Category: Eric Friedman

Expa Labs – Some Lessons Learned

With the first group of Expa Labs companies moving on to the next phase in their development and the application period for the next Expa Labs group now open, I wanted to take a step back to share some of the lessons I learned from working with each of the companies in our first group. The platform and learnings Expa has built by launching companies over the past three years was foundation on which Expa Labs was built. We didn’t set out to create “another” incubator program — we wanted to make something more entrepreneur-friendly, that valued company creation over all else. We didn’t want to rely on what others had done, instead coming up with a set of Founder First Principles gathered from interviews, discussions, and founder conversations with people who have created products, managed teams, been through programs and more.

When Expa announced our new $100M fund in March, 2016, it was to continue our mission of creating new companies, but also use our learnings to form the Expa Labs program. Starting from only a mention in the NYTimes to companies funded and starting work two months later is a testament to the work ethic of my colleagues at Expa. A lot of naysayers and folks said creating and putting into motion a program like this wasn’t possible, but we did it. And though Expa Labs will evolve over time, I am very proud of what we accomplished in the first version of our program.

Now that the inaugural program is over and I’ve had some time to reflect on the experience, I wanted to share some lessons learned;

“Coachability” Matters

Before the Expa Labs experience, the founder attributes I would most often cite almost sound cliche´ at this point; technical abilities, executional excellence, vision, ability to attract world class talent, etc…. What I didn’t have on my list was “coachable.” Though some might argue this isn’t necessarily a trait to look for, I think it’s essential. I worked with teams who, from the beginning, showed they could take feedback well and incorporate it into their thinking. There is a fine line between “I’m right” and “here are some facts” and teams that are coachable can make a big difference. They also know how to filter feedback from lots of people to make an informed, data-driven decision. Their vision may be directionally right — but tactically wrong — and it takes a strong team to change the course.

Ship it earlier

There’s an old expression that says “If you are not embarrassed by your first version you didn’t launch early enough” and it’s absolutely true. Shipping early provides many good lessons. Nobody knows what will happen — despite the loudest pontificators. Launching also quiets the naysayers — nothing speaks louder than actions. This lesson comes into play because whether you are a B2C company or a B2B enterprise company. Nothing gives you better feedback and usage patterns like a live production environment with real customers. Even if you have 10 beta users, it’s better than sitting around inside with limited info and lots of ideas.

Startup knowledge looks like an equalizer

Remember those old stereo equalizers that controlled all the audio settings? Startup knowledge is a lot like that — some entrepreneurs are very high in certain areas while others are very low. As head of Expa Labs, my job is to get everyone to at least a level set — so folks can tackle most problems with information and knowledge to create a solution. It is amazing how much information is out there about starting up a company, entrepreneurship, and almost any topic around starting a business — and yet the knowledge gap is large. Some founders are well informed about the details surrounding financing terms and definitions, while others are new to the topics. Others have deep technical knowledge about building and scaling systems, but have little to no information around hiring and HR policies. Nobody can be expected to know everything about every topic and that is where Expa comes in: We provide resources, experience, and a level set of knowledge in the areas where gaps might exist. My goal is to either fill in the knowledge gaps where I can, or pair founders with the right people.

Plans Change

I can’t say this any more directly: plans change. It reminds me of the famous Mike Tyson quote: ”everybody has a plan until they get punched in the face” and it’s true. The two types of plan changes I struggle with (but shouldn’t) are when a timeline changes and when a product launch changes the plan. Both are totally reasonable, should be expected, and yet remain difficult. For me the lesson is go with the flow a little more and let things change. Change, after all, is the only constant when building a company.

Fundraising is hard

Ok so this isn’t a lesson I discovered or needed to learn, but it’s a good reminder. Naveen Selvadurai, one of the Partners at Expa, has a great expression for founders; “it’s only going to get harder” which is funny and true. From the moment a team is funded they should be focusing on how to keep the business alive with the only thing that can guarantee it — cash in the bank. At the end of the Expa Labs program we also send out a “first look” to the LPs of Expa, which is a way for them to see the progress and status of each company and have the option to reach out if they want to get more involved or invest directly. There are no guarantees but it’s a great way to use the Expa network.

