Mastering scale – doing things that don’t scale is the path to scaling!

Masters of Scale - doing things that don't scale

Masters of Scale Episode 1:

“In order to scale you have to do things that don’t scale.”

Brian Chesky of AirBnB

 

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The purpose of this blog is to offer a summary of the key points of each of the episodes of Masters of Scale, together with a few insights. In the first of the series, Reid Hoffman talks to Bran Chesky of AirBnB about getting early customers.

I think it is a great example because we all know AirBnB as a tech-industry giant now, but like most startups it was not easy in the beginning. The founders had maxed out on their credit cards and only had a bout ten to twenty users. Their strategy: really get to know these users and what they wanted (and did not want) and hunt down new users one by one. Was that scalable? Definitely not - but it allowed them to build a firm platform off which they could then find more automated ways of getting new users - and they could not do that until they were sure they knew what their customers really wanted and loved.

Key lessons:

1 Get personal  and detailed feedback from you early customers as early as possible - that mens talking to them.

2. Use judgement in terms of what you take on board - you should not try and implement everything you hear.

3. Understand what might be the perfect user experience - and then try and build in an appropriate level of "magic" to your product. (Click the link if you would like a free tool to help you design the experience: "the 11 star customer experience template"

4. Do not start with a product that is immediately scalable (it will probably be wrong anyway), but using Chesky's words: "Do everything by hand until it's painful". There are plenty of examples of founders using their own phones or emails as the primary customer service touchpoint.

5. Designing a customer experience and scaling that experience are two different skill sets.

6. When you finally do reach scale, do not lose the ability to innovate as you did in the pre-scale phase. Large organisations quickly kill innovations that do not look operationally efficient.

7. I really like this final point they make as it resonates with so many of our early stage entrepreneurs. If you are "pre-traction" - do not despair. This is the best opportunity you will have to really design a product that your users will love. The impact you can make at that pre-traction stage has the potential to have a massive multiplier effect on the future of your business.

Pulling these ideas into "lean startup" thinking, we offer the basic diagram below as a guide:

 

Steps to scale

For those looking for another example of gaining customers in a non-scalable way, have a look at this article (and the additional material below):
"Why I spent hours conducting research for my first clients - before I was paid a dime"


Tip for university entrepreneurs/professors:

If you are going to start a business at university (while you are studying), select your initial market in close proximation such as other university students, people in the community or local businesses. This will allow you to far more easily "do things that don't scale" with early customers than if they are difficult to get to.
For more about our programmes for universities, visit: Mashauri for Universities.


 

Look out for our next article from the Masters of Scale podcast, coming soon:

"Always raise more money than you need."


You can listen to the podcast by subscribing at Apple iTunes or the Android store; but you can also go to the website at Masters of Scale and listen to the podcasts.


 

Additional material only for those seeking more in-depth knowledge and cases on doing things that don't scale.
(This material is not part of the podcast.)

Doing things that don't scale - part II

A few years ago, Y Combinator launched an excellent video series on starting startups. In our old Mashauri site, we ran a series of blogs on the series (similar to what we are doing on Reid Hoffman's podcast). One of their videos was on "doing things that don't scale" - so we have reproduced the article (with video) below for those readers who want an even more in-depth look at the topic.

 

This is an interesting video lecture with 3 different speakers:

> Stanley Tang from DoorDash – a company that undertakes deliveries for small businesses. Stan discusses doing things that do not scale.

> Walker Williams from Teespring, a startup that makes T-shirts for organisations without “risk, cost or compromise” – you can see our previous blog on Teespring at Teespring Case Study. Walker also discusses doing things that do not scale

> Justin Kan, founder at Kiko and Justin.tv, talks about the tactics of getting publicity.

 

If you are short of time, I would listen to Walker Williams first, then Stanley Tang and finally Justin Kan. Although Justin has some interesting views, most are pretty straightforward and may be less relevant for early founders – but you can skim our notes below and make your own call on what you watch.

Here are my key take-aways from the video lecture:

Stanley Tang: DoorDash

> Get the most minimum “minimum value product” out there – especially if you are not sure if there is a real market (and that goes for most of us).

> Mashauri caution – we recognise that not all products can be entirely basic if that does not allow you to deliver a good customer experience; so work out what really is the minimum for you. The advice in this video though is that your product requirements are probably far more basic than you think.

> Remember that if customers do have to struggle a bit to do what you want them to do, if they still try then it is probably a stronger sign of an underlying, unmet demand.

> Do not worry about automating your product or delivering seamless service at first. Rather use the method of simply doing it yourself. Not only is this cheaper in the short-term, it also prevents you from building things that people do not want. The example is the founders taking calls and making all the deliveries themselves.

> Another big advantage in doing it yourself is you get to understand what is really required before you build the model. It plays to a previous lecture where the advice was to become a real expert in what you are doing.

> Finally, Stanley reminds us that doing it all yourself is a competitive advantage you have against more automated customers. You have the chance to deliver a really tailored service and get instant feedback.

