The coolest new idea I took away was the "high-hurdle experiment" to surface your early adopters by making them self-qualify. This is what Google did with its If I Had Glass contest. Below are the rest of my notes and takeaways.
I recently enjoyed hearing my friend Patrick Vlaskovits speak at Google about his new book The Lean Entrepreneur. He and his co-author Brant Cooper gave a nice overview of the new economic recovery and what that means for businesses and startups and spent some time focusing on what innovation inside large organizations could really look like if it functioned well.
The coolest new idea I took away was the "high-hurdle experiment" to surface your early adopters by making them self-qualify. This is what Google did with its If I Had Glass contest. Below are the rest of my notes and takeaways.
For the last 2 months, my mind has been blown on a daily basis by the book Antifragile: Things That Gain From Disorder by Nassim Nicholas Taleb.
This is the longest and deepest I've gotten into a book since high school, and I found pretty much every chapter thought-provoking and lifestyle-questioning. I already felt like my mind had been blown, and that was just after finishing the prologue.
"Antifragile" is the word that Taleb coins for the concept of gaining from disorder (the real opposite of fragility, which is not the same thing as "robust"). The book covers the topics of philosophy, finance, math, statistics, lifestyle, food, fitness, education, and history, and it applies various strategies and concepts to finding ways to live more naturally and with more antifragility.
I can see how many people will be angered and offended by the direct manner in which Taleb denounces the professions of consultant, banker, economist, academic, business school professor, soccer mom, and tourist. I think books that question a lot of fundamentals are the only ones that bring actual progress to our lives as human thinkers, and this book does exactly that.
Overall, I took 47 pages of notes on the book (see below), and that sheer quantity is enough to show how much I liked it. It's not easy to distill these into a few bullet points, and I will be trying over the next couple months to come up with some concrete suggestions and techniques to put the book's ideas into practice in my own life. Here are just a handful of lessons and broad concepts that come immediately to mind:
Below are the rest of my notes. I really want to discuss some of this stuff with other readers, so let me know what you think.
Back in college I took a marketing class that recommend The E-Myth Revisited by Michael Gerber as additional/optional reading material. I hadn't heard of it much besides that, but I kept it on my list for a while anyways. After seven years, I decided to finally give it a try.
I found the book interesting and quite different from the entrepreneurship texts that have been become "popular" recently. It takes a much more "back to basics" approach and actually talks about how owners can make their businesses more predictable and better operationally by picking up some lessons from McDonald's.
At first I was skeptical, but then I got the point. The "business development process" and the "business model franchise/prototype" approach actually seems like a good idea after reading the entire book about it. In a nutshell, it's about doing intense experimentation and optimization of every component of a business model in order to find what works and removes the owner and his or her whims from the picture as much as possible. I found a lot of parallels between this book and lots of what Steve Blank and Alex Osterwalder write about the business model canvas.
Most of the book's examples were about retail establishments selling products. I'm curious how the book's lessons apply to service businesses, especially ones where talent and thinking are most of the product. The author said businesses should try to set themselves up so that systems run the show and you can hire the lowest skilled people possible; I'm wondering how whether that's valid across all types of businesses.
I also found the book to be much more about life and figuring out what you want (and following your spirit and your own personal values) just as much as it is about business techniques (some of the scripts and hiring practices in the book were nice and tangible techniques that are directly applicable). I also liked how the author spoke (essentially) of gamification of the enterprise (that word wasn't around when he wrote this, but his observations are exactly its essence). I did find that at times the book was a bit too sales-y (in terms of promoting the author's consulting business), but it wasn't blatant.
I recommend this book to anyone who's been heavily into all the lean startup stuff and wants a different perspective on things, and I'm curious what others think as well.
Part 1 e-myth and small business in America
Ch 1 entrepreneur myth
Ch 10 biz Dev process
Jason Nazar was nice enough to run a free day-long workshop at UCLA Anderson on "How to Start a Business," and I checked it out. I find Jason to be a passionate, hard-working, and wise entrepreneur, and I wanted to see what I could learn from him.
