12 months ago, my startup co-founder (Dave) and I had an idea, and we had the semblance of a product. We knew our product had potential, but we had no idea how to tap into it. And, regardless, we knew little about building a business.
Our outlook changed when we read Eric Ries’ The Lean Startup. Suddenly we had a blueprint, a method for growing a sustainable company. Were we excited? Hell yes. In October we entered a competition in Chicago, the Lean Startup Challenge. Unlike single-night pitch events, the Challenge was a multi-week test applying the tenets of Lean Startup. A serious competition for folks about their startup idea.
Dave and I scrapped what we had been doing and started fresh. We measured, we learned, we validated -- and on a cold December night we won the 2011 Lean Startup Challenge, walking out with a giant foam check.
Two months after the competition our company was making real money. Using the Lean Startup Model as a foundation, we have continued to learn, and we have high hopes for the future.
For all the 2012 Chicago LSC hopefuls, we have compiled a few tips.
1. Do your homework
This is a given but read up on The Lean Startup Method. Eric Ries’ Book is great but a little lengthy. I usually suggest Running Lean By Ash Maurya it’s a shorter read, and pretty much the closest thing you can find to a ‘How to Guide’ for starting a company. There are tons of free resources online as well, and take advantage of the bootcamp and workshops that Bernhard and Todd offer.
2. Find good mentors and let them rip you apart
Having solid mentors advise you throughout the challenge is essential. It can be very easy to get obsessed with every little aspect of your startup. Good mentors will reset your focus to what’s important. Mentors will also point out things that you will inevitably miss, and will ask important questions that the judges will surely ask.
Be open and honest with your mentors. You are going to face problems that you have never faced before, so getting advice from people who have gone through the same problems is huge. Tell your mentors up front that you will appreciate as much feedback as they can give you. Ask them to rip your idea apart. And when they do, don’t take it personally.
Having your idea ripped apart early is great because you have time to adjust. Startups fail because they ignore feedback and refuse to acknowledge mistakes after their product is in the wild. Figure out what’s wrong with your approach before you build anything..
Shout outs to our mentors Nik Rokop, Raman Chadha, and Adam Hirsen for all of their help along the way.
3. Do not take shortcuts
This is probably the most important piece of advice I can give. Yes, you’re trying to win the competition but more importantly you should be trying to build a sustainable business.
Following every step in the Lean Method can be a pain in the ass at times, and things don’t always turn out the way you hope. The feedback you get from customer interviews won’t always align with your vision for your product, and it’s easy to ignore feedback that requires a major change, or feedback that makes you feel like you’re taking a step backwards. You’re going to hear a lot of feedback, and everyone has unique suggestions. This is why it’s important to do the recommended 10+ customer interviews each week. You’re looking for the resounding messages, and if you do enough interviews you’ll know when you find them. When you do find them, make the appropriate change or development, even if it feels like you’re moving backwards. You will be better off for it in the end.
4. Make your blog posts memorable
You’re going to be competing against hundreds of other companies, each posting a new blog update every week. There are only a handful of judges who have to read every single post. You need to stand out and make your posts memorable. Here are some tips for making memorable posts.
a. Have a consistent, structured format.
Remember that reading your blog posts is not the judges or mentors full time job. Make it as easy on them as possible. This is the format we ended up using...
Title of post
Assumptions Tested & Results
3 biggest takeaways from the week
Questions for mentors
Any additional information you want to include
b. Focus on the big picture.
It’s easy to start testing everything possible or coming up with a million ideas for features. This is why using the ‘3 biggest takeaways from the week’ format works well. Focus your posts on the most important aspects and biggest assumptions you need to validate. Put any other experiment results, data, or ideas at the bottom of the post. The judges and mentors may or may not care to read about them but don’t force them to sift through the small details in order to find the important stuff.
c. Use as few words as possible.
Don’t make your posts look like essays. Use bullet points, and graphs. I often made the majority of our posts in Keynote and then embedded the slideshare widget into the blog. When you do need to use paragraphs keep them concise.
d. Show progress.
Bernhard and Todd started the Lean Challenge because they felt it was the most effective way to get sustainable and profitable new companies built in Chicago. That is the end goal of the challenge, to help build successful new companies.
So what’s the best way to make your posts stand out? Showing progress towards building a successful company. Progress isn’t always a step forward. It can often be a lateral or backwards step. Don’t limit your perception of progress to lines of code. Don’t get overly concerned about being the first company to build a tangible product, or the first one to make money. A company with a validated problem and large market without a tangible product will be more impressive than a company with a robust product that doesn’t solve a big enough problem.
As long as you do the necessary steps, document the results, and make justifiable decisions, don’t worry if it takes you a little longer to actually build something. Speed is an essential part of startup success, but you can’t rush it. The key is moving at the appropriate speed, and not wasting time.
5. Do not be scared to begin charging for your product.
This seems like one of the most common issues people go through in the Lean Model. Charging for your product for the first time is stressful, there’s no doubt. It’s probably the thing we struggled with the most, and looking back, probably something we waited too long to do. If you do your customer interviews correctly you can often times secure customers before you write the first line of code for your product. There are countless stories of companies who started selling to customers while their product was still hand drawn on paper.
Charging for your product filters out all of the unnecessary noise and is the quickest way to identify the contrast between ‘must have’ and ‘nice to have’ features. Asking target customers or beta users what features they need in order to pay for the product is fine but until they actually pay you it’s all hypothetical. Hypothetical situations have a high potential for error. The most essential requirement for any company to operate is to make money. Believing that you have an idea for a product that people will pay for is the riskiest assumption you can make. Rule #1 in the Lean Startup is to validate your riskiest assumptions.
There are plenty of people out there, many of them smarter than me, who will tell you to “stop worrying about the business model and build a great product that people love. If you get enough users you’ll be able to figure out a way to make money”. I don’t disagree with that, and there are companies that have done it successfully. But doing it successfully is going to require a huge amount of traction with many frequent users and will almost certainly require a large amount of funding in order to achieve that scale. The core purpose of the Lean Startup Model is to reduce the risk of failure by validating major assumptions. There is no way you can convince me that raising millions of dollars based on the assumption that you will figure out a way to make money is a good way to reduce risk. It’s possible, and it’s been done before, but it’s not Lean.
If you’re worried that charging for your product will scare off too many potential customers before they ever experience the product then offer a free trial or 30 day cancellation policy. If you can’t get enough traction through a free trial then you probably have a fundamental problem with your MVP or value prop.
It’s also easy to fall into the trap of thinking that charging for your product will result in too few signups and that you need to offer your product for free for a while in order to get enough data to analyze. If you did your customer interviews correctly then your MVP should be strong enough to attract customers. If you can’t acquire a sample size large enough to make significant data driven decisions then you’re either addressing too small of a market or have a distribution channel issue. Both of which are major problems that offering a free product can’t solve.
We’re really looking forward to this year’s challenge and can’t wait to see what companies come out of it.
