What’s your product narrative?

middle

I’ve posted previously how at Amazon developers’ first step in new product development is to write a press release about the product they plan to create. But Scott Belsky in his new book The Messy Middle takes narrative well beyond the press release.

Carmine Gallo, one of my favorite business writers, writes about Belsky’s book in the Forbes article An Early Uber Investor Reveals A Creative Strategy To Build An Irresistible Brand. His key take-away from the book is that founders should build their narrative before they start developing their product.

According to Belsky, “Most entrepreneurs jump in and build a product. They’ll spend months, even years, building an MVP (minimal viable product). Right when they’re about to share it with the world, they realize it doesn’t resonate with consumers. People don’t understand why it helps them and why they should use it instead of something else.” Belsky recommends that entrepreneurs avoid this problem by starting with a story before the product is built—paint a picture of what the world will look like when the product is finished.

Belsy recommends that developers build a private web page for the product that should answer the following questions:

·     What inspired the idea?

·     Why does it need to exist?

·     Why is it relevant?

·     How does it make the future better?

The narrative services not only as the roadmap to how you develop your product but how you will market it as well. All stakeholders, from investors, team, or partners are helped to visualize the future.

Being able to recite a narrative—tell a story—about a future customer and how the product will solve a real-world problem is a powerful exercise that few leaders do in the early stages of the development process. “It’s very powerful and most teams don’t spend a lot of time on it,” says Belsky.

It’s a truism that investor pitches need to tell a story, but Belsky’s concept of the narrative goes beyond that to acting as the lodestar during the entire lifecycle of the product.  I see Belsky’s approach as similar to what I recommend to founders, using the journalists who? what? why? why” where? and how? to tell their products story. But what is different about Belsky’s approach is that it helps everyone envision the future. He gives a great example, how Garrett Camp, co-founder of Uber imagined a future where where everyone could call up a private driver, something only reserved for wealthy elites at the time. He imagined it as a superpower that ordinary people would have at their fingertips, literally. The story evolved into Uber’s first tagline: Uber is everyone’s private driver. Journalists report on the present; you narrative is a report from the future!

This also ties in with how Alan Kay recommends founders develop their products which I wrote about in the blog post How to invent the future. Belsky’s put his money where his book is, he was an early investor in Uber, in addition to founding Behance, an online portfolio company for creatives that he later sold to Adobe for an estimated $150 million. Today, Belsky is Adobe’s chief product officer and a venture capital investor.

He uses as an example Garrett Camp. the cofounder of Uber. (Belsky was an early investor in the company) Before Uber was a product—or a company—Camp was working on the narrative. Camp began to imagine an experience where everyone could call up a private driver, something only reserved for wealthy elites at the time. He imagined it as a superpower that ordinary people would have at their fingertips, literally. The story evolved into Uber’s first tagline: Uber is everyone’s private driver.

To recap, while Jeff Bezos’s practice of writing a press release for a new product that has yet to even begin development acts as a guiding light, a narrative envisions the future how the product will change life for consumers. Both approaches will not only guide developers but help them communicate the nature and value of their product to all stakeholders from investors to users.

I’m a reformed workaholic and proud of it!

 

workaholic

ILLUSTRATION: JOHN. S. DYKES

After I graduated from college I started a business providing sound reinforcement services to local bands. Building my own Altec Lansing Voice of the Theater loudspeaker cabinet introduced me what was to become a decades-long addiction, not to any drug, but to work. It wasn’t until years later that I came across the concept of flow, but I knew what it was like to be in the zone building stuff. Hours flew by like minutes and the body signals of both hunger and the need to for rest were shut down. That single project introduced me to the addictive nature of work and helped turn me into both a perfectionist and a workaholic. I wrote previously of The Dangers of Perfectionism, now it’s time to tackle the dangers of addiction to working.

As usual it was an article the spurred to write a blog post, this time The Wall Street Journal article by Jason Gray. I always look forward to Jason’s articles on sports in the Journal but the sports columnist tackled a serious business issue in his article Working Like Crazy May Actually Be, Well, Crazy, sub-titled Are you griping about working too much, or bragging about it? If you are too busy working to read the full articlewhich I  highly recommend – here’s my synopsis coupled with my some of my experiences.