Learning never stops

I truly learned something new from every team, and I hope they learned from me. My applied knowledge from experiences and situations made sense, but I also added to my own toolkit as each company launched/built/iterated/shipped during their time in Expa Labs. I realized many things of my career convictions are now in flux — for example what worked in sales in 2014 may not be the case for 2016.

The end of a program isn’t “The End”

In conclusion I want to say thank you to the Expa Labs 2016 teams; DoveTale, Listen, Radar (NY) and NINAYO, Promote, and Chalet. I loved working (and still working!) with all of you. While the program is “officially” over, it’s only the beginning for you, with some difficult, frustrating, absolutely fun and satisfying moments ahead of you. You are now a part of the Expa family, and I am excited about what the future holds for each of your companies.

We have officially opened up applications for Expa Labs, and planning on more than doubling the size of the program. We have also introduced a new investment tier $250,000 for 10% equity along with the previous $500,000 for 20% equity. Applications are now open through March 31st 2017.

In addition to expanding the size of the program, we are now open to accepting companies from anywhere, that can work in the US. This means if you are in a city outside of one of our core locations, you can apply and potentially get into the program and work from where you are located.

With our offices in NY and SF, and now a Partner operating out of Vancouver our goals of growth and working with more entrepreneurs from more places is happening. If you are interested in learning more please checkout Expa Labs.

Contact your own customer service system

Things get done when the people who can affect change experience pain. What I mean by that the people that are most able to fix problems are the people in an organization who probably have no idea that it is happening. Therefore I believe every Founder or CEO should contact their customer service centers, as if they were a customer, immediately.

call-us-1049266_640I recognize that a call to have CEOs dial their support lines may not happen by the likes of the Fortune 500, but my hope that one person who reads this will go through their support channels today and make improvements.

Almost all call centers can be improved but the metrics, dashboards, anecdotes and discussions in conference rooms are blocking progress. If a company leader spends time on the first point of contact, or perhaps the point where a customer is most in need, they will find a place to spend cycles that will help their business. There is so much energy spent on all the customer touch points; phone, email, txt, live chats, and more – but it feels most are spread too thin.

You don’t have to look far to find companies with customer services woes. Comcast and Time Warner are notorious for having bad customer service. The first line of defense here is the phone support system. This is a power law in action that is not being fixed. If they spent cycles on the single point of contact people hate the most, would it have halo affects on the rest of the business? My answer is yes.

I have a had my fair share of customer service woes and I am usually pretty good at solving them. So much so that people that know this about me get me involved when they can’t make progress. It’s not always just about “talking to a supervisor” but goes into how you communicate and why.  I believe in the halo affect that a good product or a good customer interaction can have and this feels like an easy way to make customers happy.

So whether its by phone, email, livechat, or other means – contact your customer service team to see what the experience is like.  If its perfect that you can scratch one more thing off your todo list 🙂

Goal setting and tracking

I have read in countless books and blog posts that you can’t change what you don’t measure. This is especially true in fitness and weight loss but also the workplace. Measuring things holds people accountable can backup actions with data to show what worked and what didn’t.  This is true of individuals as well, and why I am trying something new this year.  I am working off the Derek Sivers /Now movement (his Now page) and creating a public way of holding myself accountable and tracking things a little better.

It seems others agree with this method and there is now a growing number of people participating on the http://nownownow.com/ site.

I have created my own now site, which is a way of helping me prioritize – Eric Friedman Now

I have also outlined a set of 2016 goals, some public and some private that I am going to hold myself accountable to.  The added pressure this year is that I have shared the private goals with a set of close friends so that I am held accountable as well.

Accountability is important to me with teams and direct reports, and therefore I should hold myself to the same standard.  I have reviewed some of the best ways to track these things and I think putting them out publicly is a good way to do it.  I have also started using the Strides app, and making small tasks that I can check off each day and each week.  This builds momentum as you are less likely to break a chain once it is started.  I once read somewhere it takes a few weeks to start a habit for adults, and not a long time of missing them to fall off.  I hope that putting this out there helps me and I can refer back to see how I did.

