Liam Gooding

I'm a young entrepreneur blogging about raising investment for a startup and running an emarketing agency.

[liamgooding]

Losing Sight Of Lean In Your Startup Is Dangerous and Here's Proof

It's been a long time since I wrote here. Too long. And ironically  the last post was about celebrating the launch of Virally - back in May 2012.

And now, here I am blogging about how we lost sight of Lean at Virally. 

We've made a lot of mistakes during the last ~8 months and most of them come back to forgetting about Lean. Getting too close to the battles that we lost sight of the war. 

1. We Focussed On Revenue As A Metric Too Soon

Or more specifically, we started worrying about revenue before we'd properly validated the product. And revenue can be very distracting - not only is there the technical overhead of integrating payment processing, recurring billing, plan switching, plan limits... but from a management point of view, it makes it dangerously too easy to lose site of securing validation through traction.

The result: We had a few clients paying us a lot of money, and 95% of idle accounts because we'd not properly focussed on usage, engagement, value proposition.

2. We Allowed Early Paying Clients To Dictate The Product

It's not a bad thing to have paying clients. But, we were guilty of laser focussing on our paying customers when we should have been focussing on the thousands of businesses who weren't yet paying customers, and focus on solving why they hadn't engaged with the platform.

With a UK Startups seed funding budget, it's imperitive to map out revenue as early as possible, but you need to keep focus on the fact you're trying to build a million pound turnover business, not a hundred thousand turnover. That means volume (for SaaS) and in most cases, that volume will come from the longtail.

The result: we have a lot of advanced features in Virally that confuse most of our users

3. We Didn't Raise A Large Enough Seed For Our Strategy OR We Didn't Adjust Our Spending Strategy To Fit The Seed We Achieved

We raised a large (for UK seeds) amount of money. However, it wasn't the size seed that we were aiming for. However, we didn't take down salaries to accommodate. We didn't lean up on office expenses. We didn't reduce our R&D budget and add it to marketing & sales.

In short, we either should have raised more cash or realised we needed to be more frugal.

The result: we're going to come within a knife edge of our finances, and we had to take some convertible notes, which were hugely distracting and only for a relatively small amount of funding.

4. We Stopped Experimenting With New Ideas Too Soon

Before we knew what had happened, we'd spent nearly all of our R&D budget on a single idea, and then when we listened to our customers, spotted a 'pivot' that had much better opportunity. But almost too late. 

Seed stages in a startup are for experimenting. Pivoting  Making new mockups to show potential customers. Trying new weekend hackathons. Focus when something 'bites' but keep experimenting until you feel a bite. 

If you're unsure what a 'bite' feels like, a good indicator is that it's ridiculously simple (probably 5x simpler than your original idea) and people don't need selling on it. They just want to try it out. If you find yourself still trying to convince people at networking events, chances are you don't yet have the gold strike.

The result: we felt a 'Bite' very, very late. And it was a much stronger bite than the original idea that we'd already invested 7+ months into by this point.

5. We Were Too Slow To Use Metrics As A Foundation

We should have been building the minimum User Workflows every time, and adding complexity when we had 90% of users completing each journey. Instead, we build complex workflows, stared at our 0% metrics, and then had to go back to square one, chopping away features that had cost valuable developer hours.

The result: we had a particular process (creating a new campaign) which had a 5% completion rate. But we had no idea where the problem was. After setting up full metric tracking and analysing each stage, we increased this to over 60%. But by this point, we'd already wasted hundreds of signups.

Interestingly, the costs of the metrics products out there was a contributing factor to our launch of http://trak.io 

6. We Undervalued User Experience (UX)

Virally was/is a complex product. But it shouldn't be. It's simple to explain - turning files into fans, followers and subscribers. But using Virally was NOT simple. We had loads of amazing power features that a handful of our power users had requested, but the other 98% of people who signed up couldn't even create their first Campaign.

Pretty design is not UX. UX should be done as rough wireframes - don't allow time to be wasted in photoshop.  

And don't waste time on a single new feature until you are confidently getting the majority of your users through your existing workflows.

The result: one of Virally's main criticisms was it's complexity and many users found it confusing to use. They didn't care about the 17+ extra features awaiting them because they couldn't get past the first gate.

7. We Underspent On Marketing and Sales

I can't stress this enough. For a SaaS product, put at least 50% of your efforts into marketing & promotion. there are exceptions, such as startups with huge funding behind them. But, if you're looking at a 12 month runway or less like we were, you should be bringing in those Beta users and later, free Trial users in the hundreds per week, minimum. 

