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“What is your growth strategy?” It is a classic question from VCs to early-stage consumer Internet companies, and one often difficult to answer at such an early point in a company’s life cycle because you have not yet seen which specific tactics work best.  There is usually no silver bullet answer, just a lot of hard work ahead.

This post, targeted at early stage Internet companies, tries to put some structure around that question, and provides some tactical ideas. I’ll preface with two caveats: 1. Internet marketing is a constantly evolving battleground and some tactics lose their usefulness; 2. this article does not cover important marketing topics like product-market fit, figuring out your target demographic or great customer support.

I’ll tee it off with three statements:

  • your marketing strategy should be iterative just like your product and business strategy
  • you can’t spend your way to product success on the Web (you can just fake it for a while)
  • you can lay out an initial game plan by thinking through tactics across four different areas:
  1. Viral marketing
    1. product design
    2. word of mouth
    3. pricing
  2. Active marketing/outreach
    1. Advertising
    2. PR (broadly defined)
    3. Direct outreach
  3. Distribution partnerships
  4. Design optimization

1. Virality

virusVCs hate the term “viral” when it is waved around like a magic wand, however they respond well if you’ve got concrete drivers of behavior.  There are multiple ways to encourage virality and I’ll break it into three sub-sections.

  • Product design
  • Word of mouth
  • Pricing

1.1 Product design :: Some products are well suited for virality — Hotmail was the big example in Web 1.0 with their simple email footer, and today the reigning champions are probably the social games. Playfish and Zynga have designed human motivators like competition, teamwork, pride, and generosity directly into the user experience to get people to interact and spread the word.

Take a step back from your product, think about touch points between people, and examine whether you can strengthen or encourage social interaction, and thus word of mouth, through your functionality, starting with the sign-up process all the way through.   Remember that your design has a huge influence over a customer’s behavior.  Viral triggers work best when integrated into an experience.

whisper1.2 Word of mouth :: Take a look at successful companies that are similar to yours and analyze their marketing practices.  In particular, try to study their latest tricks because their previous tricks are probably so copied that the noise level is overwhelming to consumers. If nothing else, this might help you get creative.

One simple approach is to enable “shout-outs” to sites like Facebook, Twitter, etc. but the key here is making sure you place these links where customers have a legitimate reason to shout out. Don’t think about what *you* want them to do, but rather focus on what they will want to do — and test it!

Again, don’t get so overzealous that you are causing a spam problem, because that will backfire.  If you are on Facebook, you’ll want to examine how successful social game companies are adapting to the FB redesign and policy changes, and pay attention to Justin Smith’s analyses on Inside Facebook and Inside Social Games.

Don’t overlook more traditional methods.  Blog widgets have gone a little bit out of style, but that might make them attractive again.  Email marketing can be incredibly effective.  For example, Mint.com was not a naturally viral application but they had incredibly passionate users.  In one instance, they ran an email marketing campaign asking their users to spread the word and more than 10 percent of the email recipients invited an average of 5 others to join, resulting in one new user signing up per 2.6 invitations (see case study).

Lastly, I’ll note that anything related to charitable giving always gets faster word of mouth than things purely commercial, but it must feel genuine.

1.3 Pricing :: don’t forget that you have an incentive structure in the form of pricing.  A few ideas: you can reward users with discounts for inviting others (or gift cards but just don’t kill your cash flow), offer group discounts to get teams to join in unison, and offer lifetime memberships in the early days.

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2. Active Marketing / Outreach

For Active Marketing, I want to hit on three areas:

  • Advertising
  • PR (which I define very broadly)
  • Direct outreach

I believe that most Internet successes came about because of a great product, not advertising.   I loved this recent quote from Sean Ellis:

It’s taken years for me to realize that our growth was less a function of clever marketing tactics than beginning with something that customers truly needed.  Some growth would have been automatic; the marketing team simply accelerated this growth.

Mint.com spent only about $50K on search terms. Pandora spent about $100K on search in the early days, but stopped that approach and founder Tim Westergren says “he’s not interested in traditional marketing” (source). Evernote hit 1.4 million registered users withno advertising, and EventBrite says growth has been primarily through word of mouth.  Social games company Playfish did no advertising, although I would be remiss to not point out that competitor Zynga advertises heavily on top of viral designs and admittedly has grown faster.

This does not mean that you should sit back and passively wait for organic growth to appear for your highly-iterated, agile-developed product.  Even without advertising, Mint.com says they spent ~$2 million on marketing in the two years prior to Intuit’s acquisition, which primarily went towards a marketing staff of 5 people and consultants like a PR agency and email marketing partner.

spudsm2.1 Advertising :: I think most early stage companies would be foolish to forecast significant spend on advertising. Google Search is no longer an affordable growth mechanism.  However, I do think you should experiment with advertising in small doses.  Folks seem to be increasingly turning to Facebook and possibly even StumbleUpon for more affordable, targeted campaigns.

Make sure you do two things before you spend much money:

1. understand your cap on customer acquisition cost by guesstimating the “lifetime value” of an average customer (i.e. revenue) and subtracting how much it will cost you to operate your company and service in order to earn that “lifetime value”. Make sure your LTV is conservative, i.e. reasonable customer spend and over a limited time span. (interesting post on LTV)

2. have analytics in place so you can measure results of campaigns (and ideally A/B/n tests of campaigns)

If you are finding that an ad campaign is netting great conversions at affordable prices, then by all means continue! Expect that it will take several weeks to find your sweet spot on bid levels and conversion rates.

2.2 Public Relations :: PR covers not just getting press, but also engagement with the blogosphere and online communities.  If you are running the business end of a seed-stage company, don’t put this off to a PR firm — not only is it expensive but frankly, no one can explain your product and company as well as you.

With the media, don’t actively chase PR too early (wait until you are confident of product-market fit), but learn about the journalists who cover your space and try to build your own relationships even before you are asking for a story.  Be willing to share concrete metrics — that always increases the odds of getting a story.  Look for PR help when you are hitting more of a growth stride. You can hire a firm, or look for independent PR people/boutiques in your industry who offer better rates and might be more likely to understand your product.