Overall, I was astounded by the immense breadth and depth of resources he and his team at DocStoc have put together to help businesses. They basically have an e-book, video course, and "quick start guide" for every single topic/issue a business faces (pretty cool stuff).
Below are some of my notes and takeaways.
II. Why start a business
a. Must have big burning why
i. If don’t have it, will use the “what” as excuses
b. Today is sharing what and how but won’t help if don’t know the why
c. He has huge sense of urgency for life
i. Sees big clock ticking down
a. Fallacy of the “good idea”
i. No such thing as great idea; there are bad ideas and good businesses and good business owners/teams/execution
ii. Ideas don’t matter, execution does
iii. Don’t need a “good enough idea” to start
iv. Best ones start w/ something else someone else doing and do it better
v. Worst is when you want to start biz no one else is doing
1. We already know people’s problems and ways that work
vi. By sharing your ideas with others, you get feedback
1. You also make mental contract w/ others to commit to doing what you said you’re going to do, puts pressure on you to work on it
2. Secret reason of not sharing ideas w/ others: to not get ppl asking you what’s going on, want way to back out
vii. If someone shoots down your idea, it motivates you more
viii. Just take something you’re passionate and go with it
b. Idea checklist
i. to analyze if idea right one for you
1. does it solve others’ problems
2. do a lot of ppl have it
3. am I passionate about the idea
4. am I willing to commit the next 5-10 years of my life to this idea
5. are others successfully doing something similar
6. does it have too many competitors
7. can I do something substantially different or better than others
8. can I build the business on my capital resources or what can raise
9. could I have an MVP and customers in 90 days or less
10. are potential customers giving overall positive feedback > 75% of time
11. do I have background/skillset compatible w/ biz
12. do I have acopmetitive advantage on how to get customers
13. if I don’t start this will someone else
14. can I court mentors who have been successful doing something similar
15. does it have a high likelihood of success
16. does the risk/reward match my person r/r
17. does it help me fulfill my purpose
iii. when evaluating many ideas, score each on how many points it has from this list
c. lifestyle vs. liquidity biz
i. lifestyle biz: live off profits now
1. $1M rev, $400K profit, sole owner
ii. liquidity biz: don’t take out money, go for exit
1. focus on growth, not profit
IV. protecting your idea
i. for work of authorship
ii. written work
i. for logo/mark/short phrase
ii. do a search when naming your business
iii. process for filing is easy
iv. he’s a big fan of legalzoom for basic stuff like incorporation
v. value of attorney is analysis is whether something is infringing or not
i. unless something highly specialized and technical, won’t make biz successful
1. if u genuinely invent a new process, then do it
2. if anything online, do not worry about getting a patent
a. likely unpatentable and won’t make diff
ii. first objective is getting customers
d. trade secret
i. Most investors won’t sign
ii. Use for mergers/partners/complex deals
iii. Has entire course online about how to use them
V. Business plans
a. 3 things will make you successful as small biz
i. good product
ii. figuring out how to get customers
1. #1 biggest challenge
iii. making sure you have enough capital for biz
b. uses of bplan
i. raise money
ii. get partners
iii. get others interested in idea
c. crappy ppt can be enough for a bplan for these purposes
d. 10 key questions to address
i. what is prod/service in 30 seconds, explainable to a 5th grader
ii. what is unique value prop
1. what makes better/diff
iii. what is market opp
e. best format
i. powerpoint, not 40 page doc
iii. create ppt w/ about 15 slides, each one addresses one of the main questions
iv. for product, show multiple examples on slides
v. no more than 15-30 words per slide
vi. investors like picture books, not docs
vii. his is great example of visual deck w/ key info
ii. what are core metrics
1. how long to reach profitability
a. restaurants want to achieve profitability w/in 1st year
iii. must be able to explain basic assumptions behind model
1. price per unit
2. how many orders
iv. also: use of funds
VI. setting up the business
a. right structure
i. LLC simplest, most popular, $800 to set up
1. Best for service biz
ii. C corp allows more complex ownership/management
1. Only if raising a bunch of money
b. filing and checking
i. LLC: articles of org, operating agmt
c. licenses and insurance
i. Licenses123 free
VII. Corporate identity
