Startup Artist

I teach entrepreneurs and coders how to communicate

Your Idea Isn’t a Business

As a technical guy with a few startups under my belt, I’m constantly bombarded with people pitching me their ideas.  It’s not just my friends and family – complete strangers will pitch me ideas when they hear what I do; executives of large companies will pitch me when I’m in their office for a contract.

I take it in stride.  I’ve created a process for dealing with these kinds of pitches: I simply ask the following 3 questions:

  • who’s going to pay you for this idea?
  • why would they go to you instead of a competitor?
  • how many do you have signed up already?

Usually people can answer the first two questions, but close to 100% of people will stutter and say, “Uh…none YET!” and then start talking without pause about why their idea is awesome.  I politely hold up my hands and say:

“If you can’t convince even a few of your customers that your idea is good, how do you expect to convince anyone else?”

Just Because You Build It Doesn’t Mean They Will Come

The real problem with these ideas is that the people who have them believe if that they can just get the darn idea built, of course people will use it!

Take it from someone who has built dozens of ideas: just because you build it, doesn’t mean people will use it.  Even if your idea legitimately saves your customer time and money, they still might not use it.

Why?  People have inertia – they won’t change what they are doing unless they are CONVINCED that doing something else will benefit them.  Part of your job as a business is to convince people that your product is beneficial.  If you haven’t thought about how you’ll do that, then you have an idea, not a business.

Marketing First, Building Second

The 3 questions I ask above are design to reveal a little bit about the pitcher’s marketing strategy.  If they don’t know their value to their customer, then they are extremely far away from becoming a business.

Side note: the worst are the people who say, “No one else is doing this!!” This single phrase tells me that they either haven’t done sufficient market research, or that their idea is not valuable to their customer at all.  Having competition is a good thing – it means that a market exists.

As a founder, you should always, ALWAYS spend your time marketing before you ever try to build something.  If you try to build something before you have a potential user, you run the risk of building something that no one wants to use.

Take some time to talk to your customers: figure out how to reach them (channels), figure out what you can offer them (value), and figure out what relationship you’ll have with them.

Until you can answer these questions, you’ll never actually know what you have to build.  Also, when you do eventually build something, you’ll know exactly how to get users.

Ugh…marketing sounds hard and not fun

If you don’t care about your customers, maybe you shouldn’t be opening a business.

…but if you’re simply overwhelmed and don’t know where to start, there ARE frameworks you can follow to make it easier to get through the initial marketing phase.

Check out my post on the business model canvas to see one such framework.  Basically you take 30 minutes to write down all your assumptions, and then try to validate each assumption 1-by-1.  If you’ve taken the time to fill out at least one business model canvas, you’re ahead of 90% of people who want to start their own business.

What are you waiting for?  Go fill out a BMCturn your idea into a BUSINESS!

How to Share Your Business Plan

Writing a business plan is overwhelming.  There are so many moving pieces, so many parts, it’s hard to know where to start.  Even if you do manage to put something together, it’s easy to miss something vital.

Maintaining a business plan is hard.  Things can change so quickly at a startup: your target market today may not be your target market a month from now, or you may completely change your value proposition based on real-world feedback.  You don’t have time to rewrite your business plan every time something changes.

The simple fact is: your business plan is vital.  It feeds into everything else your company does.  Funding, pitching, managing, programming, designing, hiring – everything your company does can be completed faster and better when everyone is following the same plan.  A business plan allows you (and your team) to focus.

So how do you do it?  I struggled with this for many years, but finally found something that is not only easy to update, but also easy to understand.  This means that you can focus EVERYONE on your team very quickly.  It’s called the Business Model Canvas.

Planning Your Business Plan: the Business Model Canvas

The Business Model Canvas (BMC) is a way to visualize your entire business model on a single page.  Here’s a quick primer:

Basically, you’re stripping away all the numbers, details and tactical information to leave you with only the most essential information to describe your business.  It’s the skeleton of your business.

Most people delay writing a business plan because it requires a lot of research and details – stuff you might not even need until you’ve validated some of your assumptions (i.e. will people actually pay me for this?).  For most businesses, it’s a good decision to delay writing your business plan – why do a bunch of work when you don’t need to?

However, you can create a BMC for your idea in less than 30 minutes.  In this BMC, you can easily see:

  • which assumption you need to validate
  • who you need to talk to
  • what other tasks/research you’ll need to do

As you start validating (or invalidating) your assumptions, you can quickly update your BMC with the relevant info.  As your team grows, you can use the BMC to relate your vision to others.  When it’s time to find investors, the latest BMC becomes the skeleton from which your pitch or business plan grows.

An Example: Walkbug

Okay, so you know what and why, now I’m going to show you how.  I used the BMC to great effect on a project I was involved with called Walkbug, which allowed you to access walking tours on your phone.

