Is the Lean Startup a roadmap for dying slow?

Is the Lean Startup a roadmap for dying slow? Is it creating smaller successes and more failures?

Entrepreneurs often forego satisfying, well-paying careers for the opportunity to start their own company. Yet, many founders (myself included), are willing to pivot or change their vision at the first sign of customers not wanting their products.

What does this say about us as entrepreneurs? Should we start a company over any whim or thought? Is the goal of starting a company to find something that customers want and make a few bucks along the way? Or, is it to bring something to life that we believe needs to exist in the world?

There are many ways to make a good salary that lets you buy a house, travel the world and create a nice life for your family. Starting a company is so risky. It can’t always be the best solution for achieving financial independence.

Yes, there are many valuable ideas from the Lean Startup methodology. I’ve done many presentations on these ideas over the years, and I’m generally a proponent of the methodology. In particular, running small experiments, measuring and iterating. Yet, I think we’ve taken things too far. In particular, the misunderstood idea of *only listening* to customers.

As entrepreneurs starting companies, why are we willing to give up on our ideas, product and vision so quickly? Why are we pivoting so much? If we’ll only build products that customers immediately say they want, aren’t startups just turning into inexpensive contractors for our customers?

Startups should exist to create something that needs exist in the world. This has to feel like a mission for founders. If your startup didn’t exist, the world would be for the worse.

Without that sense of mission, it’s easy to get sidetracked by customers and chase a new feature that customers say they’ll pay you to build. But that’s not a startup – that’s contract work.

The best startups have a mission, or an insight, that they know is worthy of their talents, time and sacrifice. The founders of Google knew that Page Rank was the right way to organize web searches. Marc Benioff knew that installed CRM software was too complicated and that software as a service was better. Dollar Shave Club only exists because Gillette got greedy and gouged customers for decades. It was inevitable a new razor company would be created.

Sure, listening to customer feedback is helpful for refining your vision, but customers shouldn’t set your vision. It’s our job as founders to build the future and make it easy for customers to join us in that future.

Our Future

Over a year ago, I tweeted:

I didn’t realize how prescient this would be.

As I mentioned in my last blog post, we’ve done a tremendous amount of soul searching, debating with advisors, and testing new ideas. We’ve found a mission that we can believe in and that seems to elicit an emotional response from almost anyone with whom we share it.

 

  • Broadly, our mission is to make transportation effortless.

  • Specifically, we’re starting with a very narrow focus to fix a very broken process: truck and van rentals.

 

“The best way to predict the future is to create it.”

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Renting a moving truck or van is incredibly painful. Ever been to a Uhaul or Enterprise car rental?

In fact, Uhaul’s business model is built around advertising the lowest price possible for their rentals and then upselling you on gas, mileage, insurance, boxes, tape and anything else they can get a penny for. Not to mention, it’s a complete hassle to wait in line to pick up the vehicle, worry about refueling when you’ve only driven 10 miles, figure out if you need insurance, and so on.

In the future, truck rentals will be completely self-service, delivered to you and instantly available when you need them. The combination of accelerating developments in vehicle software and hardware, combined with a new ownership model that is service-based, will make transportation effortless. We’re creating that future with Fetch.

In our current form, starting at $15 an hour, you can rent a cargo van that includes 100 miles, gas and insurance. Yes, we include gas, mileage and insurance in one flat price.

We’ll even deliver it to you. Yes, we’ll bring your truck straight to you, and well even pick it up. We’ve eliminated the hassle of driving to the rental agency, leaving your car and getting back before the store closes. Effortless.

You see, products should solve a user’s entire problem. Not just a piece of it. Offering a van or truck without gas or miles is like buying a house but having to install your own electricity and plumbing.

This is just the start. As Paul Graham famously advises, we’re starting by doing things that don’t scale. We’re physically renting the cars, washing and vacuuming them, and learning all of the details of the industry.

