Practical Lessons Learnt As An Entrepreneur

It has been more than two years I quit my job and started my startup journey. One year back I had written this post – Lessons Learnt As An Entrepreneur For One Year. Since then I have learnt many more lessons and I thought it would be good to revisit and write down all the lessons. So here they go –

  1. Business Value Proposition: Your business value proposition messaging has to be right – and it takes hell lot of time and experiments to get it right. Hint: “The customer rarely buys what the company thinks it sells him” – Peter Drucker
  2. Learning from mistakes: There are some things you cannot learn from other’s mistakes, you will have to make your own.
  3. General advice: General advice are best to be avoided. Whats works for one startups may not work for the other. So general stuff like “Raise money early” or “build a viral product” does not hold true in all cases.
  4. Get an independent board director: Even if you are not funded, you should bring the discipline to report to the board. Bringing someone else on board (apart from the founders) brings this discipline.
  5. Create a focus group of external people: These are some people whom you keep updated about your company. They review the progress and bring in external perspective to the company.
  6. Business Metrics: Work on defining the key business metrics and have a business dashboard for tracking them.  Each business function should have a set of metrics – customer (growth, satisfaction, churn, virality), revenue, product, costs etc
  7. Show up: An opportunity knocking is useful only if you are at the door. Always be looking for opportunities – to partner, to sell, to hire, to whatever.
  8. And follow-up: Overheard on twitter: showing up is job done 50% and following up is remaining 50%.
  9. Always be closing: Pick up the phone. Get out of the building. Get help. Make that sale happen. Keep closing. Get inspiration.
  10. Sharing your ideas: Talk to people around. Dont hesitate to share your idea with others. Nobody gives $*%# about YOUR idea, everyone has one.
  11. Leverage: Physics 101 –  leverage your resources – contacts, infrastructure, talent, anything.
  12. Do not assume anything: Assumptions go wrong most of the time. Hypothesise and test the riskiest ones first.
  13. Experiments vs Research reports: Experimenting on smaller (or inaccurate) sample size is better than macro numbers published in research reports.
  14. Be crazy about customer analytics: Because the original idea that you think is worthless and only by understanding your customers, you will be able to pivot to the right idea.
  15. Budget time to pay technical debt: With fast experimentation and hypothesis testing, it is okay to go forth with makeshift technology backend. Treat this like a technical debt that you have to pay later.
  16. Working hard does not matter: Building the right product is better than working hard on the wrong product.
  17. Tracking:  Track the milestones weekly, monthly and quarterly. Time runs so fast that you wont realize what you did.
  18. Keep probing customers: What would you do if you could no longer use this product? What was the primary benefit you received by using this product? Would you recommend this product to someone else? Why?
  19. Be open: Be open to change your product based on feedback from customers. Things you think will work, will not always work. Be very open to what customer means. Listen to customers, don’t just hear them. Dont just stick hard to the early business plan.
  20. MVP is easier said that done: It is not just coming with reduced set of feature sets. MVP means testing your core hypotheses most cheaply.
  21. Start with MVM: MVM is minimum viable market. Become a big fish in a smaller pond and increase the scope.
  22. Product usability: Remove the resistance to product usage. Easier the product to use, lesser motivation is required behind using it (Check my Notes on Behaviour Design)
  23. Dont repeat yourself (DRY):  Leverage existing apps / infrastructure / frameworks / web services and tools.
  24. Who is the CEO?: Whether you are a single founder or multiple cofounders, you need one CEO – the one where buck stops.
  25. Vesting for founders: Always have a vesting clause for founders. Standard is to have monthly vesting with 100% vesting in 4 years.
  26. It is not about working on your startup, it is about working on yourself
  27. Be honest with yourself: It’s not about being honest in literal sense but about bringing your suppressed emotions or doubts in front of you. It’s difficult and you might need someone’s help to bring them out.
  28. Learn public speaking: Comes handy when you need to present your ideas to other people.
  29. Write a Blog: Writing does bring out some suppressed idea and also consolidate and channelize your thoughts.
  30. Dirty your hands: At least in the initial days you will have to dirty your hands with things you are not comfortable (unless you are obscenely funded)
  31. Read books: Read as many books you can get hold on. I wish I had read these books before starting up – Lean startup by Eric Ries, Customer Development by Steve Blank, Founders Dilemma by Noam Wasserman. Dont expect to learn and follow all that is written in these books. But it will help in building new perspective.
  32. Cash flow: Always keep 1 year worth of cash in your account. Assume zero revenue when you calculate this one year buffer.
  33. Funding Philosophy: Decide on if your company really needs VC money. Only few types of companies need VC money.
  34. What is the exit: Get acquired / long-term IPO / I don’t care about exit
  35. Eat lunch with your team: Spend some quality non-work related time.
  36. Office environment: Have an inspiring atmosphere in your office. Use motivational posters. Buy a TT table.
  37. What are core values of your organization?: Core values define your culture.
  38. Core values: Core values should be clear to the team and everybody who joins. These are non-negotiable business principles.
  39. Customer service: All employees should take turn for customer service. The empathy with your customer will bring a lot of ideas.
  40. Customer service: Good customer support is the best marketing
  41. Distribution: What is your distribution strategy? A good product means nothing without good distribution. Check Peter Thiel’s lecture on distribution.
  42. What are your drivers of growth? Paid, Organic, Viral, PR, Push based Sales? Do you have model for your growth? Check out this great article on how to model viral growth.
  43. Try a lot of things: Try many things but treat everything like an experiment. Use the output of an experiment as validated learning for next experiment.
  44. And be ready to fail: Treat failure just as an outcome of an experiment. However, don’t make failure as an excuse to fail deliberately.

