anders.tyckr.com

Lately I've been gaining a lot of interest in the #leanstartup "movement". Eric Ries of StartupLessonsLearned is probably the lead missionary, but there are many out there liking this concept. To give you an idea just search for #leanstartup on twitter.

With this post I'm starting a series where I'll be writing about how to apply lean startup methodologies when revamping a complex product that already has a lot of customers (though not necessarily happy). I'll be expressing my personal opinions on how stuff work and may be completely wrong in many cases. My aim here is to work through this problem for my own gain, but with your help, and at the same time share the experience for others to gain from as well. So here it goes...

I'm not going to go in to the specifics of what a lean startup is but here's a crash course.

1. Be efficient with your capital. Operate with as little waste (of time) as possible.
2. Don't reinvent the wheel - use open source solutions that fits your needs
3. Extreme customer centric, rapid iteration, agile develpment process. (see Customer Development by Steve Blank)

These tips seem pretty fair and I got extremely interested in this considering my experience with Tablefinder.com where we were probably as far from customer developed as possible, even though we were agile (in some ways).

A little background

Now I'm part of a much larger company, about 50 people, working in the travel industry. The company is 10 years old, but our CEO still considers it a startup, and I agree in some ways. The way I see it the company is extremely customer oriented and has been since the start - developing a destination packaging system for the first clients. We are now the market leader in Scandinavia and have most destinations as our customers.

Imagine developing a web solution over 10 years where each new customer says "Yeah, I want to buy this... if you make these modifications so it suits our needs". Our customers, Destination Marketing Organisations (DMOs), are all very different in terms of business models and financing and so on. This is why we have had to make our system extremely flexible and dynamic, and also very specific for our customers needs. One problem with this is that some solutions for one customer is directly the opposite of what another customer need.

I guess one could argue that this is Customer Development, but I don't think so. This is Customer driven development which is in some ways completely different. A client says: "I want this feature in the system, and I'll pay you X to do it." Running after all X:s will soon create a chaos in the product and 100% of resources will be busy maintaining the system. Each new improvement of the system will take extremely long to implement and test. And many times, the feature that a client want to pay for may be something that their board has decided that they absolutely need. IE no end user verification what so ever.

We recently acquired a company that delivers free downloadable travel guides for over 400 destinations world wide in up to 22 languages. I'm now the acting CTO and have a mission to develop the new arrivalguides.com site. The main product of the company is a downloadable PDF guide which is free (includes a few local ads for the destination). But the product is much more complex than that. We have a large partner network including partners like Ryanair, SAS, and other big travel related sites, where users can download the guides. Then we have the DMOs, our paying customers, which pay to control (parts of) the content of the guide. And finally we have the local advertisers on each destination, which are paying for each download made.

The problem with both products mentioned here is that due to the complexity of the systems (especially the first, Citybreak DMS) implementing a new customer takes very long time and involves a lot of costs.

So Arrivalguides is also a very complex product that have many different requirements that still need to work after we revamp the product.

How to start?

My goal is to implement the new arrivalguides.com using lean startup and customer development techniques even though this is a complex product already in production.

The problem is... where do I start? I honestly don't know. I'm all for feedback here but I will go down the path that I think is best taking decisions as I go along. People say that I'm bad at planning, and I agree, but it's on purpose :). As in a startup, there is no point writing a 5 year plan, if that delays getting your product out there. I like to call this Reactive Planning. But please do comment on all the things I'll be doing wrong. This is a work in progress.

Analysis

Analysis step 1: Identify problems with existing product

• new partner integration is too complicated
• the system consists of too many parts in different programming languages
• the system is not focused
• the system is used in different ways for different partners
• Many different "customers"
  • End users
  • Partner sites
  • DMO partners
  • Guide Advertisers
  • (Site advertisers)
• Slow databasemodel
• Slow administration system
• We don't have metrics for everything end users do

Analysis step 2: Identify the stuff that is working

• End users must like something since we reach over 500 million travelers every year. Problem is that we don't know how many we are missing/not converting
• The guides are great, once people have downloaded the PDF they usually love it.

