Two observations:
1. Very little happens in a startup if you don’t make it happen.
2. Very little is done right if you don’t examine best practices and iterate your own efforts.

Common sense, right? And yet here are some further observations:

Right after I posted about demo tips and the importance of practice, I ran into someone who was at a different startup event where the demos were poor, unpracticed, and un-coached. It is a common problem.

I had coffee a little while ago with a highly successful woman who was frustrated that she hears too many younger entrepreneurs complain about the lack of mentors. “When I started,” she explained, “I didn’t wait for anyone to come to me. I picked the right people and went out and chased them.” She approached landing mentors as a sales cycle, impressing and winning over her targets with brains and a go-getter attitude.

To give a personal example, I used to believe in magic when it came to public speaking. I thought there were “gifted” wizards like Steve Jobs who could just get up and wow the crowd. Then I realized that all the best speakers practice the hell out of their talks. Brilliance doesn’t happen on its own.  (btw, if you want to learn more about public speaking, I recommend Scott Berkun’s book, Confessions of a Public Speaker)

There is no magic in marketing, virality, and product design. Instead there is creativity, smarts, measurement and iteration. Yet you see teams piggy-backing on the fad of the moment, hoping for a silver bullet but not going deeper.

A big part of “lean startup” is getting teams out of “guess and hope” mode (aka magic), and into reality-based iteration. This requires getting out of your comfort zone.

Now, the *other* hard truth of early stage startups is you cannot do it all with the resources at hand. You have to make choices and some areas will get short-changed. But do it consciously. Be master of your choices, and don’t believe in magic.

As promised, here is my 20-min presentation to the Lean Startup Machine event on July 23, 2010. Regarding the event, I was pretty impressed with how much the teams accomplished over the weekend, and their willingness to get out of comfort zones.  This deck is neither as pretty nor as good as David Cancel’s recent talk, but it served the intended purpose of giving the participants a taste of customer development put into practice.  Below is some quick color commentary on the slides:

2. Who am I? Key message: all of the previous startups I’ve been involved with talked to their customers, but that isn’t enough.  “Lean startup” is about ruthless and rigorous testing of assumptions and hypotheses. Think of your startup as a giant stack of assumptions — the more you push testing those conscious or unconscious beliefs into the future, the greater the risk they will come and bite you. I wrote more about previous experiences and lessons here.

3. The Context. Our particular decisions came out of the context of Aprizi’s customer, product, business model, etc. With that in mind…

4. The first rule of lean startup is…

5. There are no rules. Lean startup is a methodology and framework of ideas, not a playbook or roadmap. Use it to add self-awareness and rigor to your business, but make your choices based on your own context.

Aprizi’s Customer Development Steps (at which point I gave summaries of topics covered in the following older blog posts)
6. Initial Idea Validation. See this post
7. Customer Development. See this post
8. Alpha. See this post
9. Open Beta. See this post

12. Doing a Customer Development Interview. I wrote specifically about this slide here

13. Learning Comes in Waves. Focus on learning, not quotas. What I have found is that with each new step (idea, paper mockup, alpha, beta), we had an initial high burst of learning around some big decisions, and then learning started to become incremental. At that point, our efforts in customer development slowed down because we needed to make decisions, then get to work on the product so that we could get to the next wave of learning.

14. Strip Out Everything But the Core Value Proposition. On Sunday I tweeted “Many features in a young product is often a sign of not understanding the problem or customer well enough.” I was laughing at a ridiculously over-featured early Aprizi wireframe shared with the participants as an example of Balsamiq.  Needless to say, we took a serious scalpel (or hatchet) to the feature list, and of course customer development helped us focus. We simplified and tried to hone in on the point of maximum delight. When you have extremely limited resources, simplification and prioritization is a necessity, but it also just makes for a better product.

I also gave an anecdote from the very start of Aprizi. We built some code to automatically gather shopping preferences and history from a webmail account. We realized that it had nothing to do with testing the actual value proposition to the user, so we quickly tabled it.

