Disruption: Toward a Toy Theory of Innovation

startup toy theory

Nevermind high-tech. Instead, build a toy. At least that is an emerging idea among leading techies and theorists alike. Essentially, 'the Toy Theory' seeks to explain why the next big thing starts out being dismissed as a toy.

Consider this from Stupid Apps and Changing The World by Sam Altman:

There are two time-tested strategies to change the world with technology. One is to build something that some people love but most people think is a toy; the other is to be hyperambitious and start an electric car company or a rocket company.

In closing, I have two pieces of advice for the “arrogant fucks” who make the world go round. One, don’t claim you’re changing the world until you’ve changed it. Two, ignore the haters and work on whatever you find interesting. The internet commenters and journalists that say you’re working on something that doesn’t matter are probably not building anything at all themselves.

While the honesty in Sam's post is admirable, the toy analogy is its real strength. Because most entrepreneurs cannot afford to be hyper-ambitious, especially if they, like most, didn't already made it to series x. The toy analogy first appeared in Clay Christensen's extension of creative destruction. He argued that disruptive innovations always look like toys and that most breakthrough innovations are designed to be good enough (i.e. disruptive) rather than to outcompete competitors along existing performance trajectories (i.e. sustainable). For this reason, incumbents (competitors) tend to dismiss startup creations as toys.

As Chris Dixon argues in The next big thing will start out looking like a toy:

The reason big new things sneak by incumbents is that the next big thing always starts out being dismissed as a “toy.” This is one of the main insights of Clay Christensen’s “disruptive technology” theory. This theory starts with the observation that technologies tend to get better at a faster rate than users’ needs increase. From this simple insight follows all kinds of interesting conclusions about how markets and products change over time.

Indeed, Christensen, Altman, and Dixon's take on innovation bares similarities to that of others. Elon Mush said: "good ideas are always crazy until they’re not." Consider Reid Hoffman's widely shared quote, "if you are not embarrassed by the first version of your product you've launched too late"; Eric Ries' concept of the Minimum Viable Product, "that version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort"; Thomas Edison arguing that "to invent, you need a good imagination and a pile of junk"; James March's technology of foolishness; or as popularized by the french philosopher Voltaire, "perfect is the enemy of good." Historically, there seems to be some consensus about a Toy Theory among entrepreneurs, investors, academics, and philosophers alike.

Here are some examples of successful innovations that started out as toys:

  • Facebook started as a simple hot-or-not dating application on the web
  • Kodak launched its first consumer camera, transforming the photography industry by making it simple and easy for individuals to take pictures (“you push a button, we’ll do the rest”)
  • Toyota's cheap Corona model was dismissed by Detroit auto manufactures when it first hit the US market
  • eBay began by selling simple collectibles that were very difficult to trade before the Internet arrived
  • From modern telephone companies to Skype
  • Zappos and Groupon both launched with a simple WordPress website supported by manual, analogue work behind the scenes
  • In the 1970s, personal computers started out far from perfect

To this end, we all start out with toys.

Why Every Entrepreneur Should Write: Lessons of Paul Graham, Jeff Bezos, Jason Fried, and more

Inspiring entrepreneurs Jason Fried, Paul Graham, Jeff Bezos, and Fred Wilson, all have discovered one thing that makes a difference; Writing.

They believe clear writing is a critical entrepreneurial skill. One that would help you generate new ideas, clarify your thinking, hire the right people, inspire the direction of your company, or even find your stride.

But writing can be hard. It takes time. So why not spend that precious time on building actual software, pulling hours from consulting, or running your company?

If writing in fact is today’s currency for good ideas, it should help you become better at all the above–a better programmer, a better marketer, a better leader–or more importantly, a more interesting human being.

Here are five insights on why writing matters for entrepreneurs, and beyond.

From Rework by Jason Fried:

Clear writing is a sign of clear thinking. Great writers know how to communicate. They make things easy to understand. They can put themselves in someone else's shoes. They know what to omit. And those are qualities you want in any candidate. Writing is making a comeback all over our society...Writing is today's currency for good ideas.


From Writing, Briefly by Paul Graham:

I think it's far more important to write well than most people realize. Writing doesn't just communicate ideas; it generates them. If you're bad at writing and don't like to do it, you'll miss out on most of the ideas writing would have generated.


