StartupNorth

Tag: leanstartup

  • Lean Startup Day @ MaRSDD on Dec 3, 2012

    Lean Startup Day Toronto - Dec 3

    The team at MaRS and JoltCo are providing local access to The Lean Startup Conference Livestream. Sure they’ve been crazy enough to invite me to host the event and a panel, but that shouldn’t keep you from attending. This is a full day event, it starts early (because we’re EST) and continues late (because the conference is PST).

    The event is divided into 2 streams:

    1. Stream 1 – Hands on stories, workshops and discussion with people in the local ecosystem
    2. Stream 2 – Livestream of the conference from California and the program looks outstanding with Matt Brezina, Danny Kim, Jocelyn Wyatt, Stephanie Hay as well as the usual luminaries (Eric Reis, Steve Blank, etc.)

    Great opportunity to connect with other founders and entrepreneurs. Talk about what is working, what hasn’t worked, and what else you can try. The benefit of having a strong community like we do in Toronto, is that we can get together and share. The community is not an end in of itself, it is a means to an end. And while entrepreneurship can be lonely, there is an accessible community of other entrepreneurs, mentors and others that can help.

    First, you need to put yourself in a path for these unexpectedly good things. Second, you have to be able to see these serendipitous events — you have to make the connections. And third, you have to be able to act them. The definition of luck is that you were willing to do something.” Lane Becker

  • Early stage companies don’t need money, they need customers

    Note: This is cross posted from WhoYouCallingAJesse.com by Jesse Rodgers, who is a cofounder of TribeHR. He has been a key member of the Waterloo startup community hosting StartupCampWaterloo and other events to bring together and engage local entrepreneurs. Follow him on Twitter @jrodgers or WhoYouCallingAJesse.com.

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    The popular belief in Canada is that the tech startup world has been fairly light on investment dollars relative to other industries in Canada. Because there is such a disparity in seed or angel round investment size in Canada vs the US people tend to point to that as a reason people go south. The perceived result of the funding problem (and likely the weather) is that there are 350 000 Canadians in the Valley. No one can argue the talent to build global calibre tech companies exists in Canada (or at least has Canadian passports) but you can certainly argue Canada lacks that certain something to keep them here.

    Five years ago Paul Graham observed that the total cost to get a tech startup started had dropped dramatically and will continue to do so.

    So my first prediction about the future of web startups is pretty straightforward: there will be a lot of them. When starting a startup was expensive, you had to get the permission of investors to do it. Now the only threshold is courage. – Paul Graham, 2007

    There is a lot of attention around getting young people money but does that help them? Does that keep them in Canada? I would argue that the ones that do need and can use capital don’t pull up stakes and leave town for the investment. They leave town (or the country) because they are missing something more valuable than money — customers, mentorship that helps them get customers, and a network of peers.

    Know thy stage

    The problem with comparing funding deal levels in Canada and the US is that it ignores the stage the company is in relative to the stage of US startups raising money for the first time. The Startup Genome report 01 and the Startup Genome Compass offers startups an excellent way to measure themselves against a benchmark of over 3 000 startups. In the report there is a table (shown below) that gives you some overall averages for all startups.


    From the Startup Genome Report 01.

    In last seven years of being involved in the Canadian startup community (mostly in Waterloo) and in the last three years leading what is arguably the best student focused incubator in Canada while founding my own startup. I saw dozens of companies peek into the Discovery phase, a few move on through to the Validation phase.

    What I have seen happen before the discovery phase:

    • Talk of raising money is used to pull in a large group of talent.
    • Focus is not on customers, it is on technology or raising money.
    • There is little help by way of mentorship that takes the time to understand the dynamic of the group.
    • Mentors focus on finding a way to get them money so they can work full time.

    What founders fail to do:

    • Define the problem.
    • Find out what people are looking for.
    • What else do they need in a system?
    • Determine what they might pay for it by getting them to pay for it and talking to our customers.
    • Measure, iterate, repeat.

    Startups need to focus more on customer acquisition and growth in Canada, enough talk about raising money

    There are so many business plan and pitch competitions one could make a career out of attending them. This gives a false sense of success because the ‘winner’ is determined on a lot of factors except their ability to actually get customers. The game becomes about (and has been it feels like) how to put together a report on an idea (business plan) and present in a way that makes you look confident.

    The game is really about getting lots of people to give you their money because you provide value to them. What makes you better than others is that you are chasing a much bigger problem that will provide value to a full percentage of the world’s population. Bonus points if you change the world.