15. Pre-PM Fit. It’s All About People. In the very early days, don’t get lost in surveys and A/B tests and optimization or even continuous deployment. That stuff is really important but gets more so as you approach and pass product-market fit. Initially, focus on people. Watch them use the product. Listen to their tone of voice. Watch their facial expressions. Remember, all business is about people. They will use your product, share your product, buy your product, or ignore your product. You need to understand why.

My last message about people was a reminder not to completely ignore business relationships that you will need later on. A bizdev deal, a PR relationship, a blogging strategy, etc, these all take time, and you don’t want to begin from a cold, standing start once you see signs of product-market fit. So focus on your customer and product, but don’t forget to plant the seeds of these future marketing needs.

On Friday, a reader sent me an email. They were suffering from “entrepreneur’s block”, where they kill off every idea as quickly as it arises. It is the opposite disease to those who fall in love with an idea, are afraid to talk to anyone about it and thus build something no one wants. In this case, the person never builds anything at all. The cure to both problems is actually the same: get outside your own head.

It is incredibly easy to kill an idea. Innovations tend to be obvious only in retrospect. There are a million reasons why startups fail, and so a million reasons never to start in the first place. But if you really want to be an entrepreneur, you need to balance intelligent caution with entrepreneurial can-do optimism. My problem in my youth was too much of the latter, which is why I so appreciate Blank/Ries.

You need to accept that it’s ok for an initial idea to be imperfect, because they all are. You need to have a core insight, but product-market fit comes from the *process*, not from the idea. Given media-perpetuated myths, I think this notion is as surprising to some as realizing that Steve Jobs practices the hell out of his speeches, rather than just being awesome due to innate, unobtainable talent.

If you have a passion for an idea, start doing market and competitive research*, but also get talking to real people. Try different validation methods (aside: part of the fun of watching this weekend Lean Startup Machine experiment was seeing the creativity and diversity of customer development tactics). So what if the idea is half-baked! Until you start customer development, no matter how much you “bake”, it will always remain half-baked! At Aprizi, we started out with a thesis and 10 related ideas. Early customer development quickly narrowed that down to 2. The wizard-of-oz alpha brought that to one, and our crude beta made us evolve even that one quite a bit. We have a lot of learning and improvement to do still — I don’t think that ever ends.

There is nothing like hearing excitement in another person’s voice to add fuel to your own fire. But if you do not hear that excitement right away, that doesn’t mean you should necessarily kill the idea. Stubborness has a place, as does flexibility to evolve. As entrepreneurs, we work in a cloud of imperfect information. We constantly face the risk of false positives and false negatives. You have to navigate with customer development, gut and vision, experience, and the help of other smart people.

*Note on market and competitive research
If you are thinking about doing a startup, it is worth thinking through your personal filters for ideas. Do you need a billion dollar business or would a niche market make you happy? Does an idea have to be bootstrappable all the way, or would you contemplate raising money (this hugely impacts the kinds of business models you can take on)? Do you care more about enterprise or consumer? Where is your domain knowledge and passion? (Note: you don’t have to be the customer. Club Penguin was built by a group of dads who really cared about what they were doing.)

I also want to stress that the existence of competition is not, in itself, a reason to kill an idea. Excessive noise and fragmentation can be troubling (although that can open up different opportunities), but competition can be a very good thing. There are advantages to having a more educated, mature market. It all depends on how vulnerabilities match up to your strengths. A big, complex topic!

Last night kicked off an interesting experiment in New York. The Lean Startup Machine is a weekend-long customer development bootcamp where participants pitch their ideas, and all 50 people break into teams around the most popular ideas. Instead of a hackathon, the goal is to do as much customer and business validation as possible, and design some kind of MVP (does not have to be a working prototype), by the end of the weekend. I think it’s a fascinating experiment, and a great way to get people out of idea-centric comfort zones.

Lean Startup Machine teams brainstorming (1am Friday night)

Eric Ries kicked it off, then Brant Cooper, Josh Knowles and myself gave short introductory talks. I walked through Aprizi’s experiences in the trenches of “lean startup”. I’ll post the deck soon with some explanatory text, but wanted to start with this slide (note: I added the last bullet this morning).

