Startup Guide

My personal blog to guide those thinking about jumping into or already in the startup space. Message for Strategic Advice - Free consultation - $75/Hour - $199/3 one hour Session Pack - $299/Month Cody J.

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Trying to stay productive during the COVID Crisis?

These promotions on tools and knowledge might help, and keep you under budget!

https://startdium.com/blog?XmuQjOGSH6A86cWp0TVs

#startups #entrepreneurs #smb #founders #discounts #promo #promotions #covid19 #covid

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Dium

Don't miss this week's blog! Part 1 describes the core teams that make up a company🤝 https://startdium.com/blog?Ltno8JZ6YohDWr1E8HHZ photo

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PSA: SMB Guide to the CARES Act

ATTENTION entrepreneurs! Congress recently passed the CARES Act to assist those affected by this pandemic. Check out this helpful guide to the CARES small business provisions, created by the U.S Senate Committee on Small Business and Entrepreneurship.

https://startdium.com/blog?kur5HbvcVkkL6BW7CMe8

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Dium Blog: Stages of a Company

Hey all,

In case you missed the last post, startupguide is moving to the Dium Platform.  Check out the first educational post from Dium here 

https://startdium.com/blog/zimytRWodZ2CHTBFU5Uq

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We are Moving!

For the past year, I have been collaborating with a talented group on our passion project, Dium. We are excited to finally launch the first part of Dium, the blog section. If you enjoy this blog, please kindly show your support by subscribing to our newsletter at StartDium.com, the new location for Startup Guide.

Now, let’s start by addressing the elephant in the room, What is Dium? 

Dium is a platform to guide all entrepreneurs to success, whether their labor of love is a cozy restaurant or a cutting edge tech startup. Dium will provide strategic guidance through expert reference materials, cloud-based frameworks, and an insightful blog. We want to help you create an extraordinary business!

Dium’s vision is to standardize the process of turning an idea into a business. In any art form, there will always be a sort of “magic” that the artist, or entrepreneur, brings to the table. Typically, there are standard techniques that enable the artist with a baseline understanding, giving them the freedom to create and innovate. Most business software focuses on simplifying tasks, by assisting with teams, sales, and project management. But where is the software to give entrepreneurs strategic guidance? At Dium, we believe there is no reason to reinvent the wheel, and we hope to provide a standard foundation to pave the way to success. 

As we get closer to Dium’s full launch this June, we will be outlining the standard company profile, stages of a company, and Dium’s initial frameworks for our readers. Each of these topics will get their own post each week, so be sure to tune in to our newsletter!

“You don't have to be a genius or a visionary or even a college graduate to be successful. You just need a framework and a dream.” -Michael Dell

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Marketing Plan

A huge part of launching and sustaining a product is how you will be marketing it. If there is no marketing and you launch, how is anyone suppose to know? And if you launch a new feature, how will anyone know?

The simple answer is marketing, but if you haven’t done it before it is definitely not as easy as posting to social media.  In fact, social media might not actually be the best medium to grab your potential customers.

I am a huge fan of frameworks and templates, and found a really good template and post from Hubspot for creating a marketing plan (https://blog.hubspot.com/marketing/marketing-plan-examples). The marketing plan template is a great way for anyone new to marketing to make sure they have a good foundation before you start marketing and to use that foundation to guide you on what medium is best for your marketing to reach your new customers.

The HubSpot post is already really thorough on going over each part of the template, but I wanted to add a piece of advice. This template should be used with another post I have posted about marketing video strategy from EditMate. (https://startupguide.tumblr.com/post/189696320465/marketing-video-strategy) Even though the marketing plan might be used to help with a specific launch or event, you should try and maximize the assets that you are creating for future marketing efforts.  For example, a blog is a low energy and cost asset that can easily be maintained and then used for future marketing endeavors.

Hope this helps!

“It's not what you sell that matters as much as how you sell it!” — Brian Halligan, CEO & Co-Founder, HubSpot

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Takeaways from Dan Rose

It’s not easy to get a renowned and successful venture capitalist to talk about where they came from and their journey, but Jason Calacanis has done it again! As part of This Week in Startup’s sister podcast, Angel podcast, Jason interviews other investors to discuss varying topics and to glean some insights on how they became successful.

In episode 33 of Angel, Jason talks with Dan Rose and the conversation has multiple moments that we can learn from. See below for some of the key takeaways that I found from this interview and their timestamps.