    Note: This is cross posted from WhoYouCallingAJesse.com by Jesse Rodgers, who is a cofounder of TribeHR. He has been a key member of the Waterloo startup community hosting StartupCampWaterloo and other events to bring together and engage local entrepreneurs. Follow him on Twitter @jrodgers or WhoYouCallingAJesse.com.

  • What’s Your Personality Type? Insights for Lean Entrepreneurs

    Editor’s note: This is a cross post from Flow Ventures written by Raymond Luk (LinkedIn, @rayluk). Follow him on Twitter @rayluk. This post was originally published on February 1, 2012 on Flow Ventures.

    The ancient Greek aphorism “Know thyself” is very relevant to entrepreneurs. Most founders don’t give much thought to how their own personality type influences how well they run their startup. Remember, your reality distortion field distorts yourself too.

    The good news is that for the first time since I’ve been building companies, entrepreneurs share a common framework for guiding their startups: the Lean startup. Sure, some people don’t use the right vocabulary and misunderstand Lean. But I find that Lean thinking has permeated the entrepreneurial community, so much so that some founders are following the principles without knowing the term “lean startup” at all.

    The bad news is that there’s still a huge gap between the understanding of lean startups and the practice. It’s frustrating to see and I think one reason is founders don’t take into account how their own personalities influence the process. I haven’t seen anyone ask: “How is my own personality getting in the way of being lean?”

    To help answer that question, I’ve created a list of the top 5 personality archetypes I come across, as well as some things to watch out for if you recognize yourself in one (or more than one) of them:

    • “Smartypants”– You’re very knowledgeable and you want people to know it. You love complexity. You believe that superior intellect and knowledge will close the sale, investment etc.
      • Watch out: you’ll ignore the simple solution (which is often the best one) in favour of something more impressive. You’ll discount what customers say because they aren’t smart enough. You’ll be attracted to innovation vs execution.
    • “Intelligent Architect”– Most engineers have this personality type. You like to build machines and you like it when they work as planned. You like the design phase of projects because there are no customers in the design phase…
      • Watch out: you’re going to be very uncomfortable when your startup is trying to find a business model vs building a product. You can’t architect a solution when you don’t know what the problem is yet. Pivots will drive you crazy because there’s nothing wrong with the code.
    • “The Advocate”– Most sales people (and almost all entrepreneurs) are strong when it comes to selling their vision or advocating what they believe in. In a meeting, especially a brainstorm, you talk rather than listen.
      • Watch out: when you’re trying to find product-market fit, you’d better hone your shutting up skills. You can’t hear your customers’ voices when you’re still talking. You already know your own position, it’s time to listen to others.
    • “The Dreamer”– I saw a pitch deck recently for a hyper-local startup. Great deck, nice screenshots, but within 5 minutes the entrepreneur admitted he probably would never use the product, nor did he think anyone else would. It’s easy to envision success IF everyone used your product. It’s harder to make it so.
      • Watch out: you get excited about building an empire but you have a blind spot when it comes to actual customers and their problems. You’ll overestimate how well your product solves their problems.
    • “Mom and Pop”– One great thing about Lean startups is that founders are getting in close proximity to customers to validate their businesses. Most people start with people they know in their community. If you’re a natural hustler, you’ve probably walked down Main Street knocking on doors and signing up beta customers.
      • Watch out: You’ll hold as proof of your business the fact you signed up 10 restaurants in your neighbourhood. Instead of using (and possibly abusing) them to test your hypotheses, you’ll want to make them happy and get pulled in many directions. Be careful you don’t lose sight of the goal. You’re trying to build a scalable business, not a local consulting company.

    Spend a bit of time thinking about who you are. Better yet, ask the people around you and make sure there are no sharp objects close by. There’s no value judgment here. There are no “good” or “bad” personality types. But the sooner you recognize your own personality type(s) the sooner you can get out of your own way.

    nosce te ipsum

    Editor’s note: This is a cross post from Flow Ventures written by Raymond Luk (LinkedIn, @rayluk). Follow him on Twitter @rayluk. This post was originally published on February 1, 2012 on Flow Ventures.

  • Hiring for Lean Startups: The First Few Hires

    Editor’s note: This is a cross post from Flow Ventures written by Raymond Luk (LinkedIn, @rayluk). Follow him on Twitter @rayluk. This post was originally published in January 12, 2012 on Flow Ventures.

