Tag Archives: Startup Methodology

The Startup Samaritan’s Dilemma

Helpers of early stage startups – incubators, accelerators, angels and advisors – sleep good at night. There is something samaritan about what they do. They serve the bottom of the economic pyramid on which our society rests.  They facilitate jobs, and in turn taxes. Some get wealthy and part is poured back in to new ventures, jobs and taxes. A virtue indeed. Yet there is a dilemma. While high-end markets yields and numbers make the deal, the Startup Samaritan migrate towards helping “grown-ups” at the expense of startups. The cure: startup methodology.

While I was studying and working my own market research practice, I had the pleasure to work with a couple of fine venture finance agents. I did customer interviews, and created business plans and investor presentations. It was first when I got the assignment to carry out a method with the goal of evaluating risk in early-stage ventures that I understood the dilemma.

What I quickly learned was that there is a minimal quantifiable track record within a startup. Accordingly, analytic models get dismissed in favor of qualitative variables such as team, customer insight and technology. For a couple of reasons I believe that this creates a dilemma to the Startup Samaritan.

  • The time utilized in facilitating a startup is pretty much equal to that of facilitating a grown-up. Risk is lower and more predictable at the later stages. The stake and respectively the compensation is often higher. For logical reasons the Samaritan’s focus gradually migrates towards grown-ups. High-end markets yield.
  • With the theory of Disruptive Innovation, authors argue that most companies force teams to develop detailed financial estimates way too early, when their accuracy will necessarily be low. That using metrics such as net present value (NPV) or return on investment (ROI) as rank-ordering tools to make decisions is counterproductive [i]. Technological knowledge and qualitative unpredictability might cause a great headache to MBA scholars. Naturally such samaritans seek to utilize their knowledge and go after what is quantifiable.

Instead, early startup formation requires an understanding of entrepreneurial patterns – talking failure as well as success. Methodologies such as Customer Development and Lean Startup identify and learn from common challenges that occurs in startups and then describe methods that aid in overcoming such challenges. In exchange for meter-long spreadsheets, they embrace so-called Startup Metrics that are trackable, actionable and drive better product and marketing decisions. Of course you can not ignore financial data, but focusing on the assumptions behind the numbers is meaningful when there is no such track record. Dedication is more likely when motivation, knowledge and methods are aligned.

The bottom line:

  • Focusing on patterns [through startup methodologies] instead of numbers enable entrepreneurs to better manage uncertainty and their good samaritans to sleep even better in the future.
  • Principles of Disruptive Innovation can help explain why startup investors as well as entrepreneurs would want to educate in startup methodologies.

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[i] Mapping Your Innovation Strategy, by Scott D. Anthony, Matt Eyring, and Lib Gibson

Essential Startup: 5 Killer Startup Decks

Planning versus execution often makes a dilemma to startup founders. So instead of reading a pile of books on the subject you might as well getting started with some killer ideas at hand. Recently I shared a list of 6 Essential Startup Decks. Here I continue the Essential Startup series sharing 5 decks that I believe can aid in entrepreneurial pursuits.

Finding Product / Market Fit: introducing the PMF matrix

Since being introduced by Marc Andreessen and popularized by the Lean Startup movement, Product-Market Fit has evolved into a great deal in tech entrepreneurship. Several bloggers have addressed the subject lately, yet as a concept Product-Market Fit has been missing a-picture-says-more-than-1000-words. Earlier I suggested the Product-Market Fit diagram. Here Rishi Dean presents the Product-Market Matrix aligned with Customer Development and Lean Startup methodologies.

The UX Driven Startup

What to do as a founder when you actually can’t build things? Say no more, Alexa Andrzejewski, founder of Foodspotting, gives you a memorable pitch on how to craft an experience vision at startup.

Why fighter pilots run startups

Originator of Customer Development and serial entrepreneur Steve Blank shares an arsenal of great ideas on entrepreneurship, including Customer Development, Lean Startup, business model validation, market types, the pivot and the OODA Loop. Perhaps one of his most encompassing slide decks.

Continuous Deployment at kaChing

From a more technical perspective than the reminder on this list, Pascal-Louis Perez gives us an introduction to and examples on continuous deployment at startup. I am a strong believer in his statement “Release is a marketing concern”, which I also covered in What’s in a Startup Methodology giving an example of Spotify’s beta releases.

Product Management 101 for Startups

I enjoyed Dan Olson‘s talk on Lean Product Management for Web 2.0 Products at web 2.0 Expo earlier this year.  His recent slide deck includes a section on What is Product Management, as well as covering subjects a such as Product-Market fit, value proposition, usability, the pivot, and continuous improvement together with a case study.

In continuing the Essential Startup series I appreciate any tips on killer startup decks, tools and ideas.

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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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What you want to read about Startup Methodologies?

While talking about user generated content and customer development in general, and in order to learn about my readers, I figured that I would walk the talk. Having some new ideas on the subject of startup methodologies, I would ask of your opinion on what should be my next post. For those of you who would consider the case studies, EasyPeasy is an open source operating system for netbooks. It has 1M downloads with users in over 142 countries, and currently attempts to pivot into the Social OS space.