With the blogosphere, you can’t market *at* the community — you have to join and support the community.  Find bloggers with content you respect and an audience that is relevant, and participate on their sites. Make comments and engage in a dialogue with them — not about your company but about the relevant topics you both love (otherwise you wouldn’t be doing a startup around it, and they wouldn’t be blogging about it).  Again, you are building relationships.  Having a blog of your own helps here.

Look for online forums with a match to your target demographic, and again participate withrather than market at. I heard that Microsoft generated some of its best early growth for Office Live by participating in SMB discussion sites.  Building up a reputation takes time but not a lot of direct cash, and as you grow, is something that can be passed on to bright, young (thus less-expensive) employees.

Create your own touch points, such as a blog, a Twitter account, and a Facebook page.  Put in the time to make these actually useful and interesting, i.e. think about adding value through interesting content, not just sending out the online version of press releases. You should also examine whether YouTube videos or knowledge sharing through Slideshare, Scribd, or Docstoc could be useful.

2.3 Direct Outreach :: Finally, don’t stop getting out there and selling individuals, especially (but not exclusively) those you consider influencers.  As you grow, don’t let customer interactions get captured by customer support, the marketing team, and HCI testing, but rather keep those sales skills honed.  The insights you will get from these discussions are invaluable. It battle-tests your ability to effectively message your product and company. It keeps you grounded in the marketplace rather than the la-la land of ivory tower thinking which has cratered so many startups.

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3. Distribution Partnerships

rainbowThis is always a doozy for me.  Sadly, many partnership deals are more useful for how they impress VCs than for what they actually do for your business.  Over 15 years, I’ve seen so many deals which looked good on paper deliver completely mediocre results.  Don’t get me wrong — you need to invest time in this area because the sales cycles can be very long (exceptions being partners who are explicitly in the distribution business such asMiniclip), but do not count on quick results.  As an unproven company, it will be tough just to get time and attention.

Ruthlessly prioritize your targets because trying to cut deals with big companies can suck up an enormous amount of time from both bizdev people and developers (what, you thought that mega company wasn’t going to demand new features or some crazy integration?). Make sure you really match up your target demographics with that of your target partner.  Make sure you really believe that results will come and don’t waste time on “press release” partnerships unless you really think it will transform your company’s credibility. For example:

  • will that big website really put your message front and center? They know they can’t clutter up their key pages with distractions, and if you can’t get prominent placement, is it worth the bother?  You know that users are used to tuning out distractions on a web page, and minor features/add-ons rarely get clicked. Even if you have a great champion who believes in the synergies, remember that the politics of web placement/design inside a big company can kill you.
  • are those VARs or enterprise sales people really going to give a damn about your upsell/add-on product? They are already getting huge pressure from the customer to discount the price on the core money-makers (and as a fledgling startup, you inherently are not yet that).
  • Is the technical integration between our two products going to be so complex for either party or for the end user that we’ll never effectively get off the ground?  Does the partner have the resources and urgency to get this done in a timely manner?

If you want access to someone else’s customer base, you are going to need to be prepared to pay in one form or another.  Thankfully, it’s no longer the bubble years where companies like AOL could charge millions up-front for a bullshit placement on a semi-buried page, but you should expect to give up a chunk of the economics and possibly of your company as well. The numbers really range quite widely. Please just don’t forget to negotiate performance metrics and contractual outs for yourself based on poor results (speaking as someone who has inherited deals missing these key elements, and had to attempt to renegotiate — *not fun*).

A wonderful thing for today’s startups is that there are a number of interesting, open platforms where you can get distribute your product without needing a partnership, such as Facebook, iPhone (cough, semi-open), Android, and maybe LinkedIn if they truly are opening up.  However, that kind of distribution takes you out of this section (i.e. those aren’t partnerships) and back into other marketing tactics.

After spending all this time bashing BD deals, would I still spend time on this?  Yes, I definitely would, albeit with a rigorous filter for deals that could truly enable my business. Ask yourself:

  • who has an extremely synergistic product to mine?
  • who has a user base identical to my target demographic?
  • who would be really interested in the assets I’ve built up already (data, relationships, etc)
  • who has a track record of doing partnership deals in my general space?
  • who would be a good acquirer of my business?

Make sure you also think through competitive risk, but don’t let that cripple you.  Lastly, I will also note that you can achieve shorter sales cycles and possibly better terms if you and your target distribution partner(s) share the same investor. That is one useful criteria for examining which investor you want to work with.

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4. Design Optimization

abtestThis is no-brainer stuff, but it is worth remembering that you need a few key things when it comes to design:

  1. pay attention to SEO basics (here’s a recent Chris Dixon post on that topic)
  2. keep your messaging clear, concise, and compelling whether text or video
  3. A/B test both copy, images, and layout to try to find the best combination of the three on your website landing pages and your marketing emails

This stuff is critical for execution, but not really something you would bother talking to a VC about because it is just expected. However, if you have some concrete A/B testing results, they might find that both illuminating from a product/market perspective and see that you really walk the walk.

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Final Thoughts

1. I believe that an early stage company should experiment and iterate, using both qualitative feedback and quantitative analytics to help prioritize, grow or kill various initiatives. This post isn’t meant to be an all-encompassing list of marketing methods but hopefully it has helped with your brainstorming.

2. Remember that marketing tactics need to constantly evolve as effective channels become flooded over time, destroying their usefulness either out of noise or inflated cost.

3. As you think through lots of marketing activities and ideas, remember to bring your mind back to your product and think about how/if favorite concepts can be better integrated into your design.

4. This post talked about types of marketing activities, and if you want to read a great post about timing and priority of activities, check out Sean Ellis’ post Milestones to Startup Success.

5. I am constantly learning and would love to learn from you.  Please let me know your thoughts via comment or direct email to me.

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Live like you are at the bottom even if your at the top.