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    Attribution Some rights reserved by Maximus_W

    I was having coffee with a founder the other day and we started talking about his hiring plans. Since he’s a non-technical founder (which Ben Yoskovitz claims is a dead-end to begin with) he had several top coders in mind, all of whom were earning big bucks with larger companies.

    “I’m paying them a little bit of money but they’ll join full time once I can raise money,” said the founder. It’s something I hear a lot, especially from non-techie founders.

    I went back to review some blog posts on Lean hiring, and I came across Eric’s post “Lean Hiring Tips” and Mark MacLeod’s “Fat Hiring for Lean Startups“. Both are worth your time. But I think they’re also written for startups that are already up and running and need to expand. I’m interested in very early stage hiring, e.g. when you’re one person looking for a co-founder or you’re two people looking for your core team.

    Companies always take on the characteristics of their founders and in the rush to scale, I find many startups don’t stop to consider how they’re establishing the DNA of their company. The first few hires are the most important ones you’ll make.

    • Hire for an experimental mindset – Look for people who enjoy encountering problems, designing ways to solve them, and finding proof of success or failure. Skill at building, whether it’s software or a marketing plan or a sales funnel, is irrelevant at this point. You need people who will volunteer to scrap their plans, not fight you when you want to change course.

    How? Join a hackathon, Lean Machine or just create your own (laptop + Starbucks = hackathon). Give your (potential) team a crazy challenge and see who exhibits the right behaviours.

    • Hire generalists – A lot of people will disagree with this advice. If you can find the best Python developer in the country go for it. But only if she’s also willing to cold call customers, crank out some Web site copy and help you whiteboard the business model. Your #1 focus is to find a business model that works. The latent technical talent on your bench won’t help you unless you graduate from this first phase

    How? Again, hackathons are great practical tests. No matter what their skillset, look for passion about your business model and solving customer problems.

    • Prioritize UX over development – This is easier said than done since there’s a shortage of UX talent. But it’s better to have a kick-ass UX person and a mediocre developer than the other way around. UX will help you find your business model and most (good) UX people already have an experimental mindset and generalist attitude

    How? Actively seek out UX people, not just developers. You may need to work at a distance if you can’t find local talent. Consider working with less experienced people if they can prove themselves through testing.

    • Get skin in the game – Leaving a six figure job to join your startup for a paycut is not skin in the game, or not enough in my books. Hire those people later when you’ve found your business model, have money in the bank, and need to scale. Skin in the game means working full time, just like you are. It means putting their reputation on the line, raising Ramen funding from friends/family/spouses and saying “I’m going to see this through until we fail.”

    How? Stop feeling like you’re a poor startup that can’t afford to pay top salaries. Those aren’t the droids you’re looking for. Think of finding your co-founders like raising your first round. You need to get them excited to invest in your business.

    I know this advice seems to apply better to “Web” startups than general technology startups, which is a common criticism of Lean startups in general. But I think it applies more broadly. If you hire for the right attitude, you not only solve the critical product-market fit problem, but you set the DNA of your business right from the start. I guess I haven’t seen too many examples of startups failing because they lacked a specific technical skill. They probably think they failed because of it though.

    In the end, I guess “hiring” is the wrong word to begin with. You’re looking for people to co-found a business with you. You aren’t buying their skills, you’re asking them to invest in helping you shape the course of your business from the very beginning. Maybe not all of them (including yourself) will be able to scale up with the business. That’s a problem for another day.

    Editor’s note: This is a cross post from Flow Ventures written by Raymond Luk (LinkedIn, @rayluk). Follow him on Twitter @rayluk. This post was originally published in January 12, 2012 on Flow Ventures.

  • Lean Startup Tools

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    Back in May, Nat Friedman wrote about the tools used in setting up Xamarin. They include a great set of basic tools for getting a startup off the ground with very little investment. We have seen a lot of startups using a similar set of tools and I thought that we’d compile a list of the tools that we’re actively using (and some of the others we evaluated). There are the tools and blogs listed by Steve Blank that include many

    Landing Pages

    We’re big fans of WordPress at StartupNorth. We’ve powered StartupNorth on WP since the beginning. The combination of WordPress, Premise, and the WordPress MU Domain Mapping plugin is a pretty powerful combination for creating mutliple sites and landing pages to test your landing pages. But we’ve also developed a sweet spot for Vancouver’s Unbounce, it took us less than 5 minutes to have 2 landing pages and a domain set up. We’re big believers that you can use Adwords and Facebook Ads to quickly create a landing page to test ideas before writing a single line of code.

