Posts tagged ‘Eric Ries’

December 10, 2012

What kills you makes the ecosystem stronger

I have been having so much fun watching Nicholas Nassim Taleb talk about Antifragility.

Source: Wikipedia, Hitrecord.org

Did I mention that I am big fan of his work? It is just brilliant the way he has simplified complex systems. I really like his perspective on Entrepreneurs and those who risk it all and have their skin in the game. His argument which makes a lot of sense to me is that having a lot of entrepreneurs tinkering with things is what creates science and not the other way around. The problem is that those who are practitioners don’t always write their habits and rituals and why they are able to improve on their experiments so that knowledge gets lost. This is changing in the Entrepreneurial community world wide because of the explosion of the work of Brad Feld, Fred Wilson, Mark Andersen, Ben Horowitz, Eric Ries, Steve Blank and many others fallen heros who have taken the audacity to show everyone how to fail, learn from the failure and increase our odds of success as a global entrepreneurial community. The reason we listen to the above list and to Taleb is because they have fallen, lifted themselves up and succeeded, would our learning be improved if all those who fail also shared their experiences and learnings? I think it would hence the title of the blog post… I would encourage everyone to create a blog and start writing about your fears, successes and failure, you never know what titbit of information you provide can help someone else in the global community. We are able to link information together and access it from different devices and from almost anywhere in the world, if we are able to create a collective conscious of entrepreneurs and tinkerers, it would be awesome to listen to this heartbeat… just stop and think about it. This is profound stuff if only you notice it.

Taleb talks about Convexity and how that skews every assumption we have about economic models and econometrics… I am sorry Dr.Carter Hill (my econometrics professor in Louisiana State University), I think the Central Limit Theorem does not work neither does the Bell Curve. Taleb has proved many times over and the stock market is proving everyday that none of these theories and empirical work is relevant in the real world.

Coming back to the notion of why we need entrepreneurs and small is beautiful, a couple of the themes in Talebs work. Both of these things are attributes of Iceland. Watch the video above, it is 1 hour long but it sooo worth it.

March 30, 2012

Customer Development and Running Experiments – 9th Meetup

We tried a different method to capture our discussion this week using SoundCloud.com and I have to say it works like a charm, here is the SoundCloud stream, fresh off the press.

We discussed the January 18th, 2012 class Customer Development and Running Experiments session, especially the presentation by Giff Constable on the process of running experiments. I really like the down to earth style of describing the steps involved and giving examples of what one could do to test the hypothesis. The Sound Cloud link is about 1 hour and 6 minutes long, this is the first time we are using this technology I listened to it and it sounded fine. Haukur Gudjonsson, talked about Bungalo.is and how they launched, worked on the MVP, talked to customers, ran experiments and now it is starting to become a viable business. I really like what Haukur is doing.

March 27, 2012

Entrepreneurial Design – Revisited

I have written about the course being offered in the School of Design in NY with the title Entrepreneurial Design by Christina Cacioppo
Gary Chou of Union Square Ventures. I wanted to take the opportunity to bring attention to the material. I believe the structure, the reading material and all the links they have put together is incredibly relevant and useful. I keep getting back to looking at the syllabus and discovering new things that I never thought about. If you have not visited the site and checked out the material please do. Depending on the startup cycle you are in there is material there that is relevant and valid. I think particular section is valid for the Lean Startup Meetings that we have having with Hugmyndaráðuneytið. The coming week I am going to try something where we will record the discussion and share in SoundCloud for those who were not present. Here is the topic and I think I will go through the Giff’s Slides. Here is the link to the Event on Facebook

Customer Development and Running Experiments with Giff Constable

Week Two Slides

Giff’s Slides

Week Two Recap

Love letters

Readings

March 22, 2012

SXSW update – 8th Lean Startup Meetup

Cover of "Minority Report [Blu-ray]"