(via quotethattalk)

Angry Birds is the first waste of 75 millions people’s time that can be accurately quantified. Every day, users spend 200 million minutes — 16 years every hour — playing the mobile game. Three trillion pigs have been popped. It has filled billions of those interstitial moments spent riding the bus, on a plane or in important work meetings, and it is or has been the number-one paid app on iTunes in 68 countries, as well as the best-selling paid app of all time. It went straight to the top of the new Mac App Store in January, selling 150,000 copies in its first week. Sixty thousand Angry Birds soft toys have been sold. In January, the trailer for the new Angry Birds Rio racked up 500,000 YouTube views in a weekend; on official videos alone, Angry Birds has had 27 million total views. In total, the “brand” has taken more than €50 million: not bad for a game that cost €100,000 to make. On the first anniversary of its release, 2,405 people in 756 cities worldwide wasted even more of their time holding events in celebration of “Angry Birds Day”. David Cameron and Justin Bieber say they are fans. So do Paul Gascoigne and Salman Rushdie.

domainr:

Background: We created Domainr almost four years ago, and since then many people have contacted us asking how to buy domain names that other people already own. We’ve not yet been through that process ourselves, so we asked our friend Julian Shapiro, founder of NameLayer, to write a guest…

How much more dynamic, successful and funcould your business be if you cultivated your creativity? Here are 17 ideas to get you started.


Play. When we were young children, creativity was all we knew, as we filled all that we didn’t know with imagination. When we started school, facts and rules began to edge the imagination out, making it harder and harder for us to be truly creative, says Smith. Try to be a kid again and do some of the things you loved: Color, shoot hoops, build blocks with your kids, pretend (if only in your head).


Make it a habit. Renowned choreographer Twyla Tharp believes that creativity is not a gift from God, but rather the result of ritualized hard work. Her ritual involves waking every day at 5:30 a.m., hailing a cab to the gym, working out, and then returning home to write. “Turning something into a ritual eliminates the question, Why am I doing this?” she writes in her book, The Creative Habit: Learn It and Use It for Life. “By the time I give the taxi driver directions, it’s too late to wonder why I’m going to the gym and not snoozing under the warm covers of my bed… doing it the same way each morning habitualizes it, makes it repeatable, easy to do.” Apply the same thinking to whatever challenge you’re tackling, and turn it into a habit that you can maintain long-term.


Try “thought experiments.” Smith is with Tharp: “Creativity is a muscle that you must use on a regular basis in order for it to function effectively,” she says. To that end, she suggests challenging yourself with what Albert Einstein called “thought experiments” every day: While you’re driving to work, exercising or brushing your teeth, ask yourself, “What if my neighbor was a secret intelligence agent?” “What if the whole city was painted blue?” Using your imagination this way serves to reanimate your everyday world and get you in the habit of invention, she says.


Pay attention. Right now, look around the room where you are sitting. List 20 things that you didn’t notice before. Paying close attention and tuning into your surroundings helps sharpen your powers of observation, a key component to creativity, Smith says.


Watch foreign films. Choose books about subjects you might not normally pick. Read a poem or two. Go to the theater every once in a while. See a dance performance even if you think you don’t like dance. Try exotic or international foods. Travel somewhere new. Jill Murphy Long, author of Permission to Play: Taking Time to Renew Your Smile, says the more you expand your world and allow yourself to be inspired by the creativity of others, the more likely you are to come up with new ideas.


Be oppositional. If you’ve already established some creative habits but find yourself in a rut, for one week, try doing the opposite of what you normally do: Take the bridge instead of the tunnel to work; go to the gym after work instead of before; have sushi instead of a sandwich for lunch; do a puzzle instead of watching TV at night; switch your daily morning meeting to an afternoon one. Why? “Doing the same thing over and over gives you the same response or solution over and over,” Smith explains. “Trying things differently puts you in the habit of experimentation, and experimentation leads to new ways of thinking.”


Use your left hand. One powerful “opposite” trick to try: Writing with your non-dominant hand. Ninety percent of people are right-handed, but the right hand is connected to the left side of the brain, which is rational and analytic, says Susanne Alexander-Heaton, a motivational speaker and author of the children’s book The ABC Field Guide to Faeries. “By switching and printing with your left hand, you are connecting to the right side of the brain, which is creative, emotional and intuitive,” she says.


Stop thinking about it. If you’re trying to come up with a new idea for something or a solution to a problem, dedicate a certain amount of time to research and brainstorming, but then forget about it. Chris Grivas, co-author of The Innovative Team: Unleashing Creative Potential for Breakthrough Results, recommends going for a run, walk or hike, taking a yoga class, browsing a toy store, sitting on a bench outside and people-watching. The fancy term for this strategy is “excursion technique.” But whether you call it that or simply “taking a break,” the time away allows the information to incubate in your subconscious, where new ideas often arise. “When you get away from the problem for a while, that’s when the answer comes to you,” Grivas says.


Steal ideas.“ Anyone who has studied Picasso knows that his genius was in three areas: self-promotion; taking ideas from others and improving upon them; and taking existing ideas and recombining them in unique ways,” says Pablo Solomon, an artist and designer in Austin, Texas. Creativity doesn’t mean you have to reinvent the wheel every time.


Do a “stimulus dive.” If you’re working with a team, Henry recommends sending everyone out into the neighborhood to find something that inspires them (a toy robot, a well-designed takeout menu, a magazine, a piece of pie from the diner). Then come back and share the findings. What ideas can the group derive from each item? A clever mechanism from the robot? A font from the menu? A sensory experience inspired by the pie? The stimulus dive combines many of the creativity strategies (excursion technique, stealing ideas, doing something different) into one fun exercise.


Slip into hypnagogia, the transitional state between wakefulness and sleep when you start to dream but are aware that you are dreaming. May sound kooky, but it worked for Thomas Edison, who was famous for a proliferation of inspiring quotes about creativity, as well as that lightbulb thing. Whenever Edison was stuck on a problem, he would settle into a comfortable chair for a nap. But he never let himself fall fully asleep. He held a steel ball bearing in each palm and positioned tin plates on the floor underneath his hands. If he started to drowse, the balls would slip out and clang on the plates, waking him up. He would then write down his pre-sleep ruminations, images and dreams in a pad he kept handy. Lauri Quinn Loewenberg, author of Dream on It: Unlock Your Dreams, Change Your Life, says during hypnagogia (and hypnopomp, when you emerge out of sleep into wakefulness), your brain is in a more associative, impressionistic state where your ideas are not restrained by conventional wisdom.