So in summary I am doing 4 things to track goals and measure;

  1. Strides for daily/weekly things for habits
  2. Goodreads for books
  3. Public Now page
  4. Private group for 2016 goals

Looking forward to a great 2016 and reporting back to see if this works.

Broadcasting my links and things I read

I recently started using BufferApp both on my phone and my browser to syndicate content to my other networks.  I currently have the free account and have connected Twitter, Facebook, LinkedIn, and App.net.  I also use Buffer on my phone to send content (but mainly through the email function).

Buffer is a web service that takes content from you or others, and syndicates it via a shortened URL across multiple services.  You can “buffer” content to be sent instantly, or scheduled for some time in the future.

It has been very handy for me as I come across great links to share, and quickly want a way to send them out.

My buffer flow is as follows;

1. find great content
2. open in mobile safari and email link to buffer app (modifying subject which is the words in the post)
3. check stats/rinse and repeat

I started using my own Bit.ly account to track better stats across content which has been eye opening to see how things perform.  I continue to predict content that will flourish and am constantly surprised at how things do.  Links that I think are great sometimes fall flat, while linke I think are “meh” seem to get lots of traction. Overall people seem to enjoy the content which is a net win.

For the first time ever I am pushing content to LinkedIn.  I have been on the service forever, but never thought to share links there because its just too cumbersome.  Now with Buffer I share everything – and am getting a decent response rate.  My content is limited to my LinkedIn network which is inversely impacting my overall reach.  I don’t want to optimize for reach in LinkedIn as it would grow the network beyond people that I know – but strangely sharing content their make it almost the point.  As someone once said about linkedin “its like Pokemon, you just need to collect them all” which is to say you may as well try to connect with the world.  Whats the downside?

I am also for the first time sharing content with App.net – which has been a virtual graveyard for me that I am trying to resurrect.  I don’t participate in the network other than sending info, but all communities need the initial seeds to grow.  I feel I can spend time there for a future time when its had time to grow.

My primary network of “attention” is Twitter and Facebook which continue to grow.  My engagement seems “good” but I don’t have a decent proxy for what to expect.

I am very interested in determining the virality of my links and ability to read things first vs. catching them later.  I no longer use a news reader (like google reader) which as any long time reader of my blog know is a big deal as I used to be fixated on reading all my feeds.

I love sharing this content and wonder if I can keep up my momentum – I would love to hear feedback either way if you are on the receiving end of my links.

Where do you share your content?

 

hello Homeland and the #screwcable problem

I have been thinking about cable tv and the future of video for what seems like forever. Much has been written here about tv in general, boxee, and the future of television (remember Joost?).

Tonight I finished watching Homeland from Showtime – and tweeted about it (really great show by the way!)

To my surprise it set off a flurry of responses from friends and colleagues who were at various stages of being either interested in starting to watch it, in the middle of it, or interested in more.  This presents a “hello Homeland” situation for many of my friends who want to see the show from this tweet, heard about it elsewhere, or maybe just have an interest and want to sample it.  But right now they can’t do that.

 

Some friends even started watching it right away based on or tipped into watching it from my recommendation.

This is the part I find extremely fascinating (and no, I am not looking for a pat on the back).  Everyone is looking to cut their cable, and stop paying large cable co’s for service, or switch to an a la carte model.  The problem is that this does not mesh well with the behavior that we currently follow.  Its extremely hard to change peoples behavior, and although the complaints are real, the bills are high – the benefit of cable to solve this need/desire to consume things as they are broadcast is a real benefit.

This all got me thinking about Fred Wilson‘s #screwcable post in which he says:

I’ve long believed that piracy is largely a business model problem not a human behavior problem. If you give people a legal way to consume the content they want, they will pay for it.

So what business model supports the current behavior? Affiliate links and capturing attention.

Currently there are different models that could support this type of behavior.  The simplest is affiliate links.  More difficult is capturing attention.  If I could have linked out to two (or one if they were smart) types of content, I bet I could have generated direct sales, or possibly even subscription sales for Showtime via Homeland.  Afterwards, there is interest and intent around the show – just waiting to happen online.

Affiliate links

The first, and simplest method would be to allow someone to deeplink to content that only subscribers have access to.  Meaning a Showtime subscriber could link to an extended viewing of Homeland to their social network, attributing the longer viewing and following episode sale or subscription sale to their account.