It's hard as a developer-focussed team may not be naturally giften in these areas so the temptation is to allow those people to keep building more features. but don't. Get the whole team blogging, attending events, commenting on forums, Quora, Hacker News. there comes a time when there is no point doing any more R&D if you haven't got a large enough user base to validate your experiments.

We found it particularly hard to bring in quality PPC traffic. About 90% of a £5,000 spend was garbage. If your startup is in a disruptive area, or people aren't actively rushing out to find this solution, then you'll need to do a bit more than just throw money into PPC.

Of course, content marketing will be a huge part, but be mindful of the slow-burn nature and if you have a short runway, it can take 6-9 months for a blog to grow to a size where it will bring significant signups to your app.

The result: we have a tech product with nearly £100k of R&D in it, and yet we only make tens of signups per week, when our business model requires thousands.

Conclusion And A Virally Update

Even with our seed funding and our paying clients, Virally has come extremely close to running out of runway. 

Do we have enough runway to get sustainable? Not sure. But we'll be damned if we're not going to try. Just by refocussing back onto Lean, we've achieved a new energy, focus and drive within the team. Virally isn't going anywhere!

[liamgooding]

3 Week Product Launch Lean Startup In Practice

Yesterday we launched Virally at Fruitbowl Media, an online tool to allow content marketers to capture leads using social networks as opposed to webforms, and then creating a viral promotion effect once a lead engages with the content.

As a product, we think Virally is awesome. But thats not what im here to blog about. What's more significant about virally is that we launched it following a "lean startup" methodology we've been adapting for future Fruitbowl products (and client products too).

We launched a product, from idea to public Beta, with payment processing, inside 3 weeks. Here's how we did it.

Step 1: Beer

The first step in our process was pen and paper strategy meeting, and we managed to do this a lot more effectively with Beer. We had already been given the problem (or customer pain) from an existing client, and so we knew there was some degree of demand, however the definition of the MVP (Minimum Viable Product) was a long way away from certain, and so we needed a strategy meeting away from code IDE's and Google, lubricated by Beer.

I'm not saying that every senior consultant meeting should include alcohol, but I am saying that discussing the problem witout the constraints of software limitations or competitors, and with just a "slight" catalyst to pull us into the realm of fantasy, we were able to come up with the idea of a hosted app that sat silently in the background, inbetween the end customer (the "lead") and the website (the "marketer").

Originally we'd opted for a library that the client could include on their server, maybe selling it as a licensed download, but by making a few sacrifices in vanity URLs and a little app branding, a remotely hosted app would be the best solution.

This session provided us with:

A product format - hosted web app

A name - Virally

A requirement for MVP

An agreement on timeframe - our target was always under 3 weeks

A rough list of other apps we thought we should look at, only from what we already knew (no googling yet!)

Step 2: Complete A Trello Board

At Fruitbowl, we've "evolved" a loose implementation of lean software development that relies quite heavily on an amazing app called Trello. With a matrix of priorities, possible task status' and task types, we end up with something that loosely resembles an Agile spec for MVP.

No written documentation. No 8 page written "Functional Specification" (how much money gets wasted on those things scares me...). Just half a day of the product owner and developer sitting side by side around a Trello board.

One important consideration about working with this board is that you should always assume that it can change on any day (and it does most days!). Because of this, it's important for the product owner to break down every user benefit as much as possible to keep the whole development truly agile.

Also, as with all agile processes, you need someone who is removed from the development (ideally marketing background) to be critically strict about determining the MVP. It's not absolutely essential that the full board is prioritised, as it's a continual process. But in true agile sense, you need at least 1 days worth of effort (for each developer) prioritised at least so that they can get started while the product owner continues to prioritise the rest of the board.

It sounds a little complicated, but essentially all you're doing is asking the hard questions. Questions such as:

Does this feature add to proving our core value proposition to the user?

Will that feature get used now, or can it wait for a week?

Will anyone see this feature yet?

How will they use that feature if they aren't yet using this feature?

What will attract them towards this feature?

Can we deliver this feature by integrating someone elses API?

Do we need a developer API yet?

What's the expected load on this bottleneck, and do we expect to need speed optimisations yet?

A developer alone (or more precisely, a developer who is not trained to look at the product from a marketing or value proposition point of view) will give you very different answers to these questions. But likewise, a product owner needs the support of a developer to give realistic estimates of features and to fill in the gaps where needed.