Looking forward to learning more in coming years.

Everybody I Know Needs The Product I Am Selling

When it comes to product design, there are people like Steve Jobs and then there are rest of us. Product design is mix of art and science. For lessor mortals (like me), science plays a bigger role in providing the framework for product design. There are many existing frameworks that have helped me immensely. Here I am putting down my thoughts based on my experiences and ideas from other sources.

Going back to first principles, a product is a product only if there is a user. So product design has to start with a user. Two fundamental questions to ask

1. Who is the user? What is the need or want of the user?

Everybody I know needs what I am selling
Everybody I know needs what I am selling

The first questions is the most fundamental question and analogous to what Peter Drucker said about the definition of the business – ‘The purpose of the business is to create a customer’. Well, the purpose of the product is to create a user. Given that we know so little about human beings, answering these two questions is not so simple. The most common mistake, we do here is that we assume something and fool ourselves that we know the answer to these two questions. And since we are rationalizing species, we figure out many justifications to rationalize our assumptions. The better, and less risky, way is to create a hypothesis – with a promise of testing it before moving on next steps.

[This is the most frustrating part I have experienced in the product design cycle. Some call it idea-searching phase. Most of the user needs or problems cannot be just thought of. And I have seen many people, including myself, spending many hours brainstorming about that right idea. One of the suggestions from Paul Graham (How to get startup ideas) is to think about problems faced by oneself. Or  problems you have seen firsthand. Another problem is that at times you have to imagine the future, say 5 years from now, and imagine the problems faced by your user in that world. In hindsight – how would you have come up with the idea of iPad 10 years back?]

2. Hypothesis: My solution “A” meets the need of the user

How do we test the hypothesis? The most logical way is to ask the users. But unfortunately, it does not always work (it took me a venture to realize that, fortunately I did not invest much time and effort to it). Users are human beings and they are complicated. So if you ask them “Would you like know crop prices on SMS”, they would say “Yes”. “Will you pay for this service”, “Yes”. And then you create an awesome(?) product that nobody uses or pays for. Thats when people say, you should listen to your customers and listening is not about just hearing what they are saying. It is an art to figure out what customers are saying and this might be mastered with practice. But here we are trying to simplify this process using scientific methods. This course on Human-Computer Interaction on Coursera has a lot of tricks on customer needfinding.

One of the non-so-smart-ways to test it out is to actually developing the product and try it out with the real users. And that how we are going to do it. But intelligently. How? We will create a minimum viable product that users can try and pay for. Payment need not be in terms of direct money transaction. If a user spends invests time in using the product, keeps using it and tells about it to friends, that is a kind of payment. It is up to you how you define the payment (see point 6 – Product metrics). So we move to the next question to ask.

3. What is my Minimum Viable Product (to test my hypothesis)?

MVP is easier said than done. Once thing I need to remind myself is MVP has the word “minimum”. In some cases even a landing page with right messaging or product screen shots should be enough. In others, we might need a decent prototype to show it to users and test the user experience. Or going further, our hypothesis might also test whether user pays for the product and hence MVP might also mean collecting cheque from the user.