Walker Williams: Teespring

Walker focussed on three areas - we summarise each in turn below:

Finding your first users
Turning those users into champions
Finding product/market fit

Finding your first users

It is really tough to find your first users and there is no silver bullet. It all boils down to the founders spending time and effort. It could be sending hundreds of personal emails, sitting on the phone or trawling events for people to talk to. It is simply a hard slog – but “scrappiness” is what makes good entrepreneurs.

Do not think in terms of ROI when winning these customers – you will spend huge effort for limited numbers in return. Just make sure that you have users who really value your product (if possible, DON’T give it away for free).

You are probably going to be bad at selling, you will not really understand customers pain points and do not even have testimonials or cases to help you. Tough it out. (Or as I overheard a friend saying to his daughter: “suck it up princess”)

It will get easier as you get more users; but certainly for a long time the way that you win new customers will not be a scalable strategy.

Turning your first users into champions

Delight your users with an experience they have never had before and will remember – do whatever it takes to make this happen.

Spend as much time talking to customers as possible – and really listening. Answer all mails and queries yourself. Scan social media to find out what they are saying about you – and if something goes wrong: make it right!

Proactively reach out to those customers who leave. If you cannot get them back, at least you can find out what was wrong and do something to stop others leaving for the same reason

Finding product/market fit

Realise that the product you finally ship is unlikely to look much like the one that takes you up to the point where you think about scaling – so do not get too fussed about perfection. Speed is more important than a clean product.

A rule of thumb is only to worry about the next order of magnitude of customers – so when you have ten users, think about the next 90, not the next 900!

Do things that do not scale for as long as possible – keep talking to users, keep iterating as fast as possible; only give up doing un-scalable things when it is finally “ripped from you”.

Justin Kan: Kiko and Justin.tv

> Be aware of what you are trying to achieve with public relations – that should guide everything from resource spent to the media that you target.

> Remember, outside of achieving specific goals (eg awareness in a certain town among a certain sector), the rest of publicity is just vanity. Something that makes your mother happy.

Justin is a successful entrepreneur and his advice is not bad, but unless you are specifically looking for publicity now, you can probably skip this part of the lecture.

 

 

Mastering scale – getting from startup to corporate

Masters of Scale - an introduction

Reid Hoffman - LinkedIn boss

 

A while ago we produced a series of articles around Y-Combinator's excellent series on how to start a startup. Now I am pleased to say that we are starting a new series based on Reid Hoffman's (co-founder at both PayPal and LinkedIn) new podcast "Masters of Scale.

First acknowledgement to Tim Ferris (4 hour workweek, etc) whose podcast highlighted the series for me - it is well worth listening to Tim's series too.

There are a lot of really rubbishy articles, videos and podcasts that come out of Silicon Valley - many misleading, often overly-hyped and some frankly dangerous to a new founder who might take them to heart. But Reid is clearly different. He has been part of a number of incredibly successful businesses, part of a number of failures and has an eye for angel investing that is almost magical - some of his early investments include Facebook, AirBnB and Flickr. His insights are sharp and he is not afraid to take a contrarian view and so you will generally find his work really interesting. The excellent part of this series is that it takes place through interviews of top entrepreneurs who share their own experiences and wisdom including the likes of Mark Zuckerberg (Facebook), Eric Schmidt (Google / Alphabet) and Brian Chesky (Air BnB).

The focus of the Masters of Scale series is about scaling i.e. rapidly growing a business where the business model has been tested. However,  there is plenty (maybe 50%) of information around the startup phases as well i.e. where you are searching for and trying to find the business model that works. In Tim Ferris' podcast he briefly goes through all "ten commandments" - listening to this is a useful way of getting an overview. The commandments (and time in Tim's podcast where they appear) are: 

Commandment 1: Expect rejection. [09:14]

Commandment 2: Hire like your life depends on it. It does. [19:26]

Commandment 3: In order to scale, you have to do things that don’t scale. [25:37]

Commandment 4: Raise more money than you think you need — potentially a lot more. [36:18]

Commandment 5: Release your products early enough that they can still embarrass you. Imperfect is perfect. [44:45]

Commandment 6: Decide. Decide. Decide. [1:00:16]

Commandment 7: Be prepared to both make and break plans. [1:03:13]

Commandment 8: Don’t tell your employees how to innovate. [1:07:21]

Commandment 9: To create a winning company culture, make sure every employee owns it. [01:12:32]

Commandment 10: Have grit and stick with your hero’s journey. [1:23:22]

Bonus Commandment 11: Pay it forward. Use the momentum of your own success to move the success of others. [1:26:03]


You can listen to the podcast by subscribing at Apple iTunes or the Android store; but you can also go to the website at Masters of Scale and listen to the podcasts. Finally, for fuller immersion, I recommend the Entrepreneur.com site where they host the series and add some of their own perspectives as well - Entrepreneur Masters of Scale.

I know many of you are time-strapped and would like to get an overview of the episodes before investing your time in listening to them - and so over the next few weeks, we will produce short summaries here to give you episode highlights peppered with our own views. Look out for our next blog:

Masters of Scale Episode 1: “In order to scale you have to do things that don’t scale.”


