OOMAAT: One Order of Magnitude At A Time
An exploration of Startup process for tech entrepreneurs
Friday, October 7, 2011
Order of Magnitude is 10x: tasks change at each step
This captures some of the key issues around building a business. As you progress through the stages of different numbers of customers, you shift and need to use different tools and different focuses. When you are just starting out, you have zero (0) customers. At this point, your goal is to get one (1) customer. When you have one (1) customer, your goal is to get to ten (10). The task and process of getting the first customer is very different and more personal than getting the 10th. By the time you get to the 100th customer, you have enough data and enough history to be able to automate your processes successfully. It is always a bad idea to automate processes which you can not accomplish by hand for the first few cases.
For your first 50 customers, you should definately be working to talk to them in person. This does not mean you can't use surveys or email or ads to search for and find potential customers. But it does mean that you should get out of the building and talk face to face to them early on in the process. As you begin to see the patterns, you can then focus on the area where you are most likely to make traction.
Thursday, June 23, 2011
Startup Weekend Around the World , What would it look like.
- Rio http://rio.startupweekend.org/
- Boise http://idaho.startupweekend.org/
- Las Vegas http://lasvegas.startupweekend.org/
- Skopje http://skopje.startupweekend.org/
- Bellingham http://bellingham.startupweekend.org/
- Chandler http://chandler.startupweekend.org/
- Guadalajara http://startupweekendgdl.org/
- Copenhagen http://mobilecopenhagen.startupweekend.org/
- Bejing http://startupweekendbeijing.com/en/page/home
Thursday, May 26, 2011
Should I walk the outside Funding Pathway?
"I see this great opportunity, it takes more resources than I have, should I put it on the credit card, get a loan , ask an Angel or get a VC?"
I had many thoughts as I read this. Let me see if I can put them into any type of order:
First, being in the midwest is not a problem for accessing capital. There are several Angel networks and more growing all the time. Rain Source Capital is based in the midwest and supports several angel groups across the country
http://www.rainsourcecapital.com/AboutUs
You can use Angel Soft as a way to locate Angel Groups - http://www.angelsoft.net, so finding Angels is not hard at the initial stages.
However. Getting loans, getting Angel money and getting VC money are all very different animals for very different reasons. They look like they are the same (getting money), but they are not. VC money is other peoples money, in large chunks with specific expectations. Angel Money, if it is to be really useful comes with expertise, attention and introductions into the industries. There are appropriate times for each of these and there are many more times when you should not take outside funding.
The best place to get funding is from your customer. If you have figured out how to get to the right place with the customer base, then you will have flow and you can use outside money to grow faster. If you spend outside money on operations instead of growth enabling changes, then you will have wasted the opportunity. Most people have a hard time seeing the difference between operations and growth enabling changes.
You have the opportunity to build connections and relationships with Angels before you ask them for money. If you find the right Angels, you can have conversations that will transform how you approach your ideas even before you get to the point of asking for money. The angels would much rather have a deep sense of who you are and where you are going and where you have been, than to have a quick pitch and have to make a bunch of guesses.
I sense that you have a new direction. This suggests that you are about to pivot. As such, you are still in the discovery phase of things. And you are still trying to validate the idea. And this suggests you can be focusing on testing and experimenting to know if this idea really has legs. If it does, you should be able to get orders booked. If you have orders booked and you have a product that people want, you will not need a lot of outside capital at this stage.
Build the relationships now with the funding agencies (banks, angels, advisors) , but save the request for outside money until you have a backlog of orders.
Wednesday, March 23, 2011
Twitter Pitch and the Clarity it brings
Saturday, May 9, 2009
What's in a name? A business by any other name...
Data or Presentation of the Data, that is the question. Whether it is nobler to be true to the data or to make it pretty and by beautification destroy the use of the data...
I understand the value of a clear and effective presentation of data. The work of Edward Tufte is a fabulous study in making effective presentation of data. The map of Napoleons march to Moscow is still an iconic diagram for me.
However, on a regular basis, I am confronted with the situation where people use spreadsheets as though they were pieces of paper. So they merge columns or they eliminate columns to make things print out nicely or worst of all, they alternate the meaning of data in a column from row to row. The spreadsheet is a simple form of a database. When you try to make it pretty, you break the database part of it. You remove the ability to sort and reorganize and plot the data. So this tension between the effective use of the data or the effective presentation of the data is a fundamental issue. For spreadsheets, it is worth the effort to have one set of sheets which represent the data and different sheets which represent the reports or views of the data.