Jason provides a great, and typically humorous, self-test for workaholism. Does any of this seem familiar?

I can’t believe how much of a time suck this project has been.

I feel like I’m living at the office.

I’ve forgotten my dog’s name.

I just returned 20 emails on a Sunday.

Peanut. I think the dog’s name is Peanut.

Jason introduces the concept of the workbrag – the element of pride embedded in our complaints about the long hours we work. The Apple team that built the Macintosh proudly wore T-shirts reading “Working 90 hours a week and loving it!” Workaholism seems part and parcel of working in technology and media. The advent of the Internet and mobile phones has enabled the always on 24 x 7 connection to work and the workplace. The two metrics that founders often tout – much to my dismay, as neither correlate positively with a venture’s success – are how many employees they have and how many hours a week they work.

But I fell into the trap of working crazy hours myself. Predating the internet, I remember having at-home access to Software Art‘s Prime minicomputer, enabling me to send and receive email, draft and review documents, and effectively work at home. For someone who ate, lived, and slept his job this was paradise by the VT100 terminal light. And I still remember that when I told my co-founder of my first startup that bought an early flip phone, the Motorola StarTAC, he responded with glee that he could now get in touch with me wherever I was, any time of the day!

At don’t recall exactly when it was that I discovered the downside of working crazy hours – that errors start creeping in when you are pushing past natural limits. Then when trying to correct those errors you end up creating new errors! It finally dawned on me that working past my limits was counter productive. I could actually deliver higher quality work by putting in less hours. That lead me to start monitoring my teams and not so subtly reminding them of our vacation policy, which we made “use it or lose” it to prod our staff to take needed time off. And we added personal days to the company’s benefits package so staff didn’t use up their vacation days or use their sick days when some type of personal obligation – like closing on buying a house – demanded their in-person attention. However, being a workaholic I hired people in my own image, so we had teams full of workaholics! And I was seeing their error rate rising when they exceeded a normal day’s work of eight to ten hours.

Jason’s article is based on a talk he hosted by the authors of a new book It Doesn’t Have to Be Crazy at Work by Jason Fried and David Heinemeier at a Wall Street Journal event in New York City.

The authors are co-founders of the workplace software company Basecamp, Fried and Hansson are successful entrepreneurs who pay their employees to take vacation—not vacation time but the actual vacation. Fried and Hansson’s company used to have one of those “limitless vacation” policies, until they realized that it made employees nervous about taking vacation. Now they insist on three weeks.

The concept of work-life balance hadn’t emerged until years after I did my last startup. Whether or not people actually do attempt to balance their work life with their personal life or just give the phrase lip service I don’t know.

But as a reformed workaholic I’ve learned how to turn off work and spend more time with my friends and family, though I’ve yet to learn how to actually stop thinking  about work when I’m not working!

 

What separates successful people from talented ones?

theformula

Attempting to determine whether or not someone will be successful is quite different than whether or not they are talented. Predicting whether or not someone will be successful is existentially critical for founders, VCs, recruiters, and many others in the worlds of business and technology.

As I’ve written multiple times, the best predictor of a startup’s success is the team. And investors see the CEO as foremost. But how can they predict that the CEO will succeed? Or bring the company out of startup mode only to falter and need to be replaced?

In an upcoming book, to be published on November 6th, The Formula: The Universal Laws of SuccessAlbert-László Barabási, a physicist at Northeastern University, describes what makes some ideas and people succeed and others fail.

The Wall Street Journal article by Jason Zweig titled You’re a Bad Investor? That Can Be Good didn’t catch my eye, as I’m not an investor. However the sub-title certainly did: What makes people successful is different from what makes them a good performer.

Prof. Barabási is a network scientist, researching the dynamic forces that connect neurons in the brains of worms, govern which books become bestsellers, or help determine which financial assets burst into or out of favor.

In his book, set for release Nov. 6, Prof. Barabási distinguishes between performance and success.

“Performance is deeply linked to the individual,” he tells me in an interview. It follows what he calls “a bounded distribution”: the best in the world are barely separated from each other.