After a morning of sitting down and completing a trello board and adding initial effort estimates, we now have the following:

An ETA of the first prototype to send to our first private Beta testers

A rough priority of functionality towards a strict MVP

A real-time management snapshot which can be review at any time

Step 3: Build a Prototype on Staging

Because we were extremely critical of our MVP, we should be able to get a prototype for *almost any product* in around a week. And that was true for Virally, and that's exactly the target we had in our methodology plan.

We launched this behind a password protected staging environment because it was important to walk any private beta testers through this product, either in person or over a Skype call. This is important for a few reasons:

A prototype to an MVP doesn't consider UI and there certainly isn't any "hand holding" walkthroughs

There may be known bugs and we don't want to taint the Beta tester's opinion by accidentally exposing them to these. A product owner will know these quirks, and how to avoid them

The product owner knows the specific User stories or scenarios that this prototype solves, and can "hand hold" the tester through these

Again just to iterate, prototypes *should* look embarrassing. If not, you've done something wrong. So keeping that embarrassment inside a known group of private testers is a good idea!

Step 4: Integrate Payments, Either Real Or Fake

We have a rather controversial component to our internal lean startup process. And that's including a payment processor, or at least simulating one, in our MVP.

This is controversial in many lean startup discussions, but I want to quickly explain our reasoning here.

A MVP exists to test the assumptions, and an assumption is based upon a value proposition of the product.

e.g. "Virally is a tool to collect leads for content marketing campaigns that uses social networks instead of webforms, and marketing managers will pay for this as it helps them to increase conversions and work independently of their IT department"

Now I hate the situation in the UK for credit card handling, and I literally keep begging the Stripe guys to bring their Merchant Account + Gateway + Recurring Payments + PCI Compliance Handling + API stack to Europe faster, but until that time, setting up Credit Card processing for a UK startup is a bitch.

6-8 weeks waiting for the merchant account to be setup, plus a setup fee with the merchant account, plus a % transaction fee on the merchant account, then a monthly fee with the gateway, plus a % transaction fee with the gateway, then a monthly fee with a recurring billing provider, plus sometimes a % transaction fee with the provider. 

And that doesn't even include the man-hours required to integrate with 2-3 sets of API's. Paypal offer a slightly better integration, but are extremely pricey and not amazing from a user point of view.

We've integrated GoCardless into Virally, which is actually a UK only processor who provides a Direct Debit interface. What's beautiful about GoCardless is their pricing (1% with a maximum charge of £2.00) and it takes 2 lines of code to integrate!

To give an impression, we integrated all account upgrade/downgrade functionality, including webhooks, and then added GoCardless on top, in 2 days.

Step 5: Create Lean Launch Page

Why is it important to include a launch page in a Lean Startup launch? Let's assume your product is amazing, and as soon as users give it a bit of time and start using it they'll be hooked. But that's irrelevant if you can't convince them to signup in the first place!

With a blog post about you on Techcrunch (because someone in your team used to work at facebook) this might not be *as* important - but for the rest of us, we need to present some form of landing page, with user benefits, screenshots, a logo, and a sign up button.

Before with our prototype, we didn't mind embarrassing interfaces. But now, a bit of professionalism will help strangers to feel more confident about investing into your product. And even if you aren't charging any money (yet), don't forget you're still asking for an investment of *time* from a user to sign upto your product.

So invest a little bit of effort into a semi-decent logo and a single splash page. If you're launching an iPhone app, do the cliche thing of putting a few screenshots in rotation inside an iPhone mockup - go on, you know you want to.

The Virally launch page is a single page with a simple screenshot, 4 user benefits, a pricing table and some FAQs.

It doesn't convert great, but it converts better than a blank page with a signup button.

In Summary

And so there's the stripped down process we took to launch Virally. I've been writing and rewriting the process for our internal 3 week incubator for around 6 weeks now. Our new CTO and Partner in Fruitbowl, Matt Spence, laughed at me the first time I said we'd aim for a 3 week programme. After a while his mockery became "well we can try" and now I think it's safe to say he's well and truly bought in and singing it's praises far and wide!