Note to university professors and faculty heads: Mashauri work hard at ensuring our programmes for students contain the type of material that is encompassed in this series. Not only do we believe that the practical experience we give student entrepreneurs in their courses is essential, we also believe that exposure to true entrepreneurial experts is a critical part of the learning process. For more about our prgrammes for universities, visit: Mashauri for Universities.


 

Ayudanos “Crowdfund” una novela empresarial: “Elegidos o atrapados”

“Elegidos o atrapados”

Aprende de emprendedor mientras disfruta un novel – y ayuda nuestra colega Isidre March crowdfund su libro.


“Elegidos o atrapados” está ambientado en una original y realista trama de ficción y aporta al lector una visión nueva y crítica sobre los directivos de grandes compañías, los jóvenes emprendedores, el ecosistema de Silicon Valley o la gestión de las start-ups Todo ello explicado por medio de dinámicas conversaciones entre los personajes, buscando una reflexión proactiva en el lector.

Los testimonios recibidos de los lectores de la versión inicial en pdf han sido positivos y resaltan el estilo fresco al tratar temas empresariales de actualidad, los giros inesperados en la trama y la intensidad emocional de los personajes.

Ahora, tras la buena acogida del formato pdf, se ha decidido a publicar “Elegidos o atrapados” en formato libro impreso. Está ya disponible a través de la plataforma de crowfunding verkami: https://www.verkami.com/projects/17989-elegidos-o-atrapados-novela-empresarial

Verkami es la plataforma de crowfunding lider en España, totalmente fiable y respetada. Las reservas sólo se abonarán por parte de los mecenas si la campaña culmina con éxito. En tal caso, el envío de los libros al domicilio del suscriptor o en mano, lo realizará el autor personalmente en septiembre.

Si te motiva la lectura de ficción y además descubrir planteamientos novedosos sobre temas empresariales de máxima actualidad, participa en la campaña de crowfunding, con distintas opciones de recompensas, desde el libro individual a partir de 12 Euros hasta el pack institucional con el envío de 20 libros, opción ideal para asociaciones empresariales o de apoyo a emprendedores.

Además, si la campaña culmina con éxito, Isidre March lanzará a continuación mi nuevo libro “Emprender en Silicon Valley: mitos y realidades” con todas las claves para desembarcar con opciones en el ecosistema emprendedor líder mundial. Landing https://emprendersv.wordpress.com/

Descubre “Elegidos o atrapados” el thriller empresarial del momento, escrito desde Valencia para todos.


 

Finding and selecting an idea for your new business

Identify and choose an idea for your new business

Frequently when I am giving lectures on entrepreneurship or networking with groups of would-be entrepreneurs, I am asked ”But where can I find a good business idea?”

Initially I was surprised that so many people started with a need to be an entrepreneur, rather than starting with a business idea; but now I realize it is quite common. In fact we recently offered a free survey for people who wished to assess their entrepreneurship potential and as a qualifying question we asked the status of their business – astonishingly more than 40% either did not have an idea or had several ideas but were unable to decide on which one to focus.

So I decided that the next blog in our series should be about how to go about finding a business idea.

Finding the right idea for you is all about hitting your personal “sweet spot”. That is the intersection of four areas:

  • Things that you are passionate about
  • Areas where you have a strong competency (or at least can build one)
  • A real problem that needs a solution (or a better solution than currently exists)
  • A business concept that can generate the type of income / lifestyle / fame / independence / …  that you want.

To make it simple, we have designed an infographic that demonstrates this and includes some further detail about each area.
How to find a business idea

So … how to go about it.

Step one: is to think about the first two points: your passion and your competencies. Brainstorm your ideas and review and refine until you are comfortable with where that leaves you. You might even draw up a matrix with competencies on one axis and passions on another – and then think about what the various points of intersection might mean.
Hint: if you can find something that you like doing that the average person does not like, it can be a good place to start. For instance, Paul Graham of Y Combinator explains how his father likes mathematics, which many people do not. Those things that “don’t feel like work” to you, but do to others, can lead you to some great ideas.

Step two: is to think about what problems exist (that are within your competency / passion space) that are currently inadequately solved. In the best cases, it is a problem that you yourself suffer from; but if not at least one in which you have some experience or knowledge. Make a list of those problems.
Hint: you may need to do some investigation here – fortunately Google is a great source of information at this level. One way of sparking ideas is seeing what others are doing (see “Idea sparking” at the end of the blog – plenty of links and interesting things!!)

Step 3: take the list and rank each problem on the basis of:

  • How big is the problem
    • Number of people / organisations that suffer from it
    • Seriousness of the problem to them
  • How competitive is the problem space
    • How well do the current solutions address the problem
    • Are there lots of companies / solutions providing the solution
  • How well you think you might be able to develop a solution (it does not matter if the solution itself is unclear at the moment?.

It is useful to get a little quantitative here: weight each criteria, rank each answer and work out a weighted score for each problem (click on the text to download our problem assessment calculator as a guide). Let the actual score act as a guide, but ultimately you need to pick the problem that feels “the best” to you.
Hint: after settling on a problem, it is a good idea to chat to a few potential customers to see if your hunches are right.


