Tag Archives: Lean Startup

Be Careful What You Wish For : Color’s Cautionary Tale

TheNextWeb broke the news that Apple is acquiring Color Labs.  This closes what was one of the highest profile, most hyped startups of the last 5 years.  In my time in Silicon Valley, I’d say Google’s launch of Google Wave and the launch of Color were the top two in building massive hype that then came up really short.  (Do you all remember when people were *begging* for Google Wave invites?)

And that’s ok.  Sh*t happens. New ideas fail every day.  That’s reality.  What *has* changed I think that the costs of failing are dropping.  A lot.  Moore’s Law, the continuing growth and robustness of cloud-based infrastructure and open source tools and development environment, and the development of methodologies like the Lean Startup, have all combined to help teams run customer development cheaply and quickly.  They can build and vet ideas quickly and when they start raising money, they have a much better sense of what works and why.

Color ran counter to this–it went big.  On every front.

I think the cautionary tale is that you should be careful what you wish for.  I was once invited to judge a startup pitch contest.  This contest was held at Color’s Headquarters in downtown Palo Alto.  This was post Color launch, and the bloom was definitely off the rose.  Half of Color’s office space was allocated now as kind of event space, which is where we held this startup pitch competition.

Anyway, before the contest, there was a long networking cocktail type event.  I remember standing there talking to different startup teams.  One of the teams I talked to pitched me their idea.  I said to them, ‘hey, what you’re doing is interesting.  I am not interested in investing in it [for wahtever reason, can't remember] but let me know if there’s anything I can do to help.’   One of the founders looked at me, then glanced around the room and said to me, ‘Well, there’s a $42m check sure would help,’ referring of course to the monster Series A Round that Color had reportedly raised.

My response: “Look, be careful what you wish for.  If I had invested $42M in this thing, and now half of the prime real estate in Palo Alto was being used as event space for cocktail parties and startup pitches, I would want to fire everything that breathed.  This would make me so angry.  Go out and build something awesome.  Then the world of investors will find their way to your door.”

Too much of the press and Silicon Valley community celebrates the raising of money.  Indeed, a raise is seen as press worthy.  I’m less convinced that its news worthy–some founder convinced some investor to write a check.  Meh.

To me what is news worthy is winning a customer, getting a really high profile, value added partnership nailed and in market, landing a truly world class exec or developer.  The really important building blocks to constructing a real company are what we should be celebrating.  Not that you got someone to write you a check.  Focus there, and do that great and the funding announcements will find a way of happening.

 

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Here’s what’s next

I got an email today from a company founder, working on a product that was heading into beta, seeking “outside perspective on what’s next.”

As I get a number of emails from early stage company founders that are looking for advice when they are at that very early beta stage, and as this email was pretty representative of those contacts, I thought it’d be useful to turn my response into a blog post.

Here’s basically my reseponse:

Hi [Founder], thanks for your email.  Here’s my  take FWIW.

My recommendation on “what’s next,” is probably to suggest that you read the book The Lean Startup by Eric Ries.  The key point that I think is most important for any start up is the core focus and need to gain concrete, clear evidence of two basic issues:

(1)                Evidence of product market fit.  That is, do people actually want to use your product?  Evidence that you’ve built something people want is what you need first and foremost, and the question is do you have a convincing story here.

(2)                Evidence of user growth.  That is, what evidence can you show around how much time, work, and money it takes to grow your user base.  You want to showcase how you grow your users and what feedback is required to make that happen.

So there you have it.  If you’re getting your product out there in front of users, great.  If you’re asking ‘what’s next,” then the answer IMHO is to get evidence first of product market fit and then of customer growth.  Ries’ book speaks well to this, and I recommend it highly.

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#STARTUPPROTIP — use this phrase, "What we’ve learned from users is…"

This is the second posting in my “StartupProTip” Series.  This morning I was having breakfast with a very early stage founding team, building a product that was basically at working beta stage.  They were looking for advice and direction on their product.  I do a lot of these types of meetings, and this morning was fun.

As they walked me through the demo, one of the things that they said was the phrase, “what we’ve learned from users is…“  This is a great phrase, and I recommend it as today’s StartupProTip.

I think its a great phrase for several reasons.  First, it shows evidence that you’ve put something into the hands of users: you’ve built something!  Second, it shows that you’re open to user’s feedback on your product, a key trait for any founding team.  (Steve Jobs famously never used market research, but at the same time, when a product was called out as a failure like the early version of MobileMe, he responded big time.)  Third, you showcase yourself as interested in learningfrom users, the stakeholders most scarce and most important to your startup effort.  And finally, by using this phrase you are showcasing that you have an analytical approach to your customer development: you’ve built something, you’ve gotten feedback, and you’ve synthesized that into learning.

To arrive at this phrase in a pitch, you’ve got to building for validated learning in your effort.  To gain that validated learning perspective into your startup, there is no better resource of which I know than Eric RiesLean Startup.  If you don’thave this book, buy a copy and read it.

So today’s Startup Pro Tip is brought to you by the breakfast I had with these two founders.  I’d recommend that teams out there scrubbing their seed/angel/series a pitches figure out how many times they’re scripting this phrase into the pitch.  And of course, taking a step back to what really matters: make sure as you are out there building your product and your company that you and your team are taking a validated approach to learning.

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