a. Name, logo
i. Do trademark search
ii. Domain name, all social media
iii. Logo: 99designs
iv. Name something meaningful/important for you
b. Physical collateral
i. Google voice
i. If your website is not your product use weebly, wix, site creator, intuit, wordpress
2. Online commerce: shopify, volusion, magento, google checkout, paypal
ii. Mailchimp, constant contact, sendgrid
iii. Managing social media business presence course they have
VIII. Business operations
1. Lock in a great long term space
1. Space not core to business
2. Don’t get locked in to long contract
a. 1 yr leases
3. Try to get option to extend
b. Professional vendors
i. Overcommunicate expectations of deliverable and prices
ii. Be clear of what u expect
iii. Put a cap on hours attorney can work
i. Paychex? Payroll, Trinet
ii. SohoOS for customers
iii. Have course on google analytics
IX. Service-based businesses
a. You are your products
i. He did consulting before and developed philosophy of service
ii. Quality fantastic
iii. Understand underlying needs
iv. Agree on, overcommunicate
1. Final product deliverable definition
2. Timeline of delivery
v. Overdeliver on value
vi. Have a great consulting agreement in writing
1. On docstoc
b. Go right to getting customers
i. First bplan he ever wrote was for a paying client (bplan consulting service)
1. Just jumped into it, got 3 clients in 2 days, figured out all else afterwards
c. Scale expenses along w/ demand
i. Grow rev monthly, divert more and more portion of that onto business expenses
ii. As get more demand, charge more
iii. Scale by adding ppl
iv. The more money you charge, the more credibility you have
1. He got certified in hypnotherapy after college but never focused on it; what hypnotists charge affects how popular they are
2. Charge whatever amount you feel good about
X. Building and selling physical products
i. Slideware: PPT deck w/ visual representation of product to get first set of sales
b. Pre-sales contracts to fund initial inventory
i. Get positive terms on when paid
ii. Half up front to pay for initial orders
c. Where to sell products online
d. Selling IRL; Getting partnerships
XI. Building and selling online products
a. 3 golden rules
i. spend 10-50K to get it built
1. enough to get to first version to play with
2. spend this of your own money
ii. spend no more than 3-6 months to get it built
1. narrow feature scope
iii. 1st version needs to have something to be charging for immediately or can start scaling users very fast immediately
b. how to build online product
i. requirements doc
1. long outline detailing all features
iii. get a design done
iv. developers/dev shop
c. getting feedback & users
i. see how ppl use your product
ii. his presentation: 7 ways to drive traffic for free
XII. raising money
a. 5 P’s
1. we buy things on emotion and justify the logic
2. your passion is a commodity you can trade to get other things done in your business
1. in pushing for meetings
b. sources of capital
ii. friends & family
1. don’t raise money from ppl who if they lost it, they would give more than a second thought to it
iii. bank loans
1. need long history of relationship and profitable biz or collateral/personal or biz assets
2. start small line of credit and show that repaying over a long time
iv. angel investors
v. venture capitalists
c. how to do it
i. tell them what will do and timeline
ii. reach back out in advance of timeline and show that beat timeline and expectation
iii. show pattern of doing and exceeding what will do and when
iv. get multiple investors to show interest to get leverage
v. find businesses similar to yours that got investment, find out who invested, make contacts with those investors
d. mastering the pitch
XIV. getting customers
a. #1 reason why businesses fail
b. no classroom will teach; it’s experiential
c. if you’re committed, you can do it
d. if not motivated to start biz in next 3 hours, there’s nothing he can do
e. you can’t outsource sales & marketing
f. this has to be your #1 priority
g. the businesses that succeed are those that are the best marketed, not the ones with the best product
h. if you have demand for your service, you can always get capital for it
i. write down the #1 thing that if you got done today/this week/this month would be the most important for the biz
ii. track how much time spent
1. usually not much because it’s the hardest thing
j. in 1st 6 months, spend 50%+ of time getting customers
a. 5 step sales process
i. gain interest
1. talk to them about them
2. give compliment
3. show you listened
4. never start talking about self; start talking about other person
5. 3 topics they care about: health, wealth, relationships
ii. establish credibility
1. past accomplishments
