Author: Sebastian Fittko

I held this lecture and workshop as part of the E-Entrepreneurship lecture series at Zeppelin University. The Presentation in German. I will update the slide deck in english soon.

Aim of the workshop was to provide a first view on the idea of lean startup, hypothesis development and testing, and qualitative UX testing.

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Rockmelt’s engagement numbers through their beta period seem to confirm their thesis:

• Over 6 hours of use per person per day
• Average of 3 chat conversations per user through RockMelt each day
• 60% of users 35 and under are active chatters, and they each send an average of 65 messages every day and 71% of the youngest cohort use chat.
• Average of 20 uses of the information flow features per person per day
• 80% of searches go through the browser’s search interface rather than a search site
• 56% of users are age 24 and under, 80% under 35

via ben's blog

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by Brad McCarty

There’s no doubt in my mind (and really shouldn’t be in anyone else’s either) that the iPhone was the single biggest innovation in mobile phones. It completely changed the way that the market was heading and there have been copycats ever since. But if you look beyond the device itself and the first OS version, the innovation stops and the perfecting begins.

This is Apple’s forte. The company typically re-asks old questions and comes up with better answers than we’ve seen in the past. It holds true for nearly everything that the company does…outAside of the iPhone. The iPhone was a complete re-thinking of how mobile devices should operate, rather than perfecting an existing recipe.

via The Next Web

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Author: Diego Rodriguez

1. Experience the world instead of talking about experiencing the world.

It’s true! And sad how often we don’t open ourselves up to inspiration in our busy lives. You cannot create without inspiration. And you can’t get inspiration from sitting in your office cube all day long staring at a computer screen. Take your dog to the park. Meet for coffee instead of scheduling a phone call. Take your employees out for dinner. Design an iPhone app. Pitch your greatest idea to your 2-year-old. Read a book that has nothing to do with your line of work. Travel, and then use Loosecubes to book office space abroad.

 

2. See and hear with the mind of a child.

 Have humility. Have wonder. Be willing to play. He asked, “How can you use play to get to a productive end? How can you integrate play into your normal flow?” It’s these questions that great managers ask themselves. Read about why: The future of work is play.

 

3. Always ask: How do we want people to feel after they use it? 

“It’s the difference between thinking about beer and the experience of drinking beer,” says Rodriguez. Emphasizing the importance of the experience, he draws a corollary between Hamburger Helper and Dream Dinners, an organization that brings together working moms, providing them with a place to cook together and all the necessary ingredients. They leave with plenty of meals to freeze and thaw when the time calls. So while it’s essentially the same idea as Hamburger Helper (microwavable meals) Dream Dinners is selling a totally different experience.

“The very best stuff is designed around the experience,” he said. “Think of Disneyland, it’s highly successful because it’s a seamless experience.”

4. Prototype as if you are right. Listen as if you are wrong:

“What is a prototype?” Rodriguez asked the audience. “A prototype is a single question embodied.”

Never attend a meeting without a prototype but be prepared to listen to feedback. It’s this feedback that will move your product forward. Build, test, listen. The faster you go through that cycle, the more cycles you get and the more cycles, the better.

“You only learn when you start breaking things.” - Raney’s Corollary

But really, it’s all about the verb: prototyping. “I’d much rather talk about it as a verb,” he said. “I hate using the word design. It makes me want to vomit. But designing is good.”

5. Anything can be prototyped and you can prototype with anything:

While one of his weaker points in the discussion, essentially Rodriguez says we want things to start breaking because that’s what enables us to learn.

 

6. Live at the intersection of desirability, viability and feasibility.

This step is literally consulting 101, but he mentioned it many times throughout his talk. He instructs to start with desirability (you could do a lot worse than knowing there’s one person on the planet who would definitely buy your product) then move to viability and feasibility. Then it’s all about finding the balance, and living at the intersection of all three of those bubbles.

On Leading Innovation

How do you lead?

 

7. If you’re going to be leading innovation, develop a taste for the many flavors of innovation.

Don’t necessarily always strive or always judge your product on the scale of evolutionary. Incremental innovation is what keeps the lights on. If a TIDE brand manager finds a new scent that adds new sales and makes people’s lives smell better, that’s still innovation that should be celebrated.

 

8. Most new ideas aren’t.

Do you have any idea how long electric cars have been around for? Tesla’s Roadster may be the way of the future, but it’s also calling on the past.

But have you ever seen an electric car powered wirelessly? Now that’s innovation.

 

9. Killing good ideas is a good idea.

Take 10 minutes to map out everything that you’re working on. Then kill a few of those ideas. You can’t do everything and still be innovative.