But, the software is coming. Eventually, you’ll press a button, walk out the front door, and your truck will be right there. This could be at your apartment, house or even the store where you’re shopping.

 

It’s working 

We’re a week into Fetch, and the feedback has already been energizing. I can’t emphasize how much growth and customers fuel your startup.

When a customer like Dorita unexpectedly leaves an incredible Yelp review, it makes you want to push even harder and go even faster.

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Give Fetch a shot

Need to move an apartment? Pick up a piece of furniture? We’d love to help.

Use this link to get $15 off a rental (and feel free to share with friends!).

Have ideas or feedback? We’d love to hear what you think.

See you in the future!

A long road

Startups are often called an “adventure.” For the past 18 months, we’ve been on a journey to build something that people want. We’ve gotten close, had some successes, but haven’t broken through in the ways we hoped.

In this post, I wanted I share a few things I’ve learned about myself and startups that I thought would also be helpful for others.

 

How very logical decisions can lead to being stuck in first gear.

 

January 2015 – Started Transpose – website personalization for B2B marketers.

My co-founder and I had spent the previous 5 years in marketing technology. We saw personalization working for B2C and ecommerce marketers. With our background in B2B, we had an insight that B2B marketers should also be personalizing the content and products they present visitors on their website.

 

March 2015 – Launched the MVP for Transpose with a few friendly users.

A handful of friends signed up for Transpose. One user saw very strong results with a simple use case. We were encouraged. But, we also struggled with getting people that didn’t have a prior relationship with us to use the product. We figured we could solve that as the product grew and we developed case studies from early users.

 

April 2015 – Accepted into the Summer 2015 Y Combinator batch.

Wow! We were absolutely thrilled to be accepted into YC. We entered with some promising early results from Transpose and were ready to scale.

 

July 4, 2015 – Realized that we were not going to hit our demo day goals with Transpose.

After talking with hundreds of marketers, we realized no one (well, two people) wanted to use our product. We tested using Transpose in a few different ways, but nothing really resonated with us or customers.

Personally, this was an awful feeling. We didn’t feel like we were building something that people wanted or would make a difference. We wanted to believe in our vision, but the data overwhelmingly told us that people didn’t want what we were building.

Do we pivot or persevere? Ultimately, we didn’t believe strongly enough in our product or vision to persevere.

 

July 10, 2015 – Based on our experience with running webinars, we decided to try something completely new and disrupt the webinar industry on top of WebRTC.

With a few weeks remaining to the YC demo day, we sprinted to demonstrate some level of traction.

I wouldn’t say that this new focus felt like a mission for us; it felt like a problem that we understood well enough to take a stab at solving. With demo day approaching, we didn’t analyze the opportunity too deeply. We sprinted for growth.

September to December, 2015 – Data indicates that people are frustrated with products like WebEx, but they also aren’t willing to quickly switch webinar providers. Time to iterate, iterate, iterate.

After speaking with a possible technology partner, we identified an opportunity to use our video technology for customer support. While not a game-changer, we thought this could be a way to start generating some revenue.

At this point, almost a year in to our startup, we were anxious to generate any type of revenue.

April 2016 – With the product being used by a handful of customers, but still not generating significant revenue, we launched a mobile version.

A few key customers were consistently asking for a mobile version, and they were even offering to pay in advance for it. We didn’t have a ton of experience with mobile, but customers seemed excited and we saw the value this type of product could provide.

We knew we had some interesting technology and were circling around solving an interesting problem. With customers reacting so strongly to a mobile add-on, we figured this could be a major gap in the market that we could fill.

 

August 2016 – With only a few customers using the new mobile product, we again realized that people just don’t really want what we are building.

We launched the mobile product and quickly encountered several sales objections that we didn’t expect, including objections from the customers that asked us to build the product. These objections came from the teams that were responsible for implementing the product. (Not the buyers.) This was a major lesson learned: sales is really the only litmus test for understanding if customers *really* want your product.

