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StartupRob

Hi I'm Robert Johnson. I help founders to grow great businesses. Former Managing Director @Techstars. Cofounder @makersacademy

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Efficiency

Why Your Lifestyle Design “Muse” Didn’t Work

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I read the The 4-Hour Workweek at a major turning point in my life. I had just left the Army and Stephanie and I were taking a road trip from Alaska to Michigan where I was going to start my MBA program.

I still remember how excited I was. My last few years in the Army were particularly difficult and I was elated that it was over. I had wanted to throw myself into entrepreneurship for years and the time had finally come.

A few weeks before leaving, a friend of mine insisted that I read the Four Hour Workweek. The title sounded incredibly spammy, but I bought it anyway. I started reading the book as Stephanie so kindly offered to take the first driving shift on the second morning of our road trip.

(A beautiful lake that we stopped at to get out and stretch our legs. If I remember correctly, this was about a half-day before getting to Muncho lake in Canada.)

The next few hours flew by and before I knew it, I had consumed the entire book.

I was in love.

I felt like I had just read something that had been written personally for me. After years of living a life where nearly every aspect of my existence was dictated by the Army, I was incredibly susceptible to the concept of complete financial, geographic and time freedom. It was refreshing to see the way the book challenged deep-seated assumptions about the choices we have in how we live.

As an entrepreneur at heart, the part of the book that really spoke to me was about “Engineering a Muse” which is how I was supposed to fund this new and exciting lifestyle. For the next couple of years, getting my MBA and finding a profitable muse were my main goals in life.

[Read more…] about Why Your Lifestyle Design “Muse” Didn’t Work

The Eisenhower Matrix

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There are a lot of time management and GTD systems out there.

I’ve tried most of them with varying degrees of success and failure.

One that has stuck pretty well is the Eisenhower matrix that I currently use to manage my business – Makers Academy.

The idea behind the system is that instead of using one giant To-Do list to keep track of what needs to get done, you prioritize them based on priority and urgency.

Running a startup means that no matter how on top of things one is, stuff will always fall off the table. There simply isn’t enough time to do everything, so prioritization becomes key.

The problem with prioritization is that it can quickly become blurred with urgency. No matter how important we know it is to have that big picture strategy meeting, it takes discipline to do it with the constant hustle and noise from partners, customers, meetings, bills and cash flow distractions that are more urgent.

The Eisenhower matrix breaks up tasks into four categories:

  1. Important & Urgent
  2. Important & Not Urgent
  3. Not Important & Urgent
  4. Not Important & Not Urgent

Tasks should be placed in one of those four buckets and completed in the order the categories are shown.

By doing this, we combat the natural tendency to let unimportant and urgent tasks overrrule important and not urgent tasks.

I don’t think there is a system out there that works for everybody, but this system has worked fairly well for me.

Be a Failer to Avoid Being a Failure

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I want to be a failer.

As I continue to try and identify what separates mediocrity from greatness, this concept of action and failure continues to bubble to the surface. Many people who I personally consider to be doing (or have done) great work, such as Tim Ferris, Steve Jobs, Clayton Christensen, Napolean Hill and Brad Feld all have similar philosophies about how action is a primary ingredient in greatness.

Observe the people around you. Some people never want to make a mistake. You probably know somebody like this. There’s nothing wrong with this – it’s actually quite a noble purpose. Nobody wants to fail. But this seemingly biological instinct to never falter is likely the exact ingredient that holds many people back from achieving their true potential. Not wanting to fail, by definition, brings with it a slower process of acting and decision-making.

On the flip side of this there is another type of person, he or she is likely someone who seems careless and rash. People feel that they don’t always think things through. They make decisions with confidence and conviction but are quick to change direction if things don’t go their way. They get shit done – even if things aren’t perfect. They are failers.

