I’ve been an entrepreneur for 7+ years now – self-funded the first 2 years and bootstrapped the last 5. Yes I subscribe to the true definition of bootstrapping as being customer-funded versus self-funded. To some people, that is quite an accomplishment. However, I feel like the last 7 years have just been an education and it’s finally time to graduate and apply what I’ve learnt. If only college felt as relevant.
Like a lot of technical founders, I was infected early by an idea virus. My vision was taking P2P (which eventually morphed to P2Web) mainstream. Since a “usable” P2P platform didn’t exist back then, I had to build one first, and then apply it to a set of problems worth solving. Amazingly, year after year, I was able to find the funding to do just that – or more accurately the funding found me (through my earlier blog). I have never missed payroll which was my way of enforcing a reality-check on the startup. This has been both a blessing and a curse. While it has been great to be able to build what I want, ultimately it’s about building what people want which is more easily said than done.
There have been a number of key ideas in 2009 that have refined my thinking and approach to startups, and more specifically, taking products to market:
Customer Development versus Product Development
Steve Blank makes the case for building products through iterative customer development cycles versus the more traditional product development approach. Even when I launched my flagship product, BoxCloud, I knew customer feedback was the most important thing but I wasn’t very effective at collecting, filtering, and acting on it. Steve’s big idea is that all the answers lie outside the building and he outlines how to engage customers in great detail in his must-read book: “The 4 Steps to Epiphany”. Even though, the case study in the book is more applicable to Enterprise Software, it nevertheless serves as a great blueprint for building a Customer Development process for any company. I am using a Customer Development process for my current product: CloudFire and am reapplying it back to BoxCloud.
Lean Startup Techniques
Eric Ries brilliantly synthesizes Customer Development with Agile concepts and Lean thinking to create a framework for maximizing validated learning though fast Build/Measure/Learn loops. Eliminating waste is a key principle from Lean thinking and Eric applies it to the startup process – starting with a minimum viable product, split a/b tests to measure what works, continuous deployment to speed up iterations, and 5 Whys to fix the right problems. Of all the techniques, his most controversial technique is that of continuous deployment where software is released continuously throughout the day – in minutes versus days, weeks, or months. Having shifted from a weekly release cycle to a continuous deployment cycle I can share some first-hand experience deploying this way which will the subject of my next blog post.
Startup Metrics from Day 1
What can’t be measured, can’t be understood. Every successful business utilizes key metrics but defining them is not always obvious. Prior to Dave McClure’s AARRR metrics, I found myself lost in a sea of numbers which were always interesting but never really that actionable. Dave talks of having no more than 3-5 actionable metrics displayed in a conversion dashboard which I’ve implemented here. These numbers prioritize what I work on.
Product/Market fit is the first thing that matters
Originally coined by Marc Andresseen, achieving Product/Market fit is when you know you’ve built something that people want. You can manage to build a successful company with a “To Be Determined” business model but not without product/market fit. It’s easy to realize when you hit Product/Market fit, but not so easy to measure the path up to it. Conversations with Nivi and Sean Ellis’ blog helped identify what metrics correspond to Product/Market fit which in turn allowed me to focus on optimizing just those first and not waste time and money on other things like scaling user acquisition.
Time is more valuable than money
Maybe it’s that I’m older, or have kids now, but time always seems to be in overdrive. Working on stuff I love doesn’t help much either. It’s easy to loose myself for days/weeks on end solving a technical problem. Working this way isn’t conducive to customer development or a lean startup. I am a lot more conscious of time now and have had to formulate a set of techniques for maximizing where and how I spend it.
I started blogging back in 2002 and kept it up regularly for several years. I attribute my blog for finding the customers that bootstrapped my company. But as I got into the trenches of running the startup, my blogging took a hit due to ever-increasing time constraints. Posts got less frequent and less focussed till I eventually stopped blogging. I tried getting back to it many times but what finally pushed me over the edge was reading Crush It! I own not 1 but 2 copies (due to an ordering glitch). Gary Vaynerchuck makes a strong case for branding through social media. His formula is to pick a topic you’re passionate about, create great content, and keep it real.
It didn’t take much to reveal startups/company building as my real passion. There are tons of books and blogs on the topic but most are either biased by hindsight or don’t go into enough detail. The real challenge in a startup is dealing with uncertainty and not knowing whether something is working or not. Beyond theory, I wanted concrete examples and numbers to model against. Nobody was sharing these in real-time, probably for confidentiality or fear of being wrong, so I decided I would.
I hit the reset button, created this blog using WordPress + a Thesis theme and set it up as a minimum viable product experiment. I decided I would write a single post, tweet it, and see what happens. I was overwhelmed by the initial response and am grateful to all of you for reading and commenting week after week after that. I find that writing helps crystalize my own thinking and brings a level of accountability I never had before which is well worth the effort.
The year ahead
I feel a lot better prepared to navigate the startup journey in 2010 and can more clearly define the milestones for gauging success. Passion and determination, while absolutely necessary, are not always enough by themselves. I believe these ideas and techniques particularly resonated with me because they apply engineering to marketing problems. There are, of course, no guarantees for success but this approach lends itself well to continuous measurement and optimization which is the best my analytical mind can ask for.
They take the purely optimistic view of “Build it and they will come” to a more realistic view of “Build/Measure/Learn till they come (or you run out of iterations)”.
Whatever happens, I will share the journey with you right here… Thank you.