How to be successful startup founder?

In an unexpected, fast moving, world the capacity of building new economic entities under uncertainty (startups…) is extremely valuable.

Startup founders are constantly seeking “The Ultimate” strat-Up roadmap, or checklist that they can follow. Those familiar with ‘The lean startup’ concept believe this kind of universal roadmap could never exist.

A lot has been said and written about building entrepreneurial capabilities. While many of those ‘How to’ guides are quite useless, I find others too specific, and only a handful few are very effective.

The new released book “The Startup Checklist” by David Rose, joins the excellent  “Disciplined Entrepreneurship” book by Bill Aulet. Both books provide a guided ‘step based’ process for startup success. While Rose presents a 25-step checklist, Aulet suggests only 24 steps.

Being a founder and investor, Rose enters the discussion as practitioner, while Aulet’s current position is a professor at MIT, yet he holds extensive practical background as well.

So, which should you prefer to follow?

Carefully reading both books, you will soon find out that Aulet’s 24 steps cover the early stages of new venture creation in more detail, while Rose is more detailed on the later launce stages.

There is somewhat of an overlap between the books: when the last few chapters by Aulet overlap the first few chapters by Rose.

So, entrepreneurs will actually need to cover about 35 steps when building a successful venture. Keep in mind that you might need to repeat several stages, as no venture develops in linear manner – iterations are essential part on the way to success.

My recommendation will be to read them both, starting with Aulet’s “Disciplined Entrepreneurship” and continue to Rose’s “Startup Checklist”.

Ohhh… one last thing: before you comment by saying: “What bout Steve Blank’s ‘Start-Up Owner’s Manual’ guide book”. Well, Steve also covers only about half of the items you will need to address. Yet it is still one of the best guides out there)

Good Luck!

entrepreneurship

Isn’t it about time we abandon this phrase?

The ‘fail fast, fail cheap’ mantra, or in its alternative variations of ‘fail forward’ or ‘fail better’, has become one of the most common themes of entrepreneurs building their startups. It usually runs around the notion of bringing a half-baked product to the market in order to receive real customer feedback, that will enable improving it and trying again, hence reaching ‘product market fit’ (PMF) within a series of iterations.

Failure has been taken out of context; moving from a wrong misleading description of a process to justification for bad execution:

Failure is not a goal. Failure is a result of not reaching a goal. The final goal is achieving a fit for your product to the needs of the market. It should be a Converging process of finding what fits and what doesn’t. Counting startup ‘iterations’ and ‘pivots’ as an indication to its progress is simply a wrong metric.

Failure without a lesson learned is useless. PMF seeking is a Research-based process. Some of your opinions about the market, customers, and their behaviors are most probably just assumptions. Those are the ones to be validated. Validation is done by a series of carefully designed experiments aimed at learning a specific issue. There’s no use in releasing a product version without listing the assumptions you are trying to validate with this version, or issues you are trying to learn.

Failure is not an option. A well-executed experiment either supports your PMF-hypothesis or rejects it, but it shouldn’t fail. If you ‘failed’, it means that you misperformed the experiment. This is a waste of resources that startups usually can’t afford.

Since the introduction of the term in the pharmaceutical industry circa 2000, it has been embraced by the Silicon Valley community and some academic editors. Meanwhile the term itself morphed into an absurd scenario of ‘failure conferences’ or books written around the ‘secrets’ of failure.

So, this mantra should be considered a failure but.…what is the correct mantra?

‘Learn fast, Learn cheap’. This is the mantra to adopt.

Good luck!

entrepreneurship

Corporate innovation that works is: Essential, Balanced, Specific, Diverse, Costly and….

Corporate innovation is one of the hottest issues in management today. Mangers are now expected to deliver ‘disruptive innovation’, and everyone, down to the last employee should submit ‘innovative ideas’ to improve performance. This topic of ‘disruptive innovation’ is so ‘disrupting’ that a Google-Trends search indicates it to be up 300% within the last 10 years.

So, here are the 5 (+1) most important things you need to know about corporate (disruptive) innovation:

Essential: The pace of change in today’s markets is growing faster. It is not going to slow down (as a matter of fact it will most probably increase…). It already affects even the ‘slowest’ industries such as the car industry (Tesla, Mobileye, Uber) real-estate (Airbnb, Wework…) and retail (Dollar-Shave-Club, Ebay, Amazon…). Sooner or later your industry and markets will be affected by some sort of innovation that might disrupt the classic way you do business. It better be you leading this change.