Actions

The first thing do to here must be to evaluate what features people are using, and then set up a couple of different MVPs (Minimum Viable Product) for those and test it out. But how can you test an MVP when the system has so many demands from existing customers?

Action Step 1: Get metrics for how users are using the product

In order to know what metrics to collect I guess I need to know what goals we are trying to accomplish. One revenue stream that is easy to measure is downloads of guides. Of course we already have metrics for the number of guides downloaded per partner site etc. But I want something more where I can track the exact funnel and see where we are loosing downloads.

Action Step 2: Prepare for a continous deployment development environment.

We are going to develop the new site in C# ASP.Net MVC 2, and probably use MongoDB as the database engine. For other projects we use the awesome TeamCity product from JetBrains and will do so for this as well.

Action Step 3: Prepare for a good A/B testing environment

This has been one of my main questions for a while; what are the best practices for setting this up in an MVC solution? I guess that in the end it is just a matter of switching views for a certain number of visitors, and keep the underlaying controller logic the same. Please give me feedback on this if you've done something like it before. I'm also looking forward to a KISSmetrics beta invite to use to be able to track the stuff I want in a way that is more difficult to do with say Google Analytics.

Being lean?

We have all the technical skills we need to execute this project, but one thing we don't have is time. This is mainly due to how other products have been developed in the past, and we are only a couple of guys running this. Isn't this the perfect setting to try and be lean? I mean in a way that we need to absolutely optimize our time and not spend any time developing something that our customers don't want.

One big problem here is the organization. We have very talented sales people that sign new deals everyday selling stuff that we will develop, which is nice on a financial view. But I don't think this is the right way to go. (I hope I don't get fired for writing this though...) We need to have better focus on our existing product and analyze how people are using it. This sounds easy in theory, but how can we do this when we are dependent on the cash flow from paying customers?

I think I'll leave this for part 1 of this series, and it's time to take the first steps. My mission will be to try and force this type of product development strategy in the organization by proving that it works. So again, I need all the help I can get, and if you're a pro in this area, don't hesitate to leave a comment or contact me directly.

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• Customer Development for Web Startups (steveblank.com)
• Maverick Entrepreneur: Without the Fat (seedcamp.com)
• 2010 03 09 The Lean Startup Gdc (slideshare.net)
• Requirements Gathering Is Not Customer Development - But It Does Define The Problem Statement (meatinthesky.com)

As you might have read in my previous posts, I tend to speak very highly of Seedcamp. Still now, some 3 years after attending Seedcamp week as a participant and later winning the whole thing, it was the most eye-opening, developing, and the best learning experience in my whole life so far. It's not the idéas that make a company, not even only the people running the company. What truely makes a difference, is the people around you. Feel free to contact me if you have any doubts about applying or otherwize need help/support. You need to follow me on twitter. Below is information about the Seedcamp applications for this year.

Seedcamp Week 2009 applications are now open for the next wave of European web-tech talent to apply

Seedcamp Week 2009 is a weeklong programme from 21-25th September that connects 20 early stage web tech startups with over 400 highly experienced and sought after entrepreneurs, investors, marketers, product and developer experts.  The 20 teams do compete for seed funding, but most importantly, garner world-class connections and recognition in the European entrepreneurial ecosystem. At the end of the week Seedcamp will invest up to €50K each in 5 teams for a small equity stake (5%-10%).

Applications are now open and being accepted till August 23rd. More details are on our website (www.seedcamp.com) and blog (blog.seedcamp.com).

Best regards,

Anders - hopefully mentoring this year again.

The answer is quite simply: A lot!

Yesterday at 12 noon the first 24 hour business camp ended. I participated with my Getting Things Done service rmindr.com that I first wrote about a while back.