Now that you have an idea, does not mean you have a business. It is just the beginning. As you have probably heard, more than 70% of new businesses fail and that is because first time entrepreneurs seldom know the right way to go about starting, testing and refining their idea before actually building anything. Even people who have years of corporate business experience do not fully understand how to start a venture from scratch. Fortunately, there is a growing body of knowledge around a more scientific process to launching a new venture that will put the odds of success in your favour. Have a look at our latest blog that discusses this – the no BS step-by-step guide to launching a new venture.

Even better, if you are keen to get going immediately, why not sign up for our LAUNCH Programme to help you get your idea rapidly launched. We have taken best practices in “lean startup” methodology, mixed it with some critical training modules and added mentor input to really help you get your new venture to the critical point of having paying customers. Take a look at the Mashauri LAUNCH programme.
(Or if you want to test the systems first, try our our free LAUNCH).

Our final piece of advice ….  just do something. Too many people think about starting a businesses, dream about new ventures, talk about their brilliant ideas – but never get down to doing anything. To borrow a phrase from Nike: “Just do it!” If it does not work out, the lessons you learn for the next time will be invaluable.

And if 70% failure rate scares you, just remember what Wayne Gretzky said:
“You will always miss 100% of the shots you don’t take.”

Feel free to contact me if you wish to discuss your idea or how to go about making it a reality, at simon.gifford@mashauri.org


Idea sparking:
Simply start searching for “business ideas” on Google. Here are some links to get you going (the ideas range from banal to quite interesting):

Another source of ideas is new concepts that are currently being launched. I am not saying that you should copy them, but they might trigger something for you. Great sources are crowdfunding  and new product idea sites. Some examples are:

 


Register here to get more information about conceiving, launching, growing and funding your new business – and get all our free programmes immediately.

Register in Mashauri

Are you ready to be an entrepreneur (free assessment and article)?

The age-old argument between entrepreneurs being made or born continues – and probably will do for long in the future. Our view at Mashauri is that anyone can be an entrepreneur. In fact many people are forced into this journey through necessity rather than desire – and many are successful despite not having the right “genes”.

However, we do believe there are certain personality traits (rather than personality types) that will make it easier for some than others. The three main ones are around risk propensity, self-belief and the way opportunities are viewed. If you want to know whether you have the type of personality that will help you to be a successful entrepreneur, take our test at:

 Entrepreneur Readiness Assessment


One of the better (non-academic) articles written on the subject was published by The Entrepreneur magazine called “Are Entrepreneurs Born or Made?” They asked 2 experts to put forward the conflicting views:

 

James Koch Old Dominion
James Koch: entrepreneurs are born

James V. Koch from Old Dominion University who wrote a book on the topic put forward the “born” argument. His view is that entrepreneurs tend to have a personality type which he describes as:

“They have the ability to deal with uncertainty, to take risks and tolerate ambiguity. They usually have a personality that is mercurial, and they have highs that are really high and lows that are really low. There’s good evidence that they have strong self-confidence but also tend to be overoptimistic. They rely extensively on their own intuition.”

Fundamentally he questions whether entrepreneurship can be taught and that without this personality type, it will be difficult to fit in the role as an entrepreneur.

Julian Lange Babson College
Julian Lange: entrepreneurs are born

Julian Lange from Babson College argues the “entrepreneurs are made” point. He does not deny that there are certain proclivities that help, but he believes education can play an important role.

“I think much of the recent research shows that entrepreneurship can be taught. The thing that some people talking about genetics are getting at is that people have different proclivities toward entrepreneurship and different sets of skills or endowments intellectually. Maybe, simply put, you can’t teach someone to be passionate about entrepreneurship. On the other hand, I’ve been teaching for 20 years, and in my experience people can definitely discover their passion for entrepreneurship in the classroom. And in terms of general skills, if they start out with interests or endowments that make them more likely to be entrepreneurs or less likely, you can enhance their ability to be entrepreneurs through teaching. In some ways we can say there is a certain element of entrepreneurs that are born, not made. But some entrepreneurs can be made better.”

His conclusion is that education on entrepreneurship can make a real difference.

If you want to read the article, it can be found at: Are Entrepreneurs Born or Made?


As a professor at IE Business School, I sometimes give a lecture entitled “MBA versus entrepreneur” which highlights the way that the entrepreneurial thought and decision making process is different to a more corporate-type of person. This is slightly more scientific as it is based on solid research by Professor Saras Sarasvathy. It also supports the view that there are certain characteristics that, if you have them, will make it easier for you to be successful as a new company founder. (If you would like to have this lecture given at your organisation, contact me at simon.gifford@mashauri.org )

So why not go ahead, take our entrepreneurial assessment and see whether you have what it takes.


How to value your startup (pre-revenue)

Startup valuation may feel like a black art, but you can add some science to it if you understand the different methods

There are various ways of calculating the value of your startup when seeking financing. None are perfect and it is best to use a few methods to reach an estimate. This post describes a few of them.

It is important to remember that “value is in the eye of the beholder” and it is almost certain that potential investors will see things differently to you (the entrepreneur). One of the most frequently used methods of valuation by angel investors is called the benchmark or Scorecard Valuation Method (sometimes also called the Bill Payne method) and is well described by Bill Payne in his article.