When we are choosing the name of a project or a company, we look around for something that captures the business. This often boils down to the domain name. When we talk about the company we want to have the name of the company and the name of the website be the same. We want to be able to say the name or write the name of the company and the domain name is obvious to the casual observer. But even with this idea to guide us, there are other issues that arise.
The Google Test
After you select a name, the first thing that most folks do is to google the name to see how many hits you get. If you google for "google", you get 2,590,000,000 hits. I wonder how many hits they would have gotten before they started the company. Searching for googol, we 1,990,000 hits. The advantage of picking a name that has a low number of google hits becomes particularly appearant when you try to look up documentation about Ruby on Rails and you end up in the midst of train web pages.
Name Relevance
While selecting a name like Google does not initial imply search, it does imply large numbers of items and gets you into the right zone. To select a name like Johns Machining vs a name like ProtoMold leads your efforts in two different directions. In looking at business plans, and reviewing the business names, there are alot of names used which do not help the company. I have seen:
- Names which you can not write after hearing it
- Names you can't spell even if you heard it
- Names which have nothing to do with the business at hand
- Names that leave you with an impression of a different business
- Names that are too long to keep straight.
Each of these get you into trouble, but lets take the last one. There are many times when information is passing by and it has to be sliced and diced to fit into the screen space that is available. While Twitter has a 140 character limit, it is not the only place where space is at a premium or where titles are important. I have my gmail account set up to collect RSS feeds from different places that I care about. Some of these folks put up articles with titles like:
- Things to do this week
- Top posts of the week
- Good words
- Crime watch
And the sad thing is that these are the same from week to week, so they actually end up conveying no information and actually cause me not to follow the link.
As an alternative, some of the feeds that I watch put together pithy lists with punctuation:
This lets you know what you are looking at.
In the same way, when I look at gmail, my screen has 30 characters for the user names and 70 characters for the subject and then a little bit of the message. If you are effective with you email, you try to make the subject be short, to the point, and clear. If you split the difference and have a subject of 35 charaters, then you should have the first 35 charaters of your message be meaningful. This pattern can help communicate what is in an email message.
In the same way, when companies are submitting business proposals to angel groups using the Angelsoft.net tool, they are put into folders where there is a directory showing the list of the companies. It shows the name of the company and then a limited number of characters. On my screen, 30 characters are shared between the name of the company and the beginning of the first description paragraph. Often when people are writing their first paragraph, they start out with the name of their company and it ends up looking something like:
MyCompanyName - MyCompanyName is a .....
From this I conclude that it is best if you have :
- a name which is short
- a name which is pronouncable
- a name which is a clear reflection of what the company does
and that the paragraph that follows starts with the 3 words that are the core description of your business.
So instead of getting:
MyLongCompanyName - MyLongComp
You end up getting
ProtoMold - Fast Plastic proto
This idea of having short and effective names and clear focused carries on into the Angel pitches. When you get a Pitch Desk for an angel pitch, they suggest you start with the Problem, then tell the Solution and then go into the business structure.
We end up seeing business pitches, where the title of the page is "Problem", "Solution".... After dozens of pitches, these all run together. Don't spend that valuable large font title on "Problem", Tell me what the actual problem is... In Big Letters.
And when you pick a business name, make sure that it sticks with me in the same way.
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Saturday, April 11, 2009
What is the Lemonade Stand of the Internet?
If I look thru my list of Online Revenue Models I see that some are easier to implement. Some things which can generate revenue quickly as a small one person shop. These are different from those things that take some other large component to make it work quickly:
Short term opportunity or easier to do:
- 4. Ads - http://wordsearch.armoredpenguin.com
- 5. Sell a product directly - http://Amazon.com http://Frogstore.com
- 6. Sell a product Indirectly - Amazon bookstore http://Puzzazz.com
- 7. Subscription - http://Netflix.com
- 15. Donations - Ala NPR / Public Radio - http://WikiPedia.org
As opposed to Longer term harder to do things:
- 1. Get paid to do it - Consultants, webdesigners -
- 2. Increase Sales of an existing product - http://www.Pepsi.com
- 3. Reduce costs for an existing process - http://www.UPS.com
- 8. Enable an Exchange - http://Ebay.com
- 9. Float - http://paypal.com (old model)
- 10. Sell Aggregate User Data - http://Janrain.com
- 11. Product Placement - http://Vidoop.com
- 12. Pay for Job Post - http://Craigslist.com (Selective sales)
- 13. Pay for Support - Open source - http://project.net
- 14. Sell Online Real-estate or virtual Items - http://SecondLife.com
The great things about the lemondade stand is that the goals are clear, the process is clear and it ends up being all about execution.