The project came out of a startup weekend event in 2013.  Here’s a reproduction of the BMC that the team worked from for that event:

business model canvas for walkbug

Now, there are a ton of assumptions in this canvas.  THAT’S OK!  Using this canvas as a jumping off point, we sent our team to talk to tourists and college students.  We gained a lot of information, validated a bunch of our assumptions, and ended up winning the event.

After the weekend, we decided to move forward with the idea and enter a bigger pitch competition.  We still had a lot of assumptions to validate, so we started building a prototype and expanding who we were talking to.  Although we had a great response from many users, Some issues came up with our partnerships, operations and revenue models.

  • institutions not only had extremely long sales cycles, but were also looking for a level of customization that we weren’t willing to provide
  • many tour operators didn’t see the value in partnering with us
  • local businesses would only work with us after we had reached a critical mass of users
  • creating good content is HARD
  • hobbyists and locals were difficult to serve effectively

So we went back to the drawing board and updated our canvas:

business model canvas for walkbug

Here are the changes we made to the canvas:

  • Tour operators are now potential customers
  • Institutions are now partners (we trade their content for our platform)
  • We changed our potential revenue streams
  • We updated our key activities and costs to include content
  • We removed hobbyists and locals as a focus for now (we could try to reach them later)

As you can see, the canvas evolved as we got more information.  We’re currently on our fifth version of our business model, and may well be at our sixth after the next round of validation.

One thing to note: at one point, the evolution of our canvas made us realize that we had to get funding to move forward.  Using the updated BMC, I was able to write a business plan fairly quickly.  That’s just another benefit of using the canvas.

Try it Yourself!

Doing is believing.  Take 30 minutes and convince yourself.  Here are some assets to help you with that:

Preview of the Business Model Canvas Ebook (pdf)

A blank BMC (pdf) that I made for my own use

The official BMC worksheet (pdf)

If you’re on a Mac, you can easily use Preview (included in OSX) to fill out a canvas for your business.  If you’re on Windows, there are a ton of other annotation tools.  Just search for “windows pdf annotate” to find them.

 

Immediately Improve Communication: The Buzzword Technique

I recently did an experiment in which I asked over a dozen designers for their definition of the term “web design”.  They fell into 3 groups.  Here they are (amalgamated and paraphrased):

The Purists: Web design is the visual aesthetics of a website; the layout, the colour scheme and the look and feel.

The Hybrids: Web design is not only the visual design, but also how the user interacts with it.  Good web designers must have some coding ability.

The Visionaries: Design is holistic.  It transcends the medium, and therefore is part of every aspect of a user’s experience.  This includes visual design, interaction design, development, deployment, maintenance and marketing.

All of these people are doing the SAME JOB in the SAME INDUSTRY (actually they even live in the SAME CITY), but when you say “web design” to them, they all think of something different.

It’s tempting to think that all developers speak a common language, all designers speak a common language, etc.  This experiment proves that every individual has their own language.  Just because you’re a designer doesn’t mean every other designer will understand what you have to say.

Okay…So what?

If you were to work with one of these designers, how would you know what you were going to get back when you asked them to do “web design” for you?  You could expect a functioning website and end up with a few mockups.

The fact is, everyone takes simple definitions like this for granted.  We all assume the world knows what we mean when we say “web design”, and then get frustrated when the results are different from what we expected.

Instead of getting frustrated, learn the language.  You’ll get a better result, and you’ll have more fun doing it.

Level Up: the Buzzword Technique

Here’s a quick way (only 5 minutes) to start learning how to speak the same language as ANYONE: the Buzzword Technique.

It’s common to hear people use an overused term like “agile development” (developers) or “experience design” (designers) or “innovation” (entrepreneurs).  A lot of people’s first inclination is to discount what the person has to say, or make fun of them behind their back.  These people are missing an amazing opportunity to gain some understanding about their co-worker.

When people use a cliche or buzzword, they usually aren’t trying to be impressive or fancy – they are trying to be understood.  They are using the word because they think you know what it means.  However, since we’ve already established above that you probably don’t know what they mean, you should ASK.  This will accomplish 2 things:

  1. It will force your co-worker to think about what they actually mean
  2. It will get the two of you using the same word for the same meaning – basically it’s building your shared vocabulary

The next time either of your mention this term in the future, you’ll both know exactly what you mean.

Are you shy because you don’t know how to ask?  Don’t worry, just follow this easy script (it helps to be sincere):

Bob: … and that’s why we use agile development.

You: Honest question: what do you mean by “agile development”? I just want to make sure we’re on the same page.

Bob: Oh, well…that could take some time to explain.

You: No problem, I’m listening!

Bob: Awesome! No one has ever asked for my opinion before, I think I love you!

…okay, maybe it won’t go that well.  However, people do love being asked for advice.  Asking Bob for his definition and speaking the same language as him will strengthen your relationship, and good relationships are how you succeed.  Follow this script a few more times with Bob and you’ll be speaking the same language.