The second, would be driving views to content (read: ratings) via my recommendation.  This attention could be monetized by ads, and because it comes from a trusted source (me) my friends and colleagues may sit through advertising supported video for their first viewing of the show.  Subsequent purchases and subscriptions would also be attributed to the original seeder (again me).

Capturing attention

This method has been tried for years by many startups.  I have personally seen many companies that have promised solutions, but never delivered.  A real time chat room or re-played chatroom next to video content isn’t what anyone is really looking for.  They want to share their thoughts about something when its over with their friends in real time.  This is today solved by Twitter and Facebook – usually in a hard to follow thread of comments.

The real time (somewhat solved by Twitter today) and post watch need for a watercooler is very prevalent.  Some friends even wanted to chat about it as soon as they were done watching.  Why can’t Showtime (or someone else for that matter) give us a place to have this conversation.  I am much less excited about this opportunity, but if it offsets the cost of all-you-can-eat cable and gets us to the a-la-carte model faster than so be it.

The problem with an immediate consumption based behavior means that only true a-la-carte cable pricing would suffice.  This would mean an ever growing firehose of video on demand, available at a clicks notice.  Since this is not going to happen anytime soon, this affiliate model would work quite well.

Based on the reactions of some of my various friends, its clear this would have resulted in views of Homeland from a single tweet, which in an affiliate model would have ultimately been good for the show, good for me, and great for Showtime.

12 years of ebay

I was recently thinking about the sheer number of services I have signed up for, certainly increasing in the past 5 years, and thinking back on some of the old services I don’t use anymore.  I would ventures to say that my time on the VC side of things yielded probably 10 signups a week on the low side and 100 per week on the high side.

What prompted this post however was this congratulatory email from eBay celebrating 12 YEARS using the service.  This is certainly a milestone for me because I am not sure if there is another example of a service that I use anymore.  I still have an @aol.com account, but never use it.  I still have a domain from 1998 that I bought (multiplayergames.com) but thats not the same.

eBay is a service (As well as paypal) that I use at least yearly, if not quarterly.  Its certainly had its share of startups that have tried to disrupt its throne – but the sheer volume and breadth have kept it the market leader.  Its a rare site that stays in the top spot so long, and I wonder how much longer the reign can continue.  I don’t doubt the power and utility of the service (I just used it last month) but I wonder if they can sustain it forever.
I always wondered why companies didn’t take the opportunity to give something amazing to their old customers, but I guess it will always be about getting new customers to signup.

Here is to another 12 years eBay!

Bankless

I don’t have a bank anymore.  Well thats not exactly true, but I don’t have a physical bank I can go into anymore.  I now bank with Ally (Formerly GMAC) and have been happily with them for the past year.  They don’t have any locations or branches that I can physically walk into.  I do all my banking online, via mobile, or through the mail now.  This is a big departure from how I started out and I thought it was worth writing about here.

My main reason for switching away from my previous brick and mortar bank was ATM fees.  With Ally you can withdraw money from ANY ATM, regardless of the fee, for free.  This includes fees from a different bank, large chain bank, small boutique bank, and shady deli ATM machine.  They simply credit you back at the end of each month.  Interest rates were another factor, but the convenience of having no fees made up a large difference.  Let me be clear here – I actually went through the switch to be able to pull cash from anywhere and get the ATM charges back at the end of the month.

I now understand the idea of “switching costs” much more.  Switching costs are the incalculable costs associated with changing providers, brands, or your current choice with a new option.  It took me a while to decouple all my automatic bill payments, direct deposits, and bill payees into a new bank – but it was worth the switch.

So how do I bank now without a bank?

Deposits

I deposit checks INSTANTLY with payapl on my android phone.  This is much like the Chase iPhone app, but does not require you to have a Chase account.  I now understand that Charles Schwab does something similar.  Check reading and depositing into Paypal happens as quickly as you can take two photos of your check and enter the amount.  Its not so instant if you need the money quickly as it takes a few business days to show up in my paypal account.  I then have to transfer the money (withdraw) from paypal to my checking account.  This was my biggest apprehension thinking it would be a pain and too slow.  After doing this process a few times I cannot imagine going back.