Jeff Bezos in a 2012 interview with Charlie Rose:

When you have to write your ideas out in complete sentences and complete paragraphs, it forces a deeper clarity of thinking.


From Writing It Down by Fred Wilson:

I toiled in the VC business for close to twenty years before I hit my stride and the reason I found my stride was my adoption of blogging. As all of you know, I write every day. It is my discpline, my practice, my thing. It forces me to think, articulate, and question. And I get feedback from it. When I hit publish, I get a rush. Every time. Just like the first time. It is incredibly powerful

And another one from Jason Fried in Why Is Business Writing So Awful?

If you care about your product, you should care just as much about how you describe it.  In nearly all cases, a company makes its first impression on would-be customers or partners with words -- whether they're on a website, in sales materials, or in e-mails or letters. A snappy design might catch their attention, but it's the words that make the real connection. Your company's story, product descriptions, history, personality -- these are the things that go to battle for you every day. Your words are your frontline. Are they strong enough?.

Bottom line: Writing should be part of any entrepreneurial training. Whether it involves writing dissertations, essays, or class notes, it is one reason why entrepreneurship education and academia in general is useful. But you don't need to enroll to get started. All you need from here on is pen and paper. Or a blog.

For more on writing for entrepreneurs, you should check out one of my most popular posts 7 Proven Templates For Writing Value Propositions That Work.

Minimal Viable Purpose: The New Minimum Viable Product?

3 ways to outline your Minimal Viable Purpose and be interesting

In wake of Peter Thiel's rant about the lean startup and Minimum Viable Product betraying a lack of ambition, consider the 'Minimal Viable Purpose'.

Your value proposition–the cornerstone of your minimum viable product–is about more than iterating your product on customer feedback. It is very much the big idea you'd use to guide your grand vision and ambitious long-term plan. Because in new markets there are few or no other products that users can compare you to. According to Steve Blank, it's simply too early for users to understand how you are different. Hence, your value proposition should communicate a vision for what could be.

Yet your value proposition brief is probably the earliest and minimum-ist viable version of your product that you'd develop as a lean startup. Ranging from an one-liner to a couple of paragraphs, it is the messaging you attach to whatever medium—it be an email, a news article, a website, a poster, a Google ad—that serves your minimum viable product strategy. It's that version of your product which allows for maximum amount of validated learning with the least effort, according to Eric Ries.

Discovering and cramming your true north into a MVP, however, is no simple task. So, here are three ways to make your vision and minimum viable product go hand in hand.

1. Understand the job your customer want's to get done

HBS-professor Clayton Christensen argues that a successful customer value proposition begins with genuinely understanding the customer's jobs-to-be-done -- the higher purpose for which customers buy your product. Out of the functional, social, and emotional types of jobs, the latter might be the most powerful one. Inform your user research accordingly.

2. Start With Why

Simon Sinek developed his very own movement by teaching us how to create movements through inspiration. Sinek's key argument “People don’t buy what you do; people buy why you do it” aligns with that of Clayton Christensen. When getting started at your value proposition brief, start with why.

3. Create a sentimental bond

Don Draper of Mad Men famously said: "Technology is a glittering lure. But there is the rare occasion when the public can be engaged on a level beyond flash, if they have a sentimental bond with the product." In delivering your value proposition, have the courage to touch upon feelings.

What these videos—fiction or not—have in common is, they want you to emotionally connect with your audience and get to know who your audience really are and what moves them. You'd want your story to be about them, not about yourself. Also, the best value propositions dare to be incomplete. They leave room for imagination. They focus on the bigger picture; problem, purpose, passion.

Whether it is in website copy, advertisements, slide decks or in good old fashioned elevator pitches, minimum viable product is not just about the product. It is an approach to finding product-market fit. For that you'd want a value proposition for what could be - a Minimum Viable Purpose.

Make sure to check out the 7 proven templates and examples for writing value propositions or let me know what you think on Twitter.

The Cheater’s Guide to the ‘New’ Entrepreneurship Books

New books for entrepreneurs and startups 2014There is no shortage of listicals picking up any number of books-every-entrepreneur-should-read. But every once in a while, new titles packed with inspiration and actionable advice arrive. And so it turns out, 2014 was a year of excitement and experimentation.