The two broad steps are:

  1. Get an idea of what are the rough pre-money valuations of previous deals in the region where you are seeking finance.
  2. To increase or decrease that average based on a weighted scoring that considers the keMap for valuation of new venturesy factors that can make a new business successful.
    These factors vary somewhat from investor to investor, as does the weighting. But the main elements are:
  • Management team
  • Size of opportunity
  • Underlying product, technology or solution
  • Competitive environment
  • Strength of partnerships or distribution channels
  • The likely need for further rounds of investments pre breakeven point

For details of how to apply this and find a scorecard template, view Bill Payne’s article here.

For an even better insight, read the article “peeling the onion” which takes Bill’s method and adds a little more insight. It also adds a really useful spreadsheet valuation tool based on this method.

If you are seeking an independent valuation of your venture, there is a service at Value your Venture

Note: if you want to increase your chances of getting funding and a reasonable valuation, then Mashauri’s acceleration programmes can help get you there. Go to our home page and click the button indicating where you are in the process to receive recommendations on how to move forward.


Although the method above gives an excellent basis to a valuation, it is useful to try out a few other methods too as you will get some alternative numbers and more importantly get a better understanding of the underlying factors that drive the valuation.

Here are the other principle methods used (click on the name for more information):

  • The risk factor summation method (a more sophisticated version of the Bill Payne method described above)
  • The venture capital method which is based on what a VC would pay given their desired return and exit estimate.
  • Discounted cash flow based on risk-adjusting future cash flows. This works better for established companies than pre-revenue startups (and in fact is the basis of valuation of listed companies). The link offers a fairly detailed video.
  • Comparable transactions method which looks at a number of comparable transactions and their key ratios; and then applies them to your venture
  • The Berkus method, a very simple, back-of-the cigarette box method, allocating value based on the key risks of a business.

Additional resources:

Get an independent valuation from Mashauri for your startup at Valuation Now

The guys at GroundFlr are doing a good job at matching investors with startups.Why not have a look?

Our friend Mark Stewart is developing a model to help founders visualise the impact of various investment terms on valuation at Startupval.com.

Equidam is also a really useful source of ideas about valuation and has a tool where you can get a valuation for your venture based on a number of methods.


Although at Mashauri we do not (yet) offer funding to our entrepreneurs, we do support them in preparation and seeking funding when necessary.

If you are not yet ready for funding but want to get there in a hurry, then you should get into Mashauri’s acceleration programme. 

Or contact me at simon.gifford@mashauri.org for more details.


 

Achieving startup success through problem solving

The achievement habit : how to be successful by solving the right problem through reframing.

Bernard Roth is the co-founder and academic director of Stanford University’s d.school. He recently presented at Stanford’s eCorner a talk called: reframing problems and getting honest. I was so struck by the importance of the talk for entrepreneurs (and non-entrepreneurs) that I thought I should summarise the key points in a blog, but also publish the talk itself (see below). Read the summary if you like, but the video is definitely worth watching.

From an entrepreneurial perspective, we face problems and challenges practically everyday. Although there seems to be a never-ending supply of support on the web or from experts, sometimes we need to step back from the technical aspects of the problem (especially if you are an engineer) and think about the problem itself. This is where this article will stand you in good stead – and why it should be essential entrepreneurial reading.
Roth starts by establishing credibility through an introduction to himself and giving a bit of his background. He then talks briefly about design thinking which although is all the buzz today, has actually been around for decades in one form or other; although it is now being applied in fields far beyond design, including acting as a problem solving methodology.


The heart of the talk is about problem solving and he challenges the Stanford (mostly engineering) crowd to answer the question: “If we are so bright, how come there are so many problems that worry us, appear unsolvable over time and may even keep us awake at night?”

His answer: “Because you are trying to solve the wrong problem!” The way to address this is then to reframe the problem by asking yourself: “What would it do for me if I solved the problem?”. He goes on to offer up some of his own examples, but let me offer one I have seen. This may be simplistic but it illustrates the method.

Entrepreneur: “I cannot get funding for my startup”

Mentor: “You can keep banging on VC doors or ask yourself the question: ‘what would it do for you if you solved the problem.’”

Entrepreneur: “I could hire a developer to build my product”

Mentor: “How else could you get this done if you have no funding?”

Entrepreneur: “Well I could find a developer and offer them equity. Or I could find an off-the-shelf product and adapt it. Or I could find another way of testing the idea through a different MVP. Or I could learn some code and do it myself. Or …..”

In this case and the one’s that Roth uses, by asking the question a far wider range of solution spaces opens up and suddenly there are plenty of other potential solutions available – not just the one with which you started. If you do not believe me, stop reading for a moment and give it a try with a problem you have been facing for some time.

He also makes the point that we get locked into this particular way of looking at a problem and often find it hard to let go – but often when we do manage to re-frame, the solution becomes obvious. He uses a familiar joke as a metaphor to our behaviours. A drunk is walking home, bumps into a tree and falls over. He gets up and bumps into the same tree and falls again, cursing the tree. He gets up ….. and so on. Eventually, he sits down on the floor and says: “I give up. They have got me surrounded!” Which is how Bernard claims we often act when worrying over and over about a problem we are not solving. We hit the same obstacle without trying to get around it.