I fire up the app via my phone – snap photos of the checks and wait for the deposits.

I also sometimes, but rarely, can mail in a check in a prepaid envelope.  The option above is faster for me and much safer as I have all the old checks.  Once deposited I shred the old checks.

Withdrawals

As described above I can take out money from any ATM, and not pay the fee.  I have been in airports, restaurants, and other areas where there is a $2.00-$4.00 ATM fee and never blinked as I know I will get the money back from Ally.  The savings add up as you can see the monthly amount every 30 days – last month I saved about $30.00 in fees.  This also saves time as you can pull money from anywhere making life a little easier on a busy day.

Service

I don’t miss a branch at all.  I never really used a branch for anything – and am not sure I would ever go back.  I understand the apprehension people have, but 12 months later I don’t feel that I am missing out.  I have been following the payments space for awhile and there have been some great innovations in the past few years.  Its clear there is much room for disruption in the banking space.  Companies like Square and BankSimple are doing very interesting things.

I don’t mind operating on the bleeding edge of banking as I know in the future everyone will be transacting via their phone, depositing via photos, and transacting via mobile.

 

 

How to get a job at a startup

I am teaching a SkillShare class this week with Christina Cacioppo called how to get a job at a startup.  I am excited to dive into this topic as I have sorted through a ton of resumes and had a number of people reach out about this question.  I have been speaking to a number of people recently who are at different stages of their lives – but all looking to work “at a startup”.  Some are about to be college grads, some are switching from “corporate” jobs, and some are MBA’s looking for what is next.  Others are engineers looking to get into something different.  I encourage people to email me about these things because one of the most helpful things I can do is help source people. My email is available,  and I welcome the outreach.  Below are some thoughts on the discussion we hope to have as well as resources for those who cannot make it out to the class.

First ask yourself if you really want to work at a startup?

Many are exposed to the success stories but never see the tough times tech blogs, magazines, and interviews don’t share. Its a grind – no matter what. I try to convey the differences between a “normal job” and a startup.  There are a lot of peaks and valleys, and not everyone is suited for the sometimes unstable nature of the roles.  Next I ask them to pinpoint down further beyond “working at a startup” as their goal. What topics are they interested in? What categories do they want to work in? What problems do they want to help solve? These are the things I ask these questions to get a persons world view and hear how they express interest in a sector or company.

When I hear a company or sector from their answers,  I will focus in on it with specific questions on that company or category. For example if someone mentions a certain company by name, I will ask them to explain what that business does to further understand their world view.  Many people can identify a company they want to work at, but for no other reason then for its success or buzz factor.  Seldom to they name the 2-3 companies in the space that are all trying to tackle the same problems.

Next, its about figuring out what you want to do

The most important thing you can do for yourself before getting started is figuring out the industry and category you want to work in.  There is a broad definition for a “Startup” and there are many that have nothing to do with each other.  Clean Urban Energy just raised $7MM to turn “buildings into batteries” in Chicago.  Tango raised $41MM to focus on mobile chat and video.  Nestio raised $750K to make searching for an apartment suck less.  Each of these could be considered a startup in one way or another – but each is in a completely different vertical.

By focusing on a category, you can narrow down your search to a few key companies that you believe in, and can see yourself working at.

You need to show that you have a passion for a specific category, and understanding of a particular problem, and an overall obsession with building and being part of a solution.

Once you narrow it down you should figure out a plan of what you will actually be doing.  What’s your 100-day operational roadmap for yourself at the company? What will you be doing, when will you be doing it, and who will you need to help you? (Correct answer to the last question: as few people as possible.)

Outreach 

Getting in touch can be one of the things that can differentiate you from the crowd.  Most if not all startups will have a formal job board or application process.  I can’t stress this highly enough, but you should definitely apply through that process.  All other avenues into the company through personal referrals, friends, blog posts, or other means will eventually have you submit a formal application which may include a cover letter and resume and having it already on file within the job system the company uses is extremely helpful.