12 Tips for Early Customer Development Interviews

1. Work to their schedule: be flexible to the customer’s schedule, not your own

2. Get psyched to hear things you don’t want to hear: if you don’t do this, you might find yourself selling or convincing, or even hearing what you want to hear. Remember, the goal in this early stage is learning and validation, not a sale.

3. Disarm “politeness” training: people are trained not to call your baby ugly. You need to make them feel safe to do this. My approach was to explain that I needed their honesty so I didn’t build something nobody wanted to use, which seemed to resonate with folks.

4. Start with behavior, not feedback: start by asking about the person’s current behavior and processes in your “problem space”. Only after you’ve covered this ground should you get feedback on your proposed solution. Another interesting follow-up set of questions is to ask about competitors (even if indirect), and how those competitors were discovered.

5. Ask open ended questions: do no ask a yes/no question such as “do you like Nextag?”  Instead ask “are you interested in deals? how do you discover deals? what do you like or find frustrating in this process?”

6. Listen, don’t talk: try to shut up as much as possible, and try to keep your questions short and unbiased (i.e. don’t embed the answer you want to hear into the question). Don’t sell — that is for another time!  Don’t rush to fill the “space” when the customer pauses, because they might be thinking or have more to say.

7. Encourage but don’t influence: if you stay *too* quiet, some folks might start getting uncomfortable, thinking that they are boring you or you are judging them. You can keep things rolling with little motions of encouragement, such as nods, “I see”, “interesting”, etc. But do not say things that might steer or influence the interviewee.

8. Follow your nose and drill down: anytime something tweaks your antenna, drill down with follow up questions. Don’t be afraid to ask for clarifications and the “why” behind the “what”.

9. Parrot back to confirm: for important topics, try repeating back what the person said. You can occasionally get two interesting results through this. In the first, they correct you because you’ve misinterpreted what they said. In the second, by hearing their own thoughts, they’ll actually realize that their true opinion is slightly different, and they will give you a second, more sophisticated answer.

10. Thank them: (self-explanatory)

11. Ask for introductions: at the end of every interview, see if you can get leads to another 1 to 3 people known by the interviewee.

12. Write up your notes as quickly as possible: the details behind a conversation fade fast, so if you haven’t recorded the session, write up your notes and color commentary as soon as you can. I brain-dump into a shared Google Doc so the rest of the team can see it.  (Note: I typically have not recorded sessions, for fear of making interviewees more self-conscious or careful, but other entrepreneurs have said to me that, while it takes some rapport-building at the start, pretty soon people forget about a recorder.)

Addendum
If you are interested in this topic, check out Cindy Alvarez’s posts on finding people and conducting interviews.

Well done to Trevor, Ben, Kyle and Josh for organizing this event.  As I was walking to the subway in the wee hours of the morning, I snapped this shot of the New York Stock Exchange with my iPhone:

I’m a big fan of Jason Cohen’s blog A Smart Bear, but I gave him a hard time after his last post “Real Unfair Advantages” (read that first). I did not think it was concrete enough for the young entrepreneur. Let’s face it, you either have “authority” or you do not. The entrepreneur with the $100M exit under his belt, or the publicly-known domain expert, does not really need help.

Jason is right that most things cited as competitive advantages are flimsy structures easily knocked down. Things like passion, design quality, obsession, etc cannot be promised. They must be proven. If you aren’t a business “celebrity”, do not be discouraged. You can succeed with hustle, smarts, a strong customer focus, and staying power.

Let’s imagine two scenarios for the pre-proof, pre-initial-traction entrepreneur asked about competitive advantage: 1. you are applying to an incubator a la Y Combinator or Capital Factory; or 2. you are applying to seed/angel/micro-VC investors.

In scenario 1, if you get asked about competitive advantage, don’t fake it. If you have a good one, use it. Otherwise, be honest that it is an execution play and sell yourself as best you can. There’s no shame in being an execution play. Look at Zynga and Groupon — they have built competitive advantages on multiple fronts as they have gone along (brand strength, capital raising, domain knowledge, sales/distribution, etc).

