Six Rules For Incubating Lean Startups Within The Enterprise

by Tor on July 7, 2011

Egg Incubator

Corporations want to build the next Facebook or Groupon as much as you, I, and the guy in the garage. While corporations might have an advantage in resources and capital to do so, they do at the same time meet with hurdles that independent startups don’t.

Over the past years I’ve been fortunate enough to learn from corporate new- business analysis, product roll-outs, and early-stage M&A assessments at the one side, and from founding or helping raw startups at the other side. Unfortunately, there is a pattern – the methods often provided by the former are rather diminishing in successfully incubating new ventures.

Aside from knowing your customer development and Lean Startups basics, I share here lessons learned that you should know if you want your corporation to innovate like a startup.

Rehabilitate from analysis paralysis

While a challenge with corporate business planning is that it often is comprised with mountains of information, with an early startup there is a minimal quantifiable track record. Doing what they do best, corporations cram such information about existing products and markets to that of the startup. Unfortunately, executives and managers have founding teams develop detailed financial estimates and market analysis way too early. Secondary data may be fine for known-, but not for unknown conditions, which most often is the case of new startups. The answer lies not with your $500 Gartner or Forrester report. Rather, it is time to un-MBA and get out of the building.

Learn like your kids would

With time, grown-ups gradually stop learning. Kids, however, learn all the time. Kids experience their environment and make assumptions which are tested against reality, again and over again. Essentially, for companies that are adopting new technologies in fast pacing and quickly changing markets the learning process is no different. Emerging entrepreneurial methods such as Lean Startup and Customer Development assume that startups are children, and not smaller versions of mature companies. Startups need their own methods and tools, which means it is time for hands to get dirty.

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Startup Summer Kick-off at Opera Software’s: Norway Gets a True Hackathon

by tor on July 5, 2011

Startup Software at Opera Software HQ

As of yesterday about 20 talented developers will be gathered for the next couple of weeks at Opera Software’s premises in Oslo to build and launch new applications. Startup Summer is one of its kind hackathon in Norway encouraging companies to take on Lean Startup techniques.

The contestants are mainly graduate students from The Norwegian School of Science and Technology, Informatics at the University of Oslo, and various university colleges, but also existing entrepreneurs and freelancers. During the period all teams will have access to mentors as well as being able consult Opera personnel. In the end of the event and August 12. the teams will demo their products to investors and advisors (ping me if you’re interested).

Here’s an overview of the Startup Summer teams. Expect landing pages as their products will evolve hour by hour.

Kasseapp.no
KasseApp develop next-generation cash register. By running a ‘Kasseapp’ on an Android tablet and connect to a cloud, they create an elegant solution for store employees. The prototype launched this summer, so stay with www.kasseapp.no.

Hoopla Tickets
Cultural events are more important than the tickets! We develop a ticket distribution system that makes it easy and efficient to sell tickets anywhere. You create great cultural experiences, we help you communicate them. Free of charge for the organizer.

Utfylt.no
Filling out the tax returns is for many the least most fun in running a business. Utfylt.no helps small businesses record all their tax reporting; ask you a few questions, and complete your tax returns ready for submission.

Classmate
“We are tired of bad IT tools for students! Therefore, we create social tools that help students choose courses and plan their studies”. Classmate provides a social student calendar and rating of classes among other features.

Nearbite
Near Bite is a mobile-based tax map of eateries and restaurants nearby. Join beta@nearbite.me and be first with our iPhone app in Oslo.

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How To Communicate Your Bootstrapped Startup: Are You a Consulting or Product Business?

by Tor on May 18, 2011

startup bootstrapping

Bootstrapping your startup brings along a trade-off in communications and marketing. You have two messages to communicate: one about your service offering, the other about the product that you are building. How do you prioritize what to communicate? Are you a service or product company?

This was and still is a question that we deal with at Lingo Social every day. Recently, I had coffee with friend and founder of Mobilskole.no discussing what seemed to be a bootstrapper’s marketing “dilemma”. We arrived at the following.

As you make money from providing services and use profits to fund product development, you need to balance your communications efforts between the two. The more aligned your services and product messaging are, the better are chances for healthy synergies. That means ensuring that your consulting gigs leads to product sales and vice versa. Pretty obvious, but easier said than done.

At Lingo Social we went from communicating the whole digital agency package; Internet and search marketing, mobile apps, web design, analysis and strategic planning, to focus on social media marketing and management. Even better, all those former service offerings can be communicated in context of social media. For an example, inter-linking all your social media channels would have an effect on search engine optimization, and web design and apps development would integrate social networks. Following we would certainly propose to clients social SaaS rather then just building apps on an hourly basis.

Nevertheless, as founders’ skill-set in a startup varies, so does their value propositions. When you are only a few founders in communicating your services, potential customers often tune in on your personal qualifications rather than the company’s. Each member of the founding team is best at what they do, and consequently this is usually what they are best at communicating. That in fact is your startups’s DNA.

Aligning service and product offerings along with leveraging founders’ strengths have not only allowed the company to put marketing efforts in one bucket, but also increased learning about customers’ needs which in turn enables us to build a better product. As a result consulting gradually starts to work as (paid) marketing and sales.

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How To Use Your Blog To Document Business Model Assumptions

by tor on April 18, 2011

In a previous post about minimum viable blogging I briefly discussed how a blog might transform into a potential product. I learned from several entrepreneurs and bloggers that they have had similar experiences. So today, I’m launching a small experiment taking this idea one step further. Here is how I’ll use this blog to document our own business model hypothesis.