Infrastructure is an asset that creates defensibility at 6:16 - Dan talks about Jeff Bezos’s view on building Amazon when stock markets had crashed and investors were losing faith in the company.  Bezos’s viewpoint was “what Amazon was trying to create/set up was really hard and as a result, it was going to be very hard for anyone else to replicate.” Essentially, Bezos saw that if they could set up the infrastructure needed to untie themselves from the markets and to start generating their own cash flow, that the infrastructure would become a revenue-generating asset that doubled as an extremely effective mote for defensibility.

Dealing with the innovators Delima at 7:34 - Dan talks about how Bezos internalized what Apple did to the music industry with the iPod, and what needed to be done to the book industry by Amazon so that they wouldn’t lose the book market.  The issue was that almost all of Amazon’s revenue at the time was from books, which meant Bezos had to create a division in Amazon who’s goal was to literally destroy the core business of Amazon.

Future opportunities by being the core to building future business at 24:57 - At the moment in 2020, AWS (Amazon Web Services) seems like a no brainer product that fits perfectly in the all-encompassing Amazon. Though when it first released, Amazon was the book store company, and it had no business launching a web service business especially when no other web-based company (IBM, Google, Microsoft) was even thinking about it yet. The idea that pushed AWS into existence was “it’s crazy that in order to start a company, you have to build your own data center.”  Bezos spotted that the company that builds the core data infrastructure and provided it at a fair price would become integral to future company building.  

What Dan saw in Facebook when it was starting at 28:50 - The thing that Dan saw that convinced him to join Facebook, was Mark and also the huge potential that Facebook had based on its business model.  The business model stuck out to Dan as it was combining two business models from the other two companies that rose up while Amazon was raising. Facebook combined Ebay’s network-based business model, and Google’s high margin advertising model. By combining two of the most powerful business models, Dan could see that Facebook had the potential to be huge.

Data as a tool for private investing at 1:08:03 - Dan explains Coatue’s (the investment company he is apart of) investment strategy and how hedge fund managers and other public market investors were using it and how it's not been widely adopted by private market investors yet.  Dan also explains that by using data, it helps them find good companies, while also being able to accelerate the companies they are investing in.

“Respond to everyone and every email, and good things will happen” - Dan Rose

Sources: https://www.youtube.com/watch?v=srA_fWT_iCU Angel podcast episode 33

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Advice from John Altman

I had the pleasure of getting some feedback and advice from John Altman, trustee emeritus of Miami University and whom their Institute for Entrepreneurship is named after, last week and I wanted to pass along a couple things that were discussed in order to help those that are flushing out how to “do” their business. 

The key thing to do is to define your value proposition to the market that you are trying to hit. This can be an easy thing to simply write up, but until it is a concise and clear value proposition, you will not have clarity in how to achieve your end goal or company mission. It’s easy to say that my company “provides clean food to people,” or that “ we simplify logistics.” Though it is really hard to test and prove that statement and to refine it to the point of “we provide USDA Organic labeled food to people who can’t afford it traditionally,” or that “we provide a platform that organizes logistics and tracks orders for small businesses.” The reason for this is, do how do you know that people who can’t afford USDA organic labeled food even care for that? or do small businesses have enough orders for a platform? Remember that 42% of startups will fail due to no market need (Smallbizgenius.net).

To go the extra step of vetting your value proposition, specifically your delivery, you should ask yourself, “if a law came out and I couldn't do it this way, how would I do it?”  This will force you to break out of your tunnel vision and to consider other methods of delivering your value proposition. In many cases, you will find new and better ways to strengthen or clarify your delivery.

“What a good education does for you is, you become a lifetime scholar. in one way or another” - John Altman

Sources: Personal experience, https://www.smallbizgenius.net/by-the-numbers/entrepreneur-statistics/

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Founders Live Pitch Event 2/27

If you are in the Boston area and are looking for a great startup community event, Founders Live is hosting their Pitch Competition on Feb 27th!

Here are the links to RSVP to attend, or to apply to pitch at Founders Live Boston

RSVP:  http://Bit.ly/FL_February2020  

Apply: http://bit.ly/flbosfeature

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Facebook Video Ad Guide

Going a bit light this week since the last couple of posts were a bit dense in terms of things to digest.  This week’s topic is Facebook video ads.  This post is based on another post from EditMate. Whoever is creating their content is really killing it with their guides. It’s a quick read but filled with a ton of information and tips. Enjoy!  

