Business

Nov 02 2012

The Founding Trio

Dave McClure of 500 Startups calls it the holy trinity of startup founders. The frequent mantra in the startup space is that there are three primary types of founders: hackers, hustlers, and designers. The prevailing wisdom is that you should have one of each of these on your founding team. But we don’t often talk about what constitutes each of these archetypes.

Hackers

Hackers are not simply code monkeys. They need to be able to do more than just code well. Comfort with ambiguity and an understanding for coding in that context is invaluable for the hacker-founder. Many programmers are happier simply building what they’ve been told to build, but the good entrepreneurs are those who think about what happens when the requirements change – and code as if they will. This means building some things quick and dirty, and accepting that there will be some technical debt incurred in favor of rapid iteration.

Communication skills are also critical for hacker-founders. To achieve company success beyond personal success, you need to be able to communicate a vision to other technical team members and to translate for your non-technical co-founders. Likewise, some comfort with project management is valuable. Finally, any good programmer should understand how their outcomes tie to the success of the business. For programmers working for others, this is the way you communicate your worth; for hacker-founders, this is how you prioritize, test, and iterate for your startup.

Hacker-founders are not the only ones who need these skills, but the reality that there is far less supply than demand for excellent technical co-founders may tempt many non-technical folks to overlook these gaps in their search for a technical co-founder. If all you’re looking for is a code monkey, don’t make them a co-founder; just hire them on a contract basis until you can attract someone who has the complete package.

Hustlers

Hustlers are usually the business development specialists in a startup. It is important to note that this is not the same as an “ideas person.” Ideas people are thinkers; hustler-founders are doers. In a startup, anyone who fails to contribute anything beyond ideas is dead weight and should be cut loose at the earliest opportunity. Hustlers are the ones making deals happen, talking to customers or partners, raising funding to extend the runway, and generally removing obstacles for the rest of the team. Hustler-founders need to be resilient in the face of an endless stream of “no” and tireless in their pursuit of opportunities to promote the company.

Designers

When we talk about designer-founders, most people think about web design or mobile app design, but these are not the most important skills. What startups really need is UX designers, not graphic designers. This point gets lost because many designer-founders have both sets of skills. But make no mistake: this role is not about making your product pretty. It’s about making your product enjoyable and effective. Designer-founders should have extensive experience with problem solving and a disciplined approach to understanding the customer’s problem and designing for the customer’s interactions and experiences with the solution.. Designer-founders might approach this task from perspectives including design thinking, lean startup, user experience design, ethnographic research, or some other school of thought. The important part is that the designer-founder focuses on creating an complete end-to-end experience for the customer, not just the gloss that covers it.

A little of column A, a little of column B…

Few roles fit squarely into one of these categories without overlapping with the others, and any early startup employee needs to be prepared to tackle any challenges that arise. However, if your founding team has the right mix of skills to cover each of these three areas, it will give you a better chance of overcoming challenges and ultimately building a sustainable company.

Aug 29 2012

Good Enough Technology

Most people don’t need the cutting edge. If you do audio production, you might need top-of-the-line monitor speakers or pro headphones, but most people are content with the earbuds that come with their iPods. If you make your living trading stocks in real time, you might need a blazing-fast and redundant internet connection, but most people are perfectly happy with their garden-variety DSL or cable internet connections. If your business is large-format photo printing, you probably need to invest in the best printers you can afford, but for most people, a standard inkjet or laser printer is all they need.

What You Really Need

So what do you need for those activities that are not part of your core? If your business is feeding the homeless or providing a safe space for victims of domestic abuse, you still have office needs. You still need to coordinate your team and file your paperwork. You could invest in high-powered ultraportable notebooks, a dedicated server, and a fat data pipe. In fact, some technology consultants will tell you that these investments will pay for themselves in increased productivity. They may, but that doesn’t mean they are the best investment for your organization.

Pareto principle

The Pareto Principle, named for Vilfredo Pareto, and nicknamed the 80-20 Rule, states that roughly 80% of the effects come from 20% of the causes. 80% of your profits come from 20% of your customers; 80% of the world’s income is controlled by 20% of the world’s population; 80% of healthcare resources in the USA are consumed by 20% of the patients.

How to Leverage Pareto

If the Pareto principle holds true for technology spending (and in my experience, it is close enough to be a good estimate), it follows that your organization can have 80% of the existing cutting-edge technical capacity for 20% of the potential cost. Cloud hosting services, Google apps for business, and internet connections that are fast enough for almost all organizations can all represent significant savings for you and help focus on using your resources to serve the organization’s mission.

What will you do with the 80% of the cost that you have saved? If technology is not core to your business there is probably a much more powerful point of leverage for that investment. Get your good-enough technology, and put the rest of your investment towards your organization’s core mission.

Jul 30 2012

Measuring Productivity

When you zoom out, the measure of productivity often changes.