Everyone Wants to be Understood

In the survey of designers I mentioned earlier, the top complaint about people in different disciplines is the lack of understanding of what design entails.  I repeated the experiment with developers and got much the same feedback: they wanted managers and creatives to understand more about what they do.

Misunderstandings can cost a lot: time, money and your sanity.  Avoid misunderstandings, and spend your resources on more important things.

Take 5 minutes and use the buzzword technique on any co-worker.  Not only will you gain some understanding, but also a potential ally for the future.

You don’t need a developer to start a business

I was having a chat with a friend who runs a successful cultural meetup group; essentially he connects culture providers with people interested in Japanese culture.  He’s currently trying to transition this group into his full-time work.  I took the opportunity to ask him about his business:

Me: What’s stopping you from making a living on this?

S: I don’t make enough money per event that I set up.

Me: So what’s the next step?

S: I’m working with a few developers to make a website to sign up more culture providers and tour operators.  Then I can run more events and live off of a small cut per event.

To give you a little background, he runs 2-3 events per week, has 10+ tour operators and a score of culture providers.  Do you see the problem here?  Instead of concentrating on creating a business, he’s working on creating a website.  

Websites are fun, sales are hard

This isn’t rare – 90% of first time entrepreneurs make this mistake.  Why?

  • it’s fun to build a website, it’s a drag to make sales (procrastination)
  • web startups have an allure, and people want to be a part of one (vanity)
  • they think if they build a website, they can make money faster (greed)

It’s a classic case of confusing what is fun/easy with what is important, and it’s a huge waste of time.

Your website is not your business

Someone smart once told me that a business is just organizing chaos.  If you can do that, people will be willing to pay you for your effort.  They don’t care HOW you do it – in fact, they probably don’t even want to know.  The only thing they care about is WHAT you can do for them.

In the case of S above, his WHAT was making it easier for culture providers and culture consumers to connect (and he was doing an amazing job of that).  His real problem wasn’t that he wasn’t running enough events, but that he didn’t fully understand his business processes (in particular his sales cycle including pricing structure).  He was concentrating on the HOW when he should have been concentrating on the WHAT.

Do NOT confuse your website for your business.  Your business is what you do, not how you do it.

So when should I build a website?

A website is a tool – you can use tools to optimize your business processes.  If your business processes are flawed, then your website will be flawed.  You should NEVER invest time/money into a website before you can answer the following questions:

  • which business process will this optimize?
    • i.e. sales, marketing, fulfillment, management, etc
  • what are the metrics I hope to optimize (and by how much)?
    • i.e. reduce cost of customer acquisition by 30%
  • how long will it take to recoup the cost of creating the website?
    • websites are expensive – make sure you aren’t wasting money
  • are there better ways I can optimize this process?

No, seriously, I REALLY need a website

Okay, maybe a website is critical to one of your business processes.  But are you sure you need a developer?

Most people underestimate the cost associated with building a custom website – a custom website can cost you tens of thousands of dollars.  If you lower the scope of your idea, you can release a smaller (but still useful) piece of your vision using existing technology.  This reduces your risk while you ensure that your website actually does what you think it will.  For instance:

For a website that aggregates information from other websites – why not try manually aggregating the information onto a blog like WordPress?  This allows you to see if there is a market before you hire a developer to create a scraping tool.  A lot of people don’t know that I used to manually update the deals on OneSpout.com every morning at 5am before we created a scraper to get the information automatically.

Note that you don’t have to do this yourself – you can hire someone on oDesk or eLance to do it for you.

For a subscription box company – a trendy type of business, but the technology doesn’t need to be crazy.  Put up a WordPress instance with a landing page (I use Divi, but you can use any theme you like), get a plugin that collects all required information and manually copy it to a spreadsheet for fulfillment.

For websites that require custom maps – lots of providers out there, including Mapbox, which I personally use.  Create your map and then embed it on the website platform of your choice.

For a website to sell your products – there are a ton of tools for this: Shopify, Etsy, Ebay, etc.  You don’t need a custom page.

For a website for a local business – just use a Facebook page.

…the list goes on.  There are just so many technology platforms out there right now, you can probably create a barebones version of your idea for much less money than hiring a developer to do custom work.

As a developer – think twice before you hire a developer

When I used to do freelance development work, I often counselled clients NOT to hire me because their ideas weren’t validated.  If they decided against my advice, I went ahead and built the site that they wanted; after all, the customer is always right, and I got paid whether or not they were successful.

As an entrepreneur, I think totally differently.  I aggressively work to reduce my risk, and only spend money when it’s absolutely necessary.  When you need one, a good developer can be an amazing investment.  When you don’t need one, they are a huge waste of time and money.  Be absolutely sure you need a developer before you get one.

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