The Ten Year Start Up Journey | #Act1
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The Ten Year Start Up Journey | #Act1
Understanding the terrain and picking a spot to make camp.
If you want to start from the beginning, the first post on this subject is here.
This guide is for first time entrepreneurs. It is the guide I wish I had. In following it, you are the hero of the story, it comes in three acts. This post is about the first, #Act1.
How the Guide Works
There are two sequences to this #Act1. They are #Sequence1 & #Sequence2. Each sequence is made up of four #Scenes. It will take you months to complete each sequence, depending on how well you know the market(s) you are interested in. Maybe 4-8 months is a realistic time range for completing both. #Sequence1 will take about 1/4 of the total time for this #Act1, and #Sequence2, 3/4 of the total time.
At the end of this #Act1, you will have an identified customer set, that has a painful-problem(s) you understand well. And some ideas of solution(s) that you believe could solve the problem, ready to be tested. Finally a written down hypothesis on how you will build your company and lead it.
In short #Act1 will take up to 8 months, with 2 Sequences made up of 4 scenes each
Guiding Principles
Building a business takes a long time, about three times longer than you think, so get mentally prepared for a long ride and enjoying the journey. Don’t make choices for the money, choose it for the excitement/alignment with your own passions & skills, and something you want to be doing many years from now.
Good distribution beats great product (great products no one knows about, or cares about, don’t make money). So lets build distribution into our thinking from the start. We still want to make great product, but it is only part of the picture.
We constantly do the math on ‘how many, and how much’, as we go, so we don’t build something small, of low value, that no one cares about.
Do we have the right to win? Success= QR
(Q is your ability x the quality of your idea)*.We will try and select great, outsize ideas (true innovations) that when multiplied by our ability, deliver big success. It’s better to be 10 x different idea and fail quickly, than marginally different. This stop us spending years building a zombie business that struggles to gain sales, but somehow hangs on to life.
Goldilocks timing is what we are looking for. We will happily be early, but not too early, but definitely we don’t want to be too late; see a post on that here.
Problems and pain are opportunities in disguise. You can truly get used to hard things and embrace and enjoy them. This isn’t just rhetoric, humans were not born for an easy life.
Disciplined thoughts, experiments and actions are needed to succeed so document everything.
You will often go backward and have to start again, its painful, that’s just how it works.
...and he nodded his head, “Yeah, same for me. It takes about seven years to get to exit.” That's true in the software/SaaS business and it's true for many businesses and even career paths. You have to be ready for it to take years longer than you hope or want before you hit your big goals.
From Impossible to Inevitable by Aaron Ross, Jason Lemkin
Innovation is very messy and chaotic. There is no shortcut. You only get the success after many failed attempts and dead ends. Creating a business (vs running an established one), is like running around a maze, doubling back on yourself constantly, learning a little more every time and trying a new route, again and again. Every dead-end is a not a fail. It’s a fail removed. As long as you remember to document and learn from the dead ends. Consequently with this guide you will be following scientific methods from the smartest minds I can find, in the area of creating start-ups, that I know work because I have implemented it or worked with a team that has.
Building a New Business
First lets be clear on what you are doing. You are innovating. You are bringing a new business/product/ service to market. Here is what that means:
“innovation” to mean the entire process of moving new and valuable ideas into the marketplace, where benefits accrue to the users and where return is extracted for investment in the process.
Inside Real Innovation: How the Right Approach Can Move Ideas from R&D to Market -- And Get the Economy Moving
by Eugene Fitzgerald, Andreas Wankerl, Carl J. Schramm
And here is a couple of mental models to help you think about the the above process in a way you can action.
1) Market, Implementation, Technology - Round and Round the Ice Rink
This image captures how the innovation process has you skating around (in circles) between the market ( customers with wants and needs), implementation ( how you solve the delivery of a solution) and technology ( what technology you use to innovate). Refining and learning as you go. It is inspired by an MIT course on Innovation & Commercialization of Technology. Very good, you can find it here.
Innovation : Removing the Mistakes to Reveal your Masterpiece
I like to think of the innovation process, as chipping away all the things that won’t work, like a sculptor removes marble pieces they don’t need, to eventually only reveal the masterpiece; the great business underneath. That is what you are going to be doing in Act 1.