Reaching out to a Company can be intimidating.  You may think that they do not want to hear from you, or that you don’t have anything intelligent to say or offer.  The truth is that most small startups are dealing with a series of problems and trying to answer a series of questions – if you can be helpful in tackling either, then you are someone they want to be in contact with.

The coffee equation

One path a lot of folks try is to write the hiring manager, or even the CEO about going to “grab coffee to chat”.  I have recommended against this approach as it does not show enough information on your part.

There should be an inverse amount of energy and time put into a potential coffee meeting.

Let me explain with the following diagram

This may seem unfair, but putting in 4-5 times (or more!) the effort of the person you want to speak with does make some sense.  A CEO is dealing with a number of different issues at the same time trying to keep his or her startup afloat.  Things like employees, investors, a business model, the product, feedback, etc… all take up their attention.  When you reach out to spend precious time with them – even 20 minutes – you are asking them to put all the other things aside in favor of your meeting.  This is why I recommend to folks that they spend time craft an email that outlines at least 3 solutions to at least 3 issues you think a CEO is dealing with.  I can promise you that if you touch on even 1 correctly, you are someone they want to spend more time with.  This conversation may not result in a job offer, but it sure is a great way to get the attention of someone that is busy with a million other issues at the same time.

By spending time and energy on crafting a unique and thoughtful outreach request you will be differentiated from others.  It seems obvious, but this small amount of hard work is usually disregarded, and you will therefore standout.  Its an extra 20-30 minutes of work that will at least result in someone reading your note and hopefully responding.

Be reachable!

Along with submitting your information through the official means, you want to make sure you are reachable.  I always recommend to people that they should have a contact form, their email address, or some other means of getting in contact fast.  If you can get a hiring manager, CEO, or investors attention by some means – you want to make the gateway to getting in personal contact very easy.  I know of a ton of great blog posts that do not have an about page, contact page, or any way to get in touch with the author.  Don’t assume that a comments box is enough as its probably too high of a barrier for one of the people mentioned above.

In conclusion

Finally, like most investments in this space, its about the person.  People look for great team members that can work on hard problems and answer tough questions.  Background, experience, and education all play a role – but in the end it about the right fit.  There are a number of resources, top 10 lists, and other actions you can take all listed below.  I think ultimately its about how you approach a sector, and how you participate.  In a sea of sameness, standing out from the crowd can be tough.  My best advice is to participate in the space, get your thoughts down publicly, and start a dialogue with as many folks as you can.

Some resources:

[Updating this area – please leave your resource in the comments and I will add it here.]


I asked this question on Quora and invite you to participate as well: What is the best way to get hired by a startup in NYC?
CrunchBase is a great directory of Companies both large and small
Alex Taub – Tumblr
Jake Furst – Foursquare
Bijan Sabet: http://bijansabet.com/post/335646309/how-to-join-a-startup
Charlie O’Donnell: http://www.thisisgoingtobebig.com/blog/2011/4/1/how-to-get-an-exciting-job-at-an-awesome-startup-in-less-tha.html
Mark Suster part two: http://techcrunch.com/2011/03/17/whom-to-hire-at-a-startup-attitude-over-aptitude/
Eric Stromberg: http://estromberg.com/post/4778188872/how-to-get-a-job-at-a-startup-if-you-arent-a-developer
Jason Shen: http://www.jasonshen.com/2010/get-a-startup-job-out-of-college/

 

Social Discovery and the Implicit Graph (explicit too!)

Recently I co-hosted an event with Ro Gupta from Disqus, Marc Leibowitz from StumbleUponShaival Shah from Hunch, and Mark Coatney from Tumblr called Social Discovery and the Implicit Graph.

We hosted the event at the new Union Square Ventures office as part of an ad-hoc Internet Week event in NYC.  All the proceeds went to HackNY.

We invited folks to the event with a simple description and had a great conversation.

The term “social graph” was coined originally to describe the network of connections we already knew we had such as friends on Facebook or professional contacts on LinkedIn.

More recently, graphs that are inferred as a result of other primary activities – e.g. taking a photo in a bar (Color), commenting on a website (Disqus), expressing a taste preference (Hunch), sharing a new website (StumbleUpon), etc. – have emerged in a big way, particularly in advancing discovery and recommendations. Even platforms for which explicit connections are core – e.g. Twitter, Tumblr, Foursquare and others – are realizing the value in the implicit relationships that form over time.