General Colin Powell expected his Commanders to make decisions with 40% of the available information. [1. His 40/70 rule stated that you shouldn’t make a decision with less than 40% of the information but that you should never wait until you have more than 70%.] The reasoning behind this is that the vast majority of the time, inaction is more toxic than the wrong action. And this couldn’t be truer with startups.

It’s far easier to continue to collect information than it is to actually put the rubber to the road and act. I’ve met so many entrepreneurs in the last couple of years who absolutely love talking about their ideas. They talk about the market research they’ve done, the feature lists and the prototypes. They talk about how they’re going to disrupt the market as soon as…they perfect version one. Or find the perfect cofounder. Or get the financing to quit their job. But often these are reasons to postpone taking an action that could have a negative reaction.

The truth of the matter is if this person would just act, they would receive the information they need to take the next step. Many people, myself included, have found themselves in the grips of analysis paralysis. It’s difficult when you’re trying to make a decision to try and determine how much information you need and where the important elements truly lie. But information collecting and analysis have diminishing returns after a certain point. It’s akin to trying to stare at a motor and determine what’s wrong with it – you’re just going to have to tear the thing apart and start inspecting the pieces one-by-one.

The hard truth is that the negative consequences of indecision will only compound as one moves further into the life of a startup. Running a startup requires the team to make hundreds of decisions every day ranging in consequence from easily-reversible to completely irreversible. Steve Blank has a fantastic mantra in his book “The Startup Owner’s Manual” that says a startup team should commit to making any reversible decision before they leave the CEO’s office.

Something magical starts to happen when you become a failer. You start to almost look forward to finding out you’ve made an incorrect decision because it provides data about the problem. By failing fast and often it helps you take your ego out of the equation. You begin to see patterns in your decisions and your instincts become sharper.

I don’t care who you are, everybody fails sometimes. The only way to not fail is to not do anything. Give this a trial run and for the next week: commit to making every reversible decision within 24 hours of identifying the problem or question (better yet, shoot for 24 minutes) and act immediately upon receiving 40% of the information.

Being a failer is likely the best way to avoid being a failure.

Thanks to @stephbjohnson for providing feedback on this essay – follow my path of trying to be a failer @startuprob

6 Steps for Evaluating & Ranking Startup Ideas

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A previous essay on 23 Ways to Generate Startup Ideas is receiving a lot of interest, but I repeatedly see questions on what to do if generating ideas isn’t the problem, but instead prioritization. It’s often difficult to evaluate a variety of potential startup opportunities when, as the idea-generator, you’re a bit too close to stay objective. Like most entrepreneurs, I’ve struggled with this problem and the good news is that there are techniques available to assist in this journey.[1. I can’t recommend LeanLaunchLab and Trello enough for organizing and documenting efforts in ranking and testing ideas.] This essay is meant to be a high-level walkthrough of a quick and painless process for evaluating and ranking the potential of your startup ideas. The following steps are outlined below:

Step 1: Consider Effectuation
Step 2: Consider Circumstance
Step 3: Draft a Business Model Canvas
Step 4: Size the Market
Step 5: Conduct Customer Development
Step 6: Test the Leap of Faith Assumptions

Qualitative: Effectuation, Circumstance & The Business Model Canvas

Before getting into the exact steps of parsing ideas, it’s important to be aware of the mental model of effectuation. (A process of inventorying your existing assets and using them as a baseline for making decisions.) This is often contrary to the technique taken by many entrepreneurs of trying to solve the largest or most interesting problem they identify, by instead trying to solve those problems that that particular entrepreneur is most suited in solving, based on his or her specific skills, geographical location, professional network, capital base, etc. In the context of ranking startup ideas, effectuation is important in gauging the likelihood of being successful in a given startup, regardless of the myriad other considerations such as market potential, competitors, etc.