Cover of Minority Report

Kristjan Freyr Kristjansson was at SXSW2012 and he gave a brief talk about the show and more importantly shared his thoughts on attending many of the Lean Startup Panel. The summary of the SXSW update was:

  1. It is very noisy, crowded and advertisements everywhere – it would be impossible to get your startup noticed or even to meet someone and follow up on the conversation. It is a fantastic place to get connected for the first time through the parties hosted by various brands, Kristjan particularly liked the one hosted by Startup Weekend, TechStars and Google.
  2. Have a plan with regard to what you want to achieve when you attend SXSW, and it is something every startup/entrepreneur should experience once
  3. There is an opportunity to have a big Icelandic contingency in the next SXSW, as the planners of the SXSW really liked the Thojdfunder National Assembly that was organized in Iceland and they would like to tap into the crowd of brilliant entrepreneurs and people focused on solving challenging problems attending SXSW next year and apply the same approach that was applied in Iceland. Gudjon Mar and Gunnar Holmstein were the instigators. I fully support the initiative lets see if we can gather enough people in Iceland to support this initiative and show some strength from Iceland next year in SXSW.
  4. There were some very exciting interactive advertisement focused software that had face recognition software and based on your online profile was able to display ads that were targeted. The technology is here and it is just a matter of time before it becomes mainstream. The advertisements on the subway in Minority Report when Tom Cruise was running is going to happen sooner than you think.
  5. There were many formats for the Lean Startup sessions, some of them were led by Eric Ries, but there were others where different startups shared their examples of applying the Lean Startup Principles. Kristjan, thought it was so incredible to be see so many startups starting to apply the lessons and are learning fast and pivoting into valuable solutions. It is amazing to me why this has not caught on sooner here in Iceland, we have a long way to go here.

The general discussion centered around how we can experiment and validate hypothesis, Kristjan shared the link to the Lean Startup Experiment website lean.st. The 5 minute corner was taken by Helgi þor Jonsson, Helgi has been following a blog site Unicornfree.com and how he has taken the first step to becoming an entrepreneur. He has started working on a prototype of a Project Management Platform for volunteers and non-profit activities. His insight working with this blog site is the concept of 30 x 500, which is get $30 from 500 people then you have a business or $500 from 30 people. He has been taking the online course which is almost over and he would be ready to move on to the next stage of launching his product.

We discussed a lot about how to raise the bar on Startups being created in Iceland. Of course there were many suggestions, Gudjon Mar was of the opinion that we need to have big wins to establish a precedence that successful and profitable startups can be created out of Iceland. I feel we need to go one step further, successful and profitable startups need to created in a faster pace. We need to accelerate the process to actually make an impact and change minds in Iceland. I believe that if we can focus the entire startup community to pick topics from Paul Graham‘s Ideas that YCombinator will invest in and basically build companies for those problems we will get somewhere with the culture here. We need to make it attractive for someone to invest in, nothing against someone wanting to start a coffee shop it just does not create a buzz for Angel and Venture Investors to get excited about.

March 17, 2012

Starting Up Iceland

I have been frantically meeting and organizing the Startup Iceland Conference, here is the Facebook Event Page. While we are organizing this, the constant question that I get is will we be able to fund this conference can we raise the money needed to hold the conference. I am totally transparent about how I am trying to organize this. The cost of putting up this conference is quite a bit but many of the sponsors have stepped up, namely Arion Bank, Icelandair, Kosmos and Kaos, Reykjavik University and the US Embassy in Iceland. If we can pull this off it is going to be the start of something awesome, but as I promised before if we crash and burn it is going to be totally out in the open for everyone to see :)

The website design has come out really nice, I am hoping that we can finish all the fine touches and launch it in the next couple of days. I have a talented team who are a startup in their own right, who have stepped up to sponsor the website… how cool is that? A Startup Sponsoring the Starting up of Iceland. I digress, but we have our major sponsor also committed to sponsoring Eric Ries to participate in the conference. I have sent the agreement to Eric’s Agent lets keep our fingers crossed and hope he agrees to come. I already have an awesome speaker list lined up:

His Excellency Olafur Ragnar Grimsson – The President of Iceland
Brad Feld – Partner Foundry Group
Brad Burnham – Partner Union Square Ventures
Rebeca Hwang – CEO youNoodle.com
Hilmar Veigar Petursson – CEO CCP Games
Hilmar B. Janusson – EVP of R&D Ossur

The Computer Science Department in Reykjavik University has agreed to host the Hackathon, the Recktor of Reykjavik University has been awesome and totally wants to support the effort. So far, I have been very excited about the developments and I think we are well on the way… but we need more people to participate to make this an awesome event so please share the links to signup with your network and Lets Do This! My vision is to make Startup Iceland like Iceland Airwaves, in the first quarter of the year. A yearly event that is focused on Startups, Entrepreneurship and Starting New… hey! it is Spring after all! although it does not seem like it when I look out of the window.

March 15, 2012

Waste vs Value – 7th Lean Startup Meetup

We had our 7th meetup on the Lean Startup and the topic of discussion today was Determining Waste vs Value. The biggest reason for waste in any process is big batches. The book refers to a number of examples where batching things in smaller sizes actually resulted in the overall job getting done faster and in addition to that reduced waste in the process. Here is one example, where the batch processing of stuffing envelops vs stuffing each envelop had a show down. We discussed how the product development cycle if done in a lean way could result in getting feedback faster from the customers by getting a usable product to the market. We also spoke about the Lean Manufacturing Process of Toyota, how the Pull method is used to replenish inventory rather than storing a large stock. Although my experience with Toyota in Iceland is very different, my Toyota 4Runner rear wiper broke and when I wanted to buy a replacement I was told that they need to order it for me, it took a couple of days but when it came I realized I needed to get the wiper unit as well once again it was not in stock. I basically informed them that I was not interested to wait another couple of days for the wiper, I will just find the old one and try to fix it to the new arm. So, it is not consistent that Toyota has the same process world over. In manufacturing, pull is used primarily to make sure production processes are tuned to levels of customer demand. Without this, factories can wind up making much more or less of a product than customer demand. Lean Startup models do not work this way, as customers often don’t know what they want. The goal of any lean startup in building products is to be able to run experiments that will help us learn how to build a sustainable business. Thus, the right way to think about the product development process in Lean Startup is that it is responding to pull request in the form of experiments that need to be run. It is not the customer, but rather our hypothesis about the customer need, that pulls work from product development and other functions. Any other work is waste.

There were a number of questions and examples of how testing was done to validate hypothesis. Kristjan shared some examples that Eric Ries, the man himself was sharing in SXSW last week in Austin, Texas. Kristjan will talk about SXSW experience next as it relates to the book and how the whole conference was organized. During the discussions, there were  a couple of questions related to how to apply the lean methods in established conservative organizations. I tried to give examples of how hypothesis testing can be done in any process. The end result is the key and defining success and/or failure is also key to test hypothesis.

February 16, 2012

Business as a Hypothesis – Notes for 5th Lean Startup Session

This is a picture of Tony Hsieh, CEO of Zappos.

This is a picture of Tony Hsieh, CEO of Zappos. (Photo credit: Wikipedia)

Delivering Happiness

Delivering Happiness (Photo credit: Wikipedia)