From this intro we assembled about 40 people for about 2 hours of solid discussion.  There were many more questions than answers and we were able to dig into many of the issues surrounding both implicit and explicit social graphs.

I got a ton of great feedback on site and even online.  Theres probably too much to go into in one post but its a topic I definitely want to dive into more.  Hearing the opinions of the group and from the companies mentioned above, we were able to tackle some of the larger questions that arise.  There are a ton of nuances when dealing with implicit actions in a web service, and even more when it comes to deciding what to do with the data.  We think about this a lot at foursquare and it was good to step back for a awhile and talk some of these issues through with a large group.

One of the big takeaways was the need to continue the conversation – we setup a google group to do just that: http://groups.google.com/group/implicit-and-explicit-graphs

If you are interested in talking about implicit or explicit social graphs or other actions, come join us.

 

What to ask yourself before launching a startup

Circle-question-blue
Image via Wikipedia

I am teaching a SkillShare class on what to ask yourself before launching a startup.

SkillShare is a distributed learning platform that pairs people who are passionate about topics with those eager to learn.  Its run by my good friend Mike Karnjanaprakorn and recently launched to allow more learning to happen.

I recently asked the crowd on Quora the question as well – things to ask yourself before launching a startup and got some smart answers and below are a few.  There are many great threads about this topic as well.

  • Is this something you want to do for the next 5+ years?
  • Is this something you want to do to the detriment of other things in your life?
  • Do you have the mindset to do/be in a startup for the foreseeable future?
  • Is there a large enough target market for my product/service?
  • What type of skills are you bringing to the table?
  • How far will the skills you have bring you and the business?
  • Who else do you need on your team?
  • Do you have customers lined up?

 

 

A startup is a labor of love.  Its something that you will do for quite a long period of time and involve many ups and downs that can sometimes be difficult to deal with.  Chances are, the lessons you learn and trials you go through will stick with you for the rest of your life.  The upside of embarking on this journey is that you will be able to take these business lessons with you on to your next project whether you are successful or fail.

What are my metrics of success? (or, define success for your business)

One of the most common things I see when people ” do a startup” is not defining what success metrics are.  By doing this you can measure your performance, show milestones, and define for yourself and your team whether or not you are on the right track.

Going through an exercise of creating milestones associated with a timeline can put you in a realistic position of measuring success.  Perhaps its X users in a week, a month, or a quarter.  Perhaps its 500 downloads in a year.  Perhaps its selling Y units in a quarter.  The goal is to see if you can achieve these goals in the time you set out for yourself.

Startups can operate in such a lean way these days that its actually hard to tell when you are failing vs. succeeding.  Let me explain.  In the case of a small web app that costs $20-$30 per month to maintain, which provides a service to people, you may be in a situation where the app is on autopilot.  It might be getting used by a few people, and new signups each day or week, but it may not truly be getting “traction” in the market you want to enter.  Its hard to know when this is going to occur, and harder to know when to shut things down.

Can I be committed to this endeavor and for how long?

One of the more interesting questions that people forget to ask is what will they be doing 3 years from now.  If the answer is “not this project” then you should consider the longterm implications of the commitment.  A startup is a labor of love because there are a ton of highs and lows associated with it.  Its easy to be distracted, easy to get down on yourself and your team, and easy to lose focus.  Thinking about things in the longterm can help you narrow down if this path is right for you.

The other side of this coin is whether or not you are the right person to be running a startup in 3-5 years.  Many people are great at getting things off the ground, but have no longterm management experience or interest in running a 100 person company.

Is this going to be a small business or a big business?

Sometimes people refer to small businesses as “lifestyle businesses” which sounds negative, but its really not.  There is nothing wrong with a small-er business that perhaps does not have the same debt responsibilities to investors as a large business, that is profitable.  There are many more “success” stories out there that do not get written up in the so called tech press and are thriving for the founders and employees. Going after a problem, providing a solution, and having a positive cash flow business because of it is a successful business (if you are going after that lifestyle).