Remember your dreams. Don’t be so quick to dismiss all your “weird” dreams. Some of history’s biggest innovations are the products of dreams. Larry Page, Google co-founder, got the idea for the search engine in a dream. Frankenstein came from one of Mary Shelley’s nightmares. Stephanie Meyers had no previous interest in vampires before she dreamt about them, a dream which she turned into the best-selling Twilight series. And the famous swoosh-branded sneakers were going to be called Dimension Six until the name “Nike” came to an employee in a dream. But dreams won’t do you any good if you don’t remember them. Loewenberg recommends lingering in bed once you wake up. “If you jump to the floor as soon as your eyes open, you kill your dream recall.” (She suggests getting an alarm that gradually wakes you up rather than one that jolts you awake with a loud beep.) Stay in the same position you woke up in for a few minutes and think about your dreams, then write them down.


Schedule time to be creative. “Time is the currency of productivity,” Henry says, “but many of us think only about efficiency and not about effectiveness.” We stack meeting after meeting and crank through dozens of emails each day, he says, but neglect some of the activities that could add great creative value to our work. Dedicate time to idea generation and to “excursions” and other activities that get your creative juices flowing. If sitting around making paper airplanes helps you think, schedule “make paper airplanes” into your Outlook calendar. Hey, think of all the time Don Draper of Mad Menspends lying around on his office couch!


Use SCAMPER. If you’re trying to improve an idea, make it work or determine whether it’s workable at all, ask your team the questions prompted by the acronym SCAMPER, a creative thinking tool developed by Robert Eberle (who built upon the work of advertising innovator Alex Osborn):

S – What can you Substitute?
C – What can you Combine or Change?
A – How can this idea Adapt to the circumstances at hand?
M – How can this idea be Modified? What parts should you Minimize or Magnify?
P – How can you Put this idea to other uses?
E – What can you Eliminate?
R – What if you Reverse the idea?


Be a superhero. When trying to devise creative solutions for your business problems, think about the enemies involved, whether those villains are budget or time constraints, a competitor or a lack of manpower. How can you attack these enemies? What is their kryptonite? Think of yourself and your team as superheroes. What powers does everyone have that could be leveraged for a solution?


Don’t buy into “writer’s block.” “I believe creative block is a choice,” Henry says. “I think it’s a mental trick we play on ourselves that goes something like, ‘I don’t know if what I’m about to make is any good, so I’d rather not make anything than violate my assessment of my capabilities.’ The artists I know who make really brilliant work also make a lot of not-so-brilliant work. It comes with the territory.” The point: Just do it. Pour yourself into the work until ideas start to come again.


Ask everyone. Good ideas can come from anywhere, so ask your entire staff—from interns to VPs—to contribute. Don’t have a huge team? Poll your family and friends, even if—especially if!—they don’t know much about your business.


The Two Biggest Myths About Creativity

Stop believing them today. 

1. Only some people are really creative.

Sure, the big names when it comes to innovation—Steve Jobs, Steven Spielberg, Albert Einstein, J.K. Rowling, Michael Jackson, Coco Chanel—are intimidating and can lead you to believe that creativity is the sole propriety of singular geniuses. Or that creativity is, as Todd Henry, author of The Accidental Creative: How to Be Brilliant at a Moment’s Notice, describes, “a mystical and elusive force that resides somewhere between prayer and the US tax code on the ambiguity scale.” Not true, he says. “We are all inherently capable of creative thought,” he insists. We just have to tap into it.

2. Creativity is all about the “big idea.”

Creativity is more than just a grand idea that comes to you in a dream; it’s a process. “Generating an idea is fun and sexy and makes you feel good about yourself, but it’s just one part of the creative process,” says Chris Grivas, co-author of The Innovative Team: Unleashing Creative Potential for Breakthrough Results. The idea still needs to be refined, developed and implemented, and creativity is needed at each of these stages. By the end of the process, the “big idea” may look completely different than it did in the beginning.

What you do when compiling can ruin your life. And not just when compiling, but when waiting for any short computer operation to finish.

That time is ridiculously tiny compared to the rest of your workday, yet it can have a huge impact on your productivity and well-being overall. Yes, that’s a big fat claim.

And by the way, this article is not just about coders or programmers. It’s about any smart people working with computers. And there will be pictures! Let’s rock and roll -

Why am I writing this

I recently started implementing certain time management techniques into my work style to boost my productivity, reduce stress, and help my body and brain rest. I basically wanted to work in uninterruptable 100% focused 60-120 minutes blocks of time, followed by a 20-30 minute breaks.

However, I almost immediately run into a big problem: When I was compiling or deploying something, I automatically opened one or more of the following: Email client, Facebook, news reader, news sites. That’s a bad habit. It’s hard to break. It ruins my goal of clean focus.

So I decided to do some research. There was a discussion on “What to do while compiling?” on StackExchange. The most up-voted answers were of the “reduce the compilation time” kind. However, these answers don’t solve the more general problem: There will always be waiting times while working on the computer.

Other than that, the people in the discussion were mostly suggesting what they usually do (such as checking email or news) – which is a horrible idea. One good advice was that “Multi-tasking is bad”. I agree with that. But overall? Not. Good. Enough. The answers were disappointing. So, in this article, I am going to explore this issue deeply and present you with the optimal approach.

Two kinds of coders

There are two extreme archetypes of coders – The “zen coder”, and the “distraction junkie coder”. Both are extreme, so both should be rare on the bell curve of distribution, right?

Wrong. Although the “Distraction junkie coder” is, in fact, extreme, he is unbelievably prevalent.

A picture is worth 1000 words, so I am going to show you, with pictures, what is happening on the mental desktops of both of these kinds of coders.

The zen coder

What does zen coder do?

He codes. That’s the only thing he does, and that tells it all. Perhaps the more important question is what he does not do: He does not succumb to distractions. Clean focus. Clean cuts. Clean coding. 60-120 minutes of pure coding, then a 20-30 minute break, which is usually off the computer. Then he codes again. (The minutes are just an example. He can use a different pattern – but he is always balanced and betting on the long-term productivity.)

His mind is like calm fluid water with a steady flow. It is not like frozen water shattered to 1000 constantly shaking pieces.

