Getting Lean: A Startup’s Key Learnings from Web 2.0 Expo

Being fortunate to win a scholarship for this year’s web 2.0 Expo in San Francisco (appreciation to @ericries, @SarahM and @TechWeb for having this opportunity), it is also in courtesy that I share a startup’s takeaways and lessons learned from the conference.

In my approach writing for the scholarship program for lean startups, I pitched how EasyPeasy could learn from attending the conference and the Lean Startup Intensive. I described how EasyPeasy currently is seeking to validate Product-Market fit and, presumably in the customer validation phase, searching for its first transactions.

The Grand Pivot

Arriving at the conference after a 20 hours travel from Oslo, Norway and suffering from a mild jet-lag, I finally got to see Eric Ries, Steve Blank, Sean Ellis and Dave McClure and the reminder of the Lean Startup movement at work. In nearly every event that I was attending that week, either it was the in the talks, keynotes or unconferences, “Lean Startup” was buzzing. One major highlight was attending Matt Brezina‘s talk: 5 stages of Xobni’s growth and 5 pivots along the way.

Having been a fan of Xobni for some time, I was excited to learn from their practical implications in pivoting from offering an e-mail analytics suite to that of “just” an outlook sidebar plug-in. Nevertheless, by talking to @brezina and @hnshah I had my thoughts about customer validation and pivoting matured. One week later, EasyPeasy is smoke testing for a new product offering.

Minimum Viable You

During the Lean Startup Intensive one common denominator came into view. Steve Blank, advocate of validating hypothesis about business models, talked about how a startup must strike balance between a product’s minimum feature set and maximum sales. Accordingly, Dave McClure talked about how a startup must balance between user hypothesis and revenue. Lessons learned, and one key tenet with the Lean Startup methodology is that a focus on validated learning will enable startups to mitigate risk in new-product introductions, often by including continuous deployment, arguably a start-charging-now and learn fast/fail fast philosophy.

This is where the minimum viable product comes into the picture. At the second day of the conference a case of minimum viable tactics was elaborated by @drewhouston and @asmith in their excellent talk: From Zero to a Million Users – Dropbox and Xobni lessons learned. I think that this presentation gave a great many startups, including EasyPeasy, a lean toolbox at hand.

People Analytics

The Lean Startup advocates use of metrics for validated learning. Yet, there still is one vast amount of metrics to track, dependent on what line of business you are in. At the second day, Neil Patel gave an exciting talk on Web Analytics – Tracking People and Not Just Numbers, and an amazing Q&A session about what metrics you ought to track. In plenary, Neil asked the audience for their websites’ URL, he quickly analyzed their pro and cons, and gave the audience applicable tips and tricks, all in real-time. I highly recommend his slides to be found on Slideshare, 5 Metrics You Ought to Track.

iPad, Flash and HTML5

Soon after arriving San Francisco I found that nearly every overseas visitor who I got to meet at the conference, in their very first morning in town, had been rushing over to the Apple store. Ourselves, arriving one day after our Norwegian fellows (we organized by extending the #w2e Twitter hashtag with #w2eNOR), we found that the iPad 3G edition was already sold out. We put our names on a notification list, hoping that another delivery would arrive at the store before we were on our way back home.

Nevertheless, web 2.0 Expo hosted a couple of very popular talks on the tablet innovation, here and here. iPad were on everybody’s tongue and the big discussion tended to be about Flash vs. HTML5 and Adobe vs. Apple. Among a many good keynotes, Brady Forrest‘s chat with Adobe CTO Kevin Lynch did comb the debate. As when it comes to EasyPeasy, currently offering an open source operating system for netbooks, you might have a clue about how this might affect a pivot.

Learn Fast, Fail Fast

Truth is that there was many interesting talks, and unfortunately one did not have the time to attend all.  The main theme of the conference being Web as a Platform, there was a lot of interesting stuff on social media marketing, cloud computing, mobility, usability, virtual and social gaming. Many more events and people should be mentioned, yet I think that the above is sufficient to draw some main characteristics.

Pivoting, minimum viable products and analytics were just some of the themes that were buzzing throughout web 2.o Expo. What these subjects have in common and what was an overall takeaway, whether we are talking about ever changing technologies, markets or startups, is that a strong learning culture can be source of success, or at least to fail fast. I certainly will attend the next year’s web 2.o Expo.