The Result

At the end of the day, we have several dozens customers using the Breakout Room product. While these customers are happy, and we will continue to help these customers be successful and support these products, we aren’t seeing the growth worthy of a startup with investors.

 

Lessons Learned

  • You have to be able to see the future, and a mission is essential. If you don’t have an opinion of what the future will look like, your strategy will tussle in the wind without a clear direction. Without a mission to change the world in some way, you’ll struggle to recruit customers, partners and employees. You have to believe in something and be prepared to defend your point of view.
  • Interviews, sign ups and letters of intent are worthless. People don’t want to hurt your feelings, and their “feedback” will take you down the wrong path. The only things that matter: What do you steadfastly believe in, and are people paying you to solve their problem?
  • You won’t know. Are you on the right track? Are you headed down a dead end? It’s impossible to know. No startup ever makes a dent in the world by giving up. But, many companies die a slow death without realizing it. You have to believe in something and be comfortable sinking with the ship.

 

How does it feel? 

At this point, we’re 18-months into this startup journey. We’re incredibly frustrated and stressed that we haven’t had the success we anticipated. We feel indebted to our investors and worry every day that we won’t produce a return for them. We thought it would be simple. Build a product, iterate on customer feedback, and grow. Turns out it isn’t that simple.

While we focus on being very, very frugal with our expenses, we’ve still spent a lot of money, both from our angel investments and personally. For our families, they’ve remained incredibly supportive, but my co-founder and I have both spent a significant amount of our personal savings, and time is running short.

What’s next? 

What is the future that you believe in? What is a pain that you’ve personally felt? Do you have the energy to take one more run at this? How will you feel if you run out of money?

These are the questions we’ve asked ourselves repeatedly over the last few weeks.

We’ve spent a lot of time in self-reflection to sharpen our belief in the future of the world, even though it doesn’t logically fit into our background of B2B software.

We’re going to make a dent in the transportation industry.

Renting a moving truck or van is incredibly painful. Ever been to a Uhaul or Enterprise car rental store?

In fact, Uhaul’s business model is built around advertising the lowest price possible for their rentals and then upselling you on gas, mileage, insurance, boxes, tape and anything else they can get a penny for. Not to mention, it’s a complete hassle to wait in line, worry about refueling when you’ve only driven 10 miles, figure out if you need insurance, and so on.

We’re challenging that status quo. We believe that this is wrong, and there’s a different way that should exist.

What exactly is our mission? Why do this? We’ll share more details soon.

 

This is our future

Change the future, or go down trying. We’re more proud of our new mission than of any of the other products we’ve built, because it’s something that we want. Not something that makes sense in a spreadsheet.

With artificial intelligence and battery technology rapidly transforming the automotive industry, we believe Fetch can make a dent in the universe over the next decade.

 

A small way of saying thanks

There have been an incredible number of customers, investors, colleagues, friends and (especially) family members that have supported us during this crazy journey. Without their support, we’d have most likely given up long ago.

Whatever the outcome, we hope our effort is deserving of their faith. If it is, we won’t have any regrets.

 

Our New Logo (or through being cool)

Things like logos and company names are tricky. On one hand, you have a chance to set the tone for your company by creating a memorable, unique name and logo. On the other hand, get too creative or unique, and everyone will miss the point of your company. Oh, and make sure the proper domain name is available, your name can be spoken easily and your logo is suitable for digital and print format.

All of these rules usually lead to a name and logo that are fine, but aren’t memorable. It works, but no one cares.

When we started creating our new logo, this was one of the things we wanted to spend extra time on to get right. Our PlacePunch logo was fine, but we rushed it through the 99designs process. I don’t think we were ever in love with it.

This time, we were able to work with a great local designer. This let us work with a professional that could help us balance the brand we’re trying to build with proper design.

In the end. We had two options. One was great. It was clean, simple and evoked our brand in a subtle way.