“I’m actually as proud of many of the things we haven’t done as the things we have done. The clearest example was when we were pressured for years to do a PDA, and I realized one day that 90% of the people who use a PDA only take information out of it on the road. They don’t put information into it. Pretty soon cellphones are going to do that, so the PDA market’s going to get reduced to a fraction of its current size, and it won’t really be sustainable. So we decided not to get into it. If we had gotten into it, we wouldn’t have had the resources to do the iPod. We probably wouldn’t have seen it coming.” - Steve Jobs

Life without the iPod? Now that would be a scary world. In short, you can’t do everything, and trying to do so as an individual and as a company causes more harm than gain.

“More organizations die of indigestion than starvation.” - Hewlett Packard.

 

10. Baby steps often lead to big leaps.

Did you know that the company Red Octane spent 10 years releasing mediocre games and products before hitting it big with two games you may have heard of: Guitar Hero and Rock Band. What became an overnight success was actually 10 years in the making.

 

11. Everyone needs time to innovate.

That means everyone. And giving them time. How can you trust everyone in your organization to innovate? Hire good people. In history, some of the best ideas have come from the mailroom.

“I’m good at getting things done, but what we get done needs to come from those who have the best ideas–whether it’s someone in the mailroom, a first-year student, or someone on the senior faculty. The best ideas deserve the most attention.” - David A. Kessler, M.D, Yale University

 

12. Try cultivating instead of managing.

You may have heard of the garden metaphor, which breaks down 3 different ways to act as a leader.

Be at the bottom of things, be in the soil. Understand your purpose is to make those roses bloom beautifully.

Take a bird’s eye view and keep a clear vision of how you want the garden to look.

Trust what is there. Trust what’s in the garden will grow. Trust the seeds to do their thing. Don’t dig them up to make sure they’re sprouting, let them be.

“Leadership is building empathy for the people you’re entrusted to help. Once you understand what they really value it’s easy because you can mostly give it to them, you can get out-of-the-way and let them go.” - David Kelly

On mobile? Click here for the next page.

On Failing

What’s your relationship to failure?

 

13. Do everything right and you’ll probably fail.

Nokia is failing. Did you know that 70% of Nokia’s products have been discontinued while 21% were absorbed in to something else?

 

14. Failure sucks, but instructs. (If you let it.)

Remember, you only learn when you start breaking things. Failing is bad at a macro level, but failing at a micro level can lead to macro-success. Nokia started to realize they couldn’t have their products failing all the time. But what did happen, was that 25% of those failed products actually grew new capabilities for the company, most of them in form of new intellectual property.

 

15. Celebrate errors of commission. Stamp out errors of omission.

Remember when General Motors released the Pontiac Aztek? The famously garish car was such a disaster that Bob Lutz felt compelled to return to the company. In the memo to staffers, titled “Strongly Held Beliefs,” Lutz addressed the Pontiac Aztek, saying:

“In our business, taking no risk is to accept the certainty of long-term failure. (Even Aztek, in this sense, is noble!),” Lutz said.

 

16. High EQ teams rule.

Teams with EQ, or emotional quota are essential. Tracking the happiness and fulfillment of your staffers can be marked by 3 important behaviors.

Proactive self disclosure.

Inviting outsiders in.

Making everyone who contributes feel a part of the team.

 

17. It’s not the years, it’s the mileage.

It’s all about the “experience” you’ve had in your position. We’ve seen this quite a bit with 18-year old entrepreneurs who’ve successfully launched numerous companies. Age doesn’t matter as much as what you’ve produced. Like Mark Bao, my favorite 18-year old entrepreneur who launched 5 companies and 2 foundations before he left high school.

 

18. Knowing when to orbit the hairball.

This might sound funny, but if you’ve ever read the famous book  Orbiting the Giant Hairball: A Corporate Fool’s Guide to Surviving with Grace, then you’ll understand that “Giant Hairball” refers to a company. The book is about the relationship between an individual and their company. You have to find the right amount of overlap. You are not your company, and vice versa. In short, “Know Yourself.”

Shipping

 

19. Have a point of view.

Have a declarative statement that says: This is what matters and nothing else matters relative to the thing we’re working on.

Look at brands and products who “got it” like The Beatles, Vimeo, Tom’s Shoes and even quirky characters like Bill Murray. Think: this is our point of view and we’re not deviating from it. If you don’t have a point of view, stop and go get it.

 

20. Never settle. Be remarkable. (Shoot to do epic stuff.)

Embrace mediocrity in the day-to-day but be shooting for the remarkable.

 

21. Doing is the resolution of knowing.

“The best way to get started is to quit talking and begin doing.” Walt Disney.

via The Next Web

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Author: Peter Hanschke

Here’s the situation: Your development team is busy creating a Minimum Viable Product (MVP). You have people off in all directions trying to secure some funding. But do you have a Market Validation Plan? Furthermore, are you executing this plan along with all the other activities? In other words, is this an activity that you are currently performing?