Hand-in-hand with effectuation is circumstance. Where an entrepreneur is in his or her life and what their aspirations are will greatly influence the ranking of a given set of ideas. For example, someone who is currently making $50k per year in a salaried position that they hate may be jumping for joy at an opportunity to pursue just about any startup idea that would bring a high probability of letting them work for themselves – even if the upside potential isn’t much more than what they were making at their previous position. Along this same vein, Richard Branson is much less likely to view a venture like this as a profitable use of his time. Neither position is necessarily better than the other, their circumstances are simply different.

It can be difficult to try and evaluate the ambiguous shape of a startup idea without using some sort of visualization technique. Hands down the best business model visualization I have found is the Business Model Canvas presented in the book Business Model Generation. It takes about 10-15 minutes to think through the basic outline of a business model using this tool and is phenomenal for displaying and identifying strengths and weaknesses. This is a great way to start your startup idea evaluation.

Quantitative: Market Potential

(Parts of this process are derivative of Steve Blank’s incredible article on “How to Build a Web Startup”)

Now that the qualitative considerations have been taken into account, a more quantitative approach of evaluation is taken. The intended use of these metrics is to add a single element to each idea to provide a more holistic view in order to assist in ranking ideas. Here are the quantitative due-diligence measures used to give a 30,000 foot view of the opportunity:

  • Google Keyword Tool – Search a variety of terms that would be used by someone with the problem that your idea will solve. Be sure to use quotations to search the exact phrase and I’d caution you to ask yourself for each phrase you enter, “Could the person searching this be searching for something other than my product.” For example, if your startup is developing a new innovate peanut butter and jelly sandwich, a search for “good sandwiches” is not relevant because the scope is too large.
  • Size the market – Use Google Insights, Google Trends and Facebook Ads to get a rough idea of the market potential.
  • Determine the market type – Is the market completely new or are you resegmenting an existing market? (Steve Blank wrote a great article about the implications of market types here.)
  • Competitor Search – It’s amazing how often I’ve observed someone talk about their “incredibly innovative idea” only to find the exact thing within five minutes of searching Google. You should feel great if you find out that someone has done what you came up with – it lends credibility to your ability to think creatively. Also, it prevents you from wasting resources if the competitor is already too far ahead. (For tech companies in particular, Crunchbase is a great tool for competitor research.)

Refine the Top Contenders

Using the qualitative and quantitative techniques from above, you’ll get an idea on the high-level potential for your ideas. It’s likely that many of them will turn out to be less than stellar because of various issues such as competition that you didn’t previously know existed or a discovery that the market is too small or in decline. Taking joy in the fact that the ideas you do have left made it past the first elimination round, the next evaluation step is to get real feedback from potential customers.

Every idea is different, but a great (and I’d argue necessary) way of calculating value in an idea is to conduct customer development interviews and test what Eric Ries calls the “leap of faith” assumptions.[2. Those assumptions that, if proved false, invalidate your entire business model.]

Customer development is a technique Steve Blank presented in 4 Steps to the Epiphany that assists entrepreneurs in turning their baseline assumptions into facts. In a matter of five interviews, you can (and likely will) have a vastly different idea about your idea than you did when you started. The customer development process is quite in-depth so instead of doing it injustice by trying to explain the entire thing here, I highly recommend purchasing and reading 4 Steps to the Epiphany and/or googling “Customer Development Interviews” to get an idea about what all it entails.[3. I’ve found oHours to be a great tool for conducting these interviews.]

Simultaneously, while preparing and conducting these interviews, many ideas will lend themselves to methods that can very easily test the value proposition on your intended customer. Paul Graham often says that the thing that kills most startups is that they make dog food that dogs don’t want to eat. Eric Ries and Tim Ferris have documented many times the ease in testing your value proposition through a simple landing page. Going back to our innovative new PB&J startup, if you were to spend an afternoon setting up a landing page that clearly depicts the value proposition of how your sandwich is better than the other sandwiches, and asks people to input their email address to hear more, it’s easy to track some analytics on how interested people are in your solution. If you drive 500 sandwich lovers to that page and only 1 or 2 sign up, that tells you a lot. If 100 sign up, that too is quite telling.[4. Unbounce is great for this sort of quick testing.]