Balanced: Innovation by itself can never keep a business running. It is everyday money making operations, marketing, sales and finance, the back office of every organization, that must be diligently maintained. Not every person can be composer like Mozart, an inventor like Alexander Graham Bell or an innovator like Steve Jobs. Neither can every company act as Apple does. Therefore most probably it would be foolish to expect everyone in every corporation to be an innovator. Low innovation might result in losing market share, yet too much innovation might result in the loss of your cash-cow. Aim at wisely balancing current business with glamorous venturing.

Specific: You are not Google. Well… most of us are not. Hence adopting Google’s innovation strategy might be irrelevant to your business (in some cases, it might even cause damage). No two businesses are similar, hence every business should craft its own ‘Innovation Strategy’, carefully defining what, why and how is it going to engage in increasing innovation levels – and what resources are going to be allocated (yes… innovation requires investments…). Having a custom innovation strategy that fits your business will enable you to outline the right innovation balance, expected deliverables, build the relevant partnerships and allocate the appropriate resources. Strategize your innovation.

Diverse: Innovation has many faces. It can be applied to every aspect of business: product, technology, operations, business models etc.  Innovation can vary also in its intensity, starting with small incremental changes, or growing to major, radical, game changing concepts. In many cases, some of the theoretically ‘small’ and incremental ideas could deliver faster and more predictable returns than the shiny disruptive ones. So, which should you prefer? Both, but NOT to the same extent: Build a balanced ‘innovation portfolio’.

Costly: There is always this fabulous story telling how a simple app or web site changes the world and makes millions. The Dollar-Shave-Club Youtube video cost only a few thousand dollars to produce, yet the company was sold to Unilever for $1.5B within only 4 years after its establishment. An amazing ROI isn’t it? Well. They had to rise about $163M in order to build such an amazing business. Ideas are cheap. Even those rare GOOD ideas, which are relevant, doable and indicate good returns, are cheap. It’s the validation and execution that are costly. Be prepared.

Last, but not least:

Professional. Hackathons, accelerators, open innovation, innovation platforms, ideations, competitions, patents, rewards, brain storming, co-creation, TRIZ, business model canvas, agile, spiral, SCRUM, SIT, blue Ocean, incubation, 20% method, and many other terms, systems and concepts are only a means to an end: to becoming a better, viable business. Use the ones relevant for your business, and use them right. Innovate professionally.

Good luck!

Innovation

Thoughts…

  • Front camera: “Alert on right: Pedestrian running into drive path”
  • Emergency Algorithm: “… potential collision within 3 seconds, activate emergency-car-stop…”
  • Passenger-safety-algorithm: “…passenger age retrieved form data-base is 75. High chance for passenger injury: deactivate emergency-car-stop and take a softer crash into road-safety-fence on the left.”
  • Damage-control-algorithm: “…potential car damage from hitting safety-fence calculated. Result is higher than acceptable threshold: deactivate soft-crash-into-safety-fence and take a soft crash into car parking on the right.”
  • Legal-assist-algorithm: “…parking car data retrieved from department of transportation, car owner with long history of lawsuits against corporations. Potential legal costs exceed threshold: deactivate soft-crash-into-parking-car and activate regular-car-breaks…”
  • Front camera: “Pedestrian is about to be hit within 1 seconds”
  • Social-algorithm: “…pedestrian face recognized. Social profile analyzed. Owner of highly active YouTube channel, Facebook profile and Instagram. Potential Social damage of hitting pedestrian higher than acceptable threshold.”
  • Legal-assist-algorithm: “…retrieving list of potential subcontractors to blame and sue for social damage.”

*A new alliance was established: a meeting point of technology, ethnics and profits.  (Hebrew) (Alliance Website)

entrepreneurship

Just before you dive into a new venture:

Leaving everything behind for launching a new startup? you might want to be sure you have what it takes to be an entrepreneur. As an investor: you might want to make sure your money in placed in the hands of a competent team.

So are there any reliable self-assessment tools that one can take prior to launching a new venture, in order to provide some kind of feedback regarding one’s entrepreneurial potential?