Many of you are familiar with Metcalfes’s Law: the effect of a telecommunications network is proportional to the square of the number of connected users of the system (n2). This law is often cited as the reason that companies like Facebook grew so quickly and have come to dominate their markets. However, Prof. Barabási credits a process he calls “preferential attachment.” Through this, networks expand explosively as new nodes link most often to those that are already most widely connected. This helps explain the power of Facebook’s Likes. However, he also writes that networks can fail When your network oversteps the boundaries of the community where you are welcome, you may find it’s no longer a proper fit. Google certainly found that out with its attempt at a social network, Google +, they overstepped their market for search and search engine-based advertising.

So what does all this have to do with founders? According to Professor Barabisi, people’s ability to create and capitalize on ideas is constant. It varies little, if at all, from young adulthood to old age.But what does vary? Persistence. It’s long been my belief, which has grown stronger over decades in the startup ecology, that persistence is the most critical success factor – not native intelligence, training or degrees from elite institutions. It’s rewarding to see a scientist agree with my intuition!

“If you’re good at something, that’s like having loaded dice,” says Prof. Barabási. “If you only roll once, you’re wasting your chances. You have to roll over and over again!”

But how can a founder take advantage of this insight?

So, if your company brings job candidates in for interviews, each member of your team should speak to them in a different order or on separate visits.

You should review potential investments in random order, lest you be influenced by whether they come toward the beginning or the end. Sleep on important investment decisions: Today’s good or bad idea may seem the opposite tomorrow, and thinking twice will improve your odds of making the right choice.

This jibes with my belief that startups need to follow the scientific method: generate a hypothesis, create an experiment to test your hypothesis, gather data, and analyze the data to judge if your hypothesis was correct or not. A startup has to run hundreds if not thousands of small experiments. As The Wall Street Journal article concludes:

Above all, never stop learning about the markets; your best idea may be yet to come.

 

Tuning up the decision machine

johnson

Do you have a “golden gut”? Do you “go with your gut” when it’s time to make decisions? Do you make snap decisions? Well either way I highly recommend you read Steven Johnson’s new book, Farsighted, How We Make the Decisions that Matter the Most. The major takeaway is that we all have cognitive biases that make our intuition fail us but their are techniques that can help us make complex decisions more effectively.

We are talking about whether to have a cup of coffee or a hot chocolate on a cold day. The decisions Steven Johnson writes about are those that require deliberation, such as deciding it’s time to raise a new round of fund or finally hire a VP of Sales. He’s not into those behavioral economics lab experiments about kids and marshmallows – these are the complex choices that face founders if not every day, very frequently as they grow their companies. This is an area of particular interest to me and I’ve posted several articles on decision making. I believe it’s a mission-critical skill for founders.

David A. Shaywitz has a very helpful review of Farsighted in The Wall Street Journal: ‘Farsighted’ Review: How to Make Up Your Mind It’s difficult to rein in our cognitive biases and faulty intuitions, but there are tools that can improve our ability to make decisions. 

There are all types of cognitive biases, the list on Wikipedia is enough to make you give up on rational decision making in despair, everything from confirmation bias, which is the tendency to search for, interpret, focus on and remember information in a way that confirms one’s preconceptions to the Dunning-Kruger effect, the tendency for unskilled individuals to overestimate their own ability and the tendency for experts to underestimate their own ability.

In addition to being beset by cognitive biases, Mr. Johnson points out a major flaw in our decision process when we are faced with complex choices, such as deciding to acquire another company or sell off a product line. We tend to frame these problems too narrowly and he recommends that to counter this we bring in a wide diversity of viewpoints. Incidentally, this may be why research has shown that public companies with more women on their boards and in executive positions tend to perform better than male-dominated companies. Diversity is not just a do-gooder exercise, it will do you and your venture good as well.