For a single-minded programmer, productivity might be lines of code committed.
For a development team, productivity might be working code.
When you zoom out to a product view, working code that implements a feature no one uses is waste, but implementing features that people use is productivity.
Zoom out further to a business level, and it’s not just about using the feature, it’s about that feature making the customer more likely to pay for your service or product.
Zoom out again to an ecosystem (or, for you MBAs, value chain/system) level, and it’s not just about what people will pay for, but what adds value to their lives. And not just any value, but adds more value than the cost of providing said value. (N.B.: people are not rational actors, and will sometimes pay for things that don’t add value to their life.)

Now we’re in the realm of things that are hard to measure. And zooming out once again to a global level doesn’t make it any easier. What does productivity look like on a global scale? Even if we are creating value for people at a direct cost lower than the amount of value produced, are we factoring in the negative externalities to our productivity? If we are introducing pollutants, or stress, or social inequality into the world, are we truly being productive?

I don’t have the answers, but I’d love to start a conversation.

Apr 10 2012

Lean is not Skeletal

Lean does not mean bare bones. It does not mean minimize expenses at any cost. It does not prohibit raising money.

In biology, lean refers to the proportion of muscle to excess fat. In business, lean means getting more value for fewer resources.

Reduce waste. Be lean, not skeletal. Don’t cut the muscle.

It’s about efficiency. And sometimes being efficient actually means scaling up and using more resources. Elite athletes eat more than the rest of us. Michael Phelps needed to consume 12,000 calories a day during the Beijing Olympics.

Too often, I hear people talking about how they are being lean by limiting their resource consumption, instead of putting those resources behind the right purpose.
It can be tempting to focus on the resources part of the equation, and eliminate all sorts of things just because we can. The problem lies in forgoing activities that actually create value. Just because something is expensive, doesn’t mean it’s wrong. Don’t stop doing things, just stop doing the wrong things.

What are the wrong things? Anything that doesn’t contribute to creating incremental value. Value should not be confused with cash, unless the sole purpose of your organization is to produce cash. Most organizations define value differently depending on their industry.

Industry	Increments of Value
Manufacturing	high-quality physical goods
Software development	working code in the final product
Startup	validated learning
Nonprofit	social or environmental change

Lean startups don’t have to be bootstrapped. They can raise funding. They just need to be deliberate and focused about how they spend the money they raise.

Mar 30 2012

A Few Words of Advice for Lean Mentors

This past weekend, I once again had the pleasure of mentoring at Lean Startup Machine DC (#lsmdc). It’s always a great experience to be around so many people who are passionately involved in understanding and solving problems and changing the world. Over the course of the weekend, I spent more than 24 hours mentoring teams, and afterwards, I talked with many of the participants about the mentoring process, what was helpful, and what they wished had gone differently. Here are the primary things I learned.

Velocity

Early on in the weekend it almost doesn’t matter what you do as much as it does the act of doing it. It is important for teams to get through their first Build-Measure-Learn loop quickly to get them over their fear of making the wrong decision and help them realize that they can pivot quickly. Encourage teams to get in front of customers early, even if their first experiment isn’t fully thought-out.

Start with the Problem, Not the Solution

Watch out for teams that dive right into designing their product. They often seem to be making lots of process and will tell you so if you drop by, but they are usually spinning their wheels, and need a kick to get out of the building.

Don’t Plan. Act.

When you’re building anything from scratch, it’s easy to get ahead of yourself. Remind teams not to worry about where the business is going to be in two years. Tell them to figure out the first step and then do it.

Be a Scalpel, Not a Firehose

To borrow from Dan Pink, “Your goal isn’t to demonstrate how much you know or to catalog your many insights, but to leave the audience with one idea to ponder — or better, one step to take.” These teams are surrounded by a myriad of information and it’s a challenge to take it all in. As a mentor, part of your job is to help them pinpoint the right information for the challenge that is immediately in front of them. One participant at #lsmdc explained, “The one thing I felt that all the mentors could do better is provide coaching on action steps. As in, ‘This is what you should do, and here’s how to do it'”.

Deliberation

Lean Startup Machine is a fast-paced weekend. Thinking over some decisions can be valuable, but many decisions don’t need hours of discussion and analysis. Make reversible decisions quickly. Timebox. Don’t wait. In one case, a team had set their minimum success criteria and the early data already showed they weren’t going to hit it. Their feedback: “Your suggestion to pivot immediately rather than continue waiting for survey results saved a great deal of time and frustration.”

Focus on Currency

As anyone who runs a business knows, cash is king. Other forms of currency are equivalent to some discounted value of cash. Letters of intent, email addresses, and people willing to give you the time of day are valuable to varying degrees, in many cases proportional to the amount of friction in the collection process (if all they had to do was click a button, that’s cheap; if they had to jump through some hoops and still bought in, you’re doing better). Remind teams that currency is crucial for validation. One participant said “the most impactful thing you did was to keep asking “Is anyone paying you yet?” — That helped keep me on track.”

Have your participated or mentored at an LSM event? What have you found worked well, or needed improvement? Add your thoughts in the comments below.