As the name suggests, a Market Validation Plan (another MVP for those who like TLAs) is about reaching out to your target market to determine whether:

The market likes your product or product concept

The market is willing to buy your product when you have it ready

“Like” is a bit of a weak word. But at this stage of development, the product may simply be an idea or a very early prototype. So “like” in this context is appropriate. As the development process advances and the product and concept solidify, you will require stronger validation. A vital aspect to validating the market is to determine if the market that you are targeting is willing to pay for your product. Are prospective customers willing to part with their cash either up-front or through a subscription model?

 

The three steps of an MVP

Step One: First, and probably most obvious, is to talk to people or companies directly in your target market. These, in fact, are your target customers. Many companies are reluctant to do this. They feel that they may lose a sale if they don’t have the product just right. It becomes a Catch-22 between sales and development. Sales says, “The product is not ready to sell,” while Development says, “We need to validate with potential customers to make sure the product is ready.” My philosophy is that it’s better to lose some of these early sales and learn what the product needs to be than to develop the product with no validation and lose every sale!

There are many ways to find out who is in your target market. If, for example, your target is the IT group within large companies, look locally for companies that have such a department (LinkedIn is a great resource to find local companies.) If your target is individual software developers, again look locally or ask your development staff about other companies. If your target is the consumer, reach out to your personal network (Facebook is a great resource here.) In addition to asking whether or not they will buy your product, understand their work process and other systems they use. No matter what you are building, you have to fit it into a prospective customer’s existing day; understanding all the potential touch points between your product and their process is key.

Step Two: Next is to find experts who target the same market as you but are not competing with you. They may sell a different product or service but are targeting the same market. For example, suppose you sell compilers to software developers. You may want to reach out to companies that build and sell integrated development environments to the same target, or provide developer training services to the same market. Also included in this group are analysts and well-respected domain experts.

Nowadays, blogging and leveraging social networks (Twitter for example) are critical in establishing thought leadership. In addition to your blog and your tweets, make a list of all the people that blog or tweet into your target market. Be diligent and read their blogs and tweets. Comment where there is a tie between what they say and what you do, making sure to include a link to your blog. The point here is to start and maintain a conversation with others who target the same market you do. Once you have started the conversation, reach out to them to get an opinion on your product, looking for them to link to your site.

Step Three: Reach out to people who used to work for companies that you are targeting. With today’s highly mobile workforce, and by levering tools such as LinkedIn, it is relatively easy to find people who worked for a company that is in your target. Generally speaking, people stay in the same department when they move (e.g. people in marketing tend to stay in marketing), but they may move to companies that are in an entirely different space (e.g. developer tools company to renewable energy company.) If you are targeting the company from which they left, then this person would be a good candidate to talk to.

In all cases make sure to get at least the following answered:

• Whether the product solves problems that are pervasive in your target market
• Whether or not target companies would buy it
• What the overall workday process is

To summarize, an active Market Validation Plan is critical. You must find out if the market wants your product and is willing to pay for it. Reach out to people/companies who are directly in your target market, as well as those who were in your target market, and engage in a conversation with relevant domain experts.

Peter Hanschke is an Ottawa-based product management specialist. Peter's post is part of our continuing series about the ecosystem necessary to bring technology to market. We welcome your comments.

via Business insider War Room Contributors

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Micro-VCs: These are emerging group of professional investors (venture capitalists, ala VCs), who are investing from a fund of other people’s money, with a particular focus on seed-stage startup opportunities. Seed-stage means promising companies that don’t yet have a revenue stream, and may not yet have a proof of concept.

Super Angels: These are angel counterparts to VCs, who traditionally only invested their own money, but now have begun raising funds from outside investors, to do more than a few deals per year. Like most angels and micro-VCs, however, they still start with relatively small sums of money, often investing only $10,000 to $50,000 in the first increment.

Series-seed round: Since the economic downturn started, neither angels nor VCs have given much attention to startups without a product and a revenue stream. That was left to the realm of friends and family. In the last year, there has been a resurgence of interest, some say a bubble, by both angels and VCs, in a pre-Series A kicker to identify promising startups with seed funding, before major equity has been given away.

Early-stage startup: Every startup is early-stage to someone. For a startup founder, this stage is when the “big idea” has become a passion for him, but he hasn’t written anything down yet. For angel investors, early-stage means there is a good business plan and maybe a prototype, but no customer revenue. For VCs, early-stage means customer revenue is less than $10M. Thus the more precise term these days for early startups is “seed stage.”

Business accelerator: This term is replacing “startup incubator,” which is a facility provided by an individual, university, or local community for any new startups to congregate for almost no cost, with the hope of learning from each other. The business accelerator model is YCombinator and TechStars, who select only the best applicants, have a demanding process, provide experienced coaching/mentoring, some seed funding, with a required exit in about six months. Incremental investment may follow.