I often recommend that founders set up strategic advisory boards once they have nailed their value proposition and target customers. Bringing in a group of six to nine experts in fields relevant to your venture can help you greatly broaden your decision making scope on strategic – not operational – decisions. Operational decisions are for your team. However, Mr. Johnson points out that while “groups often possess a rich mix of information distributed among their members,” when they assemble “they tend to focus on shared information.” So here’s a great operational tip for founders: communicate with your advisors and other stakeholders one-on-one when you face a major strategic decision instead of convening them all in a group, where the “herd mentality” can drown out outlier recommendations.

He cites research revealing that two-thirds of organizational decisions never contemplate more than a single option. The best way to counter this tendency is through scenario planning, “what if” exercises that examine a number of options, not just the one that seems most attractive.

Mr. Johnson goes from the abstract – linear value modeling, which weighs the relative relative importance of different goals to concrete tips like going for long walks – a favorite technique of Steve Jobs, by the way, and taking longer in the shower, a technique I find both pleasurable and productive.

He is one of our best science writers, the author of seven books on the intersection of science, technology and personal experience. It’s an easy decision to follow him via his email newsletter and/or Twitter, given that virtually all founders I mentor are at the intersection of science and technology.

A framework for founders considering raising capital

lauch lens

When and how to raise capital is probably the most common questions I get from founders during mentoring sessions. There are two problems with this situation, as it leaves out the two important questions: why do you want to raise capital? and is your venture investable?

I end up giving a brief overview of the types of investors from angels to corporate venture funds. I then probe to find out why the founder is thinking about investors instead of customers. I may point them to David Chang’s presentation on raising money, the best one I’ve seen.

Jim Price is a successful serial entrepreneur and the author of the book Launch Lens – 20 questions every entrepreneur should ask has a very helpful model. His article Who Would Invest in Your Startup, and Why? from Entrepreneur answers his own question with the sub-title: the type of funding you should pursue depends on your business’s value and scalability.

He boils the question of fund raising into two questions: are you thinking of starting a business or are you looking to grow your existing venture? Here’s his fundability model:

fundability

Capital efficiency refers to the return on the investor’s dollar, such as startups that don’t require a lot of money to launch or on-going ventures that can be scales significantly by raising only a model amount of capital.

The  valuation multiples – the Y-axis – presents the biggest challenge for most founders:  how do you value your company? Typical measures such as the last twelve months of profit or revenue may work well for a business that has customers and is established in its market. Valuing a pure startup is far more difficult. Please see my post The toughest task in tech – valuing a startup for help with this onerous task. Jim Price lists three characteristics of ventures that achieve high valuation multiples:  high growth potential, sustainably high profitability and strong differentiation versus competitors.

So let’s look at his tool for assessing fundability. The top right quadrant, which every B-school student knows is where you want to be, is Venture Capital. What Price doesn’t mention is by far the most expensive capital there is. VCs look for companies that don’t cost a lot to launch or scale, but have high potential to be very large companies.

Patient Capital may be required in a company addressing a smaller market or have some other limit on scaling potential. Patient investors are friends and family, angels who have an affinity for your market, corporate investors who see your venture bringing them strategic value, or federal or local grants or loans.

The bottom right is Bootstrapping. These tend to be lifestyle business that grow very slowly but may generate enough cash to provide the founder a reasonable lifestyle, but since they don’t scale, can only be sold for a low multiple, typically 1X revenues or 10X profits.

Of course the place no one want to be is the Dead Zone. Your venture can be stuck there for a variety of reasons, but it usually means that the team isn’t considered capable of growing a venture, the market is far too small, and/or the idea is deemed unworkable. Trust me, I’ve had a few of these and the best thing you can do is “know when to hold ’em and when to fold ’em.”

What I like about this tool and would recommend it to founders is that it’s a great reality check on what type of company you want to build. And there is nothing wrong with being completely off the chart with a venture that is funded by customer revenues, for example. Or perhaps your venture is better suited to non-profit status, which opens up the world of foundation and government grants and charitable donations. Or, as has been the case with a few founders I’ve mentored, there’s the realization that one shouldn’t give up their day job.

I’ve yet to read Jim Price’s book, but it gets 5 star reviews on Amazon, so you may want to check it out. Either way, you need to invest a lot of time in figuring out where you fit in the fundability matrix and if you aren’t happy with where you land, figuring what you can do to move yourself into the top two quadrants. This is where mentors experienced in raising capital can help.