The second key point is that we often use reasons as to why we do or do not do things. He says: “All reasons are bullshit.” There is never simply one reason, life is too complex but we hone in on one reason (even if it does feel logical) and that is what stops us changing behaviour. His example was that he was on a Board of a company and always arrived late. His rationale was that the traffic around San Francisco always held him up. After a while he had an epiphany and that was he did not give the Board meeting enough valence or respect. He allowed himself to be interrupted or left late. He realised that if he really cared enough, he could get there on time (and eventually did!). This holds true for many things. If you really care enough (either externally or internally motivated), you can do something – especially if you are prepared to re-frame the problem.


The third point is that “Yoda is wrong!”. Bernard says there is a try and there is a do – and both are OK states. The problem is when you confuse trying with doing.

He offers up a few useful examples such as when he and his wife stopped to see a concert. She was not really keen and there was a queue. He dropped her off to buy tickets but when he returned she was waiting around and said that they were all sold out. Bernard then went off and bought tickets (he Yoda: Do or do not. There is no try.does not say how, but we assume he bought from some ticket holders or something like that). His point is his wife was trying when she thought she was doing. If you want to “do” you do not let obstacles get in the way. You go around them, over them or through them – whatever! You make it happen because that is your mind-set. Trying is attempting to do something but giving up if you do not succeed – and possibly not feeling too bad because at least you “tried”. He does not say that trying is wrong, but simply encourages us not to confuse trying with doing.

From an entrepreneurial perspective, we face problems and challenges practically everyday. Although there seems to be a never-ending supply of support on Google or YouTube, sometimes we need to step back from the technical aspects of the problem (especially if you are an engineer) and think about the problem itself. This is where Bernie’s teaching can come in useful.

Bernard Roth The Achievement Habit

 

Bernie has also written a book around the topic: The Achievement Habit: Stop wishing. Start doing. Take control of your life. It covers this topic and is full of other useful ways of living a successful life – click on the image to reach Amazon.

 


A final example may be if you are an entrepreneur starting a business, your problem may feel like: “I do not know how to go about launching a successful business.” That might be better framed as : “Where do I find the best resource to help me be successful in my new business?” Then the answer becomes obvious. Mashauri! 

Have a look at our free programme to test us out!

 



The full e-Stanford video can be seen here:

 

Mashauri offers accelerators and training programmes for early stage entrepreneurs who want to learn how to conceive, launch and grow in the right way to maximise their potential to succeed. Why not give our free programme a test drive? Click on the image below and sign up now.

 

 

 

 

How to start a business – the no BS step-by-step guide

1. Introduction
Given my background, you would be forgiven for thinking that I was probably an ideal person for starting a business. Good university degrees in statistics, economics and an honours in marketing. An MBA with a strategy and finance focus. Real jobs in finance and accounting (6 years); in brand marketing with the multinational Kimberly Clark (3 years) and then over 25 years of consulting to major corporates around the world mostly as a partner at a top tier firm (Deloitte; Braxtons). Within that time I also launched two consulting businesses of my own and advised countless friends and family members on their own enterprises. And I even lecture at a top business school on strategy, decision making and M&A!

Jargon buster business modelHowever, it was only when I started researching my latest venture over 3 years ago, did I find that I really did not know the best way of launching a business in the 21st century. You see my training and experience had mainly been around growing and developing existing businesses. That really entails optimising a known business model to best serve a known market. In the majority of new businesses, especially where founders have new ideas or are harnessing new technologies – launching a business is more a process of designing or discovering a business model; and only then optimising it.

Over the last few years, I have worked hard at taking my existing 30+ years of training and experience; and integrating it with the latest best practice in startup thinking to have developed a framework that can assist founders in successfully launching a new business. I do not claim for one moment that I have all the answers or that I am some amazing startup guru – and frankly acquiring these new “startup best practices” has included learning from our (my co-founder and myself) own failures, mistakes and diversions. But now I do have a much clearer perspective of the critical success factors and many of the potential pitfalls that must be addressed in developing a new business from conception to paying customers – and beyond.

The purpose of this article (and subsequent ones) is to share my thoughts with those people who are in the early stages of developing, or considering starting, a new business venture. It will include theory, practical cases, tools and links to important blogs, books and other startup resources. My wish is that it will give you a better than average chance of being successful, provide some useful support – and perhaps put the occasional smile on your lips too – because if you do not learn to enjoy the journey (or “camino”), it may be best if you do not start at all.
Business launch

This introductory article will cover, at a high level, the overall process from conceiving an idea to scaling and growing the business. I will also touch on some of the hype (read BS) around the entrepreneurial environment and then some of the truisms that hold for established businesses and startups alike! I will finish off with some links to some useful resources.

 

I do not yet have the rest of the articles planned out in detail and to an extent I will be using your feedback to structure the themes, but they will almost certainly include:

  • Business models, value propositions and lean thinking;
  • Market segmentation, personas and the customer journey
  • Design-thinking and product development;
  • Funding and finance;
  • The entrepreneurial mind-set with a commentary on depression and optimism.