Lean startup: This is a concept coined (and trademarked) by Eric Ries a couple of years ago, primarily for software and web applications. Lean startups operate on minimal money, an open source environment, and assume multiple iterations, with customer feedback, to get it right. A popular phrase heard in this environment is “rinse and repeat.” Today, if you do well in this mode, you will get funded if and when you need it.

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Author: Cameron Chapman

Apple product launches have become the stuff of legend.

The iPad sold 300,000+ WiFi-only units on launch day. Within three days, the iPhone 4 sold 1.7 million units. The iPhone 3G sold over a million units on its launch weekend.

Clearly, Steve Jobs knows how to launch a product for maximum sales. You might even wonder if you can capture a bit of his magic to kickstart your own promotions.

And I believe you can. While Apple’s reputation and sometimes-rabid fanbase obviously plays a large part in the success of their launches, there are also a number of strategies virtually any company can employ to make their own product launch a huge success:

 

1. Put the Focus on the People, Not the Product

Rarely do you hear Steve Jobs talking about the various features of Apple products. Standing on stage, he doesn’t push the speed of the iPhone’s processor or the screen resolution, for example. He knows most people don’t care, and the ones who do can easily find that information on Apple’s website or product literature.

Instead, he goes out of his way to emphasize how the product affects you. He talks about how annoying it is to carry both a phone and an MP3 player and how, with an iPhone, you’re condensing them down to one easy-to-carry device. It’s about simplicity, productivity, style — all things he knows people are interested in.

And it takes discipline. When you launch a product, everyone in your company is probably excited by the technical specs, and all of the different ways your product pushes the envelope, and it’s easy to assume your customer feels the same way. But they don’t. They care about their problems and how your product is going to fit into their life

So, that’s how you have to frame your marketing. Don’t just talk about what your product does or why it’s superior; show them a compelling picture of how it’s going to make their life better. That’s what gets people excited.

 

2. Get Opinion Leaders On-Board Early

Apple has a knack for getting bloggers and other thought leaders on board before their product launches. What really sets them apart, though, is they get everyone talking months before the product launches, usually before there’s even a demo for anyone to see. No one is talking about what the product does; they’re talking about what it might do.

Obviously, their history helps. Journalists and bloggers know that Apple has a history of releasing innovative and useful products, and they bet on the fact that subsequent product releases will be just as innovative and useful.

But it’s a strategy anyone can use, even if you don’t have a history like Apple. No, you might not have the New York Times and CNN arguing about what your upcoming product is going to do, but you can start working with the media in advance of your product launch. Even if it doesn’t get you much coverage, it’ll give you something to build on. The media will know who you are, so come launch day, at least you’re not starting cold.

And that can make getting press a lot easier.

 

3. Be Revolutionary

When Steve Jobs takes the stage, the whole world watches. It’s not just because Apple is a huge company. It’s not just because there are billions of dollars on the line. It’s not just because Steve is a great speaker.

It’s because they know Apple isn’t afraid to change the world. Their products aren’t incremental advances; they are revolutions. They change the way we think about the entire product category, and whole industries have to shift just to keep up. And people talk about it, not just because Apple decided to stage an event, but because it’s real news.

Can you do the same thing?

I think so. Maybe your company doesn’t have quite the reach Apple does, but every company, no matter how small, has the opportunity to revolutionize their business. Do something none of your competitors have ever done before, take a position that’s bold and imaginative, paint a picture of the future that your customers want to live in, and then put your whole company into motion creating that vision.

It’ll inspire people. Right or wrong, the world loves visionary companies with the courage to lead. Instead of fighting to get people to talk about you, they’ll be chasing you to find out what’s going to happen next.

 

4. Turn Your Product Launch into an Event

When Apple launches a new product, you don’t see some PR lackey trundling out onto the stage to read a press release. They stage an entire event around it, going so far as to even close their online store, so that everyone knows something important is happening and they need to pay attention.

And who do you have at center stage? None other than the CEO of the company, Steve Jobs. He isn’t so much a speaker as a showman, spending days or even weeks leading up to the launch planning his every word and gesture so that it leaves the audience spellbound.

And it works, not just for Steve, but for everyone. If you have the budget for it, throw a big press event for your product announcements. If not, at least have some kind of online event. If you make a big deal about your product launch, both your potential customers and the media are likely to take it more seriously, and it’ll be reflected in your product sales.

 

5. Take Pre-Orders

This is probably one of the most overlooked launch strategies out there.

Every company that’s been around for a while has a set of customers who will buy anything they release. As soon as you announce the product, they’ll be lining up in droves, eager to get their hands on the first units to be released.

So why not let them?

Apple almost always offers pre-ordering of their new products, and because of that, it’s not uncommon for them to sell hundreds of thousands of units within a week or two of launch. Pre-orders generally aren’t counted until the product actually ships, meaning the orders that came in over a period of weeks all get counted on launch day.