Conclusion

This process is just one way to assist in your efforts in finding that idea. It’s not meant as a step-by-step blueprint, but instead as a way to get you thinking about your startup ideas in a way that will help you in determining which ones deserve further attention and testing.

Just keep in mind, the idea is the easy part…

Follow me on Twitter @startuprob

Why Most Startup Advice is Wrong

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Not all of it, but a good chunk of it sure is. And it’s not that the people providing the advice are doing so with a malicious intent, it’s just often given with ignorance. It doesn’t take long in the startup community to realize that there are completely contradictory opinions on how to do certain things – often between two people who have each had enormously successful exits! Some people rave over the value of obtaining VC funding because of the connections and capital runway extensions it provides, while others vehemently support bootstrapping. Incubators such as YCombinator will rarely accept a solo-founding entrepreneur but Mark Suster has documented his advocation for solo-founding. Sometimes the advice even comes from the same source. I’m a huge fan of Jason Fried, but in his book Rework he gives the following two pieces of advice at different points:

If you’re inspired on Friday, swear off the weekend and dive into the project. When you’re high on inspiration, you can get two weeks of work down in twenty-four hours. Inspiration is a time machine in that way. [1. Section titled “Inspiration is perishable”]

So let your latest grand ideas cool off for a while first. By all means, have as many great ideas as you can. Get excited about them. Just don’t act in the heat of the moment. Write them down and park them for a few days. Then, evaluate their actual priority with a calm mind. [2. Section titled “Don’t confuse enthusiasm with priority]

How does a nascent entrepreneur know what advice to follow? The answer lies in probably one of the only universal truths about startups: You have to think for, and trust, your own ability to reason.

If one entrepreneur found absolutely incredible success by running a deep-pocketed VC-backed SaaS web application, they may tell you that the path to victory is to hire the absolute best engineers on the planet and to invest heavily with an eye on user-acquisition and retention. But how would that advice apply to a bootstrapped, advertising-revenue driven content service such as a new blog? The point is not that one shouldn’t listen to the advice of veteran entrepreneurs, but to keep one’s eyes open when doing so and to never blindly follow a path because a reverent entrepreneur says so.

Many people are looking for that perfect linear equation that gives them the step-by-step checklist to their entrepreneurial windfall (be that an acquisition, IPO or profitable company), but the problem is that that linear equation is nonexistent. Well, that may not be perfectly accurate, it may exist, but nobody knows what it is for your startup. What makes startup entrepreneurship so challenging and exciting is that there’s rarely a clear-cut path from here to there.

Your best bet when accumulating knowledge and tactics is to try and frame the recommendation on the experiences of the source providing the information and to analyze it in terms of where your startup currently is. One of the best ways to do this is to categorize your startup in order to be able to compare it to others. I’ve found the following four categorization techniques exceptionally helpful with analyzing:

  1. The Startup Genome Report – This fascinating report is a must read for any hardcore entrepreneur. Among other things, they help break up startups into four distinct types while providing examples for each and recommendations on strategies.
  2. The Lean Startup – Eric Ries uses a term called “Drivers of Growth” that categorizes a startup based on how it will expand.
  3. Business Model Canvas – While this won’t give you a specific categorization like the two examples above, it will provide you with a 30,000 foot view that, when compared with another startup, will be able to give you the ability to identify stark similarities and differences with little effort.
  4. Revenue Model – As I stated in my example above, how a company drives revenue is crucially important to what areas of your startup require the majority of focus. A monthly subscription model is going to operate significantly different than a transactional-based revenue model.

It’s a great idea to accumulate and analyze the experiences of others, but strive to understand why that advice was given so it will help you put it in perspective.

Follow me on Twitter @startuprob