However, in all the cases, one thing is common. We need to come with “minimum” set of functionality the product can do so that we can test our hypothesis. Sometimes there are multiple hypotheses to test and MVP also means to cut down these and test only the most important and risky ones. For instance, if the core value of a test preparation company is adaptive learning, the set of important hypotheses can be –

1. adaptive learning is effective

2. users will understand this and  pay for it

And hence these will be the first ones to test. Next step is coming out with minimum set of features to test these. Some hypotheses can be extremely difficult to test [like the example we have picked] and designing the feature set and user experience can be a daunting task.

4. How to design the product?

Even when you are convinced that the product needs the real needs of the user, it is always very easy to make a scrappy product that the user will not use. In fact, it is extremely hard to create something that user would use – and continue using it.

If it is improvement over existing product, your product needs to be 10x better than the existing one. Because there are two things always against you. a) Users resist discarding the products they are using and 2) Users resist to try new product.

On the other hand, if your product is fundamentally first one, the onus lies on you to convince your user about the need for such a product.

In both the cases, a behavior change or habit change is required. And designing new behavior is not really easy . But again, for non-Steve Jobs kind of people, there are frameworks to study and apply selectively (Notes on Behaviour Design).

Going into further details, I would go through the following checklist

Is the product value clearly visible to the user? How is it going to help the user? To what extent?

How does user start using the product? Is there a onboarding process or a starting plan? How easy it is for user to try the product?

What are the behavior changes required? How is the product tackling those changes?

How easy is it to use the product? Is it giving enough liberty to make mistakes? How much does user have to think before using the product or while using the product?

Does it give continuous feedback to the user? Is there social proof about using the product?

Had penned down some of these sometime back (7 Questions To Ask While Designing New Consumer Products)

5. Measuring the right metrics

There are two reasons to measure the metrics – to test out the hypothesis and to improvise.

Metrics give well-defined qualitative and quantitative facts to answer the following two questions

1. Is the hypothesis correct?

2. How to correct / improve the hypothesis?

If you are designing product without leveraging the data, either you are shooting in the dark or are just too good in understanding the consumer behavior and designing for them.

As Eric Ries writes in his book The Lean Startup, it’s very easy to fall prey to vanity metrics. Mixpanel and Andreessen have been very upfront in calling these Bullshit Metrics.

Again, defining the right metrics is very dependent on the type of product it is. In any case, one need to define set of numbers that can measure these metrics. Some usual metrics for software products

1. effectiveness

2. user activity

3. revenue

4. retention

5. referral

There are many others. Here is a great presentation from Dave McClure (Startup Metrics for Pirates)

One can leverage effective tools like A/B testing or multivariate testing to get more meaningful data.

6. Modifying the hypothesis and testing again

It is highly unlikely that we will get the right product the first time. And this is where the science takes over from the art. The lessons learnt till now can be ploughed back to generate better ideas. This neat figure from the book The Lean Startup explains everything.

Lean Startup Cycle
Lean Startup Cycle

Good products never get completed. They keep improving – by providing more value or better user experience.

7. Productizing

I think all the sexy work in product design end in the first two points. But the most dirty work starts when we start productizing. Productizing needs testing your product for all the corner cases, managing the product workflows, creating ancillary stuff around the product, packaging, versioning, support and many other non-cool things. Heres what I wrote while having such an experience – Lessons From Productization

A product is just a project before it is productized. It’s that last 20% of the work that consumes 80% of the time in product development.

iPhone - Productization example
iPhone – Productization example

8. Reaching out to early adopters

One of the best ways to find the early adopters is to simplify the problem so that the target market becomes very small. Analogous to MVP, we should hunt for MVM – that is Minimum Viable Market.

The ideal cycle would be as follows:

1. Discover the MVM

2. Crack it with MVP

3. Increase the scope of MVM

4. Crack it with new MVP

5. Go back to point 3

Again it is easier said than done [and I have not succeeded in doing this yet]. Be it LinkedIn, Quora, Facebook or AirBnB, this is how they have done it. LinkedIn & Quora hacked the inspiration value in the product by first going to successful and renowned people (friends). Facebook started with a single college network. AirBnB started with letting out their own apartment.

Check out this topic on quora to read about more companies and their inital traction – How Did X Get Traction? Questions about how companies got success early in their history.

Summary

To write the story in short, all the above points answer these 3 questions

1. Why? Point 1

2. What? Point 2,3

3. How? Point 4, 5,6,7,8

I think it is very important to start from “Why”. It sets the vision of the product. I also think there is no unique process to design good products. On the other hand it is still possible to design suck-y product even after using hundreds of frameworks or checklists.   It is important to be ready to fail.

To end the long post, check out this video from Simon Sinek: How great leaders inspire action

[thanks to Ashok I for reading through the draft and proving the feedback]