A big business, in my definition, is one that you have to borrow (or give up a piece of your Company for) to grow the business while you wait for the product, revenue, service to be ready for customers.  There could be any number of reasons why you want to go out and get money from an outside source such as a venture firm or angel investor – but they should all be vetted against your plan and how you hope to achieve it.  I will not get into the nuances of raising outside capital here as that is enough for another day.

Do I have a large enough target market? (or, who’s interested in my business?)

When thinking about starting a Company, its always good to think about whos pain you are going to ease.  The simple ideas and products sometimes start out from people who are so fed up with how something works (or doesn’t!) that they decide to create a solution.  I love these types of businesses because it shows that the person has a vested and personal interest in seeing the problem solved.  A great example of this is Instapaper which is a read it later service that lets you bookmark things to read in the future.  The total addressable market here is any article that has a permalink online (in other words a lot!).  Another is a recent TechStars company called Nestio.com which lets you quickly compare real estate listings together and collaborate with roomates on which is the best (Disclosure; I mentor this company).  The addressable market here is anyone that is looking for an apartment, and those that are looking with a roomate.

Doing some quick math on the examples above, you can see that the audience for these services is immediately within the millions.  That is a good sign for products that are solving problems in a simple and elegant way.

Who else do you need for your team?

Building your team is arguably the most important part of a startup.  These are the people you will be in the trenches with for the foreseeable future and you need to choose them carefully.  More importantly you need to figure what roles you will need.  At first, many of the people will be jack of all trades.  As your team grows and you need to start giving out responsibility you need to ask yourself about your management style and how you are prepared to handle this situation.

The most important people that join your team are going to be the first 10-20 people.  Typically this is a make or break team for a business.  I personally have not seen a full regime change of core team members that have led to a successful business but I am sure there is an edge case out there.

How are you going to split the ownership of the Company?

This is one of the things that is most obvious in hindsight.  I have personally been a part of “bad breakup” situations and been in the middle of settling ownership disputes.  You should setup the equity split as soon as possible.  For the sake of clarity let me repeat that last sentence; you should figure out the ownership of the company immediately.  Use this post as your crutch, and lean on it to tell your partner(s) that you must figure it out.  There is a ton written on whether or not a fair split makes sense (50/50 or 33/33/33) but I will leave that to your own research.

The benefit of figuring this out immediately clarifies any “unknowns” for people involved and helps you determine how the work will be split.

Do you have the discipline to set your own goals, and reach them?

One of the hardest things about being an entrepreneur is getting and staying motivated.  In the beginning things can get pretty hectic, but there are certainly low points.  One of the things I have seen first time entrepreneurs struggle with is the ability to stay on track, keep working, and skip all the distractions.  You can use many different tactics to help combat these distractions and things that can derail your progress and below are a few of my favorites.

Board Meetings – yup, even this early
This sounds very official and perhaps like overkill for a small startup.  Forcing yourself into a monthly meeting where you are accountable for things from the month before provides a great structure to get yourself organized (stay organized) as well as present exactly what you have done in the past 30, 60, or 90 days.  For many entrepreneurs there is no formal board in place, but I have found most groups have a “kitchen” cabinet of advisors.  This can help solidify those relationships and also hold you accountable to a meeting that you setup on a regular basis.

Milestones
You can see my thoughts on milestones above but they are very important to set.  Doing this provides a clear roadmap for you and your partners.  You would be amazed at how coming up with milestones separately provides transparency into how different you and your partner(s) view the business.

When are you going to start?

This may seem like a strange question to ask yourself, but let me explain what I mean.  Many people are “going to quite and start something” or “looking for the right partner before starting” or my favorite “just adding one more feature before we launch”.  You can see my thoughts on never launching and only iterating here.  The act of “starting” vs. “saying you are going to start” is a huge psychological hurdle you should consider getting over before too long.  You will feel different, act different, and speak differently about your business.  Its the difference between saying “I am thinking about starting something” vs. “I started something”.

For some this can be finding a partner.  For others its about incorporation.  Still others its about launching a beta product that even 1 person uses.  Different hurdles for different people – but in the end its about getting out there and “doing” vs. talking about it.

I am sure there are many more questions that could be added to this list and I look forward to the discussion!

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