Of course, it’s not always possible. You can’t offer pre-orders until you know what your final pricing will be, for example. But you can still harness the enthusiasm. Until you know your pricing, make sure you at least have a way for prospective buyers to sign up for updates. Then make sure those updates offer a link to pre-order as soon as it’s possible.

 

6. Release a Product Your Customers Will Want to Show off

Apple knows their image is vital to their success.

That’s one of the biggest reasons they place such a high value on form. People know and expect that Apple products will be aesthetically pleasing. If Apple suddenly stopped launching beautiful products, they would almost certainly see a huge drop in market share.

Don’t underestimate the importance of your product’s appearance. If it’s ugly, your customers won’t want to share it with their friends and colleagues, hiding it away regardless of how useful it is. At the same time, a professional design makes people want to talk about it, and online or offline, it can have a big impact on your product sales.

 

7. Draw out the Suspense for As Long As You Can

While Apple always makes a big deal about announcing new products, prior to those actual announcements their product lines are shrouded in secrecy. And Apple will do almost anything to protect that secrecy.

Look at what happened when a late prototype model of the iPhone 4 was found by some bloggers. First, Apple denied they had any knowledge of the product, and then when details were made public, they pursued legal action against the bloggers who wrote about it, setting an example to deter future leaks about other products.

To make use of this strategy in your own company, take your hottest product and deliberately release very, very few details about it. The mystery will drive your customer base into a frenzy.

When the iPad was getting ready to launch, the rumor mill was filled with speculation about Apple’s new tablet, but no one really knew anything about it. People went so far as to create realistic 3D mockups of it, hoping to get more readers for their websites and blogs. By the time it actually launched, its reputation had grown to mythic proportions.

The Bottom Line: Plan Your Product Launch

The point of this article isn’t to imply that you have to have as big of a launch as Apple, or transform yourself into as big of a showman as Steve Jobs. No matter how tempting it is, being a copycat is never a sound marketing strategy.

The point is that you need to think through your product launches. Deliberately plan what information you’re going to release and when, who you want talking about you, and how you can turn your product launch into something worth talking about.

That’s what Apple does. No, you may not have whole departments of marketers and PR aficionados strategizing it for you, but you can plan a launch that will impress people, even if the only person working on it is you.

via Kiss Metrics

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Author: Doug Collom

There really isn’t a one-size-fits-all formula that can be followed for optimizing the chances of attracting professional investment.  Each company is different and faces challenges and issues that can be overcome only through creativity, perseverance and resolve.

There are, however, some elements that are so basic they cannot be ignored.  Most institutional venture investors either expressly or intuitively address these requirements whenever they evaluate a business plan for a potential investment. Here are four to be especially aware of.

1. Is it a company or is it a product? – With the dramatic level of innovation that’s taking place through startups in the social media/Web 2.0/online business arena, this question is increasingly important.  Implicitly, investors want to know the product development – something that can go in a variety of directions.  For example, can the product be developed to include additional features and functionality that will effectively redefine the offering in the eyes of the customer?  Can the product be adapted to address the needs of more than a single vertical market?  Is the product so compelling that the emphasis in the business plan shifts to the customer acquisition strategy?

The mobile application market is a good example of a product category that, in general, doesn’t offer a sufficient foundation to support a company.  Individual app developers typically don’t require much capital or labor to be successful, and they don’t require professional investors.  In contrast, there are online gaming companies—Zynga, Playdom, Social Gaming Network and others—whose product roadmaps concentrate entirely on the rapid development and production of new “hits”.  Businesses like this require all the resources and disciplines of a full-fledged company to support their growth objectives.

2. How big does the market have to be to attract investment? – After the dot-com bust, the anecdotal answer to this question was $1 billion -  or at least an annual growth rate that would get you close to $1 billion quickly.

In 2011, there is far more latitude, depending on the business plan of the company.  With the advent of open source software, online development tools, cloud computing, and the ability to reach massive customer markets instantly through the Internet, startup companies have become much more efficient in product development and customer acquisition, and can more rapidly get to proof of concept and positive cash flow than ever before.

As a result, companies with online business models, for example, may not require nearly as much capital as they once did. Moreover, angel groups aren’t swinging for the fences the way the mainstream institutional VC firms do.  Instead, (to continue the metaphor) they’re frequently only looking to hit singles and doubles, and may be quite content to realize exits in the range of $10-$100 million.

3. Is prior management-level experience required? – Obviously, it doesn’t hurt.  In particularly tough times, prior executive experience in managing a VC-backed startup may be a non-waivable requisite.  Management experience of any kind is always a positive factor, since it directly relates to the credibility of the management team in the eyes of the investor.

Obviously, there are many amazing startup companies that have been built by founders with no previous experience, and lacking this experience should not deter an entrepreneur who believes he or she can build a great company.  There are effective ways to work around the experience issue if it is an impediment to getting an invitation to present before a VC firm. Teaming up with a co-founder who does bring the necessary experience, finding a mentor who carries personal credibility, or organizing a board of advisors with relevant experience and expertise are all ways of addressing the issue.