In scenario 2… wait… why are you in scenario 2? Instead, shore up your savings account before starting a company, then spend your time on the business, not chasing investors. Don’t spend your time obsessing about theory and powerpoint slides that are immediately dismissed. It will take time to get “product-market fit” and initial traction. Use that time to build authority, not just your product.

Still, on the topic of competitive advantages:

• I like competitive advantages built into the product. Marketplaces and social networks have network effects. Data-driven businesses can always stay one step ahead of new entrants.
• Technology can be a real competitive advantage if you are tackling a gnarly problem, but you must reality-check whether the complex technical solution is really necessary, or if the 70% solution would suffice (if so, go with the speed of the easier solution).
• There are sales and marketing competitive advantages: in the enterprise space, signing up marquee beta customers makes a big difference; exclusive distribution deals are another example, albeit very difficult for a super-early stage startup to pull off.
• Business model innovation *can* be a competitive advantage against incumbents, although it needs to be a radical enough change that would tie their channels or supply chain in knots to try to duplicate.

If you do not have a monumental competitive advantage, that does not mean you should pick a different business. They certainly help reduce risk, but I have come to the conclusion that the best competitive advantage is really good execution. Speed. Focus. Quality. Hunger. These cannot be sold to a cynical investor, but they do need to be promises to yourself.

(Photo of Bodiam Castle by antonychammond, via Flickr, Creative Commons)

Last fall, I was recovering from a startup that almost touched the sun, but like Icarus, took a nasty fall. I still had a burning desire to create a great company, but I  knew that it was time that *I* chose what was right and wrong, rather than work for someone else.  If I was going to chart my own path again, I needed to find a better way to do entrepreneurship.

It might sound hokey, but the last 9 months have been empowering. I have taken my startup scars and successes, mapped them against the ideas of people like Steve Blank, Eric Ries, and Sean Ellis, and become a significantly better entrepreneur for it.

Next Friday, I will give a talk on Aprizi’s approach to customer development.  In thinking through that talk, I could not help but think through how I got here. Below are peeks – my personal interpretations — into 4 startups I worked for.

Trilogy: Sell, Build, Design
Trilogy was an enterprise software company run by a smart, aggressive guy named Joe Liemandt. I joined straight out of college back in 1994 around the 75th employee mark.  My colleagues and I used to joke that the company ethos at that point was “sell, build, design”.  In some ways, the approach had commonalities to today’s lean startup advice, where you prove market demand first, get something crude out, and then improve it over time.

The big downside to the “sell, build, design” approach is the painful period during which you have unhappy customers who bought into a big vision, but are stuck using an immature product.  At the time, Trilogy liked the “big sale” with a large ticket price, and that meant making a lot of promises. Unfortunately, overselling caused customer support headaches and brand reputation problems.

There was a lot Trilogy did right, but I was left with the opinion that a little more balance would drive better customer satisfaction and one would come out ahead.

Epilogue: I left the company at the end of 1995 to learn finance at an M&A boutique, and did not get to observe how Trilogy fixed these issues. The company ended up having some high-flying days, growing to one of the biggest privately-held software companies in the world, but I don’t have a good sense of how it is doing today.

Envive: Fake It Till You Make It
I joined Envive in 1997, which made systems management software for SAP installations, around the 20 employee mark.  Envive was a classic VC fumble.  It checked off some VC favorites: the founding team had consulted for SAP (credibility and domain knowledge), had special access to SAP source code (unique technical edge), and a high-vision, reality-distortion-field founder (who unfortunately was not the best operator). It raised a bundle of money from two top-notch Valley VCs with big promises, and started expanding the team to build and launch the product. When the VCs realized they had backed a little too much promise and not enough reality, they retaliated by pulling the founder from the CEO slot.

I joined (originally to lead product marketing) just after this happened, foolishly discovering all this too late. Information flow was less efficient back then, but the real problem was my youthful naivete assuming that I could bank on the due diligence of first class VCs.

Envive talked to lots of prospects and had a good set of beta customers, so they didn’t entirely fail on the customer development side. However, it was  a pretty classic “4 Steps to the Epiphany” example of scaling too early. There were too many employees for its stage, and it wasted a lot of money on expensive direct sales guys who could not translate their success at “big software co” to an early-stage product. I was one of the few people who could close business because I came from the product side, was close to the developers, and showed the depth and flexibility needed to build trust with early customers.