Today we will be discussing the concept “Business as a Hypothesis” in our weekly Ministry of Ideas meeting. The details of the meeting are here. I wrote about our first meeting and I have been really encouraged to see the swell of participation. We started with maybe 15 to 20 people, but last week we had over 40 participating. Sharing and learning from each other is fun. I thought Gunni was going to lead the meeting but he has asked me to do it, so I am going to give it a try. This blog post is more like my notes for the meeting. I was curious whether the two words “Business” and “Hypothesis” are linked together, so I did what any respectable researcher would do… I Googled it and guess what there is absolutely nothing out there in Google land explaining this concept so I think it should be a good discussion. Eric Ries talks about breaking any business vision into its component parts, he talks about two assumptions in business are “Value Hypothesis” and “Growth Hypothesis” in his book The Lean Startup, which is by the way the book we are using during these discussions.
Value Hypothesis: This tests whether a product or service really delivers value to customers once they are using it. The traditional way would be survey or ask your customers to get their opinion, but that would not be very accurate because most people have a hard time assessing their feelings objectively. Eric tries to emphasize, experiments provide a more accurate gauge. 
Growth Hypothesis: This tests how new customers will discover a product or service.” (pp 61)
Zappos is the world’s largest online shoe store which was acquired by Amazon for $1.2billion, yes with  “b”.  Here is a excerpt from the book “The founder Nick Swinmurn according to the book was frustrated because there was no central online site with a great selection of shoes. He envisioned a new and superior retail experience. Swinmurn could have waited a long time, insisting on testing his complete vision complete with warehouses, distribution partners, and the promise of significant sales. Many early e-commerce pioneers did just that, including infamous dot-com failures such as Webvan and Pets.com.
Instead, he started by running an experiment. His hypothesis was that customers were ready and willing to buy shoes online. To test it, he began by asking local shoe stores if he could take pictures of their inventory. In exchange for permission to take the pictures, he would post the pictures online and come back to buy the shoes at full price if a customer bought them online.”(pp 57)
What is interesting in this experiment is that while running his experiments, Swinmurn tested various other  assumptions as well like interacting with customers, taking payment, handling returns, and dealing with customer support. What they learnt in that has become the stuff of legends i.e Customer Support made their online shoe store sticky therefore they spent considerable amount of time making that their main priority. Their CEO Tony Hsieh, wrote the book “Delivering Happiness” based on that premise. I also like the following excerpt from the Lean Startup book – “Even the seasoned managers and executives at the world’s best-run companies struggle to consistently develop and launch innovative new products.
Their challenge is to overcome the prevailing management thinking that puts its faith in well-researched plans. Remember, planning is a tool that only works in the presence of a long and stable operating history. And yet, do any of us feel that the world around us is getting more and more stable every day? Changing such a mind-set is hard but critical to startup success.” (pp 72)

February 10, 2012

Strategies to implement Validated Learning

The meetup yesterday on the Lean Startup was very inspiring, so I am following up the post with some more thoughts on how can we implement the validated learning concept on various businesses and scenarios. I strongly believe that the Internet and all the applications that have been built on this global network provide us with valuable sensors to touch, feel and understand the dynamics of human behavior. We can conduct experiments, collect data and learn from them. This is precisely what Validated Learning is from my perspective. The classic example is the concept of selling a car through the internet, when someone floated this idea 13 years back, the conventional wisdom was it will never work but I know various examples from Steve Blank‘s book as well as Bill Gross’s interview on This Week in Venture Capital with Mark Suster show how they experimented and did validated learning. Bill Gross is a fantastic ideas guy, check out the full video but if you want to skip to the part about the Car Selling example it is at 0:31:41 in the video. The summary of it is they had just put a landing page with some images of Car with a price tag on it, they had no inventory or distribution or management team or any infrastructure to support selling cars but they did it anyway to learn if anyone would click on the “Buy” button and their idea was if anyone click on it they will have validated the idea a car can be sold on through the Internet, they followed that link to test further hypothesis will a user actually give their credit card information and personal details like address, phone number etc sure enough they put up a form that takes in the information of the buyerand the credit card information. They were surprised to see the orders start to come in, and when it did they physically drove to a Car seller bought the car and deliver it to the buyers. When you think about this, the buyer really does not care whether you are buying it from another seller or not, all he cares about is the convenience of being able to buy a car from his office. They found out that there were many buyers and once they had validated that hypothesis, they built the infrastructure to support growing sales. Actually, I think they took down the site in a day because they could not fulfill the orders that poured in, thats what I can a luxury problem.