They will NOT include:

  • The 7 things that successful entrepreneurs eat for breakfast
  • The 5 character traits that guarantee startup success
  • The 10 reasons why venture capitalists have bad sex lives.

Lastly, I am not going to try and keep the articles to 500 words or whatever the behavioural psychologists believe our nano-concentration spans can handle. I am hoping that they will be valuable enough for anyone with a real interest in creating a successful business to want to read through in total – maybe even twice! On the other hand, if you do not – well, I will never know!

 

2. Stepping through idea to growing business
We can break down the development of a new business into phases. In a later article we will cover these in more detail, but for now they are:

Mashauri startup steps

Jargon buster value propositionNote several good authors have described the steps to build a business – probably the best being Steve Blank in his book “The Four Steps to the Epiphany”. The steps I describe above integrate well with his ideas, but Steve tends to use terms that may be a little cryptic unless you read his book (see recommended reading below) so I have tried to use more familiar terminology.

Google garbageGoogle Garbage alert: if you google “x steps to build a business”, you will find a lot of useless, some downright dangerous, advice.

Probably the biggest learning point a corporate business person-turned-entrepreneur will have to get to grips with is that, up until there are paying customers (red blocks in the diagram above), their business idea is basically one big experiment.

The way this experiment is run has also been covered by a number of people, but the most popular must be Eric Ries in his book “The Lean Startup” (see recommended reading list). His underlying theme is that when you start your new business, your concept is at best a set of hypotheses that describe how you think your business will work in the future. Using “lean startup, the founders should build a set of experiments around these hypotheses and test them via learn-build-measure loops that test the underlying hypotheses of the business.

As an example, one of the major assumptions (hypotheses) that the AirBnB founders had was that people would rent their homes out to strangers. The only way to really test this was by testing this idea in the real world. In the process they got to understand under what circumstances this might (and might not) happen so they were able to build this into their product offering.

We will cover more of this in the next article. It is also the underlying methodology we use in our Mashauri programmes and so if you want to start using it right away, you could sign in to our Launch Programme if you liked.

 

3. Navigating the hype.
If the previous section guided you through the right steps, this section is to help you navigate through some of the rubbish that you can find on starting a business on the web.

Perhaps the best way to do this is by busting some of the “myths” you might read:

  • jargon investorsMyth: Everyone should try and get a venture capitalist or business angel (see jargon buster) to fund their business.
    • The chances of getting funded are really slim. Far less than 1% of new ventures get funded (see our blog on “Holy Grails, unicorns, VC funding and other fabled creatures” for more facts). In addition, if you are one of the few that might obtain funding, not everyone likes the loss of control that goes with it – see later article on funding.
  • Myth: Social media is the answer to all your marketing prayers
    • Social media may be a useful channel for many new businesses and can certainly be an inexpensive way to reach customers. But, as in most startup spaces, it requires clear objectives and strategies. Far too many founders launch Twitter accounts, Facebook pages, LinkedIn company pages, etc and then spend mega-hours on trying to get likes and followers with no real idea why or how. One hundred people who willingly register on your website is worth thousands of FB likes or Twitter followers!
  • Myth: You have to offer things for free, especially if you are selling web-based services.
    • Someone using your services for free is a user, not a customer. Once again, there may be a sensible strategy as to why you might have a free version of your product, mainly as a way of allowing them to experience your product before buying a paid-for version. If you cannot persuade someone to part with money for your service, then you probably have not got an appropriate value proposition.
  • Myth: You should attend all the startup events you can find so as to “network” with investors and the like.
    • There are a ton of events on the go, frequently based around pitching competitions, motivational talks and startup “experts” sharing their wisdom. They can be fun, motivational and occasionally useful contacts can be made – but don’t confuse them with work. Generally, founders attending these events, even if they pay, are the “products” on offer to the vendors. (I suspect I may pick up some flak for this comment and, to be fair, there are some great events like South Summit, but you should pick your events carefully and attend with clear objectives in mind.

 

4. Some truisms
Although I started the article explaining how starting a business is not the same as running a going-concern, especially in the early stages – there are plenty of business laws that still apply. Many people holding themselves out as entrepreneurial gurus seem to want to ignore these. Frankly in this day of sky-high valuations on young businesses that are yet to turn a profit; and the rock-star status of some of the founders, it is easy to think that the business version of the laws of gravity can be defied.

jargon unicornMy list of truisms that may seem to be getting trampled to death by unicorns (jargon buster) are:

  • Cash is king – positive cash flows derived from customer revenue will always remain the lifeblood of a business (to mix my metaphors). Even if you can convince an investor to temporarily allow their cash to be that flow, they expect your business to get there – and get there quickly.
  • A startup is a temporary organisation seeking to become a permanent business through finding a workable business model. A business is an enterprise with paying customers.
  • Business strategy is still important. The teachings of gurus such as Michael Porter and Clayton Christensen are as relevant for new ventures as they are for large corporates, even if there are different interpretations.
  • Following the above point, it is essential that you are able to articulate your basis of competitive advantage if you wish to survive. By the way, being first is not a long-term competitive advantage.
  • Not all ventures must have plans to become massive, change-the-world institutions. Lifestyle businesses that simply provide a living or even bolster a salary are just as important – in fact most economies depend upon them.
  • You and/or your co-founders need to be an expert in the business sector in which you are competing and in the underlying technology or process that makes you different. For instance, if you are going to provide a highly customised tourism experience based on big data analysis of customer behaviour, your team must have deep tourism knowledge and excellent big data expertise.
  • Providing true perceived value inside an excellent customer experience in a way that is different to your competitors, will always be at the heart of any long-term business venture.

