Teague Hopkins

Mindful Product Management

Entrepreneur

Lean Startup for Nonprofits

Last October, I had the privilege to go back to Wesleyan University as a speaker. I gave a one-hour talk on how lean startup principles can be applied to nonprofits and social ventures. My talk was part of the inaugural speaker series of the Patricelli Center for Social Entrepreneurship.

Wesleyan has recently made the video publicly available, so I wanted to share it with anyone who is interested in the intersection between nonprofits and lean.

[iframe width=”560″ height=”315″ src=”//www.youtube.com/embed/bJphXf3j8JY” frameborder=”0″ allowfullscreen]

Thanks again to the PCSE for hosting me. It’s always nice to be asked to speak at my alma mater, and I look forward to coming back in the future.

The Three Biggest Risks to Your Startup

Starting any new venture is risky. Before we can limit or manage the risk, we have to understand it.

Most startup (or new product) risk can be divided into three buckets:

  1. Tech Risk
  2. Market Risk
  3. Ego Risk

Tech Risk

Tech risk is what entrepreneurs (or intrapreneurs, for those starting something within an existing structure) most often think about when starting a new venture. Can I build this thing? Is it scalable? Do I have enough servers? The irony is that, especially for consumer web startups, this risk is usually negligible. Most web startups aren’t doing anything that hasn’t been done before, unless it involves patentable algorithms. It may not be easy, but there’s high certainty that it can be done, given sufficient resources.

Market Risk

Market risk is the antithesis of the idea that “if you build it, they will come.” Do people have this problem? If we can deliver the solution, will people even want it? Can we reach the people who will buy this product? Do people believe that our solution is credible? Entrepreneurs should be thinking carefully about market risk.

Ego Risk

The final type of risk facing any new venture is ego risk – and it’s probably the most important and the least discussed type of risk. Ego risk is the chance that an entrepreneur can’t get out of her or his own way, pay attention to the data, overcome cognitive biases, and avoid falling prey to a reality distortion field.

With so much risk, it’s a wonder any new venture survives (many of them don’t). But researchers and entrepreneurs have worked hard on each of these types of risks, and there are strategies for ameliorating each one.

Tech Risk + Agile

Tech risk is often mitigated with some implementation of Agile methodologies. I sat down with Agile expert Elliot Susel to ask him how entrepreneurs can get started with Agile. Listen to that interview here:  See the Full Transcript.

Market Risk + Lean Startup

Minimizing market risk is the driving force behind much of the lean startup movement. By making a set of small bets in the form of lightweight experiments, entrepreneurs can validate market demand before investing in building a system to deliver a solution or product. Plus, talking to customers often helps entrepreneurs identify problems they had not originally imagined. Sometimes those new problems are more pressing for the customer, and lead to a new product with less market risk.

Ego Risk + ?

Ego risk is the final and most difficult hurdle. There’s no clear-cut answer to this challenge. Religions and philosophers have been focused on ego for millennia. But a meditation or mindfulness practice can be particularly useful in helping us step back from our impulsive reactions to external stimuli (e.g. data that challenges our preconceived notions, particularly if our self-worth is invested in being right, or in one particular self-image.)

Of course, even a zen-master-like separation from the ego doesn’t completely protect us from cognitive biases, nor does a higher IQ or more awareness of these effects. In fact, there is some evidence to suggest a correlation between higher IQ and higher susceptibility to cognitive biases. We don’t yet have any proven methods for overcoming biases, but the Wikipedia page on mitigation is very interesting reading, and a good starting point for learning more.

The Founding Trio

Three Feline Founders. Photo by amanky.

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.

The Startup Primer

[box]Welcome to the Startup Primer – a collection of 55 articles about the challenges of startups. If you are launching your startup, preparing to start, or if you’re already on the way to living the entrepreneurial dream, you need to read these articles.[/box]

Table of Contents

  1. Before You Start
  2. On Founders
    1. Just for Non-Technical Founders
  3. Team
    1. Starting the Team (Co-Founders)
    2. Building the Team
    3. Keeping (and motivating) the Team
  4. Boards and Advisors
  5. Marketing
    1. Social Media
  6. Product

Before You Start

On Founders

Just for Non-Technical Founders

  • Tips For Getting Started For The Non-Technical Web Entrepreneur – http://bit.ly/juR4ZG
  • How to pull your weight as a non-technical co-founder – http://bit.ly/ne66h1
  • Please, please, stop asking how to find a technical co-founder. “You don’t find a technical co-founder, you earn one.” – http://bit.ly/j9K54Z

Team 

Starting the Team (Co-Founders)

Building the Team

Keeping (and motivating) the Team

Boards and Advisors

Marketing

Social Media

Product

Special Bonus: Equity and Funding

    This primer is not intended to be a comprehensive resource for those seeking investors but these articles should give you a starting point for exploring your options.

  • Intro to Stock and Options for Startup Employees and Founders – http://bit.ly/U5Ro6z
  • Where to Look for Different Amounts of Funding – http://bit.ly/lSsHfp

[button color=”#61BFD6″ link=/contact-us]Get Guidance for Your Project[/button]

The Biggest Mistake Entrepreneurs Make

The biggest mistake entrepreneurs make is building their product before finding out if people want it.

I was working on a company last year to develop a product to help small business owners start leveraging social media and the web without spending hours on them. We had the business plan and the feature list. We had plenty of people telling us it was a great idea.

Notecards galoreAbout the time we were planning to start development, I attended Lean Startup Machine in Boston, a weekend-long competition where teams try to create a business, prove the market, and achieve revenue by the end of the weekend using Eric Ries’s lean startup method. The opportunity to practice lean startup hands-on crystallized a set of assumptions that had nagged me for months.

After the conference we started talking to people who weren’t social media experts or small business experts. We talked to people who could conceivably become our customers some day and asked them if they would pre-order the service. Over and over we got the same response: small business owners who needed web presence help didn’t want a tool that made creating and managing it easier; They wanted guidance from someone who could walk them through the process, and they wanted someone else to worry about all the technical details.

We had identified a valid problem, but our solution didn’t fit the market. So we pivoted.

We cancelled development of the product and migrated to a services model instead. We still help businesses create and handle their web presences, but instead of building tools that none of them wanted, we guide them through the process and take care of all the technology so our clients can focus on running their business.