4. Do you need to have customers or even first revenue? – There is a lot of dialogue around the need to “bootstrap” early stage companies to the point where a product has been developed and commercially released.  This is particularly true of social media, gaming and other online business companies. In seeking to access professional capital, it comes down to supply and demand.  Professional investors will look to tangible indicators of success and validation of the business model in evaluating a company’s prospects.

These might include website traffic, conversion rates, your ability to launch a beta and more.  Without anything but an idea to show, very few companies get funded to any meaningful degree.

For more traditional “brick and mortar” companies, the ability to get to “proof of concept” through bootstrapping methods is much more difficult. It is also likely that the amount of all-in professional capital necessary to support a company in this category to an acceptable exit—including the amount of so-called “seed stage” funding—is substantially higher than for a social media or gaming company, for example.  As a result, there may be a lower expectation that founders will be able to bootstrap to get to professional funding, but the emphasis will be commensurately higher on the other investment basics, including size of the market, likely market impact of the technology, barriers to entry, credibility of the management team and the like.  As a result, the bar to funding for companies in this category is fundamentally as high.

via Venture Beat

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by Jacques Mattheij 

For many would-be entrepreneurs there are two basic routes open to achieve their goals. The first is to bootstrap, to figuratively pull yourself up by your own shoelaces and slug it out in a decade (or longer) march to achievement. Possibly, along the way, funding can be obtained through business Angels or other forms of participation.

The second is to hook up with one of several start-up incubators.

The differences between these two ways of running your business are significant and it would help to be aware of those differences before making a decision. It seems as though many people view the ‘bootstrap’ route as an alternative or last resort but in my opinion both alternatives have significant pros and significant cons.

In this article I’ll try to list those pros and cons as objectively as possible. To quote a dutch soccer legend: “Every downside has an upside”, and this holds true for most of the incubator vs bootstrapping debate. Almost every ‘pro’ for an incubator translates in to a ‘con’ as well, and the same holds for the ‘pros’ of bootstrapping. Which factors weigh heavily for you is highly dependent on your situation, your personality and your comfort zone, so you will have to assign your own weights to these items in order to be able to help you in reaching a decision which route is the right one for you.

Just in case you’re unaware of what a start-up incubator is, let me give you a quick recap: A start-up incubator is a group of people operating through an investment vehicle that enables would-be entrepreneurs to attempt to reach their goals by abstracting out many of the common elements in launching a new business and to facilitate those elements. Typically a start-up incubator is run by very seasoned, successful and wealthy entrepreneurs. Start-up incubators usually – but not always – have cycles during which they announce funding is available for new companies with an application procedure where the would-be entrepreneurs present their projects to the incubators. Typical examples of (very visible) incubators are Y Combinator and TechStars, but there are many more.

Facilities

Working with an incubator means that you have immediate access to all their facilities, including lots of experience setting up corporate legal structures, shareholder agreements and possibly even things like office space and other down to earth needs of a fledgling company. Typically they’ve done this sort of thing lots of times before you came around and you get the benefit of all that experience. Do remember during the negotiation phase that you are on opposite sides of the table and it is typically a negative to let the other party arrange all the contractual work, so make sure you get any contracts reviewed by your own legal representative. If you are going to use office space, a reception desk and so on, make sure that these are charged at a rate that is at or below market value, if this is not the case consider going elsewhere for your needs.

Mentoring

One of the great advantages of working with an incubator is that since they’re (supposedly) all experienced business people and will be able to mentor you to help you grow in your capacity of being a business person yourself. You have to keep in mind though that a typical incubator will have 10′s or even more than a hundred other companies that are ‘live’. Each and every one of them is competing for the attention of the available mentors.

If an incubator has a well connected network of alumni this can help offset some of the disadvantages here, but typically the attention of the operators of the incubator can be (logically) expected to go to those that are most likely to succeed. If you plan on signing up for an incubator try to get an idea of how much time there is allocated by the various partners in the incubator for this mentoring and maybe talk to some alumni to see how well that worked out in practice.

Low hanging fruit

Incubators tend to focus on the ‘low hanging fruits’, the companies that are either very easy to make profitable or very easy to ‘flip’ to a larger party in a tech acquisition or a team acquisition. Various incubator operators are on the record stating that they are ‘in for the long haul’ but the statistics do not bear this out and incubators tend to stay away from companies that really intend to ‘change the world’. The ‘change the world’ companies are typically not launched from incubators, though there is no reason why that should continue to be the case.

