Comments (2)

By brantcooper, July 26, 2011 10:33 am

As technologists working on new products and new markets, we tend to forget where we are on the technology adoption lifecycle curve.  That’s a mistake.  Here’s why:

1. Nobody cares

See all that white space under the middle of the curve?  Those are people using products that aren’t yours. They are inundated with new offers every day. They exist in a world of information overload. It doesn’t matter how great your technology is, nobody knows about you, nobody cares about your product.  See that white space under the line marked by the blue dot?  Yeah, me neither.  If, for example, you are building a new web app that demands people spend time on your site, whether you’re the new deal site du jour or a “disruptive” new Q&A site, you’re competing against limited attention, ie., limited time carved out for spending time online.  Never mind your actual competition. You have to either increase the amount of time people spend online, or steal time from Facebook, Twitter, Google, Microsoft, CNN et. al.

2. You have a long way to go

Inside our early adopter bubble, we think a TechCrunch mention is the end all, be all.  What % of the US population has never heard of TC, 97%?  See where the curve starts accelerating up?  That’s about where the chasm lives, waiting to swallow you up.  Of course As Steve Blank likes to point out, you’re lucky if you even get to the chasm. We are easily distracted by minor (albeit clever) improvements to infrequent activity on technology platforms that from a global perspective, are obscure.  Say, like posting photos that look like Polaroids to Twitter. Not only are we enamored with such minutiae, but are ready to declare such features “the winner.” Of what, who knows?  You can try Leapfrogging early adopters, but that requires millions and millions of dollars (see iPhone/iPad).

3. Your entire ecosystem is early

Have you noticed the resurgence of email newsletters? It’s as if technologists finally got the DMA memo that email is (still) the online communication tool of choice among consumers.  In other words, if you want to reach customers, email is better than Twitter, Facebook, SMS, etc.  Not that these aren’t effective, too, for some segments, but like it or not, email is king.  The point is that the distribution of users on the platforms your product depends on, determines your market potential.

If your strategy depends on early majority platforms, you will need patient investors and money to burn. If you aim to leverage established platforms, remember that users generally like them the way they are (that’s why they were successful).  It’s hard to alter user behavior within a platform, too.

Of course, your objective might be to overthrow entrenched players, or perhaps to re-segment their market.  But remember that the momentum achieved by established companies successfully converting the “early majority” crushes your “better” product.

Use your fellow “early adopter” denizens to help vet your product, determine what works to solve pain, reward passion, instigate sharing, but don’t assume your success here and infatuation with your wiz bang technology represents a real market.

Comments (8)

By brantcooper, June 8, 2011 12:27 pm

I just did.

A couple of weeks ago, I tweeted:

f***ing hard telling clients maybe their “baby is ugly.” #lsmSF#leanstartupMI#EntrepreneurDownDays

The pause that followed was a deep void.  It was emotional.

During the next week of reflection, a non-early adopter, but loyal user of the product called the founder to  announce that he would not after all, pay for the product. Not at the proposed price, not at the price they had argued for, not at any price.

So he fired himself as Founder and CEO of his company.  And then he fired me.  (“I no longer need your services.  But in the future…”)

We talked briefly about his future, including possible pivots and leaps, but essentially, the gig was up.  I admire his self-awareness and the honesty with which he evaluated his situation.

Can you do that?

Yes, it’s difficult to know when to kill your idea.  Yes, you should be knocking down walls to work.  But the market is the final arbiter, not your hustle.

There’s a whole slice of our society based on non-transparency, on not being totally truthful. It’s necessary for polite society.  You don’t always need to hear your haircut sucks or you look fat in that outfit.  But this is a problem, too, when you really need to hear the straight dope.  As a startup founder, you need to surround yourself with people who are willing to speak the truth.

You need to talk to investors who won’t grinfuck you, e.g., those who makes intros to a bunch of other investors, instead of telling you why he thinks you’re not fundable. You need advisors like Dan Martell, who challenge whether you got the stuff, or Patrick Vlaskovits, who will kick your ass because you’re spending more time documenting your business canvas then actually outside the building testing your business model.  Truth-telling is why I admire Eric Ries, who is willing to challenge the most fundamental media myths surrounding startups and “visionaries.”

Gravity’s Zipper

You will be exposed.  If your idea isn’t what you’ve built it up to be in your mind, it will eventually fail.  Believe in  yourself, be skeptical of your idea.  Surround yourself with truth tellers.

Comments (4)

By brantcooper, May 9, 2011 5:46 pm

Whether there’s a tech bubble or not is an interesting discussion going on in the blogosphere. (Reading guide is below.)

I fall into the “boom before bubble” pack. Having lived through the 90s’ bubble, there’s no way we’re there yet.  That doesn’t mean there won’t be one, but my feeling is we’re skating a razor’s edge off one side of which looms another wave of  housing foreclosures and a doom & gloom Sequoia presentation. Investors herding like sheep around darling Silicon Valley startup memes is not in itself bubblicious, it’s SOP.  Sheep investing affects supply and demand conditions that result in higher valuations.  Good or bad, that doesn’t in itself represent a bubble.

The Internet bubble was about more that overvalued startups. Horowitz and Graham argue other dynamics way better than I can (see links below), but I think it’s important to point out that bubbles dramatically affect the entire economic climate. The bubble was “our” version of 70s inflation.  The bubble caused a huge migration of people to the SF Bay Area. Salaries went through the roof (not just for engineering talent.) So did cost of living.  In the 90s, the housing bubble was inseparable from the Internet bubble. The buying of lots of different goods became irrational.