2. willingness to want to help
3. genuineness, transparency
4. ability to speak clearly and give metaphors others can apply to their lives
5. nothing more compelling in biz than one’s own certainty
a. currency like money that can be used in exchange for value/getting people to do things
iii. establish need
1. first actually understand the person and get them to know you understand
2. prospect must feel like you know what they need
iv. offer solution
1. my product is what fulfills the need you’re looking for
2. when they say “what do we do from here”/”next steps”/etc., you finish immediately w/ transaction
v. system to establish easy transaction
i. 1 out of 10 who have an interest in your service, will actually buy when offered and qualified
1. need wide enough funnel
ii. way to talk to lots of ppl
iii. no’s get you 1 step closer to yes
iv. if you don’t believe in your product/service, really hard to exchange value
c. methods & types of sales
d. sales is exchange of value; marketing is getting someone interested in exchange of value and driving ppl to u; PR is building awareness of product
i. key is exchange of value
e. reason we’re so adverse to getting sold is because ppl are always trying to give us something we don’t want instead of learning what we do want/need
f. when someone figures out what you want/need, much more impactful
XVI. Marketing & PR
a. Online marketing
i. "7 ways to get traffic online"
1. search engines
2. Referring traffic/press
a. Top blogs w/ contacts in his PPT
3. Social media
4. Viral loop
5. Solve a compelling need
6. Online partnerships / distribution deals
7. Refreshing content
b. Local guerilla marketing
c. Leveraging PR
XVII. Building a team
a. The bar for partners, employees, investors
i. 3 criteria
1. they are the best at what they do
2. no asshole policy
a. 1 bad person will kill the biz
b. must go extra mile to help someone else
3. work harder than everyone else
a. 12 hour day
b. in office until 11
c. work on weekends
ii. AGPIE values: accountability, growth, passion, integrity, excellence
1. What is the ideal position you’re looking for?
a. If not what you have, it’s a red flag
2. What do they do better than anyone else?
3. If I talk to 10 people you worked with before and what things about you bothered them, what would they say?
ii. If anything comes off as pompous/arrogant, one strike rule (done)
iii. Time to improve an employee is detrimental
c. Issues w/ partners, early employees and equity
i. Must have process in place for how to make decisions when you disagree
ii. Must discuss up front
iii. Prepare lots of if-then situations
1. If someone wants to leave, etc.
2. Gets pregnant
3. Not enough money earning
v. Paying equity for work
1. If typical rate is 10K, and my valuation is 1M, you can give 1%
a. But give 2% by valuing the risk higher
2. Board of advisor on 3 year vesting schedule
3. When getting service or value over time, don’t give equity all up front
d. Hiring/firing docs on docstoc
i. Job descriptions
ii. Job application
iii. Consent form for background check, criminal check
iv. Non-binding offer letter
v. Employment agreement w/ IP transfer
vi. Release of claims for termination, offering consideration
vii. Should have documented feedback over time
viii. Last day: vacation time, final day, etc.
e. Employees vs. contractors
XVIII. Financial planning/accounting
XIX. Business dashboard
b. Key metrics
c. Benchmarking success
XX. Primary legal considerations
a. Working w/ biz attorneys
i. Get referral to someone who has dealt many times w/ ur situation
ii. Personality get along
iii. High level of competency in your situation
b. Preventing and managing lawsuits
c. Enforcing your rights
XXI. Mentors, advisors, and boards
a. What you don’t know, you don’t know
b. Courting advisors
i. Find ppl you like, ask them to coffee, say what want to learn
c. Working with a board of directors
XXII. Buying and selling businesses
a. Finding businesses to buy
i. Multiple of net income
a. How to make right decisions
i. Docstoc matrix
1. “How to make decisions: 4 factors”
2. A: potential upside
3. B: likelihood of success
4. C: effort involved
5. D: strategic value
ii. Entire book/presentation on this on docstoc
b. Stay in the game: protect your downside risk
a. Entrepreneurs’ dilemma
i. Stay attached to problem you’re trying to solve but flexible in solution you use
1. Be passionate about the problem
2. Don’t let ppl dissuade you from that
b. Entrepreneurs sell ether
c. Mistakes people make before starting a business
d. The one most important thing
I'm excited about having graduated on Friday from UCLA Anderson. Our commencement speech was entertaining and inspirational, and I wanted to share the top 10 list that Guy Kawasaki shared with us.