3 weeks is significant for many reasons, but most importantly from a business case for Fruitbowl Media:

We can be reactive to market changes

We can avoid or reduce huge tender processes as we only need a smaller budget

We have a known cost package which can be taken "off the shelf" by both clients or investors

We can deliver the methodology as consultancy to other agencies or internal companies

We get to start work on the next project sooner, which is important for an agency selling itself on rapid innovation

Anyone interested in finding out more about the methodology, how it can apply to an upcoming project or how we can deliver this as an agile training workshop should drop me an email: [email protected]

[liamgooding]

Entrepreneur Loans Present A Fourth Option To Young People

UPDATE 21st March: A £10m Youth Enterprise Loan Scheme was announced in the 2012 budget. News Link

Following pressure from Richard Branson's Virgin Media Pioneers Campaign, and David Cameron's support of the idea, a scheme that will offer young people a 'Student Loan' type business loan to startup a new company may in fact make it into George Osborne's Budget on 21st March.

This means young people now have a fourth option, and perhaps this fourth option will become as socially accepted (expected?) as going onto University after college? How will it compare to going to University?

How Much Can University Students Access?

Currently, young people going to University can access upto £9,000 a year towards tuition fees, plus £7,675 a year in maintenance loans/grants. Over 3 years, this would mean around £50,000 in support.

How Much Investment Would A Young Entreprneur Need?

Most young entrepreneurs (myself included) could make a difference if they just had their living costs covered. Assuming a moderate, yet comfortable, monthly allowance of £900, and entrepreneur would be able to focus around 50 hours a week on a new startup venture.

Now lets add around £500 to buy ~90 second hand books, another £1,000 a decent computer and some SaaS business services (most of which can be had for free using free plans and trials).

Throw in a small £1,000 marketing budget for the year.

Add a business mentor (for free) for support, motivation and guidance.

The total cost to the young entrepreneur for their first year? £14,500

Making Money - Creating Employment

This wouldn't even include any revenue from their new business - an unrealistic model but lets assume they get to the en of the first year and have successfully learnt how to break even. So direct costs total in the first year were exactly equal to any revenue they brought in.

So they start year two on a new slate - they've lived and learnt for one full year (which is the same as a first year at University, right?). But they have a brand. A reputation. A client base. Maybe even a finished product.

By the end of year two, they're probably turning a small profit and employing someone else - maybe even a partner who is on the same scheme.

Accepted Entrepreneurship

This is going to produce a new generation of "accepted entrepreneurship". One of the key objections facing many young entrepreneurs is parents opinion. Entrepreneurship is risky. It's unproven. It's not guaranteed. It's not safe, like University.

But seriously, do parents really think that a University Degree is going to guarantee their child a job? No. It is not. Trust me - I know enough unemployed graduates to say with great confidence that University is not a fast track into a great job.

Particularly with my work with Kent Foundation, I'm behind this scheme 100% and think it's fantastic. I would definitely have gone for it instead of University - though I'd still advise moving town for the experience and to shake-up your comfort levels!

[liamgooding]

3 Reasons Google Music Will Fail

Google launched their Google Music service to the public yesterday (previously in Beta) If you haven't yet seen it, head over to the link where you'll be greeted with Google's trademark bland product tour page.

I'll explain Google music as you'd hear it if it were an elevator pitch at a typical startup pitch:

"Google Music is going to totally disrupt the music industry. We saw iTunes & the iTunes Music Store, and we saw dropbox... [long pause for effect] and we said 'hey guys, lets make something totally awesome that puts iTunes and Dropbox together. And so we made Google Music."

Does this sound familiar?

That's because Apple launched iTunes Match/iCloud and Amazon have Cloud Drive/Cloud Player

So who at Google was so arrogant, or ignorant, to assume they could arrive late to market, take iTunes & Apple music store head on, and take on the "Cloud Locker" market as well?

Here's 3 reasons why Google Music will fail, from the perspective of listening to this elevator pitch

1. Google Is Very Late To The Market

Startups are often concerned with being the first to market. But Google proved this isn't important with their big hitter: Google Search.

Many examples exist outside tech startups of late market entires dominating over time. It's not uncommon that being the second or third to market is actually seen as market proof. Fourth or Fifth, mabye you missed the train...

But is Google just too late on this one? Has their arrogance blinded them to it? They're behind Apple and Amazon with their music store, and behind Apple, Amazon, Microsoft, Spotify, Dropbox...

These services don't all work in the same way. But we know from past startup scrutiny, this doesn't matter. They all solve the same pain.

They solve the same problem, but in a different way, is still definitely competition.

2. They're going to rely too much on Google+

Google must think Google+ is the bees knees. They've got all those users and people are talking about it a lot.