Following his Steve Jobs bio, Walter Isaacson partly crowdsourced his latest title, The Innovators. Peter Thiel's new book Zero to One builds upon class notes collected by a former student of his. There's a Playboy anthology blowing dust off old interviews with some of the most celebrated minds in business, and a free collection of essays curated and self-published by a venture capital firm.

Here's a shortcut to the most interesting entrepreneurship books of 2014, including reviews, teasers, and freebies.

The Playboy Interview: Moguls, by Playboy is an ebook anthology featuring interviews with legendary business minds such as Steve Jobs, Bill Gates, Lee Iacocca, David Geffen, Malcolm Forbes, and Ted Turner. For a sneak peek, see the Steve Jobs interview freely available on Longform.org.

To celebrate the interview’s 50th anniversary, the editors of Playboy have assembled 13 compilations of the magazine’s most (in)famous interviews—from big mouths and wild men to sports gods and literary mavericks. Here is our collection of 12 interviews with the most lucrative executives.

Amazon Digital Services. 289 pages. Via Amazon.

The Innovators: How a Group of Hackers, Geniuses, and Geeks Created the Digital Revolution, is Walter Isaacson, author of the Steve Jobs blockbuster biography,-s latest title, and it is nominated for 2014 National Book Award. Isaacson went online to crowdsource the early editions of the book, making the early Adam Turing and Ada Lovelace edits available on Scribd and LiveJournal. Prior to mainstream media's reviews – The New York Times, Washington Post, and Wall Street Journal – Salon.com published a behind-the-scenes interview with the author. Isaacson even published an excerpt and essay drawn from the book on Medium.com.

Isaacson begins with Ada Lovelace, Lord Byron’s daughter, who pioneered computer programming in the 1840s. He explores the fascinating personalities that created our current digital revolution, such as Vannevar Bush, Alan Turing, John von Neumann, J.C.R. Licklider, Doug Engelbart, Robert Noyce, Bill Gates, Steve Wozniak, Steve Jobs, Tim Berners-Lee, and Larry Page. This is the story of how their minds worked and what made them so inventive. It’s also a narrative of how their ability to collaborate and master the art of teamwork made them even more creative.

Simon & Schuster. 544 pages. Via Amazon.

Zero to One: Notes on Startups, or How to Build the Future, by Peter Thiel with Blake Masters. I've been following Blake Masters' blog notes from Peter Thiel's CS183: Startup classes at Stanford University. It is a must-read filled with clever entrepreneurial advice and creative inspiration. And now it is all packed into a 200-pages book. Both The New Republic and The Atlantic published their reviews. In the latter, Derek Thompson wrote that Zero to One "might be the best business book I've read".

Thiel begins with the contrarian premise that we live in an age of technological stagnation, even if we’re too distracted by shiny mobile devices to notice. Information technology has improved rapidly, but there is no reason why progress should be limited to computers or Silicon Valley. Progress can be achieved in any industry or area of business. It comes from the most important skill that every leader must master: learning to think for yourself. Doing what someone else already knows how to do takes the world from 1 to n, adding more of something familiar. But when you do something new, you go from 0 to 1. The next Bill Gates will not build an operating system. The next Larry Page or Sergey Brin won’t make a search engine. Tomorrow’s champions will not win by competing ruthlessly in today’s marketplace. They will escape competition altogether, because their businesses will be unique.

Crown Business. 256 pages. Via Amazon.

The Hard Thing About Hard Things: Building a Business When There Are No Easy Answers, by Ben Horowitz. Sarah Lacy called Horowitz's new book "the most valuable book on startup management hands down". And after reading the reviews of Wall Street Journal, The Economist, and The New York Times, I would understand why. For a behind-the-scenes look at the book, Inc. published an excellent interview with Ben Horowitz here.

While many people talk about how great it is to start a business, very few are honest about how difficult it is to run one. Ben Horowitz analyzes the problems that confront leaders every day, sharing the insights he’s gained developing, managing, selling, buying, investing in, and supervising technology companies. A lifelong rap fanatic, he amplifies business lessons with lyrics from his favorite songs, telling it straight about everything from firing friends to poaching competitors, cultivating and sustaining a CEO mentality to knowing the right time to cash in.