However, if you are planning on a project that has a long runway, that requires large amounts of capital or that requires the development of completely new technology then you are probably not going to find many open doors with incubators. Incubators revolve around the ‘team’, not around the ‘product’ and if your vision of the product is a rigid one and you think in terms of years to market rather than a ‘minimum viable product’ in three months time then trying to get in to an incubator may well be wasted time. Hardware based companies, a new pharmaceutical company, biotechnology, energy start-ups and so on are better off trying to hook up with specialized investment vehicles serving those markets.

Network of alumni

Probably one of the bigger advantages of being in an incubator is that you have immediate access to a large network of former incubator bred entrepreneurs. The combined wealth of experience here is something that is hard to quantify but it is probably safe to say that if you’re faced with some kind of immediate problem that the network of alumni will have at least a reasonable idea of how to solve it. You’ll still need to do the solving yourself, but that’s still several points ahead to being out there on your own. It’s hard to see any downsides to this, other than maybe that it may lead to a feeling of seeing everything through an incubator tinted glass and forgetting that there is a whole world outside of the companies started through incubators that may have a valid (and sometimes conflicting) opinion as well.

Peer review

Having a network of alumni factors big in one other aspect, to have respected peers to review your ideas, products and demos. Constructive criticism is hard to come by and to have ready access to a large number of individuals that are willing to provide this service to you at no cost other than reciprocity is a huge advantage. Again, the combined experience is likely to be substantial and most of the tuition fees in terms of mistakes made and accidents survived have already been paid, so this can help substantially in improving your product before you demo it in public or hit the market.

via The Next Web

List of Incubators

Silicon Valley-based incubators:

• Y Combinator, www.ycombinator.com, Mountain View, CA
• The Founder Institute, www.founderinstitute.com, SV and San Francisco
• I/O Ventures, www.ventures.io, Mission Area in San Francisco
• Plug and Play, PATC, www.plugandplaytechcenter.com, Sunnyvale, Redwood City and Palo Alto among others
• AngelPad, www.angelpad.org, SOMA area in San Francisco
• Summer@Highland, www.hcp.com/summer, Menlo Park and Lexingon, MA
• New one: 500 startups Accelerator Program, www.500startups.com, Mountain View, CA
• Dog Patch Lab, www.dogpatchlabs.com, San Francisco, CA

• TechStars, www.techstars.org, Boulder, CO and Boston, MA
• Launch Box, www.launchboxdigital.com, Washington, DC
• DreamIT Ventures, www.dreamitventures.com, Philadelphia, PA and New York, NY
• Alphalab, www.alphalab.org, Pittsburgh, PA
• Shotput Ventures, www.shoputventures.com, Atlanta, GA
• Capital Factory, www.capitalfactory.com, Austin, TX
• MidVentures, www.midventures.com, Chicago, IL
• Excelerate, www.exceleratelabs.com, Chicago, IL

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Author: Marty Zwilling

Many entrepreneurs work hard on the proof of concept (technical), but skip any proof of the business model (revenue flow). In other words, once they are convinced that the product works, they assume their price, sales channel, and marketing will bring in the customers. These days, the technical side may be the easy part.

Proving the business model requires a different approach than proving the technical concept. For example, one CEO I know gave away his software product to the first ten customers. Customer personnel seemed to like it, and it worked, so he was totally devastated when he couldn’t sell one for a “reasonable” price in the first two months of hard work.

So how do you go about proving the business model? It starts with a customer problem or need, and includes proving the technical concept, but starts earlier and goes much further, per the following key steps:

1. Quantify problem cost-of-pain first. Before you design your new solution idea, gather evidence and estimates of how much money a customer is willing to spend (if any) to solve the problem. Factor in your margin, and you will have an upper bound on your solution cost. You won’t succeed with a product that is too expensive for the market.

2. Prove the technical concept. If the product doesn’t satisfy the need, or it doesn’t work, no business model can work. Start by testing the requirements on real customers, and providing “beta” versions to get real feedback. Iterate and improve the fit until your test customers are delighted, not just tolerant.

3. Use focus groups. Gather some representative customer contacts, and give them your best sales pitch, including price, channel, and support. Then listen carefully to the feedback. Don’t be discouraged if you don’t get it right the first time. Changes at this stage cost almost nothing.

4. Talk to domain experts. Here is where your Advisory Board can help you in finding real people with deep experience in your product domain, and gather some unbiased feedback. Listen to potential angel investors, who have domain expertise, and aren’t afraid to ask the hard questions on pricing and channels.

5. Limited rollout. If you have a physical product, try it in a couple of stores first. If you are on the Internet, try one city. This is tricky, since you have to do realistic marketing to see realistic results, but don’t roll out the big viral campaign yet. Look at product costs, margins, commissions, and other expenses to make sure you still have a bottom line.

6. Get a reference customer. You should descend on that big best customer candidate with everything you have. Don’t give the product away, but make sure he has every bit of service you can provide. He better be so pleased that he is willing to provide a testimonial for your real marketing campaign.