My 24 hours consisted of everything between 4-hour-dig-downs in weird php errors (later saved by a Hjalmar php hack), and taking a soothing bath outside in 40 degrees water overlooking the snowcovered rocks in the Stockholm archipelago spa Hasseludden Yasuragi.

The event itself was without a doubt one of the best and most productive entrepreneurial events I've been to. The location certainly added to the excitement, but mostly it was the people's attitude towards entrepreneurship that made an impact on me. When the event ended, the participants were asked if they would want venture capital for their idea, and only about 3 out of 90 put their hands up.

I don't want to put too much into that because it is normally not 24 hour ideas that get funded anyways, but it shows that starting a service or product on the internet has never been easier or cheaper. These services will not likely be the next Google's or Amazon's, but it can easily be services that bring in some revenue for their creators. This type of "minipreneurship" is really starting to boom, and events like 24hbc is proof of that. You can easily start something in 24 hours if you put your mind to it and make sure to focus your idea.

Learning from my Seedcamp experience "focus" and "metrics" are the two most important words I've brought with me. So based on that this is how I focused by 24 hours at 24hbc:

• Step 1: Make my development setup work on the production server. (to enable fast deploy during the development)
• Step 2: Define basic functionality for the site to be valuable. For rmindr.com those features were:
  • Create actions with tags and notes
  • Access context lists through a private rss feed
  • Move actions to different focuses (inbox, next, someday/maybe, scheduled)
  • Collect ideas by sms from a cellphone
• Step 3: Define advanced features that can be included if there is time left
• Step 4: implement

I managed to get all of step 1 and 2 done to a level where they could be released in an alpha version. I never managed to get into the very necessary but quite advanced feature of organizing actions into projects in an infinite number of levels. That will come in the beta release. Maybe in another 24 hours... or not.

I've had this idea for almost a year now and I did the interface design this summer. So an event like 24hbc was exactly the push I needed to get it out there.

Thanks for any input regarding rmindr.com and feel free to vote for my project at http://www.24hourbusinesscamp.com.

Image by .nele via Flickr

As of lately I have been quite into the "Getting Things Done" methology. I'm very bad at implementing it myself, but I'm quite good at telling other people how and why they should use it. I just found this interview by Robert Scoble on fastcompany.tv where he interviews David Allen to get some of the core stuff of GTD out from him. http://www.fastcompany.tv/video/david-allen-on-getting-things-done

As I have been listening to one of David Allens seminars I've been completely sold on the idea of GTD. Although I've only implemented a small portion of the system I really feel a lot less stressed. Earlier I had problems sleeping because there were so many ideas floating around in my mind that I had to keep track of. Now I'm using a tool called Things to keep all those ideas for me. A huge relief not having to remember everything at all times.

The next step for me is to get really good at the weekly review. Because without having a good routine for that, everyone will fail to fully implement the system. I'm not saying that because David Allen says so, but because I'm 7 months into implementing the system, and I've noticed that I look at my lists far to seldom nowadays. If I do the weekly review, I will put the right stuff on the right list at all times and will probably check the lists more often.

That leads me to the biggest problem I have with the system. How do you keep your lists? It's quite good when I'm by my computer, but then at the store and so on there is no way that I would carry around a bunch of paper lists just to see what's on there. Now with the Iphone, there are a lot of new tools for keeping those lists, but in some ways I think it's a bit too complicated since it is still a platform specific solution.

Enter rmindr.com, my main on-the-side project. It's an online GTD app much like any other GTD app out there. With one big difference. The userinterface just works. It is highly inspired by Things (mentioned above) because that fells natural for me. I don't really think this service will make me rich or anything, but what it does is that it solves a problem, in particular My problem. With rmindr you get all of your context lists avaliable on any device through RSS. Collaboration is really simple with drag-n-drop ease to delegate tasks. Collection is really simple through the API where collecting a new task through any medium or tool will be possible, and as easy as a HTTP Post to a specific URL, or a MMS/SMS/Phonecall to a specific number.

