Lean Startup Paralysis

In my previous post, I started a Lean Canvas for Bounce and hoped to have the next post ready the following day. That didn’t happen, largely because I got struck by analysis paralysis.

Phase 1 – Reviewing Bounce’s Lean Canvas

Getting a 50-page business plan reviewed is hard. Getting a 1-page business model reviewed is easy and, is an important part of the process.

It is imperative that you share your model with at least one other person – Ash Maurya, Running Lean

With that in mind, I started incorporating feedback from a couple folks. First, Hakon Verespej left some great comments on my first canvas which I’ll summarize:

  • Key Metrics – Instead of several metrics, identify a single metric that best encapsulates our goal and drive decisions around that metric. See Walgreen’s “profit per customer visit” here: http://www.anbhf.org/pdf/walgreen.pdf
  • Channels – Where’s Facebook?!  Of course…should have been there.
  • Unfair Advantage – “Exposure” isn’t sustainable.  I agree. I don’t think I have a real unfair advantage at this point.
  • Unique Value Proposition – “Makes being on time easy” isn’t compelling enough.  I agree, largely because it’s too broad and doesn’t speak to each of my customer segments specifically.  Which is where Riyaz’s feedback comes in handy.

Next up, my friend Riyaz Habibbhai shed quite a bit of light on the Unique Value Proposition box:

Basically, we need to come up with value propositions for each of our customer segments.

When it comes to Unique Value Propositions, one-size-fits-all…fits no one.

Phase 2 – Value Proposition Matrix

After chatting with Riyaz, I began to realize exactly how much of my first canvas was a total guess.  Every single one of my customer segments had potentially multiple value propositions, and I had no clue which one was the most valuable.

My first thought, was to organize it all so I can get a lay of the land. With that, came the value proposition matrix:

Now I had 12 customer segments, 16 value propositions and no clue which pair was the most compelling.  This is when my head started to spin.

Phase 3 – Knowing what I Didn’t Know

Before I started Bounce’s Lean Canvas, I was blissfully ignorant of what I didn’t know. Now, I was overwhelmed by it.  I didn’t know…

  • Who Bounce’s best customer segment was
  • Why they wanted Bounce
  • What features they wanted Bounce to have
  • How much they were willing to pay for it

In fact, at this point, I’m not exactly sure what I do know.

Faced with a huge, empty spreadsheet of not-knowingness, I spent a couple days stuck in paralysis.  I knew my energy needed to be spent filling in my knowledge gaps, but doing so by interviewing hundreds of people was too daunting of a task – so instead, I did nothing.

Phase 4 – Something is better than Nothing

For me, the worst thing about analysis paralysis isn’t that I’m not getting things done, it’s that I feel lazy for not getting things done. Feeling lazy is demoralizing and can start a pretty nasty downward spiral.

But feeling lazy can also be that kick to the ego that gets my ball rolling again.  After a couple days of “mehs”, I decided come hell or high water, I was going to do something.  It didn’t have to be the optimal thing, it just had to be some thing.

As luck would have it, a friend of mine needed a lift from the airport and, wouldn’t you know it, some of my potential customers are at the airport!  With that in mind, I headed there a couple hours early to interview some folks:

I’ll post more details and videos about the interviews later, but the big takeaway here was that it stoked the fire again.

Phase 5 – Running Lean

The other fuel for my recent fire was Running Lean, which arrived the same day I set out to do my interviews. John Sechrest highly recommended this book to me and I’m grateful he did.  It’s written by Ash Maurya, the man behind the Lean Canvas, and had I read it before my little bout of paralysis, I could have saved myself quite a bit of time.

Things I know now that I wish I would have known then:

  • It’s best to make multiple business model canvases – one for each customer segment, which its own corresponding unique value propositions.
  • Prioritize the business models – otherwise you’ll get overwhelmed (ahem)

If you’re in the process of testing hypotheses, I highly recommend you grab this book. Easy read with targeted, prescriptive advice on business model validation.

Phase 6 – Takeaways

So that I don’t repeat this same mistake again, I’ve thought quite a bit about what I can learn from this experience. Here’s what I’ve come up with:

  • If the “optimal” next step feels too daunting to take one, take a suboptimal one. I’ll feel less guilty about doing nothing with my time and may capture enough momentum to tackle the “optimal” step next.
  • Ask for help. I wish I would have asked for help from some other folks to get me out of this rut a little quicker. Help eventually came in the form of a book, but maybe it would have come more quickly in the form of a friend.

Next up: Interviewing strangers at the airport!

Join the experiment – subscribe for updates via Email or RSS.