 

5. Some recommended reading
There is more new business venture reading material out there then you will ever have the time to read. Frankly for most of my readers, you just need enough knowledge of the new venture process to successfully launch and your business, not become startup specialists. I would therefore recommend the following books:

Important reading

Great to have reference books:

6. Conclusions and questions
If you find this article to have been of value, please let me know either via the comments section or direct to my email at simon.gifford@mashauri.org In addition, if you have any suggestions as to how the style may be improved (eg shorter, more examples, etc), please use the same media.

Our objective is to help you to be more successful in launching and growing your business. The Mashauri process, mentors, training and community are part of that; but should you decide not to use our programmes we hope that at least these articles will be of some value. If you do want to fast track your business to success, then I suggest the LAUNCH programme which is mentor-backed and about to commence.


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Some shared wisdom for founders and investors

Over the weekend, I watched a fascinating interview of Chamath Palihapitiya sharing some valuable wisdom on a number of topics of interest to entrepreneurs and investors. Admittedly, I had not heard of him before – but he is the guy responsible for Facebook’s growth and AOL before then; and now founder at Social Capital … and so has some credibility.

The video is posted below and if you can spare about 30 minutes, it is worth watching. I am also posting my thoughts and takeaways in case you want a quick overview or a little more detail to see if you think it is worth viewing.

Note: the interview was conducted by the Founder Institute. Mashauri and FI overlap in a competitive space, but we acknowledge the great work they are doing.

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Thoughts on trends

Chamath discusses trends and likens them to a pendulum. His point is that the best ideas (and deals) are from companies who can adapt both sides of the extremes and still find a balance.

Gretzky skating to where the pucks goingMy personal takeaway was:
As founders, are we really building for the future? We tend to look at the mainstream companies in our industry and build something different to them and believe we are riding the future wave. I am not sure if we look hard enough at the future to see where that is going and try and build for that. Or using the one on my favourite metaphors, the skater Wayne Gretzky’s comment: “Skate to where he puck is going, not to where it is ….” Are you really building for where the puck will be?

 

 

Thoughts on investments

Chamath sees some sort of crash or at least an industry “reset” in about 3 years caused by some externality (he discusses a few). He makes some great points about companies not having to reach $1billion valuation to be successful as he discusses the craziness of the levels of investment in some B and C rounds. He shares some sensible thoughts about reaching a moment when it is time to just “buckle down and make this f$%^^ thing work” rather than chasing the next round of funding.

My favourite quote of the interview:
“Failure should be celebrated. Stupidity should not be”.

Thoughts on education

Chamath covers question at the end of the interview about education. He notes how it is now obvious that the US College system is fundamentally broken; but applauds the idea that Edtech is moving from a “save the seal” type mentality to one of recognising that it is about building and deploying human capital.

 

Mashauri has the mission of increasing the success rate of startups around the world. Beyond the acceleration programmes and training courses we host, we also share ideas and cases from successful founders to motivate and educate our users. Why not sign up to make sure you receive these articles when we publish them?

 

Startup failure rate is too high – and it’s NOT OK!

News article version of startup failure article

Mashauri (Mashauri.org) is an organization with a mission to significantly increase the success rate of startups across the globe.

Infographic: startup failure rate is too high

They have written a number of articles about startup failure rates – and why Silicon Valley and others are not right in the accepted view that the majority of startups must fail and that failure is “good” because it is simply a learning experience.

Although they recognize that there will be failures and that it should be a learning experience, they believe that we can learn how to be better at launching and growing businesses – and in fact that we can learn from other founders’ success and failures and do a better job at developing viable businesses. They also claim that failure is far less of an option for many entrepreneurs than is the case in perhaps Palo Alto where funding is more plentiful and entrepreneurship is a choice, not the only option.

Mashauri have recently conducted an investigation into UK Government statistics where they have combined a number of databases to  paint a picture of what is the actual failure rate of new businesses and when are they likely to fail. There are good reasons for using these particular datasets and they believe that the learnings are translatable to other countries, although the results might need to be adjusted for local factors.

Their overall findings are:

  1. About two thirds of all businesses fail within the first five years
  2. Almost one third of new businesses never gain traction (ie receive income from customers or receive funding)
  3. We are not getting better at helping new businesses become successful– in fact we are getting worse

These are shown with the relevant charts in the infographic below.

The full article can be found at: Startup failure rate is too high.

Or click the link at: http://wp.me/p7JRbh-IW

The next article in the series is going to look at the “why” of failure and try to map this onto the “when”.

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The author, Simon Gifford, is CEO at Mashauri, Director of Genesis management Consulting and an adjunct professor at IE Business School in Madrid.