Post link below

https://www.editmate.com/project/2020-guide-facebook-video-ads/?utm_source=ActiveCampaign&utm_medium=email&utm_content=Your+2020+Guide+to+Facebook+Video+Ads&utm_campaign=2020+Guide+Facebook+Video+Ads

Note: Facebook has a habit of changing things so this guide is valid as of 2/9/2020 when this post was made.

"Today most people prefer to watch a video rather than read a page of text”         - LISA LUBIN

Sources: EditMate blog post

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Getting Started on Your Product?

When it comes to making something and releasing it into the world, there is a trap that usually ensnares novice founders. The trap is called over-preparation, or sometimes referred to as the inventor paradox. Over preparation will make you want to plan out every single feature that crosses your mind, include as many people as possible, and tackle all the needs of your market.  

Regardless of what type of business you are starting, this trap will be waiting for you.  To help navigate this, I highly recommend reading the free short PDF book from Basecamp called “Getting Real” (https://basecamp.com/books/getting-real). Even though the book is geared towards web and app startups, the lessons here can easily be translated to other types of startups/businesses.

Below, I will be doing a quick synopsis on three sections from three different chapters that I found really helpful for avoiding the overpreparation trap. The three sections are Fix Time and Budget, Flex Scope from The Starting Line chapter, The Three Musketeers from the Stay Lean chapter, and What’s the Big Idea from the Priorities chapter.

Fix Time and Budget, Flex Scope

As the section title says, the advice here is to keep your deadline and budgets fixed, but be flexible with your scope. If you are running into an issue of not getting everything you wanted to be done in the time and budget that you set, then it’s time to cut back on your scope (things you want to be completed). The effect of fixing time and budget, but not your scope, is that it forces you to prioritize, actually deliver something (and not continue to push back “opening/release” dates), and allows you to make changes to unreleased things due to experiences with the released parts of your product/business. “It’s better to make half a product than a half-assed product”

Basically, you can’t over-prepare if you have a deadline and budget to hit.

The Three Musketeers

The advice here is a bit more directed to the app/web business, but essentially it discusses the advice of keeping your initial team small. In the case of an app/web business, you should try to find a developer, a designer, and a sweeper (in between person).  This will allow you to be flexible, and force you to prioritize what needs to be built for your initial release.

The general take away is that for any business, keep your initial team as small as possible. Filling it out will only make it harder to keep momentum, stay on track, and keep communication simple. It gets exponentially, not linearly, more difficult to do these things as you add team members. 

What’s the Big Idea

Before you get going and start spending resources, it is a good idea to have an explicitly defined one-point vision for your app. To help with getting to that vision, ask yourself the following: What does your app stand for? What’s it really all about? Why does it exist? what makes it different than other similar products? 

An example from the book is “Basecamp: Project management is communication,” the book has a couple more as well.

Having a concise vision will guide you in decisions of what to keep and add, and if you are staying on a consistent path.

Hopefully, these three synopsizes will steer you away from the trap of over-preparation, and help you release/open your business on time and within budget!

“How does a project get to be a year behind schedule? One day at a time.” -Fred Brooks, software engineer and computer scientist

Sources: Get Real by Basecamp (https://basecamp.com/books/getting-real), personal experience 

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Startup Mechanism Theory: How to be a Break Out

I’m keeping with the theme of guiding new founders, by unpacking a topic I was introduced to a couple weeks ago from Dave Payne, the Managing Director of Techstars Atlanta. The topic that was discussed was something he calls Mechanism Theory. The theory basically says that in order for a startup to have a chance at success, it has to have a unique way of solving its target problem that is initially non-obvious but elegant. For a full video explanation, see this link: https://techstars.wistia.com/medias/gxmtqs06rx

This theory resonated with me in that it provides a way to more concisely explain what makes a startup top-notch through its product or approach, besides giving all of the credit to Defensibility and Unfair Advantage(s).  To help display this theory, Dave gives a great example based on Tinder.  With Tinder, the macro reasons for creating a dating app might be the onset of smartphones and that people are dating more. Based on these facts, other startups have tried to tackle this space, but the mechanism of the “swipe” is what allowed Tinder to stand out and get the flywheel going.  

Taking this a Theory further, I believe that mechanisms are not only Features but also can be a path to market. For instance, a product could be just like the rest, but if the path to market is the key to getting the flywheel going then it would be a mechanism as well. For instance, I would consider something like Direct-to-Consumer in a traditional retail industry or finding an indirect path to your customers that gets the flywheel going as mechanisms. 