Congratulations Google, you managed to copy Facebook in every way. You even added Company Pages! Company pages, oh my god how innovative! I can't wait to get one!

Oh wait up... we already have a Facebook page and a LinkedIn page.

Google seem oblivious that the only people who have stuck to Google+ are the tech geeks and first adopter community. They think Google+ is going to be their secret weapon. Afterall, Ping (did you even know what that was?) is dead. Or did it even come alive?

Sorry Google, but Facebook + Spotify is going to win the social music round. 

3. Google Assume People Are Unhappy With iTunes

If I was sitting at the pitching scenario I mentioned above, and heard the Google Music elevator pitch, my first response would have been "What's wrong with iTunes?"

And I imagine in reality, this question has come up at Google HQ.

I can only fathom that Google have a long list of faults with iTunes, otherwise why would anyone switch away from it? But personally, I can't think of them...

When investors are analyzing a startup, they will always want to know what your going to do better than your competition. Why would people switch to your product/service.

Google's arrogance (or ignorance) has perhaps led them to the conclusion that we don't like having a huge selection of songs, from all major labels. We don't like having one software portal to connect all music across my desktop, smartphone, tablet and laptop.

Google Music will fail because:

It's too late to the market

It's going to rely too heavily on the unproven Google+

Their competition already solve the customer pain flawlessly

[liamgooding]

Using A Slide Deck To Get Interest From VCs

Up until recently, we'd been approaching angel investors and potential contacts using our business plan. And I've already emphasized how important this plan has been for us, as founders, to really discover and analyse our product.

But maybe it hasn't been the best tool of choice to explain Microwd properly. Maybe too much detail stifles their imagination?

And after much hesitation, I decided to produce a visual Keynote Presentation (AKA a slide deck, or Powerpoint for non-mac users) of 11 slides to email out to investors and VC's. And it's working great.

How Long Is It?

Our slide deck has 11 slides.

1 title slide

2 slides explaining the product benefits to users

6 slides taking a visual walk through a typical user journey

1 slide of financials

1 slide of contact details

It takes less than 2-4 minutes to fully take it all in if your reading it on a computer. It fits into a 3 minute spoken presentation.

This seems like a perfect length to open a conversation and quickly establish if the VC is a right fit for the product, and vice versa.

How Much Does It Tell About The Business/Product?

To me, the question here is "are you happy with everyone and anyone seeing this?"

I think the deck falls somewhere between private and public. I mean, I'd never in a million years ask any investor/VC to sign an NDA. Ever. It's just rude.

But likewise I don't think I would put it up for public download.

We have the financials pretty openly on 1 slide. We have screenshots of an unfinished product. We've got some stuff that we'd rather not let our competitors see yet.

Once we have the new pivot launched to our users, I'm sure we'll be less private about it.

Assume though it's safe to send your slide deck to a VC based on their email address and your probably on the right lines.

How Effective Has It Been?

Before, when asking if angels or VC's would take a look at our business plan, we had 100% response rate asking to look at the plan, and 0% responses from VCs. Of those angels, 1 has made a commitment to join a funding round, but not to lead it.

And I already know how important it is to establish a round leader.

Now, I'm asking investors and VC's to take a look at our slide deck. I've had 100% success rate with investors AND VCs. 

More investors are happy to look at an 11 slide deck than a 1 page executive summary.

How awesome is that? I mean, we need to close some of these deals, and fast so we can get in this full time. But having the extra success rate just by changing our pitch materials is an awesome boost.

Also, being a lot more visual has probably helped to demo the awesome user interface of the new Microwd!

What are your thoughts on using slide decks to attract investor attention? Let me know in the comments?

Are you an investor/VC who would be interested in reading the deck? Email me

[liamgooding]

The Lean Startup By Eric Ries Review

This is the brief summary of the book, as I've only ready it twice so far. If you need a more in-depth review and can't wait, try the Amazon webpage.

I'll review the book as I understand it so far, and hopefully come back after I've had chance to give it a few more pass throughs.

Give It Me In 140 Characters Or Less

This book is for any entrepreneur of a new startup (new product facing uncertainty). Applies for internal startups of larger organisations.

Who's The Author

Eric Ries was the founding CTO of IMVU - an online social network where users communicate via a little 3D avatar. The company now does around $50mill in annual revenue. Eric is a pioneer of the "Lean Startup" movement, bringing a lot of the engineering and management methodologies he developped while building IMVU into the multi-million dollar business is is today.