    Analytics

    We primarily use Google Analytics and WordPress Stats for StartupNorth. We’ve been working with startups and using a KISSmetrics and Mixpanel to measure activity on their web properties and applications. Make sure you read Ash Maurya’s 3 Rules to Actionable Metrics to understand how the analytics can be used in combination with split testing and/or cohort analysis to better track your optimization before product/market fit (What do you measure before product/market fit? – check out Ash’s conversion funnel and metrics).

    Mailing Lists

    We haven’t been as proactive in building a mailing list for the StartupNorth community as we probably should have been. I’ve used have started using MailChimp because of the quick integration to GravityForms and WooFoo, but have had very positive experiences using both Campaign Monitor and Constant Contact.

    Billing and Accounting

    What is amazing is that both of these companies are local to Toronto. We use WaveAccounting integrated with our bank account and PayPal for tracking expenses, billing, and financial operations. And we use Freshbooks to bill for sponsorships. They are a must have in our back office. What we’re missing is a really easy to use and integrated payroll system (I hear that it might be coming).

    Human Resources

    For full disclosure, I’m an advisor to TribeHR. It doesn’t change the fact that they rock. It is the easiest way to get an HR system in place. And there is no better way to get feedback and help employees improve than Rypple.

    Surveys and Feedback

    We are actively using Survey.IO to gather feedback from users about the state of StartupNorth. It helps us figure out the state of our product market-fit, if there is such a thing for a blog about Canadian startups, fill it out and help us be better.

    Project Tracking

    We use Pivotal Tracker. We like them so much, we actively recruited them as a sponsor for StartupNorth. There are lots of other tools from project tools to issue tracking. Curious at what others are using.

    Source Control

    We use Github Bronze for our project hosting. Most of the code we work on is PHP against MySQL (see WordPress), though we have additional apps in development like the StartupNorth Index (which will be moving to startupnorth.ca/index shortly) but all are LAMP.

    Hosting

    Full disclosure: VMFarms is a sponsor of StartupNorth. However, their hosted VMs that are backed up and hot mirrored coupled with the outrageous “white glove” makes them a dead simple choice. We also use Rackspace Startups and EC2 for access to easy Linux and Windows VMs for development and testing environments.

    Customer Relationship Management

    We don’t have any strong recommendations. There are platforms like Salesforce that are fantastic and sales teams are used to. There is Highrise which is broadly supported with a lot of 3rd party tools. But so far, neither of these has been the clear winner for us. There is a great Quora question about “What is the best CRM for startups” that lists SFDC, SugarCRM and Highrise. There are a lot of choices for CRM including Nimble, Insightly, Woosabi, Capsule, Solve360,AppPlane, Batchbook, PipelineDeals, TactileCRM, ZohoCRM and many others.

    Conferencing, Screen Sharing & Telecommunications

    I’ve been using Calliflower for conference calling. It’s $5/call for up-to 5 callers, or for $30/month unlimited minutes and >70 participants, it’s a great solution. It is not a replacement for a office phone system.

    Google Voice and Skype have been the least expensive way as a Canadian startup to get a US phone number. This is great for me as an individual. However, this does not scale to an enterprise or an organization. I’ve been looking at Grasshopper, RingCentral and Toktumi, but I have yet to settle on a solution.

    SEO & SEM Tools

    This part of the list is pretty much cribbed from Steve Blank’s list of tools for entrepreneurs. Go read it for a more comprehensive list of tools beyond the SEO/SEM listing included below.

    What are we missing?

    I’m going to cover in the next post: discounted travel, conferences, business cards, design services, and other tricks for being relentless resourceful as a founder.

    There are a lot of online tools that startups are using to make or break their business. And there is a lot missing, monitoring like NewRelic, PagerDuty, Pingdom and Blame Stella for example. But I’m curious what are the indispensable tools being used at iStopOver.com, HighScoreHouse, CommunityLend, Idee/Tineye, Massive Damage, Empire Avenue, Indochino, Lymbix, Hootsuite, AdParlor, Locationary, Chango and others. What are you using? What gives you the edge in quickly and effectively gathering feedback to test your hypotheses?