Clarke’s Three Laws are three “laws” of prediction formulated by the British writer and scientist Arthur C. Clarke. They are:
When a distinguished but elderly scientist states that something is possible, he is almost certainly right. When he states that something is impossible, he is very probably wrong.
The only way of discovering the limits of the possible is to venture a little way past them into the impossible.
Any sufficiently advanced technology is indistinguishable from magic.
  • How do you know if your startup idea is the next next big thing? It’s easy. It isn’t. Most Great Companies Started With Bad Ideas Most great companies started off with very different ideas that were either not very good or impractical. Very rarely does a startup actually start with the idea that makes them the next big thing. Here are just a few examples of successful companies that had very different and troubled initial ideas: Initial idea: Allow groups of people to band together to accomplish a goal called ThePoint
  • Eventually: Groupon
  • Initial idea: HTML5 supported location-based service
  • Eventually: Instagram
  • Initial idea: Web-based massively multiplayer online game called Game Neverending
  • Eventually: Flickr
  • Initial idea: Compare two people’s pictures and rate which one was more attractive
  • Eventually: Facebook
  • Initial idea: People to share photos and get grouped based on locations in an app called Color
  • Eventually: To be determined
  • At Yipit, our initial idea was a local search site focused on furniture in New York. Today, we are the leading aggregator of daily deals like Groupon, LivingSocial and the 485 others. What Does This Mean For You? When you stop expecting that your startup idea has to be the next big thing, you can draw some valuable conclusions: Stop waiting for the perfect idea. The perfect idea isn’t coming. You just have to pick a problem you are passionate about and start working on it. Over time, you will evolve your startup into the next big thing
  • Your idea isn’t the real value, it’s you. The value lies in your ability to learn from potential customers, iterate based on those learnings. Those iterations will determine whether or not your startup will be successful, not the initial idea
  • Don’t worry that your first idea will fall flat. It falls flat for almost everyone. Your idea is based on so many assumptions, it’s bound to be full of issues. Figure out what’s wrong and fix it.
  • Get your prototype out there as soon as you can. Don’t spend six months releasing your first prototype. It’s going to fall flat. Instead, get a prototype into the hands of your potential customers as soon as you can. You need to learn as quickly as possible what’s wrong with the idea so you can fix it.
  • Don’t write a business plan. Within a month, your business plan will be irrelevant. Instead of spending that time writing a business plan, spend it getting your prototype into customers hands.
  • Your initial startup idea isn’t the next big thing and that’s okay. Just get out there and start working on a big problem that you’re passionate about and you may eventually turn it into the next big thing.

In one of his recent presentations, Frans Johansson explained why groundbreaking innovators generate and execute far more ideas than their counterparts. After watching his presentationThe Secret Truth About Executing Great Ideas, my thoughts began to surface about how meaningful the presentation was regardless of a persons industry, culture, field or discipline. Anyone can come up with an amazing idea but how you execute the idea will determine your success.

[Editor’s note: A must-have for professional Web designers and developers: The Printed Smashing Books Bundle is full of practical insight for your daily work. Get the bundle right away!]

Ideation: Idea Conception

Coming up with an innovative idea will require some methods of generating ideas from brainstorming to mind mapping that can help conjure up useful ideas. During this process one must make sure to keep focused on a goal. If you have no goal, how will you know when you have reached the finish line and are ready for refinement? Start out with a few thoughts or themes and see what you can come up with.

Don’t get stuck on trying to come up with different variations of the same idea as you will want to develop ideas further later. While there is no exact path in ideation or other creativity techniques from start to finish, creating an idea you are happy with and feel hasinnovative potential is the key. Believing in your ideas innovative ability will give the confidence you will need later on during pitch time.

Disposable Cup Holder Improvement
Is this new disposable cup holder an improvement or an innovation?

Many people have tried to innovate, but because something similar had already existed, it’s merely an improvement. When designing within familiar bounds, you can still create something amazing but your audience will not likely be astonished at the sight of it. It is easy to see the particular innovative idea as something that was so simple to come up with but if that’s the case, then why didn’t you do it? The trick is to come up with them before. That’s the challenge. Once you find that special seed of an innovative idea, try to avoid key mistakes that will stop your idea from ever seeing the light of day.

As interesting as some ideas may be, that is not always enough for consumers. Getting the message out that your new idea is imperative will gain more consumer attention, especially in more difficult economic times. Always having a short and clear value proposition with an inescapable feeling of necessity can help gain capital, exposure and consumers. Do not wait until everything is “perfect” as they may never be and this will only further delay your ideas release. Act, do not sit idle!

Nurture New Ideas

Think of your typical cup holder from a fast food restaurant or coffee house made of cardboard. They are rigid with no handle and have been cause of drink spills and panic attacks for years. Recently a new cup holder has come about that is more mobile and has a handle (see image above). These changes have made it easier to transport drinks and prevent spills. This idea in itself is only an improvement on what was there previously.

To truly be innovative, you should take opposing thoughts and combine them, which increases the innovative potential of your idea (see image below). Think of the invention of the Burqini that combines the idea of a burqa that Muslim women wear and the flexibility of a swimsuit at the beach. Innovative ideas can sometimes be explosive but many potential barriers will arise and just having an innovative idea is not always enough.

Innovative Idea Diagram
Groundbreaking and innovative ideas come from combining ideas from different industries, cultures, fields, and disciplines.

In order to take an innovative idea from the embryo of a concept to market, you need to have the determination to push through failure. The odds are against you no matter the idea and statistics say you are going to fail a few times on your road to success. Knowing this, you have to hedge your bets more effectively so you can adjust your path and continue forward.

Don’t be intimidated by the perceived brilliance of innovative designs, because you are typically seeing the last iteration that has changed compared to its original concept. This happens with adjustment through failure. As Johansson mentioned, Picasso had made around 20,000 (as high as 50,000) works of art in his lifetime and Einstein published 240 papers with a short number of successful creations. Innovative success happens in volume (see image below).

Idea Success Rate Diagram
Stevens, G.A. and Burley, J., “3,000 Raw Ideas = 1 Commercial Success!”

How To Pick A Successful Idea

Don’t put everything behind your first idea! You wouldn’t go to the racetrack and put your life savings on 1/3000 odds, would you? Even though we are taught that all innovations come from a visionary who predicted a need for the future, this is usually not the case. Naturally, most inventions come from necessity and others from creative spark. When executing a creative idea with the resources you have available, you will have to make adjustments along the way that may not have been accounted for originally. Johansson suggests that you take the smallest executable step (smallest bet) so you don’t risk everything on your original idea.

Once you define the smallest step, you know your scope of risk. This is very important because you can then take baby steps to overcome challenges and utilize resources more efficiently on your road to success (see image below). While strategy is paramount, one shouldn’t get lost in planning and take too long to execute. Stay motivated to move forward, because forward motion even through failure is the key to success.

