.

In the end the main reason that has driven me to quit my job and take up a frugal entrepreneur’s life is that I want to spend all my working hours on something that I feel actually matters.  I want 2013 to count – not that 2012 didn’t count but in terms of my professional life, it was more of a transition year.

Since I’m also an aspiring writer, I’d like to use this blog as an outlet to express my thoughts going forward. I plan on writing about the trials and tribulations of an entrepreneur’s daily life and perhaps discuss product strategy, technology, management and whatnot. We’ll see – I give myself no rigid schedule or list of themes that I need to cover. I would rather go with the flow, so the blog may end up closer to a personal journal than a start-up’s status report, with a few quirky digressions sprinkled in for good measure.

I enjoy writing and I hope my blogging will ultimately prove useful, namely as a means to:

  • force myself to gather my thoughts and express my problems, concerns and decisions regularly and in as formal a way as possible
  • reach out to others and collect advice and opinions about what I am doing
  • maybe come across with some of my ideas and help make my company more visible in the great wide ocean that is the Internet these days

I suppose I’m also hoping for some feedback from readers, whoever they might be and assuming that somebody actually agrees to go through my ramblings from time to time. Maybe some of the information will come in handy to someone, who knows? Otherwise it will all just be for me, and regardless of the outcome of my adventure I’m sure I will look back fondly on my first entries, bringing me back to that naïve wantrepreneur that I was in early 2013…

So if you made it through this entire first post, congrats! You are one of my first readers, and I’d really appreciate it if you would leave a comment or reach out to me on twitter (@vassvdm) with your thoughts, counsel or just words of encouragement. I’ve purposefully left out a lot of details about myself, my background, my product idea, where I live, who I work with, etc. I leave that for upcoming posts, so if you’re interested you’ll have to read more!

Happy New Year to all, and let’s make 2013 matter.