  • The Entrepreneur’s Guide to Customer Development

    The Entrepreneur's Guide to Customer DevelopmentI was reading Eric Reis’ Lessons Learned blog yesterday and he talked about The Entrepreneur’s Guide to Customer Development. I begrudgingly read Steve Blank‘s Four Steps to the Epiphany, which is a must read for any entrepreneur (begrudgingly read because it is not the easiest reading). It is a great book, but it’s tough reading.

    “And Steve is the first to admit that it’s a “turgid” read, without a great deal of narrative flow. It’s part workbook, part war story compendium, part theoretical treatise, and part manifesto. It’s trying to do way too many things at once. On the plus side, that means it’s a great deal. On the minus side, that has made it a wee bit hard to understand.” Eric Reis

    I bought a copy yesterday based on Eric’s recommendation. It is a phenomenal resource for learning Customer Development. Patrick and Brant have done a great job writing an understanable how-to guide for using Customer Development and Agile Development in a Lean Startup. The book includes a shout out to our friends Dan Martell at Flowtown and Sean Ellis at 12in6.  

    The book incorporates the wisdom and experience of real world practitioners of Customer Development in the 5 years since the inital publication of The Four Steps. For the first time a lot of entrepreneurs will hopefully begin to understand a technology adoption lifecycle and the marketing of products/services. I wrote a chapter in Cost-Justifying Usability back in 2005 where I had first encountered Steve’s Customer Development Methodology from his course notes in 2004 at Stanford (yeah, I know that’s crazy). In the chapter, titled “Valuing Usability for Startups”, I argued that getting out talking to customers and testing your hypotheses were key to success. However, I proposed using the Bell/Mason Diagnostic for evaluating the stage of corporate development in order to calculate Return-on-Investment of usability. In hindsight, I probably should have instructed entrepreneurs and usability professionals to look at processes like Customer Development to search for a “repeatable and scalable business model”.

    The Entrepreneur’s Guide to Customer Development is a short mandatory introduction to using customer and agile development to search for a  repeatable and scalable business model.

    Discount for StartupNorth Readers

    A few quick emails to Patrick today, and he offered to provide StartupNorth readers a 25% discount on any version of the book. First ten StartupNorth readers to go to CustDev.com can use the discount code.

    Discount code: STARTUPNORTH (limited to the first 10 users)

    Good luck!

  • Marketing metrics

    Photo by Darren_Hester

    Mike McDerment from FreshBooks gave  a great presentation on the basics of web application marketing metrics. He focuses on the metrics, systems and reporting that all companies should be building into web and mobile applications. It is a must read for any entrepreneur building a web application.

    Metrics

    Cost Per Acquisition (CPA)
    How much does it cost you to get a customer? It’s a simple enough calculation, how much do you spend on sales and marketing to acquire each customer. Roll up your staffing costs, your ad buys, your outbound marketing, etc.
    Average Revenue Per User (ARPU)
    How much revenue do users generate? How do you track it? Does it change based on segment? How do you increase it?
    Churn
    What percentage of your existing customer base leave every month? This is different than CPA because this is about customer satisfaction and retention. Don’t think this is important? According to April Dunford churn is a killer. “The probability of selling to an existing customer is 60-70%. The probability of selling to a new prospect is 5-20%”
    Lifetime Value (LTV)
    How long does a customer continue as a subscriber? Does their ARPU change over time? Do you have ways to increase their spend or reduce their churn?

    These basic metrics are expanded by Dave McClure in AARRR! Startup Metrics for Pirates. Where the metrics are divided into 3 main categories:

    1. Get Users (Acquisition, Referral)
    2. Drive Usage (Activation, Retention)
    3. Make Money (Revenue)
    Startup Metrics 4 Pirates (Montreal, May 2010)
    View more presentations from Dave McClure.

    It seems so simple on surface, but as CEOs and startups we need to be committed to building the systems and metrics into our products. I was just floored at MeshU when I heard Dan Martell talk about the Flowtown.com Startup Immune System where they are beginning to use the lower level business performance metrics to automatically rollback design changes based on performance against the baseline. You can only start doing if you’re building on top of metrics. The idea of having automated your software deployment and sufficiently built business metric baselines that you could autoroll back poor performing changes. At Nakama, I wanted this so much. Not because I had bad developers but because we often made design decisions based on limited customer feedback and I wanted the system to protect me from my own hubris.

    Metrics are good place to start. One of the best ways to understand how your company is performing is to begin measurement. Mike has done a great job