Idea Pathway to Success Diagram
“Nearly every major breakthrough innovation has been preceded by a string of failed or misguided executions.” — Frans Johansson.

When implementing strategy, whether it is used to free up resources or define a path to move forward, do not plan on coming up with the ultimate plan that will carry your idea to the finish line. Coming up with a base and enabling yourself to act will help to get things done and eventually discover the final solution that goes to market. You will need to bring yourself to an idea intersection where you can pick and choose the best ideas. This intersection can be used to generate extraordinary, electrifying and trendsetting ideas.

Exploring Innovation Deeper

THE DEVOTION OF PABLO PICASSO

Pablo Ruiz Picasso was a Spanish artist that had a unique talent in painting by combining different techniques, theories and ideas making him one of the most well-known figures in 20th century art. Picasso had always shown a passion for art from a very young age and was determined to express his passion to the world. Overcoming high and low barriers, he achieved much success and fortune in his life. As Pablo Ruiz Picasso said, “action is the foundational key to all success.” Continuing to move forward by taking action and not sitting idle will create momentum for success.

Early in his life, Pablo Picasso slept during the day, worked at night and persevered through poverty, cold and desperation. He was known to have burned much of his early work just to keep warm at night. Picasso motivated himself through passion to push forward and eventually made luxurious connections. Constantly updating his style from the Blue Period, to the Rose Period, to the African-influenced Period, to Cubism, to Realism and Surrealism, he was a pioneer with a hand in every art movement of the 20th century.

Picasso was extraordinarily abundant throughout his long lifetime. A skillful self-promoter, he used politics, whimsicality, and harassment as a selling tool. The total number of artworks he produced has been estimated at 50,000, comprising 1,885 paintings; 1,228 sculptures; 2,880 ceramics, roughly 12,000 drawings, many thousands of prints, and numerous tapestries and rugs. From all of these works, only a few dozen have been regarded as a great success, leaving thousands in museums for viewing after his death and even more collecting dust. Picassco dedicated his life to art and has very influential with his portrayal of Cubism.

FRANK EPPERSON’S JUICE ON A STICK

Frank Epperson was an average American who at a young age discovered a “frozen drink on a stick” that would later become an innovative idea. In his life he dabbled in real estate before discovering how to take his idea to market.

At the age of 11 Frank Epperson invented the “Epsicle” that is now known as the “Popsicle”. He was mixing powdered soda with water to make soda pop and accidentally left the mixing bucket outside on an unusually cold night. During the night the mixture froze solid, with the wooden stirring stick standing straight up. There was one huge problem: you can’t start an Epsicle production line on your back porch because the weather didn’t allow for such a thing. Epperson overcame this hurdle by gaining access to a commercial freezer, stamped his name on the sticks and wanted to sell his idea.

Unfortunately for Epperson, ice-cream makers were not interested and he did not share his idea again until a fireman’s ball years later. He pushed through rejection and failurewithout burying all of his resources until he had achieved a solid idea. While he discovered this wonderful treat early on in life, it took him 16 years to introduce the idea and 7 years more to sell his Popsicle patent. The popsicle can be credited for the entrance of tasty frozen deserts into the mainstream and happy children’s faces around the world. Todayhundreds of millions of Popsicles are eaten in the United States each year, and there are more than thirty flavors available.

ALEXANDER GRAHAM BELL’S MODERN COMMUNICATION

Alexander Graham Bell was a scientist from Scotland (originally) that had always had a natural curiosity for the world. This resulted in experimentation with inventing at a young age, most notably a simple dehusking machine at age 12.

Due to the gradual deafness of his mother starting at a young age, he was led to study acoustics which eventually led to the invention of the telephone. Bell’s telephone grew out of improvements he made to the telegraph. He had invented the “harmonic telegraph” which could send more than one message at a time over a single telegraph wire. His path to success was not as clear as one might think and is surrounded by past failures and controversy.

Bell’s first serious work with sound transmission used tuning forks to explore resonance. Unfortunately, this groundbreaking undertaking had already been completed worlds away in Germany. A short change in path led Bell to transmit sound through electrical means. He experimented first by trying to transmit musical notes and articulate speech.

Alexander Graham Bell had not set any clear destination and became overwhelmed with his experiments. After many sleepless nights he created a harmonic telegraph which became the first stepping stone to the creation of the telephone. After entertaining other possibilities such as the phonautograph and sending multiple telegraph messages on a single line, Bell refined the idea of acoustic telegraphy.

By recognizing progress and changing his path, Bell (with the help of Thomas Watson) was able to invent the sound-powered telephone. By starting with the idea of transmitting a voice through electricity, Alexander Graham Bell was able to, through a series of refinements, invent technology that is used around the world even today. Bell continued to test out new ideas involving kites, airplanes, tetrahedral structures, sheep-breeding, artificial respiration, desalinization and water distillation, and hydrofoils.

JACK DORSEY’S MICRO COMMUNICATION

Jack Dorsey is an American software architect that had an interest in making “instant messenger” updates available for friends to see. This was a refined concept that eventually grew into what we now know as Twitter. Three guiding principles of this innovative idea are simplicity, constraint and craftsmanship.

Jack had an early fascination with cities and how they work, so he would always carry maps around with him. His attraction with mass-transit and how cities function led him to taking advantage of public transit databases in Manhattan. He built off of his original idea that gave meaning to his overall concept. His idea make clear though working on dispatch software, programming real-time messaging systems for couriers, taxis, and emergency vehicles.

Jack Dorsey’s experience helped him see his idea in a completely new perspective. Taking his seedling of an idea that would update friends of his status, Dorsey completed several field tests before recognizing that the technology available didn’t support his innovative idea. There are times when putting off a project is irrefutable. Jack Dorsey originally came up with his idea in the year 2000 but wasn’t able to execute effectively until 8 years later. Jack was effective in not letting his idea sit for too long but instead taking action when technology would let it thrive.

Conclusion

Making ideas happen isn’t easy and requires patience, determination and hard work. The most important part of it is not just coming up with a promising concept, but rather rethinking it over and over again, implementing it and then putting it to practice.