Quite simply, the guy is a rich geek who learnt to do a lot more than write code. He figured out not just the most awesome ways write code, but pioneered the methodology behind WHY we write each line of code.

Who Should Read The Book

Let's be honest, this isn't a very long book. You can read the words themselves in a few days, so I'd recommend quite a broad set of people check this out.

But in terms of who should absolutely read this book 2-4 times (and take notes) I'd say (in priority):

Any CTO, especially founding CTO. This group will probably take the most literal value from the book

Any entrepreneur who is pre-startup or in the first year of business

Any manager or entrepreneur who is about to launch a new product (against extreme uncertainty)

Any manager who is responsible for managing any software teams

Any employee in a larger organisation who is frustrated with the inefficiencies of the beast

The book has a few distinct examples where the methodology itself can broadly apply so it has relevance outside of a tech startup, but I must say I think tech startups will take the most immediate value from the book by far. Ries is a legend as a CTO anyways, so just reading the anecdotes about engineering challenges at IMVU are a great read.

What's The Lean Startup Methodology About Then

The book is divided into three main parts, and loosely follows the lifecycle of a startup through it's core lifecycle: Vision, Steer and Accelerate.

Each stage represents a new "phase" where new challenges apply. During each phase, Ries constantly refers back to the core 5 principles of the Lean Startup methodology:

Entrepreneurs are everywhere: the quick gist is to not stereotype an entrepreneur as a tech geek in his mums basement, or as the silver-haired guy who flies around in balloons. The principles and structure of the Lean Startup will work for "intrapreneurs" too (entrepreneurs leading new ventures inside larger organisations).

Entrepreneurship is management: we need to apply fresh management theory when leading the helm of a new startup, as we're dealing with a different type of business

Validated learning: startups have a lot of learning to do, and so the Lean Startup encourages every action the startup does in some way produces Validated Learning. This way, we can turn "vision and instinct" into scientifically validated results tested in a real market.

Build-Measure-Learn: this is the life cycle of a startup. The faster can can complete this cycle, the faster we can evolve (pivot or persevere) and repeat the process. Think weeks, not months.

Innovation accounting: a new way to measure a startups performance and success, and warning against the danger of "vanity metrics".

If you couldn't be bothered to read the entire book, taking these 5 principles to heart and reading a short blog post on the amazingness of an MVP and you'll be set.

Is It Good Then?

I promised this would be brief, so I'll say this: It's an awesome book, short and enjoyable.

Ries is a great author, and he genuinely brings to life his take on management and operation theory for startups. You'd be a fool to not at least give this some of your time. You'd be arrogant if you didn't think you should spend a few hours giving it a quick read over.

And you'd be very wise to read this 2-3 times.

One Very Minor Warning

If you aren't (yet) in a large organisation, the later chapters will seem pretty irrelevant. They focus a lot on applying the Lean Startup for internal startups. I found myself jumping over some paragraphs that clearly explained principles I didn't think I needed to learn until I found myself in a big organisation.

But on my second pass through, I'd internalised the overall content a lot more and figured I'd read it properly. I still didn't find some of it relevant, but this isn't a criticism at all. More just a warning.

[liamgooding]

5 Causes Of Losing Momentum In A Startup

Since we burst out of the gates with the development of Microwd, I've already experienced a mini rollercoaster of management, finance, strategy and business development.

This last week I couldn't help but feel like the project had slowed in momentum though. And it was a horrible feeling, especially when I'm talking about a product worth millions.

I'm hoping that looking inwards at some of the factors that I think caused this will help me, and other startup founders, to avoid them in the future!

1. Other Founders Having Lots Of Other Comittments

Including myself, all the founders of Microwd have full time jobs. We also have other 'projects' outside of our day jobs. However, I've been aggressivly 'leaning' up the projects I'm involved with since we started running with Microwd. 

I've now cut everything down to the day job (in which I was already part way through writing a book) and Microwd. Which was very hard.

It's a hard ask for the rest of the founding team to do the same. It's risky. And it's mostly because of these other projects that we discovered each other.

But talent is only a third of your equity stake...

Risk + Sacrifice + Talent = Equity %

Unfortunately, we lost 1 founder to this one. He had to drop out of the project due to conflicts of interest with his day job... but we hope to hire him again later on our journey as he's an absolute rockstar!

