As an investor, John Spindler finds the lack of background research by entrepreneurs to be one of the most commonly encountered frustrating problems. To solve this he suggested:
Make 2 columns:
Fact column- 2–3 facts you KNOW about this business plan.
2. Second column- Hypotheses. What things do I need to find out to build this thing?
Work out what is your OPPORTUNITY HYPOTHESIS. Build, Measure, Learn. Call it a project rather than a business because it is easier to fail fast. (I like the psychology of this idea and have already found it helpful).
In the experimental stage check your are measuring the right metrics, evaluation of them will lead to excellent execution.
Don’t build something nobody wants
3 types of advice: validated, negative and useless. (Validated/Negative advice in 8 weeks can be tested to see if it works. Good or bad it will help you. )
However, 95% of advice is useless in the next 8 weeks. Therefore, shelve it because it’s useless to you now.
Lean is just about organising the chaos, reducing waste and risk, providing more learning and a common language. IF your core assumption is wrong you need to test that FIRST. Then you will save yourself a lot of time.
It’s a common language. There is jargon and as soon as you learn it you can communicate with others — be ‘in the club’ as it were.
If you are going to build, do a lot of thinking. Then build the thing that teaches you what you need to learn.
The number one thing an investor will look at is the team. If you can convince a quality person to join you that is a sign of success. If you can recruit a quality army this is your number 1 asset! What quality of ARMY can you recruit? Investors will care about this more than anything else as it is the biggest single determinant of success.
Get OTHERS to validate your product. Your own validation is not that valuable but multiple external validations are.
A good hypothesis is simple & clear, written as a statement, establishes participants (who), variables (what’s involved) and prediction of an outcome (evidence).
The Pepsi Challenge type scenario is NOT the right first validation exercise. You have to assume that the first answer is wrong. Ask 5 why’s & eventually you might get to the nub of it. AVOID CONFIRMATION BIAS like the plague.
Most people are NOT early adopters in ANYTHING. Most people have habits that are very hard to break.
MVP is not a crappy version of the product. It is a prototype. Consierge MVP is legitimate. It can be a simple landing page, it can be a proof of concept, it can be something for people to engage with, it can be a paper prototype, a pitch, fake demo video, or something to help a developer to understand. It is just a way to answer the questions you need to answer.
Consierge means it is not scalable. It’s just there to allow you to learn. Beware, If your hypothesis is circular then its not a hypothesis and you need to think again.
Key assumptions you need to make
At least several other people are working on the same thing right now. How you think this your business idea will work is probably wrong. Your main job is to learn faster than the competitors. That is why the team is the key. It is the process and the people that win NOT the product itself.
The market is not stable and anyone who doesn’t keep moving forward will fall behind.
Call it a project, give it a name, sell something, convince someone else to join, set a goal that will inspire you, live 6 months in the future, fall in love with the problem and not your solution. Follow Peter Thiel’s philosophy as per ‘Zero to One’ (find it on Amazon its a good book.)
There are two types of teams. Napoleon team — they will follow your every command. The best teams however are people who are smarter than you and can do things you can’t and you bring them on the journey with you. They don’t want to just be footsoldiers for your army.
Bare minimum you need a hipster (domain insight), hacker (builder) and hustler (seller) to succeed.
Paul Graham- You need three things to be a successful entrepreneur — a great team, proof that customers want it and a willingness to do it with minimal money!
‘Make something people want’ — Paul Graham, Y Combinator
Avoid wasting too much time trying to change the ‘stuck’ middle who don’t want to innovate because they are very good at using the current system. Are your people your assets or your problem?
Before building your business ask: What problem would someone else solve for me?
Another thought: The number of secrets in the world is roughly equivalent to the number of startups we need.
How did the companies that are currently successful scale. When you scale big you win even if your product is inferior. Unless you can bring 10* value you are unlikely to be able to displace an incumbent. (As per Peter Thiel).
He would thoroughly recommend doing Stanford’s online course on design thinking (8–10 hours). Emphasise, define, ideate, prototype, test. Do it in groups if you can, it will radically transform your thinking.
‘Kick Ass’ products have evidence that they solve a customers problem in a big market. Focus on the early adopters. People you can beta test with. Commit 5 people. They need to know they are aren’t buying a perfect solution.
They are trying to find a home made solution. They want you to succeed, they will give you their time and honest feedback and you have a relationship of trust. Your mum is not one of these first customers!
Do you know the demographic? Needs and goals? Problems that need solving, Present behaviours? How do they go about solving those problems? Reference group? The behaviours and the psychology are key.
BJ Fogg. Head of behavioural theory at Stanford. B=mat. B=behaviours, m=motivation, a=pre-acquired ability, t=triggers (we are all contextual. We need external triggers to get us to change our behaviour. Every product is a behaviour change. Activation threshold affected by these three things, the triggers have to be enough to get them over the threshold.
Can you make something better than it already is? make something simpler? In an ideal world how would this problem be solved? Better, Simpler or emerging methods?
He suggests we build 5 actual profiles of 5 potential customers (actual people) . The more specific the better: Motivation, Habit , Income, Age, Location, Status, Backstory. Become intimately acquainted with there problems.
Then understand the full use-case lifecycle.
What do these personas do when ‘triggered?’
Entrepreneurship is a career. Startups are risky experiments. You don’t have to experiment full time. Start today with what you have.
Do you invest in startups who don’t use lean methodology? Yes but its rarer. Sometimes people just get damn lucky and hit a home run of first base but its the exception rather than the rule and it might not be repeatable.
Then he talked about financing and how ‘founders fit’ and how investors look at these things. Do you have someone resourceful, someone who can do x and y. The team you build now might well not be the team that takes it to the next level. Identify the task in hand and see if the team members can get you there.
Funders and investors must fit. An investor should never distort the function of the startup because this is your task. You have the hands on the controls. They are investing in you!
Suggested reading: Moms test by Rob Fitzpatrick, Running Lean by Ash Maurya and Lean Startup by Eric Ries.
This article came out of notes I took on a talk by @capenterprise at the first NHS clinical entrepreneurs pit stop – The beginning of a new journey. Or see my medium blog