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How to craft a lean & mean Value Proposition for your Startup

EasyPeasy Value PropositionMark Twain said “I didn’t have time to write a short letter, so I wrote a long one instead.” Nonetheless, every business model needs a clear value proposition – a description of the value or benefit that your product creates for a specific customer. However, crafting that 1-line pitch that makes a customer turn to your company over another might be a challenging task. Here I describe the VAD technique for crafting high-level value propositions for your startup.

Author of Crossing the Chasm, Geoff Moore, suggested a great template for making and baking your elevator test. Yet as I needed an even more high-level pitch, I had a look at the value propositions of promising web startups. Luckily I didn’t have to go far. Guy Kawasaki is a true master of crafting value propositions and mantras, as he prefer over [corporate-ish] mission statements. On his blog I found some killer examples:

I like these. They are short, simple, playful and to-the-point. Guy is not afraid of polarizing people. Its premise is that you will rather take a “sniper approach” than using a shotgun in aiming value propositions at your customers. Generally Guy seems to put a verb or call-to-action first, followed by the application and a differentiator. That is [verb; application; differentiator], or VAD if you like.

Another interesting value proposition is that of Xobni. By highlighting “Drowning in Email?”, Xobni immediately makes you aware of your problem and invokes some kind of thank-god-I’m-not-alone-feeling. Instead of being everything to everyone, Xobni makes it clear that it offers you an Outlook sidebar plug-in. Following, Xobni highlights it main features and user perceived values – “searching your inbox and finding information about your contacts fast and easy”.

Now consider EasyPeasy. Its current value propostions are:

  • EasyPeasy: an open source cloud OS for netbooks.
  • EasyPeasy: Linux for the rest of us.

When using the VAD technique we came up with the following high-level pitches:

  • EasyPeasy: Rediscover your netbook.
  • EasyPeasy: Make your netbook a lean, mean surfing machine.
  • EasyPeasy: Run any web app inside the operating system

I admit being scared of polarizing main audiences within open source and Linux. Yet, VAD helped us drill down customer segments and perceived user value. From a positioning point of view these value propositions polarize new netbook users, and focus on solving the problem of current netbook users that feel pain with their pre-installed OS.

There sure is more to it. If you would like a more in-depth approach to value propositions and business models, I recommend reading chapter 2 in Business Model Generation by Alexander Osterwalder and Yves Pigneur.

Now, feel free to slaughter or embrace the high-level EasyPeasy pitch, or throw away the shotgun, load your rifle and craft your own VAD-style value proposition.

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What’s in a Startup Methodology?

Back when I did the transition from studying software engineering to entrepreneurship, one question kept coming to me – while methodologies are inevitable for successfully building software products, why isn’t there an integrated methodology for launching and taking that product to market?

Take for an example the Perpetual Beta and Spotify, a successful online peer-to-peer music streaming service. Spotify did not only use beta versions to test engineering requirements with early users – using beta-invites enabled Spotify to create demand for their service at the same time. Software developers have been embracing practices such as Continuous Deployment for years, but merely from a technical viewpoint. I believe that the Perpetual Beta represents a new line of ambidextrous practices that not only enables a startup to plan, test and build – but also serve, distribute and market their product at a lower cost.

Astonishingly, methodologies that help entrepreneurs facilitate software product development alongside commercialization are still scarce. At the one hand there exist a variety of methodologies to manage risk in agile software product development, including Scrum, Extreme Programming and Adaptive Software Development. However, none or few of these methods, to my best knowledge, encapsulate risk in commercialization. To simplify, think of it as Scrum + marketing (Scrumm). At the other hand traditional management practices have been argued not to fit the extreme uncertainty in startups, and often comes to short in terms of aligning with disruption driven by Internet technologies.

At that time I was also more than inspired by Crossing the Chasm that addresses the specifics of marketing disruptive high-tech products. However, I still find the Pre-chasm phase left unintended. In my last post I wrote about diagramming the product-market fit, in which I have aligned with the Technology Adoption Life Cycle below.

Pre-Chasm Startup Methodology

In many ways I think that new-product introduction is about ramping the Pre-chasm, where building and taking new products to market are not two separate activities. Obviously a startup needs ambidextrous qualities, and working engineering and marketing in parallel will enable a startup to discover the holy grail of product-market fit – a key tenet with Customer Development and Lean Startup thinking. Together with elaboration on 37signals’ Getting Real and Rework, I look forward to seeing what this emerging school of startup methodologies brings.