With that said, my interpretation says that making a startup that has a winning mechanism, still needs to be paired with defensibility and/or an unfair advantage. Otherwise, someone can copy your mechanism and become a powerful rival like in the situation of Uber and Lyft.

In summary, it will benefit you greatly to not only think about the macro reasons for why your idea needs to become a business but to also think about what mechanism you will use to tackle them.

“Brands that stand out from the competition are purposefully disruptive or different” ― Bernard Kelvin Clive

Sources: Personal Experience, Dave Payne’s Theory on Mechanisms

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Your End Goal

I started this year with how to jump into the entrepreneur space with a great idea, and simplifying the stages that your idea will go through.  In this post, I want to discuss what your end goal(s) is.  After all, knowing your end goal will help guide your decisions and ambition towards a target.

This conversation will almost always start with what your Home Run Scenario is. This is the scenario that if everything went perfectly what would your ideal end goal be.  Some examples of Home Run Scenarios are selling your company to a bigger company, franchising your idea, or grow a business that can support itself and your needs.  These Home Run Scenarios do not have to follow the typical tech startup end goal but should be what you honestly believe and want to be the end goal of your business.

The next thing you should do is to then take a look at what are the other Exit Scenarios that could occur. These are for you to think through so that you cast a wide net and make sure you aren’t missing anything.  The things that need to happen in order for you to hit each Exit Scenario will inform you of what needs to happen in order for you to hit your Home Run Scenario.

With your Home Run and a handful of Exit Scenarios, you should now be able to see a path from where you are now to one of these end goal scenarios. This is also probably the best time to take a deep look into whether or not you have the drive and capability to make it to the end. If you find that you don’t, it is time to make a decision on dropping the idea or figuring out what you need to do or change in order to make it to the end and to start doing those things immediately.

As a note, this blog is geared towards all entrepreneurs who want to start all types of business. With that being said, your end goal(s) do not have to fit into the typical Tech Startup end goals, and being humble and realistic will take you far.  Also, do not fret if you find out that your end goal or one of your exit scenarios is that you are a “Lifestyle Busines,” as making a ton of money on your own time, as your own boss, is extremely difficult to do and should never be shamed. In fact, if you can obtain financial independence doing what you want to do without getting an “investor,” you are actually keeping things “simple and sweet.”

“If you want to be happy, set a goal that commands your thoughts, liberates your energy and inspires your hopes.” - Andrew Carnegie

Sources: personal experience 

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Saw this great quote that summaries what makes an entrepreneur and anyone else that is a doer so important, and why ideas are a "dime a dozen"

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4 Stages of a Business

Continuing with the theme of helping any new business owners or big dreamers who are planning to start a new business this year, I wanted to clear up the vocabulary that is often used when defining what stage your idea/business is in.

Typically you will hear things like Seed, Series A, Series B, pre-seed, etc. It is not that these words/titles are insignificant or that they do not carry meaning, but as a founder or someone thinking about jumping in, these things only serve to cloud your understanding of what you should be focused on. To simplify things, you are only concerned with the 4 stages of a business.

I like to call these stages Ideation, Venture, Scale, and Growth. 

The Ideation stage is the initial stage that kicks everything off. This stage is the least expensive in terms of money but is arguably the most important stage. Your goal is to do as much market testing as you can do, in order to verify and hone your business idea. This is where most businesses die, as your first version of it will usually not be the best version, and the time and energy needed hone and verify usually filters out those who are big dreamers but not big doers.

The Venture stage is the first execution stage, usually given titles like seed, early-stage, or pre-series A. For those that make it to this stage, its time to put your money where your mouth is.  In this stage only 1 and 10 companies usually make it out, the rest either die or become “zombie companies”. The goal here is to prove through traction, that you are ready and can scale.  The things you are proving are product creation, deploying a product(s) with early customers, demonstrating product/market fit, proving out the sales dynamics that will support efficient growth, and making sure that you have a solid team that is ready to execute.

The Scale stage is a transition stage and usually goes by the name of Series A and sometimes given prefixes like post series A or pre-series A. Once here, companies either become lifestyle business through slow growth (not a bad thing), see rapid expansion, or they burn through their capital and die. The goal here is to take the processes and strategies you have created in the Venture stage and figure out how to scale them. The things being done in this stage are usually the deciding and implementing of infrastructure and hiring the team needed to scale your business to support rapid growth.