With the RSS context lists I'll be able to see my grossery store shopping list with any phone while I'm in the store.

The service will be launching shortly as I'm putting the last bits and pieces together. Stay tuned for more info. I won't have a beta sign up page unfortunately, but if you subscribe to the rss of this blog you'll no when it opens.

Seedcamp's new promotion video interviews a bunch of great entrepreneurs and investors and asks them a couple of very interesting questions. After seeing the video I wanted to give my opinions on the matter from the point of view of being a fairly fresh entrepreneur that won the Seedcamp competition last year with my company Tablefinder. So here it goes:

1: What is an entrepreneur?

To me an entrepreneur is someone that does not consider work a burden. My job is partly doing exactly what I would be doing in my spare time. So thus I work a lot. Another key factor for me is passion. You have to see the sparks flying out of the eyes and ears of the entrepreneur as he or she is trying to solve the problem.

2: What are investors looking for?

This is obviously not the easiest question to answer for be but I will answer from what I've experienced works and what doesn't.

The single most important factor is your 30 second pitch. And the most important part about the pitch is that it doesn't have to describe all of your business. I made the mistake in the beginning because I wanted the investors to understand everything about my idea and why it was/is so great. Those type of conversations tend to be very detailed and long and complicated, and clearly not suitable for an elevator pitch.

Another thing I've learned is that the pitch is not about to create something that sounds nice and really smart gives metaphors  on all of the cool functionality your idea will have. It is rather about simplifying everything to just its core. If you cant say your main thing in one sentence, you are not enough focused, or you are trying to explain to much of the idea.

So from my experience investors are looking for a really clear idea that you can express in a few sentences, and that has a big proven market.

All investors talk about that they think the team is the most important thing. And I agree fully, but the point is, if you and your team is really good, you still need to be able to pitch your idea. And if you even get to have a meeting with one of the bigger investors, you probably already have made a pretty good impression as an entrepreneur.

Your team is not always about bragging about all the stuff you have accomplished, but sometimes passion is enough. If really love solving the problem you are working on, and make that rub off on people around you, I believe you have come very far towards what investors are looking for.

3: How do you find investors that are right for me?

This one is very important, but also very tricky. It clearly depends on what stage your company is in. I made a big mistake, but got invaluable pitch-training in the process, by pitching Tablefinder to all of the big investors in London, when we clearly, with hindsight, needed angel funding. The problem for us was that the business had changed directions a couple of times before Seedcamp and the company was more mature than the business idea. In the end it is always important to have investors that share the same vision as you. They should be people that are well connected within your area of operation, and should be willing to help you grow your business.

An investor is going to be a very close partner for quite some time, so it is as important to screen your investors as it is for them to screen you. Unfortunately sometimes or many times we entrepreneurs don't have the luxury of being picky. But when I will do it again, I sure will put my self in a financial situation where I will be able to be picky.

4: What is it like to be an entrepreneur?

Now this one I know. And I can't emphasize this enough: it takes passion and a whole lot of patience. To be an entrepreneur is doing what you love everyday, and not getting tired of working. Many of my friends think I work too much, but is it really work if you love what you do?

I might not love every moment and aspect of my work, especially working without any income what so ever for 6 months is not the best kind of fun. But the rewards of solving a problem and building your business when nobody thought you would make it, that is what I love. The satisfaction of doing something that nobody else could do, and being respected for doing so is unbeatable.

So, in the video they talk about getting through "the first tough months". I don't think that is the toughest part at all. But the big problems come when you try to build your business after you have launched. If the business doesn't start rolling straight away, and you won't get funding until it does. That is when it is tough. But also the most rewarding if you can push through. Seth Godin's book The Dip was a great source of inspiration for me when things looked like we were out of business. We were in the dip, but now I finally feel we are moving past it.

5: What is the biggest mistake you've made?