The other option was dangerous and unconventional. We loved it. But, many people would hate it.

 

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I love our logo. It does everything wrong, with a purpose. It perfectly conveys the idea of Transpose. It has orange, so it’s connected to our past. It’s 3d, which is a terrible idea, but it somehow works here.

Some people will hate it. But, that’s a good sign. I’m through worrying about doing what’s safe. This is our company. If we believe in something, get feedback and can defend our decision, then we’re going for it. No one ever celebrates what’s safe.

I’m in love with our name, our logo and how we’re building our company. Who knows what will happen and if we’ll build the company into anything memorable. But, at least we believe in it.

 

 

 

Should we raise a million dollars?

I was catching up with an investor last week. During the conversion, I was asked “why not raise a million dollars for your startup?”

We’re currently working on a very small seed round. The goal is to use those funds to launch the product and find the first 50 successful customers.

But, my co-founder and I are repeat entrepreneurs. Why not go bigger and faster this time by raising more money?

Right now, we’re not raising that much money for a few reasons:

1) We don’t know how big our opportunity is. Is it $2 million? $10 million? $100 million? If it’s say, under $5 million, raising a million bucks feels like we would over-capitalize the business. We take the responsibility of returning shareholder value very seriously, and over-capitalizing is a quick way to limit everyone’s upside. If it turns out we’ve found a massive opportunity, and we’re scaling quickly, raising more money may make sense for us.

2) We haven’t decided what we want to be when we grow up. Do we want organic, steady and predictable growth? Or do we want to use additional funding to scale up really fast, have a board of directors and go big? There are pros and cons to both.

3) I’ve seen many repeat entrepreneurs be overconfident with their product and market. Time and time again, I see founders either raise (or invest themselves) millions of dollars in a business before even having a customer onboard. Having a smaller bank account creates a powerful incentive to make sure you’re solving a real customer problem that can generate sales. In other words, it keeps you hungry. For our type of business, we don’t need $1 million in capital to get the first few customers.

I like to think of fundraising as dating.

  • Seed round = first date / build the product
  • Super-seed = going steady / find more customers
  • Series A = move in together / there’s a real, validated opportunity here
  • Series B+ = let’s get married and commit to this path / go for broke

For now, we need to get to know our customer and product better. I’m sure we’ll consider raising more funding in the future, most likely once we have some level of traction with customers.

Year 1 Startup Goals

As we dig into the first year of our startup, we recently spent time going through the annual-goal planning process. (Yes, it’s as exciting as it sounds. But, it does provide focus.) The first year of a startup is typically spent figuring out the product and retention, securing the first handful of customers and starting to work on marketing and sales.

For our startup, we’re focused on figuring out the product and building out the internal tools to provide stress-free products and support.

I thought it would be a fun experiment to share our 2015 goals. A) I’d love to get thoughts on our goals and B) I find it helpful to have some level of public accountability at this stage of the company. (Yes, ask me about our progress.)

With that, here are our goals for 2015:

  • 100 successful customers
  • Launch two integrations with key partners
  • Launch automated on boarding program, weekly training classes and product recipes
  • Have at least $100k cash on hand
  • Have revenues to support at least one additional hire
  • Bonus stretch goal: $1M annual run rate

100 successful customers is the key goal. (This implies they are using and getting value from the product.) Most of the other goals are inputs or by-products of that goal.

We’re pumped to get started and would love to hear about your first-year startup goals.

 

 

 

 

Customer Development – Don’t Overthink It

One of the most valuable habits I’ve used since my first startup experience (Techrigy) is that you have to validate your product ideas with customers as quickly as possible. (At that time, it wasn’t called “customer development.” We did it just by spending time with anyone that would talk with us.)

If you Google “customer development,” there’s an emerging curriculum on how to conduct exactly the right interviews that follow a formal process. While these methods are helpful, they can also be very overwhelming to new entrepreneurs.