And there’s the final point.  Frankly, as long as the voices saying we are in a bubble remain as strong as those who say we aren’t, it’s hard to say we are.  There’s was very little dissent in the 90s or perhaps more accurately, that dissent was easily drown out by the ignorance of the mainstream media. But that isn’t the case today, either.

The Best Way To Avoid a Bubble

Think globally, act locally.  Successful startup ecosystems in Boston, New York, Boulder and a few other cities eases pressure on Silicon Valley prices for EVERYTHING, including startup valuations.  Yes there are advantages to investing in startups in large ecosystem like Silicon Valley, including access to partnerships, vast amount of resources and M&A opportunities, but there are pitfalls, too.  Strong entrepreneurship exists outside Silicon Valley, as many of the past “big wins” show.  Local non-SV ecosystems frequently have strong, yet  underemployed resources, lower engineering costs, employees less likely to jump ship, and local environments arguably more attractive that Silicon Valley.

But where’s the money? San Diego’s Avalon Ventures is the only VC with an active fund. Tech Coast Angels, who laughingly claim “lean startup” as a tag, is infamous among entrepreneurs for their six month plan for not investing, rather for any risk-taking activity.  Local support organizations like CONNECT server clean tech and life sciences well, but their vanity metrics fail to reveal their inability to attract and help Internet and software entrepreneurs.  There are about a dozen San Diego angels on Angel List, most of whom have no San Diego investments.

I have heard similar stories from other startup cities, even the bigger cities that seem to be thriving.  There are several problems:

• Many local investors are “old school,” believing they sit in the catbird’s seat and can wait for for entrepreneurs to knock on their doors.  (Not going to happen.)
• Many local investors follow the lead of Silicon Valley investors, rather than striking out on their own.  (Angel List helps solve this, plus lower $ amounts should increase risk tolerance.)
• Investors don’t know how to connect to local entrepreneurs. (Entrepreneur groups are thriving and investors need not fear being swarmed.)
• Many entrepreneurs don’t know how to connect to local investors. (Entrepreneur groups help with this, too.)
• Some entrepreneurs either ask for money based on ideas or are not building “real” startups. (Why do you think I evangelize the Lean Startup framework?)

The crazy result is local startups going up to Silicon Valley to find funding and then experiencing a tremendous amount of trouble to move there AND local investors investing in Silicon Valley companies.  This circumstance not only represents a failure to support San Diego’s economy, but also serves to increase the pressure on the Silicon Valley bubble, er boom.

Please let me know your thoughts on the bubble and local investments in comments.

_____________________________

Here’s a short guide on bubble opinions:

Yes, there’s a bubble

Steve Blank (post)

Paul Kedrosky (post)

Mike Maples (TechCrunch)

No, there’s no bubble.  (Yet.)

Henry Blodget (slides)

Paul Graham (article)

Ben Horowitz (post)

Howard Lindzon (post)

Comments (14)

By brantcooper, April 28, 2011 11:57 am

Despite Dave McClure’s imploring to “kill a feature” and Eric Ries‘ urging to “cut your product in half, then halve it again,” most startup founders I encounter are trying to work their way toward Product-Market fit by planning and building new features. The analytical mind of an entrepreneur, both engineer and business-side, naturally tends toward solving problems and ostensibly, features solve problems. But it’s the wrong approach for most startups.

Solution-centralism starts in Customer Discovery.

More often than not I encounter surveys that pay scant homage to the problem, usually has a means of filtering respondents. For example, a typical survey asks “do you have this problem” and if so, how appealing do these solutions sound?  Tweaks to the problem description involve messaging more than understanding.  In other words, the startup team focuses on understanding what words resonate with respect to the problem, as if  the problem itself is fully understood.  Interestingly, the problem continues all the way through to asking pricing questions that evoke dubious responses like “would you be willing to pay?” or “how much would you be willing to pay?”  There is no direct connection to value in these questions.

You hear this in elevator pitches all the time, too.  Egocentric pitches assume the features (and even the benefits) make the problem compelling.

In fact, the opposite is true. The willingness to pay depends on the depth of pain (or passion).

One of my favorite Eric Ries quotes:

If you can’t sell magic, you can’t sell your solution.

Nobody cares about your solution.  They care about solving their problems.

Solution-centralism continues in Customer Validation.

Your product is out the door and you have some market signal, but are still searching for Product-Market Shanggri La.  And you have the feature list and engineering spec that is going to get you there.  Everyone does.  You’re one feature away.  Always.  Your iteration loop has an invisible exit gate.

This is the chasm before The Chasm.  This is where you become the anti-Dropbox, a shattered “tip of the spear.” This is where you become unable to answer who you are:

• too many features;
• features people don’t use;
• features across too many market segments;
• features to keep up w/ Jones’ Widget Co.

Stop.  Please.

Problem-centralism Wins

Be a problem expert. In this age of fast development and no IP protection, whoever “owns” the customer, wins.  You own the customer by understanding and solving their problem better than anyone else.  This is why Customer Development, when properly done, is critical to your success.

• When surveying users early on, focus on problem statements before solution.  (FYI, I am working on an application to help with that.)
• Interviews are critical toward establishing empathy.  Emotion indicates resonance and cues you when to dive deeper, rather than going shallow and broad (like surveys).
• Product demonstrations are not for “show and tell,” but rather is this solving the problem (exercising the passion).
• Messaging/positioning around problem lures the unsuspecting and suspicious alike.
• While iterating product toward what resonates, kill features.

Ultimately your addressable market size depends on amount of pain (passion) in the market, i.e., the size of and number of market segments that share a “big enough” pain (or passion).