Harper Business/HarperCollins. 304 pages. Via Amazon.

Creative Entrepreneurship, curated by the kbs + Ventures team, is a collection of articles from some of today's finest tech entrepreneurs, investors, and writers. Among the contributors are Tim O’Reilly, Paul Graham, Sarah Lacy, Felix Salmon, Mark Suster, Steve Blank, Fred Wilson, Charlie O’Donnell, Chris Dixon, Andrew Chen, Seth Levine, Babak Nivi, Dave McClure, Dan Shapiro, Adam Penenberg, among others. Here's a Forbes interview with Taylor Davidson from kbs+ Ventures – the co-curator along with VC partner Darren Herman.

"Creative Entrepreneurship” was born out of the desire, want, and curiosity of kbs' staff to understand the crazy world of entrepreneurship. “Creative Entrepreneurship” curates the perspectives of leading entrepreneurs and venture capitalists as a guide for people interested in learning more. Each writer graciously contributed their work to create a curated resource for creative entrepreneurs. This book is the teaching and inspirational aid for our kbs+ Ventures Fellows - a highly selective group of kbs+ staffers from all levels and areas of the agency - who go through a six month educational program to immerse themselves in the startup and venture capital world.

Download the book for free here via kbs+ Ventures.

What are your experiences reading these books? Are there any other must reads? Let's chat on Twitter.

Warning: Use These 7 Startup Experiments At Your Own Risk

Testing Value Propositions

You have learned how to design stunning value propositions or positioning statements using the proven examples of successful entrepreneurs and inspired business thinkers.

You probably spent hour after hour inside your office, turning every little word of your positioning statement to make it shine. Now, wouldn't it be nice to find out what actually sticks with your audience and what doesn't, before you invest even more into it?

To get you started, here are 7 super simple ways to quickly test your value proposition in social media.

1. LinkedIn Value Proposition

Your LinkedIn headline is visible in LinkedIn's search results pages, in the "profiles others have watched", in group discussions, and more.

By adding your value proposition to your headline along side a call to action in your profile summary, you could easily measure variations in number of profile views and contact requests, using LinkedIn's built-in stats.

2. Twitter Bio Value Proposition

Add your value proposition to your Twitter bio. Start engaging with prospective customers or users on Twitter. Did the updated bio get you more followers, requests? The high-level pitch template might be a good choice since  the Twitter bio is limited to 160 characters.

3. Tweet Your Value Proposition

Tweet your 140-character (or even better, make it 120 characters so that fellow tweeps can pass it on) value proposition, using a clear call to action in the end. What is the feedback, number of clicks, conversations? Measure and adjust.

4. Blog Your Value Proposition

Blog posts are excellent for testing your problem and solution hypothesis. In doing so you'd use a high-level value proposition for the headline and more detailed version for the head and copy. Further, you’d add your blog post to Hacker News, Reddit etc. or experiment with guest posts depending on where your customer segment lives.

Make sure to make the permalink generic so that you can adjust the headline based on feedback; unique visitors, page views, bounce rate, and more importantly, conversations. Use comments to get feedback from customers. See more under landing page value propositions.

5. Landing Page Value Proposition

Worth a post on its own there is an array of advice for properly doing landing page testing. But you don't need to make it rocket science.

Set up a simple landing page, using WordPress or Twitter bootstrap templates, or tune your existing site to make sure it clearly communicates your value proposition alongside a call to action. Look up Google Analytics or locate a split testing service such as Unbounce.com to test for different variations of your value proposition copy.

6. E-mail Value Proposition

E-mail is not only a powerful tool for testing your value proposition, but also for delivering it. Here, your high-level value proposition goes into the subject field while your longer version goes into the e-mail body. Target your customer with validated learning in mind, and measure accordingly.

7. Phone Propostion

Pick up the phone. Just dial up. Now.

Beware vanity metrics

The beauty about testing your value proposition in digital media is, it allows for quick feedback, quantitative as well as qualitative.

But beware vanity metrics. Because the amount of unique visitors, page views, likes or followers seldom tell you if you're on the right track or not.

Rather, use these techniques to start a conversation and drive actionable metrics that help prove the viability of your business model.

Let's chat on Twitter.