How assumptions made an ass out of my startup

When we started Nimbus Health, we knew we were making some assumptions, but there were a few things we knew too:

  1. A launch customer is ready to use our product
  2. We know how much they’ll pay
  3. There are 50+ companies just like our first customer
  4. Our first customer is influential and will refer us to those customers

Of course, each of these things that we “knew”, turned out to be assumptions as well. Bonus! They were all wrong.

  1. Our customer was ready to use the product, but it wouldn’t matter.  There was another decision maker involved (their customers) who would make the final call.  Almost none of them did.
  2. “Our pricing isn’t just cheaper than your existing solution, it’s easier to understand!” They didn’t want cheaper or “easier to understand” – they wanted “easier to pass onto their clients.”
  3. That the 50+ other companies “understood” the pain we were solving was true.  That they felt is so badly they’d be willing to pay for a solution was not.
  4. Referrals, HA! Half the other companies are competitors and those that aren’t don’t really get along that well anyway.

So, wtf? How are we going to be able to do anything if even the things we know to be true, turn out to be false? Enter the Lean Canvas.

Lean Canvas = Assumption Destruction

Lean Canvas is technically a morphing of Alexander Osterwalder’s Business Model Canvas by Ash Mauyra, but what really matters is that it is a single sheet of paper that makes it obvious which of our assumptions are wrong.

I haven’t filled one of these out before, so we’ll be learning together. Here’s how I’m thinking it’s going to work (btw, you should follow along fill one out for your business too):

  1. We fill out each of the section of the canvas
  2. Recognize that every single thing we’ve written down is a hypothesis
  3. Call out each of the experiments we’re doing to test these hypotheses
  4. Iterate on our canvas until we’ve got a business model we’d bet our mother’s retirement on

Like you, I don’t have a lot of time to waste on documentation, so I didn’t.  Here’s what I come up with in half an hour for Bounce:

Quick, dirty and wrong, but at least we _know_ it’s wrong.

If you want to see how I went about filling it out:

Fwiw, the most helpful thing so far was to really call out my problem statement. That has really helped to drive a lot of clarity into my customer value proposition. Now I’m looking forward to coming up with experiments to test these hypotheses.

What’s Next

Want help not making an ass of your startup? Schedule a 1-on-1 mentoring call.

Join the experiment – subscribe: Email | RSS

Beware of Teases: Customers who say Yes, but mean No

Beware of Teases: Customers who say Yes but mean No

Teases

A comment thread with the extremely knowledgeable Tristan Kromer, reminded me of several misleading responses I’ve heard from customers.  At first glance it sounds like they’re saying, “Yeah, I’d pay for that”, but are really just being teases.

Consider the following replies to, “Would you pay for it?”:

  • “Yeah, I’d definitely recommend it to my boss”
  • “I’m probably not your target audience, but I know other people would pay for it”
  • “I don’t write the checks, but I’ll definitely bring it up at the budget meeting”

Good news! We can tell our advisors that we’re going to get discussed at a budget meeting! Wrong. These are responses I’ve heard from customers who like the idea (yeah!), but none of the above have the authority to cut me a check.

Teases are the worst kind of customer. In fact, they’re not our customers at all because they’re not decision makers. We need to talk to the folks with the money before we know the real answer to our question.

Gold Diggers

Now, consider these replies:

  • “I like the pitch. Come back when you have a product.”
  • “Hmm, maybe if it also did _______.”

That’s right…these customers are gold diggers. These customers didn’t find our initial value prop compelling enough, so they want more!

To be clear, this is very valuable feedback, it’s just not positive, valuable feedback. If they don’t find our pitch compelling enough to start talking $ and cents, we’re trying to build something that isn’t solving a pressing concern. Time to incorporate their feedback or hit the drawing board.

Liars

Finally, we have the liars:

  • “Yeah, I’d buy it. I haven’t bought any apps before, but I’d definitely buy that one!”
  • “We don’t normally use 3rd party software, but this make a lot of sense.”

These customers want so desperately to give us good news, they delude themselves; if we’re not careful – they’ll do the same to us.

Actions speak louder than words. If they haven’t established a pattern of buying products like ours before, we’ve got a long road to hoe, before we nail this deal.

Conclusion

analogies.

Beware of customers who sound positive, but stop short of talking about money. These sirens will smash your business model against the rocks of reality.

Let $ in our pockets be our compass.

Join the experiment – subscribe: Email | RSS

5 Steps to Identify, Segment and Contact our Customers

Segmenting customers
Mmm…customers

So we want to ask customers if they’ll pay for Bounce before we build it, but first we need to figure out who they are.

Step 1 – What problem do we solve?

Since people don’t buy products, they buy solutions to problems, we started by identifying the problem we solve:

Being late is stressful. Bounce eliminates that stress by making it easy to be on time.