Looking even closer at the list, it seems that ads and donations are the quickets and easiest.
Easiest:
- 4. Ads -> Set up a Blog and turn on ads
- 15. Donations - Ala NPR / Public Radio -> Put up a donate button
A little more work:
- 5. Sell a product directly -> Requires fullfillment
- 6. Sell a product Indirectly -> Sign up with Vendor to resell product
- 7. Subscription -> set up a subscription, membership
While both Ads and Donations require you to create content that is valuable to the reader and then to attract an audience, it seems that ads generate more revenue for the level of work.
This Suggests that suggests that the Lemonade stand of the Internet is to create a Blog and put up ads on it.
The steps to this would be:
- Set up a bank account to keep all the revenue in, keeping money separate from the personal money.
- Sign up for Blog software - Let's use Google Blogspot - http://www.blogspot.com
- Sign up with Ad provider - this is a part of blogspot by clicking on monitize. Ads will be inserted into the blog.
- Write content that is valuable to an audience.
- Spread the word that you are writing and build an audience.
Does this seem like the simplest revenue and business model on the internet? Would this be the canidate for the "Online Lemonade Stand"?
What would your choice be?
How to make money on the Internet or What is you Revenue Model or Monetizing your web app business models.
What are the different meta models for generating revenue from a web page or an online business? I have been collecting a list. I have been planning to write about it in detail, but I just saw a post that makes it clear that I should just get the list out and then work on the additions later.
I was sent a link for this article:
http://www.boxuk.com/blog/monetizing-your-web-app-business-models
Which is interesting, but more complex than I was working on. In double checking the list and comparing it to the list I was working on, I did not find any new models. They seperate out on other axises , and go into more details. For example, I consider "Licensing Content" to be "Selling Something directly". However, I am still looking for more large scale models to add to the list.
Here is the list of all the meta catagories that I have been able to identify:
- 1. Get paid to do it - Consultants, webdesigners -
- 2. Increase Sales of an existing product - http://www.Pepsi.com
- 3. Reduce costs for an existing process - http://www.UPS.com
- 4. Ads - http://wordsearch.armoredpenguin.com
- 4a - Pay Per Impression
- 4b - Pay per click
- 4c - Pay per Action
- 5. Sell a product directly - http://Amazon.com http://Frogstore.com
- 6. Sell a product Indirectly - Amazon bookstore http://Puzzazz.com
- 7. Subscription - http://Netflix.com
- 8. Enable an Exchange - http://Ebay.com
- 9. Float - http://paypal.com (old model)
- 10. Sell Aggregate User Data - http://Janrain.com
- 11. Product Placement - http://Vidoop.com
- 12. Pay for Job Post - http://Craigslist.com (Selective sales)
- 13. Pay for Support - Open source - http://project.net
- 14. Sell Online Real-estate or virtual Items - http://SecondLife.com
- 15. Donations - Ala NPR / Public Radio - http://WikiPedia.org
Company examples to understand the business model:
- 1) Mozilla.org -> donations + advertising (google search)
- 2) Mysql.org -> Sell Support
- 3) Pepsi.com -> Increase existing Sales
- 4) Ebay.com -> Enable exchange
- 5) PayPal.com -> Float + Sell credit cards
- 6) GarageGames.com -> Sell Directly: software
- 7) Amazon.com -> Sell Directly: Fullfillment
- 8) Pandora.com -> Ads + Selling indirectly
- 9) Blip.fm -> ?
- 10) Npost.com -> Ads + Selling job postings
- 11) TechFlash.com -> Advertising
- 12) Sampa.com -> Sell product
- 13) Milliondollarhomepage.com -> Sell directly (pixels) or Advertising
- 14) Zillow.com -> Advertising + Referals
- 15) Redfin.com -> Selling houses
- 16) facebook.com -> Ads
- 17) Linkedin.com -> Subscription
- 18) UPS.com -> Reduce Costs
- 19) Wikipedia.org -> Donations
- 20) AboutUs.com -> Ads
- 21) Footwise.com -> Selling directly
- 22) Frogstore.com -> Selling directly
- 23) Toonlet.com -> Ads (google search box)
- 24) Tinyurl.com -> Ads
- 25) Nowchannel.com -> Selling indirectly
What websites do you go to and how are they generating revenue? What makes them sustainable in the long run?
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