Epilogue: Envive ended up creating some innovations that led to the assets of the business being acquired, although not for a fortune. The company faced serious platform risk from SAP itself, who had their own lightweight product and caused a lot of customers to sit on the fence, but I believe that with a more controlled burn rate, it might have been able to forge a path to better markets. That would have depended on the board’s support for risky pivots and putting product-market fit ahead of growth.

Ithority: Design, Build, Launch
Ithority was the first business I co-founded and ran; Aprizi today being the second. We started it on the side in 1998, with the mission of creating an online marketplace for freelancers and services, and then pivoted downstream to focus on information. Our mistake was swinging *too far* from the Trilogy approach.

We were frustrated with the half-baked products of previous companies and wanted to make something really good. While we “got out of the building” talking to customers, it took us far too long to get a working product in the hands of customers.  We failed to produce what people now call an MVP (minimum viable product) and that was a mistake — it could have made a big difference for us.  Then again, it was a strange, irrational time.

Startup quality in 1999 was largely determined by how much money you could raise and how quickly you could spend it.  I don’t miss those times at all, and I don’t think the bubble makes for very interesting case studies because it was so warped.  My co-founder and I both got our starts at Trilogy, where the CEO respected operational cash flow, and we didn’t want to play that raise-and-spend game.  We bootstrapped the business with a little friends-and-family money until being acquired by a company called Opus360. Opus360 was one of the last companies to go public before the crash, and we watched, not terribly surprised, as much of our stock evaporated (thankfully, we had negotiated some price protection and didn’t walk away completely empty handed).

Epilogue: I worked at Opus for a while to try to right the ship after the bubble burst, which meant firing a lot of people and trying to restructure inherited, badly structured bizdev deals. Opus eventually sold to a larger company, but in a highly dilutive deal. I still wish they had voluntarily de-listed, hunkered down with the not-insignificant cash they had remaining, and fought on with a small but hard core team.

The Electric Sheep Company: Tripling Down on the Wrong Vision
I joined ESC in early 2006 as employee 5 or 6. ESC created virtual worlds and VW marketing experiences, and my job was to build the Second Life practice. 2006 and 2007 were busy years — SL was growing like gangbusters and we built an incredible brand, working with many of the top media, CPG, advertising and technology companies. ESC’s founder/CEO then raised $7M, built around a vision and strategy that Second Life could become a “metaverse” — a 3D layer on top of the Web.

The problem quickly became one of focus. We still had the consulting arm (which had ballooned in size). I was leading a team creating applications on top of Second Life (ecommerce, search and a new client UI). We had another team creating a virtual world ad network, and yet another team investing in AI technology to drive a new form of game play.  That is 4 divisions for a young company in a high-growth but still-unproven space.  Hiring quality slipped. Management was spread too thin. And of course, the underlying platform bet on Second Life turned out to be wrong.

We got caught up in the hectic task of keeping up with our own success, which turned out to be a sleight of hand. We also allowed ourselves to be pulled off of good business fundamentals by the reality-distortion field of a great vision.

This all sounds terrible, but the truth is only about 9 months passed between raising money, pushing into all these areas, and deciding that we needed to fundamentally change course (around November 2007).  That should have been completely recoverable.  If the company had stayed focused, small, and restrained, we would have been left with lots more of two critical assets: money in the bank, and credibility with the investors. However, the vision had been built up too big, the bets too bold, the platform risk too extreme, and so the fall was correspondingly painful.

We sold a lot of customers, but I only wish I had “lean startup” top of mind during those days.

Epilogue: After the early-2008 restructuring, the company focused on the services arm, nurturing a hope of giving another go at a product. Today, the remaining team is working on a new product in the music space, and I hope they can create something amazing.

My lessons from this one are many, but here are a few: choose and validate *one* critical business; tread carefully where platform risk is high; work with early stage investors who understand “pivot” (even if they hate the over-used word); don’t take strategic money early; don’t try to do products and services under the same roof.

