Best of Web for last week:

- – - -
Have an event? Did you just release/update a product? Looking to hire? Looking to raise startup capital? Email me: mj@robotsandpencils.com for inclusion in next week

Next Startup School is Feb 27/28 – 2010.

Financing Events:

Best of Web for last week:

- – - -
Have an event? Did you just release/update a product? Looking to hire? Looking to raise startup capital? Email me: mj@robotsandpencils.com for inclusion in next week

Next Startup School is Feb 27/28 – 2010.

Financing Events:

Best of Web for last week:

- – - -
Have an event? Did you just release/update a product?  Looking to hire? Looking to raise startup capital? Email me: mj@robotsandpencils.com for inclusion in next week

Next Startup School is Feb 27/28 – 2010.

“Your landlord doesn’t want your stock, Safeway doesn’t want your stock. They like cash.” -MJ

On 2009-02-04, MJ gave an hour-long presentation at CTI entitled, “Buying Money: Raising Financing when the Sky is Falling”.

This was deemed a more useful lecture than MJ’s “Raising Financing during a Bubble”, alternate lecture. Truly a great lecture, but kind of short and not really in demand right now.

This is the first MJ talk presented in video form. Do you find this presentation too long? Too short? Do you need it in an alternate format in order to digest it more conveniently? Please leave a comment so future presentations can be more easily consumed.

Thanks, -Gord (the videographer)

You need Flash player 8+ and JavaScript enabled to view this video, MJ’s BUYING MONEY lecture.

Click on a timecode to jump to a particular topic.

When: March 24, 2009 @ 5:30pm (dinner will served)
Where: Downtown – send me an email to find out where: killingmichael@gmail.com
Who: People who are thinking about or who are angel investors.

#1: All pitches are screened (read: they do not suck).
#2: All pitches will be short.

Not sure if you should come? Just drop by. No company is worse off by having a chance to tell its story

If you can’t RSVP ahead of time, please do still drop by… we will order more food and take what’s left over to the mustard seed!

Thanks,
MJ

p.s. Times are tough so any support we can muster up for these entrepreneurs would be amazing. Paul Graham has stepped up his early stage investing activities and Warren Buffet has been quoted as feeling like a “Mosquito at a nudist colony“. These are two amazing investors still investing, so we’re hoping there is still support for the entrepreneurs in Calgary

Please make sure to check out Slide 33 where Eric talks about “proportional investment”.

Eric Ries Lean Startup Presentation For Web 2.0 Expo April 1 2009 A Disciplined Approach To Imagining, Designing, And Building New Products

View more presentations from Eric Ries.

The biggest risk for your startup is building something people DON’T want. So, taking the inverse: your startup has a straightforward task: build something people want.

If you build something people want, you win [1]. If you don’t, you lose. And, the losing hurts in ways you didn’t know could hurt [2].

Q: How do you know what people want?
A: You don’t.

This is why so many startups fail: you can’t predict what people will want. [3]

You will have hunches, insights, passions, and a starting point but in the end your success will likely look much different than what you thought.

Flickr was supposed to be a online game.

PayPal was supposed to sell cryptography libraries.

(Read F@W for many more similar examples.)

Don Keough (former CEO of Coca Cola) spoke to why he sold Paramount Pictures. The net of it: he didn’t understand how to build a business around movies. It was too “hit” driven. Meaning, for reasons beyond their control (genius), some movies would do amazingly well, and some wouldn’t. Compare this to selling cans of Coke (process).

Startups can feel like the movie business. It can seem hits driven (a “yuppie bingo” model). The key point is that they don’t have to be. You don’t need to take so much risk with your time, your reputation and your investors capital. [4]

How you ask?

Deploy. Learn. Repeat.

If you can keep iterating and don’t run out of money (or morale) you win.

Movies can’t do this.

As Eric points out in his presentation, eventually IMVU was able to release their software 50 times per day (continuous deployment). Think about the power of that: 50 times per day they can learn about what people want.

I liken this to flying. You can fly a plane a night using the instruments (IFR). But, if those instruments were only updated once per hour, you’d be dead. It is the same with startups: the faster you can refresh your instrument panel, the faster you can iterate, the more likely you’ll build something people want, and end up giving speeches at Web2.0

The deploy, learn, repeat is a PROCESS. It isn’t about being a visionary, genius founder. PROCESS over GENIUS is how you significantly increase your chances of building something people want.