Business Model Customer Development

Simple structure of the business model testing scheme

As a part of some recent changes to this blog (moved to own domain), I have added a new structure that follows the Business Model Canvas. This means that all posts will be categorized with one or more of the 9 business model blocks; customer segmentation, value proposition/product offering, distribution channel, customer relationship/demand creation, revenue models, cost structure, key activities, key partners, and partner development. For subjects regarding external and competitive hypothesis I’ve added Strategy as an additional category. To this I attend to use Lean Startup and Customer Development techniques to develop our problem/solution hypothesis.

Why use a blog to test business model hypothesis

Why would I do this? First of all, I hope to share lessons learned in documenting business model hypothesis in the context of a digital startup. Posts will be living examples of how to do or not to do this. Second, by documenting such hypothesis we’ll be able to measure our own progress and decisions, and at the same time receive valuable feedback from fellow entrepreneurs as your self. Third, by watching the emergence of methodologies such as Lean Startup and Customer Development, I believe that the social web has given breed to an academic sub-culture. Hence, I hope to contribute to such research in the field of entrepreneurial management. For an example, we’d be able to see at what frequency which business model blocks are tested and if we’d need any additional blocks other than what the framework covers today.

“Speed Wins”

One major challenge though lies with broadcasting own ideas just about ready for any competitor to pick it up. However, as I do believe in the startup methods I here cover, “speed wins” is the winning argument. Transparently documenting business model assumptions and receiving feedback from potential users would in principle be a source of advantage.

I hope to give fellow entrepreneurs a sense of what went wrong, what went right, and how to to better document business model hypothesis for their own business.

Make sure to check out the Business Model Press WordPress plugin to begin “business model blogging”.

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Asymmetric Motivation: A Viable Marketing Strategy For Small Businesses?

by tor on February 17, 2011

People need shoes. There is a grand market for shoes. Zappos has proven it. Big Shoes dubbed “Store Sko” in Norwegian, a small shop in my neighborhood that sells (guess what) big shoes, has proven it. The shop has been running profitable for years. Big Shoes is master of segmentation marketing.

Asymmetric motivation

Big Shoes has a positioning advantage – competitors, incumbents and mainstream shoe shops are reluctant to pursue the market of abnormal shoe sizes. First, the market is not perceived large and hence lucrative enough compared to mainstream markets. Second, customized shoes require customized inventory and production lines.

Niche marketing

When a mainstream shop cannot provide for the customer that shoe size s/he is looking for, they refer to Big Shoes, a sales person told be. Big Shoes receives referrals from competitors because they are in fact not yet competitors – they target different segments. Rather, for the mainstream shop, it is a matter of customer service.

Since Big Shoes is about the only big-shoes-specialist in Norway, customers come back. As customer retention is high, Big Shoes builds a stronger relationship to its customers who again share the news with new customers.

Solving problems

People with extra-large feet do not mainly need a spectacular design or shock-absorbing functions with their shoes. They need shoes that fit. Big Shoes excel at solving that problem for this particular segment. The shop has even started providing shoes that competes with regular shoes on design.

By solving a real customer need, Big Shoes are able to provide great customer service, keep clear of competition, and accordingly charge extra. The shop has added mail order as distributions channel and expanded into additional XXL product ranges. Big Shoes makes a sustainable business of asymmetric motivation.

Update: Thanks to Paul’s comments I have changed the title and done some changes in this post; this is not a case of Jobs-to-be-done marketing. Rather it makes an example of asymmetric motivation, one facet of disruptive innovation.

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Minimum Viable Blog: What Blogging Taught Me About Startup Methods

by tor on January 12, 2011

As of now I have not yet shared with you any post on lessons learned from 2010. Not better, I believe that I have been neglecting this blog for the last couple of months. That will not be the case for 2011. Here is why.

Early and often

This blog was started at the very end of 2009. Prior to this, I had attempted to start blogging several times. Every time I’d configure the LAMP stack, source a cool WordPress theme, and fine tune its look-and-feel. Being completely locked-in on the technicalities – I never got to write any actual content. Consequently, there was no room for feedback and motivation stalled. The pattern repeated itself in a continuous cycle.

Entering 2010, I figured that it was time to go quick-and-dirty. I had to break with the pattern; forget about that stunning domain name, forget about database design, forget about adding features. Instead, I’d just publish that first post and start collecting feedback. Without going into that content is king thing, this has been more of a learning path understanding the value of interacting with real audiences. Nonetheless, one year later I’m still using standard WordPress.com hosting and theme, and subscriptions are growing.

Minimum Viable Blog v.2

Now, if you swap the word blog for product or startup in the short story above, you’ll find that the pattern has a thing or two in common with startup methodologies – the very thing I have been ranting about the past year.

Launching a “Minimum Viable Blog” did not only enable me to measure visitor, click and subscription metrics. It enabled me to test and validate value propositions with real audiences. Initially, I had this plan on writing about digital strategies. An idea grounded in a recurring problem I had experienced through consulting: existing strategy frameworks were not adapted to the web. However, first, I couldn’t resist scratching my own itch as a feature entrepreneur and decided to write a quick piece on trade-offs between deliberation and creativity. Soon I was having Skype calls with inspired bloggers in the field of technology entrepreneurship. I had discovered early adopters who encouraged me to continue down that track.

Following, this motivated me to revisit shelved ideas about early-stage business models and methodologies of integrating marketing and software development. Since, I have learned about customer development, lean startups, minimum viable products, pivots, product/market fit, and metrics-driven marketing among other inspirations, which I brought into teaching at the University of Oslo. From theory to practice and back, I expect to give such topics a real try this year.

No longer in hiding

As of 2011 I am founding an Internet software startup (more to come). So far, I have studied, taught, worked in and ranted about startups, but have yet to go all in. Going forward, I will share here my pursuits in search of product/market fit.

A special thanks to all subscribers for following me in 2010.

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