Solution: ask founding team to sacrifice all other projects apart from their day job

2. Bootstrapping Slows Things Down If There's No sweat Equity

My lead developer only has a minor sweat equity stake - the majority of his involvement so far is mostly on a discounted freelance basis. Other people in the development team are purely freelancers (though we have a share/option pool for employees).

Because everything is being bootstrapped on my own cash, if my personal cashflow has a blip, invoices get delayed, relationships weaken, and my work starts getting a lower priority.

Solution: your founding team should have a 100% sweat equity dedicated developer

3. Timezones Reduce Communication Effectiveness

Managing a development & design team across different timezones adds a frustrating layer of latency to all communication. This means a solid project management app is essential.

We've tried quite a few different project management apps, and right now the most effective is a simple set of task lists from Teambox. Frustratingly, the rest of the features of Teambox just get in the way, but the task lists are simple, intuitive, and have all the functionality we need. Actually, they're awesome.

Solution: use a project management app that's as simple & intuitive as possible

4. Bottlenecks In Your team

By a bottleneck, I mean you have someone who is absolutely essential. Ideally, every member of your founding team should bring something unique. But if they're suddenly unavailable, does progress halt? Do bug fixes freeze? Do meetings not get set up?

I'd expect I'm like most startup founders in that I don't have the luxury of 5+ rockstar developers, however I certainly realise I need a competent backup. Even the most amazing engineers get sick, food poisoning, hangovers...

Solution: as soon as possible, recruit a rockstar #2 developer

5. Losing Sight Of The Simple Solution Your Product Offers

Feature bloat, I know it affects most projects (and clients). In all the apps and custom builds I've handled for clients in Fruitbowl Media, I've always ruled features and functionality like a tyrant, constantly aware that feature bloat cuts into profit margins and delays delivery times.

So I'm amazed that looking over our app, I'd been guilty of getting distracted by the superflous details. I'd lost sight of making our MVP (Minimum Viable Product) absolutely awesome.

Solution: force your MVP to market as soon as possible so you can't get distracted

Summary

This is one of my most honest blog posts to date, but I felt I needed to reflect on the past 2/3 months and ask myself why we didn't have our first 1,000 Beta testers (who are already queueing up) using our MVP.

Those first 1,000 email addresses I have sitting to go out should be enjoying Microwd, testing our features for us, suggesting better and more useful ways to use the platform, allowing us to perform customer development over product development.

In light of this, I've just set a very aggressive launch date for Microwd for our team. The ink wont even be dry on our investor agreement by the time our doors open! 

[liamgooding]

A Business Plan Is For You, The Founders

The current Business Plan for Microwd is 10 pages long, 2,800 words and labelled V11. At it's largest, it was over 6,000 words. It has currently been viewed by 16 people directly, and probably more including those 16 people showing it to trusted colleagues/advisors.

But our business plan isn't for those people. It's for us, the founders.

Woah, Not So Fast There Cowboy!

Now I'm not an idiot, so I'll address the first thing that many people just shouted:

"A business plan is for investors!"

Okay well maybe. All investors will request to see the business plan.

But is a top class business plan going to attract investment if the founders have poor credibility, poor background skills, poor charisma, poor attitude? It certainly isn't.

In my experience so far, I've gone over every detail of the business plan when I've had followup meetings with investors. Why? Maybe they want to hear it from the funders in person, to check you understand it fully. Maybe because a spoken sentence communicates 100% more from than a written one.

The point is, the Microwd business plan has pretty much been delivered in it's entirety verbally to almost every investor I've spoken with. I've explained each section, in the same detail as the plan (and then some), over coffee/lunch.

So, was the business plan really for the investor, or was it for me, to organise those thoughts and messages and arguments, to incorporate improvements to the model, so that I could deliver them with increasing clarity with each coffee?

I'm finding this is the case for Microwd, and particularly the angel Investors I'm speaking with. 

Here's An Example...

After a recent conversation about activating the business model, one investor made some great points and showed how, with some clever timing, we could potentially half or avoid a future funding round we'd planned. He just put it on the table, and simply offered:

"Why don't you run the numbers, I'm curious what the plan would look like..."

So I did. and he was right. With some clever timing (and a lot of market research too to check the pricing) I could potentially squeeze out the need for a funding round that would have diluted everyones shareholding - including my majority.

Having the balance projections in their 8th version, and the business plan in the 11th, shows how iterative a business planning process can be. Just by seeking the investment, we're already learning so much more about making Microwd leaner, much leaner, and potentially much more profitable, maybe skipping the ramen profitability stages.