Well, searching the web reveals several DIY tests who are really lame (see one here) or shallow (see here), limited and lack mentioning of any scholar validation for accuracy and quality.

But there are better self-assessment tools you might run into:

One is run by Psychology Today, which is a somewhat more robust (yet not highly appreciated by professionals I talked with) Initial report is free, yet full report requires small payment. A better self-assessment tool, which is free, is run by several academic institutes in the UK (try it here). One of the most comprehensive ones was developed by an EU team (try it here), led by Prof. P.S. Zwart, Professor of Small Business Management at the Faculty of Economics in the University of Groningen, the Netherlands. This is the longest test, and full report will cost almost $60 (!!)

But how accurate are those tests in measuring your ‘entrepreneurial capacity’ or predicting your ‘entrepreneurial success’?

The answer really goes back to the question of whether entrepreneurial capacity is ‘nature’ or ‘nurture’. As far as we know today, we are born with some level of core natural capacity, BUT, apparently, if this capacity is not extremely low, competences and capabilities CAN be further developed (usually be deliberate practice)!

So how good are those tests?

Firstly, like any other self-assessment test, they are more accurate when you are not trying to bias the results, by providing the ‘right’ answer.

Secondly, most probably, if your score is not extremely low, you can still ‘nurture’ yourself by, learning, practicing, and lots of hard work.

entrepreneurship

Should you join in?

New corporate accelerators are announced in growing numbers: Microsoft, IBM, GM, GE, Citi, Barclays, Samsung, Tyco and more. Is it s good place for you as a start-up? is it a good investment for you as a corporate?

Airbnb founders boosted their venture after joining the Y-Combinator accelerator. But what if a ‘Hilton Accelerator’ was available at that time? Would it have been a good idea for them to join it?

So assuming you have a great ‘disrupting’ venture, just as your investors expect it to be, should you join one of those corporate accelerators? Would Airbnb grow to be significant and disruptive as it is today if they had joined a corporate accelerator? I do not think they would.

Corporate accelerators vastly defer from each other, yet the vast majority of them fit only a particular type of venture, and only at a specific timing.

While the value for the corporate is clear, the value for the new venture should be carefully evaluated. For a ‘disruptive’ venture, an investor accelerator might be more applicable (500 startups, UpWest Labs and DreamIt are good examples). On the other hand, cross-industry ventures (e.g a Fintech venture operating in the travel industry) might benefit a corporate accelerator in its target industry (in this example a travel-based accelerator).

Early stage startups should pay extra care not to get carried away by this accelerator flood.

Corporate accelerators on the other hand, should pay extra thought on the type of engagement and commitment they seek with startups.

entrepreneurship, Innovation

So where did Paul Graham go wrong?

In a fantastic essay about startups and economic inequality Paul Graham states:  “I am a manufacturer of economic inequality”. Graham further connects a line between Y-Combinator startups, founder getting rich and increasing inequality ( see short essay version here).

a) Startups create new economic value (through the Schumpeterian process of ‘constructive destruction’)

b) The successful startups, translate this value into economic wealth.

c) Only in some cases this ‘wealth’ is translated to increased inequality. In most cases it will do the exact opposite.

Many startups move revenues from large ‘incarcerating’ organizations to newly established ventures founded by ‘non-rich’ founders (e.g. dollar-shave-club). Those revenues are translated into ‘wealth’. Hence successful startups cause redistribution of wealth, which eventually positively affects the inequality index.

A successful startup will move many individuals (founders, employees, initial investors) from the ‘lower’ to the ‘higher’ economic segments, hence positively affecting the inequality index (in numerical terms).

Some startups even provide many ‘non-rich’ individuals with tools to move higher on the socioeconomic scale by generating new income and wealth (Kickstarter, Airbnb, Fiverr etc.), further flattening the inequality curve.

Entrepreneurs are the source of economic development through their startups, yet, when those startups are heavily funded by existing ‘rich’ people or go for early exists to ‘monopolistic’ corporate, inequality will get worse. Same applies to startups that grow into being monopolistic corporations themselves.

Inequality is ‘natural’, and in its moderated levels it is a great driver for creation.

Inequality on its highest levels is not a driver for creativity; it is a source of frustration and a driver of rebellions.

entrepreneurship