Over the past few months I have been learning a lot about how to tackle the business, product, and development challenges in a web startup. My chief sources of wisdom have been:
- Steve Blank, who has done great work at defining the business challenge of an early stage startup, and who has a great methodology for tackling that challenge as efficiently as possible.
- Seth Godin, who talks about the characteristics of products that win in the modern economy.
- The folks at 37Signals, who have remarkable ideas on how to be highly effective at developing high-quality software for the Web.
In this post I would like to summarize my lessons learnt from these people so far. This summary is as much for my own edification as anything else!
How to run a startup -- Steve Blank and Customer Development
My first contact with a 'startup methodology' was through Steve Blank and his book Four steps to the Epiphany, which is about a methodology called Customer Development. His thesis is that the challenge faced by startups is fundamentally different from the challenge faced by established businesses. The challenge of a startup centers on the search for a scalable business model, whereas the challenge of an established business centers on how to scale a known business model. The Customer Development methodology provides a way to to conduct the search for a business model as efficiently as possible so as to maximize the chances of finding a successful business model before one runs out of cash.
Steve Blank ties his ideas in with ideas from Business Model Generation which essentially breaks down the business model into eight areas: customer definition, product definition, customer acquisition channels, customer relationship channels, cost structures, revenue stream, key business activities, and key partners. Mr. Blank says that startups begin with only a set of hypotheses in each of these eight areas, and must methodically and continually test these hypotheses and iterate on them until one reaches a set of hypotheses which are empirically proven.
A final part of this is the Lean Startup idea which emphasizes agile development, the use of open source software, and the use of public cloud infrastructures to facilitate rapid 'Build-Measure-Learn' cycles which allows one to test the business model hypotheses in the cheapest way possible.
These are all very empowering ideas, and there are plenty of great bloggers like Sean Murphy and Andrew Chen who share a lot of insight and perspective on these topics on a regular basis. I think any new entrepreneur should dive into these gems of wisdom and try to follow the advice as best as possible.
Which products succeed? -- Seth Godin and Purple Cows, Tribes, Permission, etc.
The above methodologies help establish the modus-operandi of an early-stage startup. They make the search for a business model efficient. But how do you formulate your business model in the first place? How do you decide what to try next when your last attempt failed? How can you learn the right lessons from each failure? Are there some salient characteristics of products that catch on? Are there some salient characteristics of products that fail? Can you use these to guide your search for a business model within the framework of customer development,? The great and famous Seth Godin writes a lot of great things about these topics. Let me try to summarize what I take away from his work.
Godin says we are living in the 'post-TV-industrial' age. The 'TV-industrial' age was one where products were first built and then mass media marketing (epitomized by television campaigns) was used to find customers for these products. Today, the opposite needs to happen. We need to build products targeted at specific customers. Products which succeed today must focus relentlessly on the problems of very niche audiences and solve those problems in remarkable ways. The marketing and design of products cannot be separated. The design is the marketing! Seth Godin talks about this idea at length his book Purple Cow.
But Godin goes further. He says that once you build a remarkable product, you need to get people to pay attention to it. And people are increasingly resistant to paying attention to new products. So how do you get your foot in the door? The way to do this is to tell compelling stories about your product; stories which are grounded in an authentic set of values; stories which some set of people already believe. And you got to earn the permission of these people to allow you to tell them this story. If they listen to you, and if they believe your authenticity, they will give your product a try. And if your product lives up to your projected values, they will do your marketing for you by telling their friends. You have to find your 'tribe' (the group of people who share the values that your product symbolises), get them to allow you to tell them your story, and then enable them to spread the word about your offerings.
Godin says that this is the only way to succeed in today's economy. It pays to be small. It is necessary to target a niche. It is necessary to be authentic. It is necessary to tell stories grounded in values. It is necessary to be nice. It is necessary to be remarkable.
Getting Real and other pearls from 37 signals
The folks over at 37Signals have an amazing software development philosophy and build truly amazing software to boot. Their books Getting Real and Rework share remarkable insights on how to go about building kick-ass web apps in highly effective ways. By following their advice, one can build 'smaller, faster, better' software. One can use fewer resources. Etc.
Their books have prompted me to rethink how I go about the process getting software out of the door: gone are the elaborate documents, restrained is the urge to add random features, renewed is the focus on getting things delivered, renewed is the desire to keep things as basic as possible.
Their philosophy really ties in well with the customer development / lean methodology. They way it fits in my mind is that it shortens the 'build-measure-learn' cycle dramatically, allowing you to learn more in shorter periods of time. And that allows a bootstrappers budget to go further!
Tying it altogether
What I really appreciate about all the resources I have mentioned is that they really help me to focus. They guide me toward the things I should be focusing on on the business (Steve Blank), product (Seth Godin), and development (37Signals) sides. They give me a basis upon which to judge the results of my decisions. Without all these ideas, I would certainly have been lost!
Of course, I am just learning about all these concepts. And I definitely need to put them into practice to assimilate them deeply. But writing them down in my own words, and trying to delineate my perceived interconnections between them, has been cathartic. I hope that it might be useful to others in my position as well.
Thanks for reading!