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Diagramming Product-Market Fit at Lean Startup

Continual iteration is a fundamental principle in agile thinking as well as in startup methodologies such as Customer Development and Lean Startup. Basically, its premise is that a startup will mitigate risk and uncertainty by shortening product and customer learning loops, and adjust its product-market fit accordingly.

A startup achieves product-market fit when it masters the balance of building a solution, or product that acts on a customer’s problem, or vice versa. Both product development and customer development each has its own iterative loop structure. I believe that the two should be reciprocally acting and proceed in parallel towards the goal of product-market fit and that this makes a multiple-loop system. This invokes an ambidextrous challenge to early-stage ventures.

Building on my former post on Disciplined Creativity with Mihály Csíkszentmihályi’s Flow diagram, I would add to the Lean Startup model.

The diagram above shows product-market flow as a result of efforts in parallel iteration between agile product development (at the y-axis) and customer development (at the x-axis). In order to achieve a product-market flow state, that is product-market fit, a balance must be struck between customer development and product development. If a startup is drifting too far along one of the axis without iterating, flow cannot occur.

I believe that iteration beyond the product-market flow zone could be considered pivoting – that is when you change a fundamental part of your business model in regards to products and customers. To successfully iterate between product and customers and achieve product-market fit, you would develop a minimum viable product offering that enables you to learn about your customers needs and wants.

At startup you must pay close attention not only to the iterative tasks within customer development and agile product development separately, but also to the feedback loops in between the two. However, time is limited, and you should be aware of trade-offs in achieving flow in a Lean Startup. This is where continual iteration and validated learning allows for greater risk reduction under extreme uncertainty.

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9 Minimum Viable Product WordPress Themes

The Minimum Viable Product is one key tenet of the Lean Startup and Customer Development methodology. According to Eric Ries “the Minimum Viable Product is that product which has just those features (and no more) that allows you to ship a product that resonates with early adopters; some of whom will pay you money or give you feedback.”

With the raise of cloud computing and SaaS, the website often makes the product itself. Nevertheless, commoditization of Amazon-ish hosing services, search marketing, free and open source software such as the LAMP stack and publishing systems like WordPress – allows startups to build and market their products at a lower cost. This is a simple overview of – cut to the chase – minimum viable WordPress themes.

1. Optimize by WooThemes is a product and feature-centric theme that emphasizes a clear value statement and sense of call to action.

2.iPhone App theme by Templatic. The name speaks for itself. The theme is designed for, but not limited to marketing of iPhone apps. The call to action button is nicely positioned in the mid of the screen. Although the blue area/the header is static, I’m sure that this can be changed with ease.

iPhoneapp WordPress theme

3. Feature Pitch by WooThemes is an out of the box theme suitable for marketing that one compelling product of yours. Also take a notice of that lighting orange tab at the upper right. Good thinking.

Feature Pitch Minimum Viable Product wordpress theme

4. eBook theme by Templatic. Although the name implies a focus on eBooks, its message can easily be changed to work for any product.  It comes with widgets for testimonials and newsletter sign-up right out of the box.

ebook WordPress theme

5. Coffee Break by WooThemes has unlike the others put the call to action buttons at the leftmost side. It is clean and clearly built with usability in mind. The slider can easily be disabled.

Coffeebreak Minimum Viable Product WordPress theme

6. iProduct Theme by Templatic. Yes it is a product-centric theme. Its layout differs from the others as its download buttons are centered underneath the product image. iProduct comes with a pricing plan module, as well as a testimonials and customer service widget by default.

iProduct Minimum Viable Product wordpress theme

7. Eminent is a simple company-product hybrid. It provides call to action along with Twitter aggregation and client list features.

Eminent minimum viable product wordpress theme

8. Ignite is one dead simple theme. It is primarily a landing page, but it might make a good basis for starting the design of a minimum viable product site.

ignite minimum viable product wordpress theme

9. GetBusiness is a Web2.0-style theme more focused on company profiling. However, with slight modifications it would work as well as a minimum viable product theme. The call to action button and value proposition is at the heart of the front page.