“It took us about 7 years to feel like it was breaking through, for us to hockey stick”
Senior long-serving executive at Linkedin
#Act1
You will use the following scientific methods & frameworks in each of #Sequence1 and #Sequence2.
#Sequence1
This breaks down to 4 scenes:
#Scene1 = Researching a number of potential areas you are interested in that align with your abilities & passions.
#Scene2 = Prioritizing where to start doing experiments to discover problems and needed solutions.
# Scene3 = Size and validate the opportunities, get excited by them and prepare to test demand for potential solutions.
#Scene4 = Sketch out what your business might look like and your initial vision based on what you have learnt so far.
#Sequence1 is a mostly remote research, but should include interviewing and speaking to people as often as possible to test assumptions & qualify information. You want to measure and ‘feel’ the market through a number of different lenses. #Sequence2 is more hands on, learning-by-doing research, to increase the chances of uncovering a real ‘shark-bite’ problem. This is also when you begin to create your first product/solution. You begin to decide where you want to play ( what customers and problems to serve) and how you want to win (what solution and business model). Its also where you firm your first vision of the business, decide its purpose and how it might operate.
#Sequence1 frameworks
You will use the following thinking tools/scientific methods, to gather and analyze information for #Sequence1:
Trend research to check which way the winds of opportunity are blowing: PESTLE Analysis
Understand the players, so we know our friends and enemies : Ecosystem Mapping
Understand the powerful, so we don’t pick the wrong fights: Porters Five Forces
Understand the value chain so we dig for gold in the right spot : Porters Value Chain Analysis
Reviewing markets and keeping our options open: Market Opportunity Navigator
Prioritizing and sizing the markets for #Sequence2: How Many, How Much
#Sequence2
This breaks down to four scenes:
#Scene1 = You will have in-depth conversation with potential customers to understand their problems and needs.
#Scene2 = You will collate and capture all you have learnt into a jobs-to-be-done framework and rank opportunities.
# Scene3 = Size and validate the opportunities and get excited by the ones with the most potential.
#Scene4 = Test demand for potential solutions to see which ones are worth building a business around.
#Sequence 2 is a lot of deep conversations and analysis of how customers spend their time and the problems that arise. It requires you learn great questioning skills, great listening skills, and be able to start to pull everything together into focused opportunities for testing. It feels messy at times but over a number of meetings you will start to spot big opportunities and be able to test demand for paid solutions. You will also begin to form your ideas on how the business can be structured and how you will lead it.
#Sequence2 frameworks
You will use the following thinking tools/scientific methods for #Sequence2
Speak to some potential customers in-depth - Customer Development Framework from Steve Blank.
Capture with exactness where they are underserved and then calculate the biggest opportunities - Job to be Done & Outcome Driven Innovation.
Create a draft of a vision for the company using BE 2.0 Vision Framework from Jim Collins.
Create our first business hypothesis including how we make money and deliver the product - Business Model Canvas
Prepare your leadership style using BE 2.0 Framework from Jim Collins.
Begin testing demand for your solution using the Customer Development Framework and Pretotyping techniques.
Why this Way?
By following these sequences, you will reduce your risks of:
Picking a small market that is hard to win.
Closing off your options too early.
Solving a problem people don’t care about or is well served by others.
It will increase your chances of:
Picking market(s) with lots of options and size, giving your more lifelines if you fail (like a cat).
Discovering big enough problems, meaning the number of potential customers is big enough to build a business around.
Being aware of timing ( see fundamental rule no 5.) and whether the market is new or existing; which matters a great deal in pretty much everything you do in #Sequence2.
Building a business that makes money and can grow.
Be ready to follow the scenes like the piano playing below. Our brains want them to be straightforward, one after another, but sometimes you will go back and forth, and sometimes be working on more than one at the same time. Reflection time inbetween scenes, will help your brain pull it all together. Long runs or bike rides or walks create the aha moments!
The subsequent blog posts will give examples how to do the work and tests in each scene, and the key questions you need clear answers on. Please share this blog with any new entrepreneurs you think will benefit from having a guide as they build their business.
Enjoy the journey ahead!
It took me five years to feel like we were not going to go out of business, like this thing I had built could sustain.
Lee Arthur, author of The Ten Year Start Up Journey, GM Blenheim Chalcot North America, founder Streetbroadcast
*Albert-László Barabási Book | The Formula The Universal Laws of Success