7. Sample trade show or user group. If you use the big “Coming Soon!” sign correctly, people will stop by your booth for a look. Make sure they are real customers, and that they get the whole story (not just a technical demo), including price and channel. Otherwise their feedback has no value in proving your business model.

All this assumes you have done the right job first in assessing competition, establishing the sales and marketing channels, and optimizing costs. I see business plans with a great analysis of competitor’s product features, but competitor’s business models rarely get mentioned.

Over the last few years, the right business model has become the key to converting a good idea into a winning startup. Your business model can be your competitive edge, or it can be your soft underbelly. Prove it out, before you dive in with the sharks.

via Business Insider War Room

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Author: Sebastian Fittko

For every startup it is critical to market their first product successfully to (a) prevent the startup from wasting time and money on poor opportunities and (b) selecting those opportunities that are good ones wisely, focus the team and understand what will be required to succeed and how to define that success. Go through the following 10 questions to evaluate the opportunities of your product initially:

1. Value proposition: Exactly what problem will this solve? 
2. Target market: For whom do we solve that problem?
3. Market size: How big is the opportunity?
4. Metrics/revenue strategy: How will we measure success?
5. Competitive landscape: What alternatives are out there now?
6. Differentiator: Why are we best suited to pursue this?
7. Market window: Why now?
8. Go-to-market strategy: How will we get this product to market?
9. Solution requirements: What factoidrs are critical to success?
10. Go or no-go: Given the above, what’s the recommendation?

Start with a minimum viable product and repeat the evaluation of the questions continuously by each customer and market feedback.

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Author: Larry Chiang

Catching the eye of a venture capitalist is hard enough. Convincing him or her to mentor you – especially if they’re not familiar with you and your work – is a much more difficult proposition.

It’s not impossible, though. What it takes is accelerated networking skills that allow you to beat the Catch-22s that so often trap entrepreneurs. Here are seven tips that will help you get your foot in the door.

1. Don’t ask for a coffee – I believe that anyone in this world can be gotten to and networked with. The first step is rarely ever a coffee.

A coffee connotates a 90-minute minimum time commitment for a VC. A better first step is a 5-10 minute phone conversation. Before you get that coveted ten minute wedge of phone time, though, you’re going to need to do some work.

2. When the student is ready, the teacher appears - I think I first read that phrase in a fortune cookie – but that doesn’t make it less true when it comes to mentorship.

Tactically, this might mean ambushing a VC at a party, conference, panel or party. I mention parties twice since they’re a favorite hangout for many VCs. And by ambush, I mean combine your elevator pitch and charm as you solicit an invitation to further interact. Your goal is simple: Get yourself mentored.

3. Pre-network with a VC via a portfolio company introduction – There’s a phrase I coined called “the transitive property of influence”. Essentially, it means charming once and transitively conveying it to the end target – the VC you want to have help you.

How it works is pretty simple: You reach out indirectly to a VC by directly romancing the CEO of one of his or her portfolio companies. If that executive makes an email introduction, you’re in.

4. Woo by reading – In Star Trek, Spock would do the Vulcan mind meld to get insight into someone’s thoughts. You can go one better without risking the assault charge by reading what your would-be mentor reads and reading what they write.

I used this practice to woo Roelof Botha after he mentioned, “MoneyBall” on a panel I chaired. Read the books, blogs and other material they recommend to build rapport. The more you have in common, the better.

5. Mentorship as a funding vehicle – I moderated a panel at SXSW where VC and 500 Startups founder Dave McClure gave some cogent advice to the audience: “If you want a VC to consider giving you money, ask for mentorship first.”

The VC’s risk is mitigated when you take their coaching. It is, in many ways, a trial by mentorship, allowing them to augment your shareholder equity before they invest. And it increases their confidence in the likelihood of a positive outcome.

6. Ace the initial conversation by mentoring them – Mentorship goes both directions. The student/teacher dynamic often includes some role reversal. In the end, if the mentor is good, the student surpasses the mentor pretty quickly. In the interim, here are ideas to get you started mentoring your mentor

• tell them what to pay attention to
• tell them what trends you see
• tell them your opinion of what recent news means
• tell them what else you like in your marketplace
• tell them what specific industry problems exist and how you’re solving them

7. Kiss VC Butt – Read the following verbatim and try to minimize your gag reflex: “Hey I read all about you at Stanford Business school website and I think you’re an incredible genius. I have dreamt of one thing and that is to get a call back from a thought leader like yourself”.

Do VCs have massive egos? It’s hard to say. But I do know that after you magnanimously kiss ass like that, it rarely hurts your chances. You don’t, of course, want to be the obvious brown-noser in the room. My hack is to sincerely compliment them on something undeniably true, so it comes across as genuine.

Larry Chiang is CEO of Duck9 and is also co-moderating the upcoming ReverseVC Pitch Panel and Dinner at Stanford. He submitted this column to VentureBeat.

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via design sojourn

 

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