Which Brings Us to Today
It can be a little painful to look back on these years, but I am stronger for it. I can take theory from folks like Eric Ries and Sean Ellis, ground it in reality and fit it to my current context. We still have a lot of work to do at Aprizi, but it feels great to approach business with more deliberation and a sounder process than ever before.

I should note that these are my own personal impressions, and my intention is not to point fingers but rather to focus on learning. If it has been useful in helping you think through your own startup, then the post has been worth it to share.

(Awesome photo at top by Romeo66, Creative Commons on Flickr)

The best way to build a startup is to have everyone in a single physical location, but that isn’t always possible.  I’ve had to deal with virtual teams on multiple occasions, and my last employer, The Electric Sheep Company, took it to an extreme, with 75 people mostly scattered around the country.  Here are a few lessons I’ve learned over the years in making virtual teams work effectively.

1. No Substitute for Facetime: Humans are social creatures. We tend to only go the extra mile for colleagues we have met, like and respect.  I learned this lesson in one of my first jobs out of college. We were working on a trans-Atlantic deal, but whenever I needed something from my British compatriots, somehow it always felt like my requests went to the bottom of the heap.  Halfway through the deal, I got to meet and have a beer with my Brit colleagues.  All of a sudden, I was real to them. I was a presence they liked and respected. They would pick up the phone when I called, and pull an all-nighter if I needed it.  I shifted from “the guy asking for stuff” to a compatriot and teammate.  The sooner you can get new hires in a room with everyone else, the more productive everyone will be.

At Electric Sheep, we found that we needed to do company-wide retreats every 3-4 months to get people back on the same page, strengthen relationships, and re-energize everyone. (Note: while the ability to hire anyone, anywhere certainly helped the business when it needed to staff up quickly to meet demand, the broad distribution of the company was a serious impediment when the company’s prospects became more difficult.)

2. Flexibility with Accountability: I’m sure you’ve faced it — a fire drill pops up and the critical person is nowhere to found.  Or, you are getting into the zone and suddenly find yourself bottlenecked because your colleague isn’t reachable to answer a simple question.

Personal freedom is important, but for collaborative work, flexibility cannot come completely at the expense of team productivity.  Working remotely requires extra levels of communication. This includes sharing your availability and how you can be reached. If your work is collaborative, it also means working when other people are working. One way to add structure is to have everyone agree on a specific time window where they will work and collaborate in real-time.  On the flip side, you might also consider time windows where people can be deep-focus productive and *not* have to be instantly responsive to IM and email, save for emergencies.

3. Empower individuals: This is important for all startups, but especially critical with remote teams.  It is very easy for a remote employee to fall into passivity or even negativity.  In an office, you can draft off of the energy, intensity, and activity of others on a down day.  Mark Pincus coined a great phrase: “everyone should be a CEO of something.” Flip people out of the mode of “doing what they are told”, and help them take charge of solving problems and creating new opportunities.

4. Weekly 1-on-1’s: Managers need to talk to their reports 1-on-1 every week, in-person or over the phone.  Do not leave this to email, IM or group meetings — you won’t get honesty, and relationships will atrophy.  As CEO, you might not be able to physically “manage by walking around”, but you should do your best to connect with individuals and keep your finger on the pulse of the organization. Furthermore, you can really boost morale simply by listening to people’s ideas.  Even if their ideas don’t get adopted, most people want to be heard and respected.

5. Level up in email: a lot of communication happens in email, which requires both efficiency and etiquette. If you are not effective at text communication, then working remotely might not be for you.  If you cannot inspire people in text, then you should not try to lead a distributed organization.

Everyone needs to be extra-careful with written communication, because you won’t have “water cooler” interaction to keep things civil and patch things over. Before interpreting something in a negative light, try to give the author the benefit of the doubt. Before sending that angry note, stick it in your draft folder for an hour or two. I once witnessed a truly spectacular email flame-out by a frustrated, angry employee. What began as a rant quickly degenerated into an email war with 20 other people, and ended in a firing.  That was an extreme unpleasant case, but as a rule, you want to be extra-sensitive in email when working remotely. When in doubt, switch to the phone (which leads directly to my next point…)

6. Escalate off of text *immediately*: text communication is ripe for mis-communication and misunderstandings.  The instant something gets frustrating to explain, get off email and pick up the phone.  The instant you start feeling anger or irritation, take a deep breath, and pick up the phone.  This applies to interactions with colleagues, customers, vendors, and partners.