Guy shares alma maters with me (Stanford followed by UCLA Anderson), so I identified with him immediately. He was the chief evangelist at Apple and author of ten books (two of which I've read and really enjoyed: Enchantment and The Art of the Start).
You can watch his speech in the video above, and my notes are below.
Guy's Top 10 Practical Tips for Succeeding
1. Aspire to jump to the next curve.
Instead of working on a better sameness
2. Don't worry, be crappy.
When you're on the next curve, it's time to ship.
Ship and then test.
3. Never ask people to do something you wouldn't do.
Whether it's asking customers or employees
Importance of ethics
4. Obey the absolutes.
There's a hard line between right and wrong.
5. Default to yes.
Always thinking "how can I help others?"
6. Drop everything when your boss asks you to do something.
Make your boss or wife look good.
7. Become a baker not an eater.
For baker's, life's not a zero sum game.
8. Hire people better than you.
A people hire A people. B people hire C people (and so on).
Hire people better than you to prevent a "bozo explosion."
(See my notes on the book Who.)
9. Change your mind.
It's a sign of intelligence.
Steve Jobs changed his mind all the time (and convinced you he was right before and after).
10. 10/20/30 rule of PowerPoint
Optimal slides: 10
Optimal time: 20 minutes
Optimal font size: 30
Figure out oldest person in room and divide age by 2 and that is the font size.
11. Suck it up
Need to pay dues.
Do the dirty job.
12. Have children.
True success is happiness in life.
Children are his greatest joy in life.
Nothing came close in his life in joy.
One thing I've been thinking about is the various approaches to philanthropy. I wanted to briefly mention the two spheres they fall in and ask what you think.
The most common behavior I keep reading about is something like "deferred philanthropy." It's where an individual is hard-working, profit-seeking, and makes a lot of money in his first sixty years only to later give most of it away to charity. I've heard so many stories of investment bankers who later serve on many charitable foundation boards, give away a ton of money to charity, and even set up their own non-profits or foundations. There's also obviously stories like Buffett's and Gates's (both were first mostly wealth-seeking and later philanthropic).
There's a trend now for younger entrepreneurs (especially those who have accumulated wealth) to commit early on to give most of it away, and I think that falls in the same realm. There are tax incentives to give money to charity, and setting up foundations, allowing people to keep wealth (sort of) in the family (without paying estate taxes); family will be controlling that wealth and can have it pay for various expenses as long as it's generally philanthropically-oriented overall. I see it as a question like, "Do you want to give your money when you die to the government to recirculate in society or to a charitable cause of your own choosing?" Given some individuals' mistrust of the government and annoyance with its corruption and inefficiency, giving to charities (which are also imperfect but maybe less so) seems better.
I've been wondering two things about this trend, and I'm curious what others think. First, if you work so hard to achieve a big goal and grow a big, valuable company and in the end just give most of your money away, what does that say about your incentives and inner goals and desires? Is it just to benefit from the money in the meantime? Is it to feel rewarded on the inside from having achieved and built something great (and the money doesn't really matter)? Or are people actively negotiating and working hard to pull in the maximum wealth possible all in the name of the society to which they'll give their money back (seems unlikely to me)?
Second, it's interesting what this means about the flow of money. Consumers pay money to these big growing companies for their goods and services, then these companies are sold and the founders donate a bunch of wealth (that came from consumers) to charity. So it's like everyday consumers are effectively raising money for charity en masse through companies. This seems like a good thing, but not something that's explicit.
The second model of philanthropy is more like "simultaneous philanthropy" where you're actively "making a difference" philanthropically earlier in life and as you move through your career. This can be in the form of social entrepreneurship (companies that are non-profit or for-profit but which give back at the same time as earning money) as well as simply doing community service, volunteering, CSR, and just giving money to charity now, before you've become very wealthy. There's also the idea of "catalytic philanthropy," or approaching philanthropy from an entrepreneurial standpoint and using business skills to be more effective at change.