Most inventions come from necessity, so pay attention to small problems in your environment and find simple solutions to these problems. Do not sit idle on the idea — act instead. Take opposing thoughts and resolve them in your innovative designs. And keep innovating all the time, one step at a time. The time will pass, and if you have some luck, you will see your idea growing, flourishing and maybe even turning into a real success. …So what are you waiting for?

Last year I wrote an article on GigaOM about the ultimate lesson [learned] from my last startup: Knowing what matters to everyone involved is the most important thing when founding a company.

Knowing what matters requires you to:

  • Think through your own values. Few people do. Ask yourself the really hard questions, and be brutally honest.
  • Make sure you understand which values your fellow co-founders and early employees consider non-negotiable, and screen for them in yourself and others. If these values can’t be reconciled, it’s a showstopper.
  • Make sure you understand which values your co-founders consider important but notnon-negotiable. Talk through what the lack of alignment means in practice: What types of issues may arise and how do you deal with them? Make sure everyone has the same expectations.

Several people who thought this made sense contacted me, because they weren’t sure how to operationalize the advice. Having learned from past mistakes, we created a set of “Value Alignment Questions” before starting Otelic.com. I’m sharing them with you below in the hope it will eliminate a lot of “WTF?!” moments for you down the road — whether you already have or are about to start a company.

It took us two days to go through the questions and build a thorough understanding of each other’s perspectives. While that’s not an insignificant time investment, I think it might be the cheapest form of risk mitigation a founder will ever find.

Personal Values

Starting a company is an emotional and probably financial rollercoaster. Why are you doing it? What’s the intrinsic drive that’s going to power you through all the obstacles ahead?

What you might hear: “I want to make a dent in the universe.” “I want to be invited to Davos” “I want to attract more gold diggers than the 1848 Gold Rush.”

What are your personal constraints? 

What you might hear: “I have a kid, so I’m only staying in the office for eight hours a day” “I’m committing a maximum of three years to this venture, because after that I think I might need a sabbatical.”

What are your biggest fears about the venture? 

What you might hear: “That it will turn into an enterprise company.” “That my wife gets tired of our financial struggles and leaves me.” “That I don’t get enough say about product direction.”

What are the things that really tend to bother you? 

What you might hear: “Lack of progress.” “Music in the office.” “Lack of ownership/accountability.” “Not having crystal-clear goals.” “Not shipping or testing a new version of our product at least weekly.”

What would cause you to want to shut down or leave the company? 

What you might hear: “When it’s not fun anymore.”

What are your character flaws, and what are you bad at? 

What you might hear: “I tend to over-promise and under-deliver.” “I am not good at time management.” “I can be irritable.” “I’m easily distracted.” “I just can’t stand doing certain types of work, including XYZ.”

What are your character strengths, and what are you really good at?

What you might hear: “I consider my signature strengths to be love of learning, humility and integrity, and I’m really good at XYZ.”

What about working hours and working weekends? 

What you might hear: “40-hour weeks” or “16 hours per day, including weekends.”

What about time off? 

What you might hear: “Five weeks per year.” “Two weeks per year.” “Nothing until the company is profitable.”

What types of people do you want, and do you not want, to work with?

What you might hear: “I only want to work with people who can X.” “I refuse to work with anyone that is Y.”

How do you expect to grow as a person from building this company and what to you hope to learn?

What you might hear: “In the short term, I want to get better at lean startup methodology.”

What support do you need from your co-founder(s)?

What you might hear: “I need you to understand my financial situation and not pressure me to take risks I can’t afford.”

Execution Values

What role do you see yourself in two years down the road?

What you might hear: “CEO.” “I couldn’t care less.”

What if others don’t feel this role is a good fit?

What you might hear: “Then I’m flexible.” “Honestly, then I’ll probably leave.”

How do you want us to make day-to-day decisions?

What you might hear: “I want veto right on X.” “I think I should decide everything related to Y, and I don’t care about the rest.”

How do you want us to make major decisions like firing, selling the company and raising funds?

What you might hear: “I want to vote on executive hiring/firing, parting ways with co-founder, raising funding and issuing stock options.”

What barriers are you worried about us running into? 

What you might hear: “Funding.” “Burnout.” “Product direction.”

Financial Values

What would be your fair market salary?

What you might hear: “I’m currently making $140,000 per year, but could probably get another $20k somewhere else.”

What’s the minimum salary you’d be willing to work for and for how long?

What you might hear: “Six months with no pay plus 18 months with $50,000 per year.”

What your maximum “tolerable” opportunity cost?

What you might hear: “$120,000, because my market salary is $100,000 post-tax, and I’m willing to work for two years at $40,000 per year. That’s the most I can afford.”

What do you think of the possible financing solutions: paying customers, venture funding, consulting, keeping our day jobs, etc.?

What you might hear: “Getting venture funding is probably a requirement for me. I don’t want to **** around and do random consulting just to keep the boat afloat.”

What do you think is a fair approach to splitting the founders’ pie? 

What you might hear: “Equal parts.” “Founders’ Pie Calculator.” “I don’t know; make me an offer, and let’s take it from there.”

What valuation would make you want to sell the company?

What you might hear: “$5 million.” “$1B”, “I don’t ever want to sell. Are you in it for the money?!”

I recommend writing down and revisiting the answers to these questions periodically. The answers will inevitably change as you move forward. Your personal circumstances will change; your knowledge of the market will change, and the company itself will change. Still, if you do proper values due diligence on day one, you have a good foundation to stand on as you move forward together.

A site called Pinterest is growing like crazy and none of us are talking about it enough.

What Tumblr was to 2011, Twitter was to 2007, and Facebook was to 2006, a site called Pinterest is to 2012.

Launched in 2009, the site had 11 million visits during one week in December of 2011. You can safely figure its monthly number is around 40 million by now. That’s impressive 40% growth year over year.

Like any social media success on the Internet, what Pinterest is, exactly, is hard to explain. Users post things they find on the Internet there. Mostly, they post photos – photos of products, pretty people, dogs, houses, design, and landscapes.

Pinterest calls itself “an online pinboard to collect and share what inspires you. Discover new things hand-picked by people who share your interests.”

How is Pinterest growing so fast? Mostly through word-of-mouth. My wife joined when her mother told her about it. Since then, my wife has told lots of her friends to join.