A 30-second phone call can save hours of wasted time writing emails. A 30-second phone call can prevent unnecessary drama, or pop it like a balloon. When people are irritated, their reaction is to stay off the phone, but this is the worst possible idea. (p.s. you will probably need to push software developers to do this, since many hate the telephone, but I cannot stress it enough).

7. Experiment with tools: Every team has it’s own preferences for collaboration tools.  I am partial to Yammer because it is lightweight and asynchronous, and thus easy for people to share and interact.  I use IM a lot, but many remote dev teams like IRC. A good document sharing tool is also effective, whether it be Google apps, Dropbox, etc. For the product/dev side of things, a lot of people like using Pivotal Tracker and/or Basecamp for higher-level organization. Some people like email lists; I’m not a huge fan personally, but if you don’t have them, you need other tools to make up the gap.  You’ll never get unanimous approval on any single tool, but you do need general buy-in for something to work.

8. Choose your work style consciously: When you work from home, the lines between work and personal life start to blur.  Be careful that work doesn’t expand to take up all available space.  I’ve seen plenty of people who work 14-16 hour days, but actually get the same amount done as those who put in 8-10 hours of intense, high-concentration time. It can come down to personal preference, but make it a conscious choice.  For me personally, it depends on the tasks at hand — I find creative work harder to do effectively in unbroken bursts. And of course, if you are finding the house too distracting, switch to a coffee shop or co-working facility.

9. Keep conference calls short and small: In general, try to have the fewest people at any virtual meeting as possible, and always end your conference calls early!

Interesting Related posts:
Mark Suster, The Power of “In Person” – Why Distributed Teams are Less Effective
Mark Suster, People Management: Startup Teams Should Dip but not Skip
Ben Horowitz, CEOs Should Tell It Like It Is

Thank you to Chris, Becky and Jessie for contributing their tips on working remotely.

“Isn’t Lean startup” supposed to prevent failure?” That was the question posed by Andrew Warner to Sean Ellis in a recent Mixergy interview. There is only one answer, “of course not.”

Sean responds that not everyone is built to be an entrepreneur: even the best tools in the wrong hands go awry. True, and there are many other reasons startups fail: team chemistry, money woes, technical risk, and so on. You can pivot badly or run out of pivot ideas. A successful startup is a mix of great execution, luck and timing.

No-Man’s Land

Lean startup methodologies help you speed up and bullshit check yourself and your ideas, but many companies will still end up in a lean startup version of “no-man’s land”. Their ideas and iterations will be good enough to pass validation tests along the way but not quite good enough to create the breakout hit entrepreneurs need in our noisy online world, or at least not in the time the entrepreneurs can allot to chasing that dream. Good but not great.

Fear of no-man’s land is familiar to most entrepreneurs. Reality is messy, and can deliver a lot of false negatives and false positives.

Bradford Cross recently wrote “If you can’t falsify your hypothesis, it might be correct – but if you try to validate your hypothesis, you can easily delude yourself into perceiving it as correct.” I like the statement because it forces an entrepreneur to face fears and overcome the stubborn optimism that flows in our slightly-crazy veins. My only caution is that it is really easy to kill a good new idea, and most stuff doesn’t turn into gold without a hard fight. You could spend your life testing and killing ideas and never actually *do* anything. But I like the spirit of Bradford’s argument.

In the case of Aprizi, I know someone, somewhere, some-when is going to crack the code on shopping personalization/discovery and be hugely successful, and I fiercely want it to be us. Lean startup methods increase our odds of getting it right, but they do not guarantee it. Our job is to bust our asses to stack the deck in our favor and make our own luck.

Net-net, lean startup ideas and lower infrastructure costs combine to de-risk new software startups tremendously, but if you think they de-risk anything entirely, you would be deluding yourself.

Fight on my brothers and sisters!