I think Eric is going to have (is having) a transformative effect on the startup/hacker community. But, I wanted to point out Mary Poppendieck. I was lucky to spend time with Mary and take her course on ‘Lean Software Development’ a few years ago and I really credit her with championing on how lean manufacturing principles can be applied to software. Lastly, if this is all resonating with you, you’ll want to buy 4 Steps to Epiphany by Steven Gary Blank.

[1] Once you’ve built something people want, you’re called a company Once you’re a company you’ll call this stuff ‘innovation’.

[2] I know I can’t talk about this… yet.

[3] This is why all those other proxies for success are used by investors. Team, etc.

[4] Yes, I’m aware of the irony.

** You can follow Eric on twitter here: http://twitter.com/ericries (I’m here).

** Audio is thanks to the guys at VentureHacks.

Lessons Learned
Below are some of the lessons learned from my first startup experience. Most of them are probably misguided, inconsistent, or a product of my own inexperience. But I want to share them with you so that you can avoid some of the same mistakes.

1. Dont outsource product development.

If you cant yell across the room to your product development people, you are at a disadvantage. You simply won’t be able to iterate fast enough. Find someone who believes in the market enough to work beside you, then create a product together.

2. Define actionable, accessible, and auditable metrics for success.

Creating metrics that matter can be daunting (and depressing when you consistently fall short). But without them, you are vulnerable to long periods of ineffective development, misguided strategies, and lag time when iterating. Define actionable (can actually do it), accessible (can get the data easily) and auditable (can the data be trusted) (via Eric Ries)

3. Only enter into strategic partnerships, advisory agreements, or marketing partners if they can affect revenues within one month.

Signing on a strategic partnership with Microsoft won’t make you succeed. VC’s wont care, your customers wont care, and neither should you unless they immediately affect the spreadsheet numbers. Sure, there are proven metrics regarding social proof- but in the long term, people dont pay money for a partnership, they pay money for a product or service. Dont believe me? Steal the logos of Cisco, Google, and IBM and put them on your strategic partners page and measure the difference in sales volume.

4. Just because people invest in you, doesn’t mean your product matters or has a market.

“A fool and his money are soon parted” Substituting “a fool ” with “people” makes this idiom much more accurate. The only thing that will validate your product or service is your customers. Having money to invest doesn’t mean that they have expertise in your space, and it certainly doesn’t justify your product.

5. Stay on loop- Invent, Market Test, Create, Measure, Iterate.

Better minds have come up with better models for basically the same thing (see OODA loop ), but this is from my perspective. Invent an idea first. Thats the easy part. The most crucial mistake that I made again and again was skipping the market test phase and simply building a cool product. Its easy to create really cool stuff, but if no one wants them, it doesn’t matter. After creating the initial product, find a way to measure it (see Lesson #2) and then start iterating to make it better.

6. Product development first, everything else, second.

I continually fall short on this. “We need better design”, ” A better outreach strategy”, ” Lets change that logo, and that color”. I love branding, but at the end of the day, Kiva didn’t have a great social media strategy and Google has a terrible logo .

7. Surround yourself with people that don’t agree with you.

Echo chambers are caustic. Ask the annoying people who you don’t like to try out your product. You probably don’t like them because they are not like you, which means they don’t think like you, which means they fill blind spots. This can be highly valuable. I cant even begin to list the times I have discounted someone’s opinion because I didn’t agree with them. That’s dangerous.

8. Create a structured environment with creative outlets (chaortic).

Dee Hock wrote the book on this topic (literally), so I wont go into too many details. But the gist of it is this- Humans need to have structure to get things done. But to truly allow people to excel consistently, structure is optimized when coupled with freedom and creative license. If you want a great example, watch this video of the most creative people on the planet.

9. Fail early, often
Cuban has a great insight on this . In business, you only have to be right once. Its not the same in school, sports or other pursuits. The same goes for product development. The more often you can create a product people don’t want, the sooner you can find out what they do want.

—

[1] It will probably take me another year or two before I can write mine up from #5.

Thanks for selecting us as the #4 best Web2.0 company and inviting us to speak at the PICK20 awards reception. Much appreciated!

Thanks,

Michael

p.s. For those not in attendance: the PICK20 awards we’re held in a room modeled after the UN.

p.p.s. Thanks to Jonathan Kallner from KPMG for the warm welcome and to Peter Wolchak from Backbone for moderating the panel consisting of Leonard from NowPublic, Kate from LintBucket, Bernie from ConceptShare and yours truly.