This second model seems like a better, more honest model to me, in the same way that "living life now as you eventually want to" seems like a better philosophy than the "deferred life plan" (see also 4-Hour Workweek).
What do you think? Is it right/logical/good to be building up companies and deferring certain things just to give it all away in the end? Is society raising money for charities through for-profit companies that eventually give it away? How "efficient" and non-corrupt are most charities anyways? And is a model of simultaneous philanthropy preferable? I don't have a lot of data or answers and am curious what others think.
When I was a senior at Stanford, I remember going to an inspirational talk by an entrepreneurship professor named Tina Seelig, and the talk was titled What I Wish I Knew When I Was 20. When I was recently strolling through a bookstore in Hong Kong (!), I randomly caught sight of a book by the same name, and it turned out to be a written version of the talk I had heard. Given that it's been 6 or 7 years since I heard the oral version, I figured it wouldn't hurt to have a written refresher, and the book certainly didn't disappoint.
The book is a quick, entertaining account of the lessons Tina learned throughout her life and from her interactions with the many students she has taught and coached. Most recently, she has been teaching a class together with the d.school (Stanford Design School), and I really liked reading the descriptions of the in-class exercises she runs (I wish I could participate in some of those now!). Though some of the advice in the book seems "obvious," hearing it told through real students' stories makes it much more "sticky," vivid, and fun.
Below are my notes on the book. Definitely a fun and inspirational quick read!
Ch. 1: Buy one, get 2 free
I'm a big fan on Brad Feld's balanced and brutally honest blog, and when I heard that he had published a book of startup advice based on the TechStars experience, I knew I would enjoy it. I just didn't know that I would enjoy it this much.
It's called Do More Faster: TechStars Lessons to Accelerate Your Startup (by David Cohen and Brad Feld), and it now ranks among the top 5 startup books I've read so far. I'm recommending it to everyone along with The Lean Startup and The Startup Owners' Manual.
Below are my main notes and takeaways. I didn't capture every point in the book if I had seen it a lot before, but if you're looking for a great comprehensive overview of many important modern startup issues, this is the book for you. What I particularly liked was reading stories by well-known entrepreneurs from around the world and hearing about how they approached problems in their businesses (and I liked the commentaries by David and Brad as well). It was also neat to hear about how TechStars works and how the combination of mentorship and operational focus helps the companies have a better chance of success.
Theme 1: Idea and vision
7 email rules
Use what's free
Don't hide your failures
Quality over quantity
Theme 4: Product
Find your white space
Focus on what matters
Theme 5: Fundraising
Seed investors care about 3 things
Theme 6: Legal and structure
It's been a month since my March travels, and I've been super busy since I got home. I wanted to take a few minutes and wrap up my notes and thoughts about New Orleans start-up culture and the NOLABound experience.
Below are the rest of my notes for Days 3-4 of the trip as well as my larger takeaways at the bottom. Sorry for the length of the post! "I wish I had the time to write a shorter letter."
Launchpad accelerator visit
Talk by Alan Domesqieu (architect)
Various impressions of city from touring it on my own the last day
It was long overdue, but I finally finished reading The Innovator's Dilemma by Clayton Christensen, an HBS professor. So many people kept citing this work around me, and I now understand why. The book is a bit slow and dry in its writing style, but the key points are incredibly deep, thought-provoking, and not as often discussed in start-up pop culture.
My biggest takeaway is that when companies are doing the "right" things, like being good managers, following business school teachings, executing, listening to customers, etc., these practices that help them scale successfully are exactly the WRONG things to be doing when confronted with disruptive innovation. That's the core of the dilemma. As a start-up gets traction and grows into a big company, it makes it much less likely that it will be able to keep doing disruptive innovation. This is a really interesting concept, and one that's bittersweet.
My notes are below. You can also download a great book guide that was included in the book at the bottom of this post (sorry for the quality, I took the photos on my phone).
I really enjoyed the book, even though it took me a while to get through it (this was a physical copy I was reading for 10-20 pages at a time).
Part 1: Why great companies can fail
Ch. 1: How can great firms fail