I'm happy that investors want to look over our plan. I love the feedback - it's basically free coaching for a £500/hr consultant.

But it's for us. Its ours. It's a map of our iterative (agile?) planning process. It has 16+ co-authors already, with combined turnovers across those co-authors into the tens/hundreds of millions. It's only 10 pages as an end result, but it's had tens of thousands of words put into it.

I've read a fair share of 'Maverick Entrepreneurs' who dismiss business plans, and say they weren't in any way a contributing factor to making their millions. But I don't buy it.

Try This For A Tester

Even if you write the business plan after you've started trading, speak to 16 different investors/entrepreneurs about it, and then try and tell me you don't learn anything or want to change something in that plan.

What are your comments? Did you write a business plan pre-startup? Have you written one since?

[liamgooding]

Decide Your Most Important Tasks Each Day

I've recently read The Power Of Less as part of a Personal MBA project to read 100 essential business books. One of the key things I've been taken from this book is defining my Most Important Tasks or M.I.T.s for each day.

It's a simple process, and I'd like to share my experiences with this awesome productivity technique. It's helping me to stay productive while juggling the day job, a personal life and launching a startup [Update: Virally].

Why would you need to define MITs for each day?

Think about your connected world:

Your blackberry vibrates as it delivers new emails instantly. Anywhere, anytime

Your iPhone connects you to the 900 people you follow on Twitter. Anywhere, anytime

You iPad allows you to browse what your 1000+ friends are upto, how drunk they got last night and why they just became single. Anywhere, anytime

New emails land in Outlook instantly, which is always open on your desktop. Always

A colleague could walk over to your desk (or into your office) at any time and expect you to deal with their question. Instantly

You could get called anytime between 8.30am and 6pm on your office telephone. And you have to take the call

You could get a call anytime on your iPhone, and you probably have to take the call

Your SMS text messages land instantly on your Blackberry. BBM too.

A skype call could come in at anytime, and if not you have Skype chat and MSN chat open just in case

And I'm sure the list goes even further for some people...

The point is, that with all these connections always open, it's almost impossible to not get distracted. And once you get distracted, you lose concentration and you lose focus.

And it's when we focus on a task that we can get it done.

So how do we make MITs?

This isn't a complicated process - like all good productivity tools or techniques, it gets out of the way and does the bare minimum.

Keep a small pocket sized notebook (a paper one, not a note on your iPad or Blackberry) or diary next to your bed at night. Before going to bed, write down a simple list of the 3 most important tasks you need to have achieved by the end of the next day. Only 3.

Its important that you only write down 3 tasks

Why only 3? Because any more on the list and it will seem overwhelming. Any less, and either the tasks are too big and need to be broken down, or your just not going to get enough done in the day.

All that matters the next day is your 3 MITs

for this to really work, you're going to need to do something drastic. Horrific. Crazy.

You need to try and disconnect yourself until you have achieved all 3 MITs. Now I say disconnect yourself because it's just not possible to remove some of those channels for some people due to job restrictions. But if you think about it, you can certainly cut some away.

I found this helps with a fixed time, so between 9am-12pm cut down all of your connections apart from the ones you have to keep open for your job, and focus only on your MITs.

Try this list to see if these could work for you:

Only open your email client 3 times a day. 10am, 1pm, 4pm

Don't check your facebook account until 8pm in the evening

Only open your twitter client for half an hour a day

Turn off push emails on your smartphone. Set it to check hourly, or just check it manually when you're waiting on a specific reply

Tell colleagues you shouldn't be disturbed until after 12pm

Put on headphones until after 12pm. Headphones are a great social signal in co-working paces that says 'do not disturb' without seeming rude

Use the away & do not disturb status features on any instant messenger (Skype, MSN etc.)

Redirect your calls to voicemail until after 12pm

Pass all your calls through a receptionist/PA who could deal with most of them for you, and pass the rest to deal with after 12pm

Anymore, please add in the comments!

By blocking out all other communication distractions, you'll allow yourself to achieve focus and attack the list of 3 MITs.

Also, try keeping the notebook on your throughout the day, and even copying the list to a sticky note on your desk. This way, you'll constantly be reminded to get back on track throughout the morning.

If you don't achieve any of your MITs in your day, ask yourself why. Think where you went wrong, or where you got distracted. Try and fix it for the next day.