One of the best things about using a simple tool like the Fundability matrix is that it can be shared between founders or between a founder and their mentors. This is a much more efficient process than having a mentor deliver a lecture on the types of investor leaving the founder at sea on the most important question of all mentoring sessions: What should I do next?

An inside look at Apple’s software development process

creative selection

Creative Selection is a term coined by Ken Kocienda, who spent 15 years at Apple developing software and working on the iPhone and iPad during the second reign of Steve Jobs.  I’ve always been fascinated by what goes on behind the scenes of the works of art I admire, be they movies, books, software, hardware or in Apple’s case the brilliant melding of hardware, software, and services.

While I’ve read quite a number of book’s about Steve Jobs and Apple none of them have gone into the deep, nitty gritty detail of how software was designed, developed, reviewed and released at Apple.

Ken Kocienda’s book Creative Selection – Inside Apple’s Design Process During the the Golden Age of Steve Jobs is the not the first book by an Apple developer, Andy Herzfeld, one of the key Mac developers, released Revolution in The Valley: The Insanely Great Story of How the Mac Was Made in 2004 and there might be others, but either way I highly recommend Ken’s book to any software developer or business person interested in how the sausage is really made.

Ken lists seven elements essential to Apple’s software success:

  1. Inspiration: Thinking big idea and imagining what might be possible
  2.  Collaboration: Working together well with other people and seeking to combine your complementary strengths
  3. Craft: Apply skill to achieve high-quality results and always striving to do better.
  4. Diligence: Doing the necessary grunt work and never resorting to shortcuts or half-measures
  5. Decisiveness: Making tough choices and refusing to delay or procrastinate
  6. Taste: Developing a refined sense of judgment and finding the balance that produces a pleasing an integrated whole
  7. Empathy: Trying to see the world from other people’s perspectives and creating work that fits into their lives and adapts to their needs

Creative selection is the missing and combining of these elements, plus adding in a personal touch, a little piece of themselves, something Ken calls octessence.

In addition to learning a lot about Apple and its design and software development process you will also have a front row seat as Ken demos for Steve Jobs. His description of that event is poetic and renders real insight into how Jobs ran Apple and interacted with his team.

One thing I had read about Jobs that impressed me greatly was his quote about the meaning of focus:

“People think focus means saying yes to the thing you’ve got to focus on. But that’s not what it means at all. It means saying no to the hundred other good ideas that there are. You have to pick carefully. I’m actually as proud of the things we haven’t done as the things I have done. Innovation is saying no to 1,000 things.”

That’s what I thought the title Creative Selection referred to. But as you will find from reading Ken’s book there’s that and so much more, all written clearly and engagingly. Ken even includes an index for book nerds like me, so I can track down every mention of terms like creative selection.

Read the book, even if you don’t take advantage of the index.

 

 

Why pivoting will just make you dizzy!

grit

Silicon Valley seems obsessed with failure. Failing fast, failing harder – that’s the mantra of the lean startup. Constantly pivoting until you are dizzy from spinning left, right, up, down. The pivot is the new status symbol for founders. If you haven’t pivoted at least once you haven’t really done a startup.

This idea, like the idea of the minimal viable product, has really bothered me for some time.  I finally found a someone who agreed with me on the fallacy of the MVP idea. You need a minimally remarkable product, not a minimally viable product. Would you like a minimally viable baby? I didn’t think so! How about a remarkable baby, sound better? For founders your startup is your baby. But you can read that contrarian viewpoint in MVP vs. MRP. 

Having participating in the startup world since 1980 I’ve had a success or two, but mainly lots of failures. And I’ve been obsessed with what the one ingredient that separates successful founders from unsuccessful ones. And after lots and lots of reading and lots of observation I’ve decided it’s persistence. And what drives persistence? Passion. For if you don’t have passion for your product, for your customer, to succeed you won’t be able to keep going. You know the sayings: When the going gets tough, the tough get going. Quitters never win and winners never quit.