February 9, 2012

Validated Learning – 4th Meetup

We had a fantastic turnout today with over 40 people participating in Hotel Kex lobby in our 4th event related to the Lean Startup book discussion. Ari led the discussion about Validated Learning, once again the whole meeting was in Icelandic until I interrupted the flow with my 2 cents in English :) what can I say I am like that. Anyways, it was very exciting to see the level of participation and interest in this material. I think the most important element of the discussion was when Gunni gave examples of how traditional businesses can apply the Validated Learning concepts to established and functioning business models, and how one can improve on them. The whole premise of the Validated Learning concept is to treat every assumption we have about our business like a scientific hypothesis and build tests to validate those hypothesis. There were a bunch of references during the examples and talk to Steve Blank‘s book the four steps to Epiphany. I thought this video was very apt as it talks about the lost lessons of validated learning, I like the conclusion- “Lean Startup does not teach you to create value, that comes from within and from your value system. Use Lean Startup methodology to refine that.”

February 7, 2012

Metrics that matter

Building a business is hard, running one while you are building it is harder. No wonder there are all these metrics on the failure rate of startups. Try juggling 5 balls while you are on a mono-cycle on the freeway, that is what it feels like when you are in the early stage of a startup. So, how does one navigate this mine field? Well, if we go back to basics, we absolutely need to have defined metrics that matter to building the business. Eric Ries in his book Lean Startup talks a lot about this but none of the stuff that he his talking about is new, just like what Warren Buffet says he does in the investment process is simple, but doing what he does is very hard. I want to make one small change to Eric’s method of Build-Measure-Learn, I want to change the order a bit Measure-Build-Learn. This idea goes back to the times when I was in software development, I actually got pretty good at it when I started writing Test Code before I actually wrote the Code for the Use Case, I saw that I was making rapid progress in how well I could write the actual functionality in the system. For all those people writing software, read the RefactoringTest Driven Development method and Continuous Integration by Martin FowlerKent Beck and others. The Lean Startup book refers to this as well.

Lets define some metrics that matter, this also depends on which stage of the development the startup is:

Idea: You have a brilliant idea that you have shared with your friends and family and they think that this could be the next best thing to sliced bread. The things that you absolutely need to instrument at this stage are:
  • Is your potential customer really hurting so bad that they are willing to pay you to solve it? how do you know?
  • How will you find your customer? or more importantly how will they find your solution?
  • What is the size of the market? how do you know?
  • Is the market growing? how do you know?
  • Will the customer continue to buy from you? how do you know?
The important thing in instrumenting your idea is to automate it, i.e just like a dashboard in your car build some gauges. The age of the Internet has bought all this to your doorsteps. There are many resources that are available that provide you with a wealth of data that you can read and make an instrument out of.
Startup: You have validated the above 4 things and you have also build a Minimum Viable Product (MVP), you have your first customer and you are excited that this thing is actually going to make you afford a cafe latte. Great! so what are the metrics that you absolutely need to have here?
  • All of the above +
  • What feature of the solution that you have sold to the customer that the customer absolutely cannot do without? how do you know?
  • How do you plan to scale your business? i.e. how are you going to sell more stuff? how are you going to support the customers?
  • How do you collect your payment? have you automated it?
  • What is your Average Revenue Per User? (ARPU)
  • What is your turn around time for customer issues?
  • How many “features” read “bugs” that need to be addressed right away?
  • How many people visit your website? (although the above ideas can be for any type of business, this metric is critical, if you are not being found you are not going to scale the business… Period)
  • What is your conversion rate? i.e % of those visiting your site want to try your product/service
  • What in your website attracts the visitors? this is nothing but which links they click on.
  • How is your bookkeeping? are you accounts in order? have you automated it? again no excuse for not using tools that are available today to automate this important metric.
Once again measuring all of this is trivial in the age of internet. There are many tools available to do that Google Analytics, KISSmetrics, etc so no excuses for not having built instruments into your solution.
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