  • “Don’t bias your interview subject”
  • “Make sure they name the problem with your bringing it up.”
  • “Don’t ask them how much they’ll pay”

I generally agree with these points, but there’s also a high-degree of over-optimization happening here. One of the most important things founders be is customer-focused. You learn so much by talking with potential customers and getting a broader data set. Sure, your first interviews won’t be perfect, but simply having 15-minute conversations will reveal:

  • Is it easy to reach potential customers? Are there enough of them to build a business?
  • Do people get excited (and lean forward) when talking about the problems you’re trying to solve?
  • What types of other products do these people use?
  • etc

Being customer-focused breeds good habits and gives your more data to work with. Sure, your data may not be perfect. But, getting into market quickly will give you a quick litmus test of your business’s viability. Don’t overthink it.

 

 

What Customer Development Doesn’t Tell You

We’re a week into working on our new startup. We’ve spent the past week running “customer development” interviews, and we’ve already learned a ton and iterated on our original ideas a few different times.

Yet, while customer interviews are great for learning what paint points customers have, how customers react to product ideas and mockups, and propensity to buy, there are many things that customer interviews don’t answer:

  • Is the product sticky? Will customers continue to use it for multiple years?
  • How competitive is the market? Will larger companies enter the market? How well-funded are competitors?
  • Can the product thrive as a stand-alone offering? Or, will it eventually become commoditized as part of a larger suite?
  • Does your team have the skill to pull this off? Are you eager to spend the next 2-3 years solving this problem?

These are just a few of the questions we’re asking as we build out our product strategy. Yes, customer development is a powerful technique for identifying pain points and receptiveness of potential solutions. But, it’s not a complete blueprint to building a business.

 

Takeaways from “Startup CEO”

I spent part of the Thanksgiving holiday plowing through Matt Blumberg’sStartup CEO” book.

Matt is the CEO and founder of Return Path, an “email-intelligence” company now at nearly 500 employees. Return Path is a very well-respected company in the email industry, so I was eager to dive into the book.

Matt’s created a true field guide for startup CEOs. In the book, he covers everything from testing products, raising capital, managing a board of directors and building a company culture.

For me, the best aspects and advice from the book include:

  • How create a high-functioning board of directors. Matt provides tangible advice, including the amount of preparation required to create a really good board deck and meeting. We didn’t have a formal board of directors at my last startup, so this section was very helpful.
  • How to iterate and pivot within your startup. Matt’s stories about growing Return Path through new products, acquisitions and even divestitures are unique.
  • Personal growth and management. Matt is a big-time follower of Lencioni and Drucker. Matt’s advice on managing your schedule, meetings, personal growth and even work-life balance are personally very inspirational. I’m always striving to be more productive. Matt’s “operating system” is really hardened and most entrepreneurs can learn a lot from his process.

“Startup CEO” was a fun, useful read full of strategies for growing both your startup and personal career.

Catching a Break

welcome to silverpop

 

Today is my last day at Silverpop. While I don’t want to write anything overly-personal, I felt I needed to take a moment to publicly acknowledge the gratitude I have for the past three years.

When we decided to sell PlacePunch to Silverpop, we weren’t sure if it was the right decision. Three years later, I can definitively say it was an incredibly-positive and unique experience.

Going into the deal, we knew that Silverpop was a product-focused culture with a team of smart, experienced, good people. We also knew it was on the cutting edge of marketing-technology and that we’d get to see a heck of a lot from inside Silverpop.

And from the first day, the team at Silverpop supported us, challenged us and pushed our team to mature faster than we ever would have on our own. Launching products to thousands of customers, working with a global team, and being mentored by successful entrepreneurs has felt like compressing a career’s worth of experiences into a few years.

When our acquisition with Silverpop was almost done, my mom told me “Everyone needs a break to get ahead. I think this could be yours.” I’m so thankful we caught that break.