Word of mouth marketing like this only starts when there’s a great product to inspire it. So that’s the foundation of Pinterest’s growth. The web site works well and people (mostly women, it seems) love to use it.

But the other thing Pinterest does exceptionally well is get people on-board who think they may want to try the site, in a very sticky, compelling, and highly branded way.  It is not run-of-the-mill.

The Pinterest sign-up process is the secret to its success. Any startup can learn from it.



(The original post in French can be found here. Because of its success, we are translating it in English and hopefully in other languages. Do not hesitate to leave comments and suggestions)

Since the launch of Kima Ventures with Xavier Niel in February 2010, we received thousands of pitches from around the world. The vast majority of business plans are received via our website, which is linked to our database of start ups.

We have invested in over 130 start-ups (some are visible on our site) in 18 countries, from China to Nicaragua through Pakistan, Israel, Norway or Switzerland.

Reading business plans can be fun, but for this to be true, it needs to clearly answer the questions on the investor’s mind without going into unnecessary detail.

For instance, there is no need to present the evolution of the e-commerce market over the last 10 years when you present a start-up selling pins on the Internet.

You really have to realize that an investor receives a large number of projects. You can be the most motivated entrepreneur, you may even think that you have an idea to rival Google and Groupon, but do not think this is enough to convince an investor.

Examples such as :
“I told all my friends about it, and they believe it’s a killer idea”.
“We already have 30 users; this proves that there is a need”.
will not convince an investor. You have to be pragmatic and provide some real and factual elements to prove that you have a project with high potentials.

These elements must be as concise and precise as possible.

Here’s how to present your company in a few slides. Please note that the quality of this slide deck (clarity, design, setup) is as crucial your project itself.

An investor once told me when he saw a friend’s pitch: “I don’t know anything about this market but I have never seen such a great presentation. I want to invest.”

Personally, the fact of seeing a well crafted presentation let me think that the execution of the project can be equally good. (not always the case I agree )

Let talk about content now.
Here’s what you need in your business plan.
Ideally target between 10 to 15 slides for a first contact. You can double some of the slides below if it is strictly necessary.

Slide 1: Name + Company logo + Baseline + Vision.

Example 1: Google : let’s reinvent online search
Example 2: Kima Lab, become the go-to tool to help create business plans/pitches for entrepreneurs.

Slide 2: Be sure to explain who is in the operational team.

You will notice that you have not yet described your product. That’s fine.

Describe precisely the founding team, it’s experience, specialties and roles within the company.
Feel free to add hobbies to highlight your temperament.

There must be a minimum of two founders to succeed:
1 sales person + 1 tech person or 1 product person + 1 tech person.
The ideal is a team of three founders:
The sales/marketing person + the tech person + the product person.
or the tech person + the product person + the business/finance person

You can of course recruit necessary skills later, but nothing beats a good team of cohesive and complementary founders .

I will write another post about the importance of the founding team later.

Do not be confused if you have no experience … Just demonstrate why you think you are the most appropriate person to properly implement your project.

Slide 3: Explain the product very clearly

Briefly explain the product. Ideally, your grandmother should understand what you say – some investors may not be more competent than your grandmother on some topics anyway.
Really, I’m not kidding. Make a test with non-professionals to verify that your presentation is clear and that your product is understood.

Slide 4: Show the product.

You should definitely show your product (if it’s already live) or your prototypes. If you do not have a prototype, use precise mock-ups of what you plan to deliver.
Some tools allow you to make mock-ups like Balsamiq Mock-up, but you ideally want to present the project’s design or your online site.

Slide 5: Economics and scaling Forecasts.

Provide the following:
• Revenue per transaction
• Gross margin per transaction.
• Net margin per transaction.
• Planned transaction per unit of time (day, month)…
• Cost of acquisition (for each channel)

Please present your figures over time (It is very likely that your gross margin evolves after a product launch and as you achieve higher volumes of sales)
For instance, if you have an e-commerce web site, your shipping costs will get down as volume rises. Same for all your operational costs when you get economies of scale.

If your service requires high level of resources (server, bandwidth, ..) it is likely that your costs will decrease with time too. To make it simpler present it in 2 parts: before scaling / after scaling

It’s still too early to build a financial plan (see below). The goal here is to understand how much you actually earn on each transaction.

Slide 6: Describe the project situation and current progress.

Where are you in your roadmap? Is the site / product ready? Already launched? Since when? Do You already have customers?

Slide 7: Numbers.

If your service is already live, or selling products … how many customers do you have? How much revenue have they generated in the last 30 days? The last 12 months? Since the launch of the project?

What is your customer/user acquisition cost so far?

Provide as many meaningful figures as you can. That is the THE most important slide.
Simply put, demonstrate that the revenue generated with your customers is more important than the cost to acquire them. Not so simple.
And if your model does not work yet, describe practically why you think it will be working in the future work.

Slide 8: Market Size.

AStartup investors want to make at least 10X on each of their investments. You need to show you’re in a big market and that your company can get big.
A typical VC will not be interested in a business that can generate less than $ 100M in revenue within 3-5 years.

Your market sizing needs to be realistic. If you run a mobile application to monitor heart rates, don’t show the size of the mobile applications market in general. This will not help anyone.

Slide 9: Describe the international deployment strategy (if any).

It’s cool to plan to conquer the world, but as you know it is never simple. Explain specifically how your product will be deployed in other countries.

Slide 10: Do mention all your direct competitors and differentiation factors.

An investor will have to check your competitive environment before investing. Do not hide competitors from us because you will get blamed for not knowing your market.
Describe your real position in the competitive landscape.

Slide 11: Your financial forecasts.

Give details of your expenses and income over the next 3 years. Show something simple but detailed enough to determine whether your approach is realistic. (Excel allows you to dream, but selling a B2B product to 5000 customers per year with 3 sales reps may be difficult).

Slide 12: Your Financial Needs.

Provide your past fund raising data, what you plan to raise today, and under what conditions. Do not write “Conditions: to be discussed.” Offer something.

Slide 13: Your Contact Info.

First Name / Last Name / Email.

Some other tips:
- Do not send your presentation in PPS format (which requires the reader to view it in full size)
- Do not use animation in your PPT presentation.
- Feel free to incorporate a little screen-cast demo of your product. You can create it with Camtasia or Screencast.com.
- Prepare your presentation in ENGLISH. Your investor may be anywhere.