But just as I felt like a lone voice crying in the wilderness about why putting out a product that was only minimally viable was a bad idea in this world of ruthless competition and the battle for the customer’s attention, I’ve felt just as alone in my belief that it’s persistence, not pivoting that leads to big successes. Whether it’s Pandora and its founder Tim Westergren being turned down by 150 VCs before finally getting funded or Boston real estate developer Don Chiofaro calling Fred Salvucci every single day for a year until Salvucci, then Secretary of Transportation for the state of Massachusetts who was the roadblock to Chiofaro’s dream of building One International Place in the financial district, unbelievable passion has driven these founders to persist, not pivot. To not accept failure, rather than to fail faster and faster. Well here’s a book for all you founders who have been indoctrinated into the world of the lean startup, the MVP, the fast failure and the pivot: Grit: The Power of Passion and Perseverance by Angela Duckworth. But while Grit was a bestseller it seemed aimed at parents, not founders and I’ve never heard a word about it at MIT or from my founder friends. But it’s well worth reading. Here’s the Amazon blurb:

The daughter of a scientist who frequently noted her lack of “genius,” Angela Duckworth is now a celebrated researcher and professor. It was her early eye-opening stints in teaching, business consulting, and neuroscience that led to her hypothesis about what really drives success: not genius, but a unique combination of passion and long-term perseverance.

In Grit, she takes us into the field to visit cadets struggling through their first days at West Point, teachers working in some of the toughest schools, and young finalists in the National Spelling Bee. She also mines fascinating insights from history and shows what can be gleaned from modern experiments in peak performance. Finally, she shares what she’s learned from interviewing dozens of high achievers—from JP Morgan CEO Jamie Dimon to New Yorker cartoon editor Bob Mankoff to Seattle Seahawks Coach Pete Carroll.

But finding Grit didn’t do it for me. I was still under the spell of the Lean Startup – Steve Blank, Eric Reis et al.  It wasn’t until I read the Quartz article “The Lean Startup” is an unproductive legend by Luis Perez-Breva that I finally found someone from the startup world who doesn’t buy into the fail forward, fail faster mantra of Silicon Valley. As he writes:

The problem is that, with a focus on an imaginary product’s viability, it gets easier to discard everything else. Then it’s all downhill. Every next “validation” just strengthens the emotional attachment to the “idea.” It’s all fatally powered by the seductive appeal of availability and confirmation biases. And what starts as an ambition to build a world-changing innovation with nothing but a minimum viable product ends up with an easily forgettable flop.

The numbers for founders are daunting: Since 1994, the U.S. economy has seen a whopping 15.6 million new businesses created, but only 1 in 10 has survived. Perez-Breva makes the point that the goal of a startup is to stop being a startup! If you are constantly pivoting, putting out one MVP after another, you are stuck in the startup mode. Here’s what we both have seen in today’s startup world:

Whether building or funding, companions that don’t care about solving the same problem or just want to “do a startup” make for bad journeys (they should be interested in building an organization). Lastly, none of these are science: a recipe to hack your way through a bad idea, putting “whatever” in the market, hoping for the best, or pivoting.

The Lean Startup ideology has sown a lot of confusion in cohort after cohort of my MIT students for a decade. The recipes have all the right sounding words and slogans. They seem to make so much sense, so how could they not work?

Time and talent—not a product idea—are the most valuable assets of an entrepreneur and innovator. Ten years’ experience with Lean Startup and its variants has taught only that it’s an expensive recipe for remaining an entrepreneur longer, not really for innovating.

Luis Perez-Breva is the author of Innovating: A Doer’s Manifesto for Starting from a Hunch, Prototyping Problems, Scaling Up, and Learning to Be Productively WrongHe is an educator at MIT and advises organizations on AI and innovation. If you don’t have the time to read Grit: The Power of Passion and Perseverance or think it’s aimed at soccer moms, not an engineer founders, at least take the time to read Mr. Perez-Breva’s article. And if you are starting up already, keep you eye on the prize: graduating from being a startup to being a real company, with an actual product, customers, and revenue. Forget about all those vanity metrics like page views, downloads, number of users or even writeups in the tech press, and harness that passion you have – right? – to persist and persevere to create a sustainable business