I've made so many during the last 2 years, but the one I think stands out the most is that I wanted to do too much. I wanted everyone to have our solution because "everyone who eats could use our service", which is true but not really a healthy customer definition for the business. I also wanted everyone to have the best features already there once we launched. This ended up delaying our launch with many months. And now with hindsight, I would like to say as Paul Graham of Y Combinator says:

"If sitting down for a couple of hours to come up with a company motto delays your launch by a couple of hours, it is probably not worth it"

So when I do this again, I will launch as quickly as possible with one solid problem solving feature and nothing more. Additional features can always be added afterwards.

One thing I learned at Seedcamp was to think of "outcomes" rather than "features". What does the user really want to accomplish? And are we producing that outcome? To me it has worked in the simplification process, not only for features, but also for the pitch.

6: Lessons I've learned along the way?

When you are running with your startup in 200 km/h in one direction you are picking up a lot of experience along the way. The problem is that if you don't stop to think, you won't be able to apply what you've learned until you've run past your objective.

Having gone through a really tough period where I had to focus on bringing in money just to pay the bills, it was like a took a step back, slowed down, and everything became clear to me. Almost a euphoric moment when you get a weight lifted of your shoulders because "It can't get any worse" and that there is no pressure for you to produce results because people have stopped believing.

I never stopped believing and I feel I've been rewarded already. Everything I learned at Seedcamp and through all of my pitches I've made, good and bad, I can now apply, and start to pick up speed once again to get even more experience. Hopefully next time I will settle down to understand what I've learned it will be for better reasons.

I've already mentioned above many of the lessons learned for me. But I think one that I haven't talked about is trust your instincts.

I think one of my largest mistakes was when winning Seedcamp, I thought that everyone around me knew better about my business than me, because of their experience in other fields. And I thought it was all done now since the people around me would "make it happen". Nobody but you make it happen!

Meeting great entrepreneurs and investors has been invaluable for me and I wish everyone could do that, but never think that they know exactly what is right for you, and never expect that they should make any decisions for you. You are the one that knows most about your business, so try to take in the advice, even though it is hard when running 200 km/h, but trust your gut feeling about your decisions and stick with them.

7: Europe or the valley?

As I've never been in the valley I can't really say much about it, but I must say I'm envious of the entrepreneurial environment. As Michal Arrington at Techcrunch say in the video, starting a business in the US gives social credit, but in Europe, many people would look at you and think you were crazy for quitting your government job for starting a business.

This mentality is exactly what Seedcamp is about, which is also something I strongly believe in. We need to utilize and recycle entrepreneurial experience in Europe, and help each other succeed. This reason alone is why I took the initiative to start OpenCoffee in Gothenburg as there are not many places for entrepreneurs helping entrepreneurs.

8: What are the classic mistakes start-ups make time and again?

For us, one of the main problems has been focus. As Saul Klein said on Demo day:

Find your mountain!

Meaning that you have to pick one peak to climb, and not take on all at once. This is very difficult, but from what I understand now, a good measurement of how focused your idea is, is if you can define it with just one short, clear, and understandable sentence.

Another problem on the same theme is trying to pinpoint your core customer. I mentioned this above, but the answer to the question "Who is you customer?" is not "Anybody can use this service!" but rather a specified demographic which you know a lot of details about.

On the May 8, STING's Innovation & Technology Award will be given to the top technology companies that apply to the competition. The winners will get a nice 150,000 SEK (€16,000) in pricemoney, but more importantly the winner will be direct qualified to the final of this years Seedcamp. Last year I was lucky to be among the winners, and I have nothing but good things to say about the experience.

When working in a venture capital financed company and trying to get stuff going really fast really early, the most important thing to have is a good network of contacts. Once you know the right person at the right company, things get way easier. Seedcamp is about giving you the opportunity to create such a network, whether you win or not.

So if you are a Swedish company I strongly recommend applying to both STING's competition, but also to Seedcamp directly.