GetBusiness minimum viable product wordpress theme

The themes have in common the emphasis on minimum viable product techniques. Their design is built around the product rather than the other way around. There is a clear slogan and value proposition, as well as product feature listings. Call to action buttons, along with testimonials and customer service widgets are at the center of the templates. Perhaps the most important, the minimum viable theme should organize for customer feedback and simple testing of ideas.

You may have noticed that WooThemes and Templatic themes dominate the list. I believe that this is not by accident. If you have a look at their respective sites, you’ll see that they make good examples of how to design a compelling reason to buy.

Stay tuned for more minimum viable product themes to come.

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6 Essential Startup Decks

Among the great many startup 101s’ that are out there, it can be hard to separate the wheat from the chaff. Here is an overview of the most essential startup decks that I have taken notes of. The list is merely a snapshot of hands-on startup methods and tools but a complete list of entrepreneurship literature. Pre-Launch Pitch Deck makes a great example of a startup pitch. For more on pitching  it is definitively worth looking into Pitching Hacks: How to pitch investors from Nivi and Naval at VentureHacks (PDF and free sample) to be used in companion with Dave McClure’s Startup Viagra: How to Pitch a VC.

Mint Founder Institute Accounting, this time by Mint founder Aaron Patzer, is a must read on how to draw your business case together and getting the numbers right.

Startup Metrics for Pirates by Dave McClure is the nuts and bolts of how to formalize traction and accountable metrics for your startup, including methods from the Lean Startup.

No One Cares About Your Stupid Little Startup by Xobni founder Matt Brezina takes us through its phases and tactics for building critical mass.

The Lean Startup methodology by Eric Ries combines the best from the agile development paradigm with Steven Blank’s Customer Development methodology (which might as well have been included) into a low-burn startup methodology.

Drop the business plan?! The Business Model Canvas by Alex Osterwalder, is an one-slide template and systematic approach to analyze, brainstorm and sketch out your business model. If you are not familiar with the framework you might want to start with the Business Model Generation book, the lean startup business model pattern and Steve Blank’s post on how to process it.

There sure are several interesting startup decks, and no such list goes without mentioning Guy Kawasaki’s The Art of the Start and Garage‘s Perfecting your Pitch. I will read SEO Moz’s Venture Capital Process again. Not to forget Getting Real and Rework – the business, design, programming, and marketing philosophies of 37signals’ (see aslo Eric Santos’ summary). Neverthless, keep up to date with Lean Startup news.

Do you know of other essential startup decks, we would love to know about them.

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What is Open Source Entrepreneurship?

Recently I commented to Dogpatch’s blog which coined the idea of Open Source Entrepreneurship for their philosophy; “the community benefits from a very high level of interactivity and sharing between the members”. With the growing role of open source as an enabler of entrepreneurship, I believe that coining the idea carries responsibility and deserves further elaboration.

With EasyPeasy, a community providing an open source operating system for netbooks, I observe that some competitors makes use of open source software alike. However, they do not necessarily share their source or new builds back with the community  – which in the first place provided them with the opportunity. Open source software may be an impetus to entrepreneurship, but is it mutual? Should open-source enabled entrepreneurs contribute back, or does the argument “we give back when we grow big” hold?

My take is that with the dissemination of open source software, technology becomes commodity and allows entrepreneurs to shorten development and time-to-market cycles. Since open source software is available to almost everybody, it is not the technology itself, but its application and capacity to meet with customers’ needs that makes competitive edge. As a consequence the basis of value creation migrates from “back-end” product development towards “front-end” customer development. For a simple example, the threshold for putting up a LAMP architecture and yet another Digg-clone script is minimal.

I believe that entrepreneurs that are using open source should share their modifications and extensions from the start. Even in spite of competitive risk. And it is more to it than ethics. The nature of open source methods allows startups to leverage the true value of building user and customer relationships, learn from and test their hypothesis with early adopters. This is essential to user-lead product development which turns out to be a promise of value creation. As with social media, community management becomes a necessity and startups will be able to get a head start when it comes to tapping into their users’ needs. When done right the startup will be able to recruit from the open source community, and create market evangelist as they get ownership to the product.

There is probably more to it, but I hope that open source entrepreneurship adapts open source software thinking but exploiting it. See also Matt Mullenweg, WordPress founder: Why it pays to stay faithful to open source. In the long run “giving back” will help the open source paradigm to evolve, and in turn spur entrepreneurship.

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