What Innovation Tools Are The Most Popular: Lean Startup, Business Model Canvas, Disruptive Innovation

innovation tools compared

Today, more than ever, companies looking to create new growth have tools at their hand to help reduce risk and increase the odds of success.

The Google Trends chart above shows a selection of "The Fantastic Four" and their relative interest over time.

Historically, Blue Ocean Strategy sees the most interest, but is slightly declining. Disruptive Innovation sees less interest among the four, but is growing. Both Lean Startup and Business Model Canvas are rapidly growing. The chart speaks for itself. But the comparison is only as good as what people search for on the web.

Although the frameworks take different angles on innovation, they are not mutually exclusive. They overlap and complement each other. And in many ways the later frameworks build upon the former, applying similar concepts in new wrapping.

In innovation there is no one-size-fits-all. So rather than looking at what are the popular tools, companies should look at what are the right tools.

Personally I find it useful taking a modular, “lego-like” approach, combining and distilling the methods into tailored frameworks, which is what I will look at in my next posts.

What methods and tools do you use? How do you combine them?

Follow me on Twitter or subscribe to stay tuned.

Turn Your Blog Into a Lean Startup and Business Model Design Tool

Business Model Canvas for WordPress

Business Model Press is based on Business Model Canvas by Alex Osterwalder, licensed under Creative Commons Attribution-Share Alike 3.0.

Blogging is not only useful for introducing ideas. It's also the primary way many companies communicate with and get feedback from their customers - making blogging a killer opportunity for business model- and customer development.

After having more than 100 students and 20 startup teams doing exactly that - blog their business model - I learned that it helped the teams systemize collaboration, speed up the learning process, get going with customer development and more quickly take action on their business model assumptions.

However, the teams still had to download the business model canvas, convert it into a picture, upload it to PowerPoint, take notes on top of it, and store it as a new picture. Further, they had to upload, resize, and import it into the editorial before finally publishing - and repeat for each and every iteration of the business model. Not very efficient.

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Heads-up on TechCrunch’s Take at Norwegian Startups

Norwegian Startup Troll

See the full article on ArcticStartup.

TechCrunch recently published a timely article questioning if Norway is leaving its tech startups out in the cold. Here’s why the discussion needs another angle and the problem in fact is the problem.

Mike Butcher starts out comparing the ones of Spotify, Rovio, Tradeshift, and Everbread to the lack of evidence of successful startups from Norway, even pondering upon Opera as a half-fledged success. The arguments are as half the truth as pointing at Bipper and Wonderloop (both Norwegian semi-expats) as examples of the opposite.

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7 Proven Templates for Writing Value Propositions That Work

Value Proposition Examples and Templates

You already know that getting your value proposition right is critical to your business model. You can have the best features, the most perfectly executed presentation, the most stunning price, but no one will ever know of it if they don’t get past your high-level value proposition.

But how do you craft such a pitch?

Continuously looking to perfect your value proposition you'd consult lengthy articles only to find that there's a jungle of advise out there. What you need is applicable examples from entrepreneurs and investors who have successfully given and taken thousands of pitches, right?

So I've put together 7 proven templates that are designed to help you create a clear, compelling value proposition in minutes.

#1 Geoff Moore's Value Positioning Statement

Probably the most popularized -  in his seminal book Crossing the Chasm - Geoff Moore suggests a specific template for outlining your value positioning. In addition to the first part below, Moore also introduces a second statement focused on competitive positioning.


For  ____________ (target customer)

who ____________  (statement of the need or opportunity)

our (product/service name) is  ____________  (product category)

that (statement of benefit) ____________ .


For non-technical marketers

who struggle to find return on investment in social media

our product is a web-based analytics software that translates engagement metrics into actionable revenue metrics.

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10 Scrappy Minimum Viable Products That Made It

 This collection includes the early websites of Facebook (still with the The), 37signals, LinkedIn (not that bad in fact), eBay (without the pictures I'm afraid), Twitter (probably the first sketch), and more. Note that some may miss CSS and therefore may not display identical to the original.

If "preach what you teach" still holds, this better be a minimum viable blog post. As far as I put the slide deck together in under 1o minutes, did the research for it during a quick train trip this morning, and publish this as soon as possible (even if it's a bad time to post), it would need iterations.