Step 2 – Who has the problem we’re solving?

Anyone who doesn’t like being late.

Step 3 – How will we tell people with this problem about our solution?

Hmm…now we’ve got a problem.

No one identifies with the customer segment we’ve called out here.  No one joins the, “People who don’t like being late” group on LinkedIn.  No one reads ThePunctualityBlog.com.  As we learned with OnCompare, if there’s no way for us to interact with these people, they’re not a customer segment.

Step 2 (again) – Who has the problem we’re solving?

Who has lots of meetings outside their office as part of their job?
Real Estate agents, sales people, event planners, founders, general contractors, etc.

What kind of companies “sell” being on time? 
Florists, caterers, utility installers/repairers, plumbers, electricians, etc.

Who is routinely affected by bad traffic?
Long distance commuters, van pools, people who commute over a bridge, etc.

Who really wants to be on time for their personal life? 
Single people who are dating, busy parents, the “chronically late”.

Who is unfamiliar with the local traffic patterns? 
Business travelers, people who have just moved to an area.

Step 3 – How will we tell people with this problem about our solution?

Almost all of the customers above self-organize into groups.  Either actual LinkedIn, Meetup or trade groups, or they’ve formed ad hoc communities on blogs or forums.  Or perhaps, they have a common set of suppliers, or they advertise in the same set of magazines. For example:

  • Real Estate Agents – LinkedIn, meetup, trade group, blogs and forums
  • Florists – trade groups, all interact with FTD, all interact with wedding planners
  • Bridge commuters – listen to the radio, subscribe to traffic twitter feeds, download traffic apps
  • People who have just moved to an area – read hyperlocal blogs, new college students read college newspapers

Etc.

Step 4 – Identify the Influencers

Now that we know the groups our customers hang out in, we need to identify the influencers of those groups.  For blogs that means finding the authors, for meetup and linked in groups it’s finding the moderators, if we need press it’s finding the person who is going to write our story, etc.

Of course, we need more than their name, we need at least their email address. To find that info for every one of our influencers requires hours and hours of tedious net-scouring, and to be perfectly honest, I hate don’t enjoy it.

Luckily, my friend Marcos Polanco introduced me to oDesk – a fantastic resource for internet research.  The idea is simple, pay someone else $5/hr to do the tedious work.  I write up detailed instructions on how to find someone’s email address including things like:

And then I tell them to “Find the contact info of the top 5 hyperlocal bloggers in each of these cities: Los Angeles, New York, Chicago, San Francisco and Seattle.”

5 hours, and $25 later, I’ve got 25 email address.  So much better than me doing it myself.

Step 5 – Provide Value

Now that we’ve got our influencers’ contact information, it’s time to reach out.  Of course sending a, “You should tell your group about my awesome product!” email isn’t going to work.  If we’re going to get anywhere with influencers, we need to provide them and their group value.

Hey [local blogger name],

I saw your article on how awful traffic is getting in Chicago [link to article].  A friend and I are launching a Kickstarter project [link] to build an app that makes getting around Chicago easier – despite worsening traffic.

Think [blog name] readers would be interested in something like that?”

When I’ve done this before I’ve pitched the actual product, not a Kickstarter project to fund the product, so I’m not sure what kind of reaction we’ll get. Either way, we’ll use FollowUpThen to bug them about it at least one more time. ;)

To Recap

Those are the 5 steps we’re using to identify, segment and contact our customers:

  1. What problem are we solving?
  2. Who has that problem?
  3. How will we tell people with this problem about our solution?
  4. Identify influencers
  5. Provide value

I’ll keep you posted on how it works out. In the meantime, alterations or alternatives to this approach are welcome.

Join the experiment – subscribe: Email | RSS

Tool: FollowUpThen

Is a customer uninterested, or just too busy, to respond?
Is a customer uninterested, or just too busy, to respond?
The scenario:

  1. I want to get some feedback from a potential customer
  2. I find their contact information
  3. Send a succinct, but personalized, email asking to chat or meet up
  4. Crickets

What now? Well, if I even remember that I emailed them (unlikely) I could chalk it up as, “I’m not providing enough value for them to talk to me.” But what if this person, like me, is busy, forgetful, or both? Worth following up one more time, right?

Enter FollowUpThen, as proselytized by my good friend Rishi Shah at Flying Cart.

  1. It’s free
  2. It’s easy
  3. It sends you a reminder to follow up with your customer if she didn’t get back to you

Now I send customer emails and bcc [email protected].  If my customer doesn’t get back to me before then, FollowUpThen will remind me to get back to them.

Works for [email protected], [email protected], [email protected], etc.

PS – It’s like a free version of Boomerang, which is what I searched for to find it.

Join the experiment – subscribe: Email | RSS