The Growth Stage is the final stage a company gets to and is usually called things like Series B, Series C, etc. This is a perpetual stage that usually ends in a company turning into a unicorn (becoming a titan of industry), plateauing by surviving, or not hitting the size needed and dying. The goal here is to take the systems and processes that are now ready to scale and expand them to grab as much market share as you can.  This stage usually has your company executing your processes and utilizing the systems in pace over and over like a flywheel trying to take market share.  There is usually only slight changes made to these processes and systems at this point for honing and adapting, but these things and your company are usually at a size or scale that makes it hard for you to make any large changes without disruption to the day-to-day activities.

I hope this simplification and summary of the stages of business decrease the intimidation of starting or continuing forward with your business/idea this year!

If you have any questions or feedback, feel free to reach out!

“The critical ingredient is getting off your butt and doing something. It’s as simple as that. A lot of people have ideas, but there are few who decide to do something about them now. Not tomorrow. Not next week. But today. The true entrepreneur is a doer, not a dreamer.”  –Nolan Bushnell, Entrepreneur

Sources: Personal Experience/Knowledge, This Week in Startups, https://medium.com/angularventures/there-are-only-three-stages-for-startups-b8783d6b0f1

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New Year, New Businesses!

I hope everyone had a relaxing and celebratory Holiday and New Year weeks! Now that we are in full swing again, and with potential new entrepreneurs joining the ranks due to “new year, new me!” or “My resolution is to start working on my great idea!” I wanted to post some questions to ask yourself when trying to validate a business idea.  The below list is from Michael Seibel, CEO and a partner at Y Combinator. These are the questions he likes to ask startups and was part of his 2018 “Building Product” Startup School presentation.  Granted some of these questions are slightly geared towards technology startups, it can be argued that the intent of these questions should be answered by any business owner or individual looking to start a business. The intent of these questions being that you are trying to understand if the problem you are solving is big enough and affects enough people deeply enough, for them to pay you enough money to support and/or grow your business.  If at the of this exercise you find that you can’t support a business with your idea, full thankful that you were able to dodge spending more time and money on it, or that you can now go back to the drawing board and figure out a way to make the idea sustainable.   Best of luck everyone, and feel free to reach out if you have any questions!

Problem

What problem are you solving?

What problem will be solved at the end of what you are doing?

What do we expect the result to be?

Can you state the problem clearly in two sentences?

Have you experienced the problem yourself?

Can you define this problem narrowly?

Who can you help first?

What can we address immediately?

How do we get the first indication this thing is working?

Is the problem solvable?

Customer

Who is your customer?

Who is the ideal first customer?

How will they know if your product has solved the problem?

How often (frequency) does your user have the problem?

Who is getting the most value out of your product?

How intense is the problem?

Are they willing to pay?

How easy is it for your customer to find your product?

Which customers should you run away from?

Product

Does your product actually solve the problem? Be truthful. How and why not?

Which customers should you go after first?

How do you find people who are willing to use your “bad” first versions of your product?

Who are the most desperate customers and how do you talk to them first?

Whose business is going to go out of business without using you?

Are you discounting or starting with a super low price? Are you consider this approach? If so, why?

Performance

What are you using to measure how users are interacting with your product?

What 5-10 metrics are you measuring to understand how your product functions? Why those metrics?

When you build a new product or feature, what is the metric that will improve because of that feature/product?

What number do you track to show how well your company is doing?

What is your top level KPI (revenue, usage)?

What are the underlying metrics that contribute to achieving your top level KPI (new users, retention of users, content created => DAUs at Social Cam)?

Which of these metrics are you trying to move this development cycle?

Product Development

How long is your product dev cycle? What is causing it to be that long?

Who is writing down notes at your product dev meeting?

Which category does each of your brainstormed ideas fit: New features/interactions on existing ones; bug fixes/other maintenance; A/B tests?

How easy/medium/hard are they to do?

How can you restate the hard ideas (disaggregate idea into smaller ideas)?

What parts of hard ideas are useless or hard? Are there other options?

Which hard idea will improve act the KPI the most? Which medium idea? Which easy idea?

What is the spec for the product/feature we want to build?

“I don't understand how you can have product-market fit and not a lot of people wanting your product. The two go hand-in-hand.” - Michael Seibel

Sources:  Michael Seibel’s 2018 “Building Product” Startup School presentation

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Holiday Break

I will be taking a break from posting for this weekend and the next. I hope everyone has a great holiday break as well.  Everyone deserves a break and to relax with the important people in their lives. 

Enjoy the break, we earned it!