Mirage photo at top by Michael Gwyther-Jones, Flickr, Creative Commons

I just piggybacked on a twitter conversation between Sean Ellis and April Dunford talking about product management versus product marketing (see April’s post). Sean tweeted this comment which I just wanted to highlight:

“Functions” is part of the problem in early stage. IMO goals better: PM fit, then conv eff, then growth… [Ed note: PM fit = product-market fit; conv eff = conversion efficiency]

I completely agree with this.  At the beginning, you need a small, tight-knit, complementary team that ignores function and focuses entirely on goals, splitting up tasks to effectively meet those goals.  With Aprizi, I do any product marketing tasks, and Liz and I split various product management functions.  Function definitions are not relevant, and we don’t feel pressure to do things irrelevant to the near-term goal of product-market fit, save for some effort sowing seeds via relationship building.

“Function temptation” is more of a problem for heavily- funded companies with large starting teams and immediate investor pressure for growth.

At founding, make sure you all agree on priorities.  I was talking to a very talented business development person the other day, and he was stuck on the importance of distribution.  His logic, as I understood it, was that customer acquisition is the biggest struggle for consumer Web startups, so clearly distribution is the most important thing and must happen right away.

I disagree.  A big distribution deal before product-market-fit is a recipe for disaster*, and I’m not talking about the economics.  You might get pressure from the big partner to make what *they* want, not what the customer wants.  Your flexibility to pivot will be severely restricted by expectations, promises given, and a legal document.  Instead of iterating your product in obscurity, and thus relative brand safety, you risk giving hundreds of thousands of people a bad experience.  That bad user experience will threaten your relationship with the distribution partner and possibly neuter future opportunities.

This BD person isn’t an idiot, but rather they are a talent, attitude and skillset that should come on board only *after* product-market fit is found.

My belief in customer development > product market fit > conversion optimization > growth is borne from many scars, mistakes, and a burning desire to do this thing we call “startup” better.

[Update: just to clarify, I'm not saying that you should completely ignore all BD work, since channels are indeed important and they take a long time to develop. I write more about relationship building in the comments below where Sean and April weigh in, and where I think the discussion is better than the actual post.]

Bob Sutton wrote an interesting post the other day called “The Wise Boss: More Evidence For Expressing Confidence, But Harboring Private Doubts“. He touches upon a topic that a lot of business leaders grapple with: what is the right balance between confidence and transparency. The interplay between the two is particularly heightened in a young startup, where you are inevitably surrounded by uncertainty and doubt (anyone who says otherwise is either blind or full of shit). It is essential for a startup CEO to be the anchor of the business, which often means keeping concerns locked up inside, or at most, reserved for a close co-founder. Like all things, it is all about balance:

• A startup CEO needs to be a strong optimist that others can rally around, but if you take this too far during difficult times, credibility will disappear fast and recover *very* slowly.
• A startup CEO needs to be decisive and quick-thinking, but without jerking the company around with fads or poorly thought-out decisions.
• A startup CEO needs to give people the leadership they *very much want*, while making sure that people feel like their voice is at least heard and respected, even if not always acted upon.
• A startup CEO needs to foster employee independence and empowerment, without allowing a complete free-for-all.

If you find the right balance, and are willing to make tough, even unpopular, decisions, you will earn respect.

Confidence and comportment are also very important for fundraising. This is an area where I have considerably less personal experience.

A lot of VCs say they like realism and humility in a pitch, yet so many industry observers believe that reality-distorting confidence wins the day more often than not. I have seen countless situations where a smooth-talking entrepreneur swept a VC off their feet, and then proceeded to waste tremendous amounts of money due to drinking too much of their own kool-aid or disastrous operational skills. For better or worse, I’ve worked for two venture-backed companies like that. It is arguably the biggest chink in the VC “pattern recognition” armor, and possibly a bigger weakness for investors who have never been operators themselves. Still, as an entrepreneur, while you need to exude confidence and conviction, I suspect that the best approach is not to try to radically change yourself for the investors, who after all spend their days trying to see through people, but to just stay strong, be yourself, and hunt down the investors who fit *you*.