Lean startup gems for your evil plans venture or skunkworks team

Profile picture for user jreed By Jon Reed August 21, 2016
Summary:
Getting drafted into "startup advisor" made me rethink my startup lessons, and how they might apply to other companies - and teams with attitude. Here's the tips that stood the test of time.

startup idea
Since I graduated in 1991, I've only worked in startups. Well, except for a brief teaching stint, and bagging groceries, a field from which I made an inglorious exit in 1993. Since 1995, it's only been enterprise-related startups, which probably explains a lot.

When you're in startups for decades, hard lessons become ingrained - the kind we are endeavoring to avoid at diginomica. Two big ones:

  • Once you're comfortable, all is lost.
  • The time to course correct is when you're rocking along. Or, as my colleague Den Howlett puts it, change the roof when the sun is shining.

Aside from that, I've never really put my startup lessons on paper. But I did grab the back of a napkin not long ago. At Collision 2016, I volunteered to do a round robin advisory session - four startups in sixty minutes. Each would be a rapid fire consult, with me in the strange position of offering startup advice. I say "strange" because the only way to really learn startups is to live them.

Afterward, I saved my lunch napkin and decided. In true startup fashion, that napkin should become a blog post. Disclaimer: with one exception, I've never been involved in a venture capital funded startup. Even then, I walked before the stock options rose (a little) and fell (hard). If you're looking at the SaaS/rapid growth and (maybe) VC funded route, I point you towards Jason Lemkin's definitive SaaStr blog, event and community.

Even if you're working in a large company, so-called "lean startup" principles have now infected the enterprise, aided and abetted by cloud/digital tech. In other cases, enterprises form smaller units or acquire companies they hope will "disrupt" their business as usual. Two recent pieces I did of that flavor: Capital One and UPS.

The startup tips that made the cut

So with that in mind, whether you're part of an evil plans venture or an internal skunkworks project, here's the principles that made the cut on my napkin. I'll sprinkle in links to articles and examples.

Have an analytics strategy from the beginning - know how you will measure your progress. (Especially important for internal skunkworks projects!).

Big ambition is great, but start with a small, focused use case you know you can win.

Build a great product/service with open source/cloud tools - the (comparitively) easy part.

Create a great, rootable narrative - frame the problem you are solving in terms people can relate to. But: be prepared to change that narrative if market conditions change. (Gartner's Hank Barnes writes on narrative on a regular basis.)

Marketing is the hard part; great marketing consistently beats better products and buys time for inferior products to mature.

Adoption is everything, therefore UX is everything. Enterprise UX is less about beauty and more about making the experience "frictionless" across platforms and devices.

Free pricing tiers can fuel adoption, but have a fair and effective way of getting folks to upgrade. Example: Slack - great free service, but useful premium features. RethinkDB shared an interesting view with me on the art of premium features.

Industry expertise leads to niche success via narrowcasting to "sweet spot" customers. Shooting for home runs beyond your industry stomping ground is riskier and less effective than proving a model and expanding it. Strive to be the best in the world at that industry thing you can solve.

Have a customer reference/advocacy program ready from the first customer. Consider giving early customers discounts in exchange for their formal role in an advocacy program, including on-the-record case studies with quantifiable results. That advocacy becomes one of two baselines for your content marketing strategy.

Everyone in your company is a marketer, via content and community. (that's the second content baseline). Social media isn’t enough. Subject matter experts should be blogging, sharing content, speaking, contributing to open source projects - whatever motivates them. And they should be encouraged to do so as part of their job descriptions/incentives.

Bad days are not for indulging in despair, but for dissecting the problems, using them as fodder for change.

Profitability is everything. Build on profitability wherever you can. A cost structure that rises incrementally while revenues grow exponentially is ideal. (the SaaS unprofitable growth model is a special case, and only for those who know what they are getting into. If that's your game, track Jason Lemkin)

Transparency builds trust, which becomes a competitive advantage. See: the Watsi example of transparency with all stakeholders and donors, including financial information and transparent pricing. Or Gitlab, which open sources almost all of its corporate strategy documents, including marketing, where even competitors can see it.

Give most of your intellectual property away to build name recognition and good will, including open sourcing. Let your competitive edge be your ability to create new assets, or build premium services and features on those assets. (patents and certain algorithms are notable exceptions to this).

Fail fast, with no ego attachments to ideas that don’t work - aggressively change direction as needed. My GoButler piece is a good example of this, with the CEO talking about why his investors are on board with his dramatic pivots.

Foster a painfully direct style of communication within your company, where all contributors have a voice regardless of position. Things left unspoken hurt far more than sharp words. That said:

Keep the startup jocks away. Building a "no jerks" culture is about recognizing that diverse voices are integral to competitive edge. At diginomica, we've doubled down on editorial coverage of diversity at work. When he was at Redmonk, Donnie Berkholz gave an "Assholes are ruining your project" talk that remains a favorite. Update: Dave Kellogg's Three Golden Rules of Feedback fits in well here.

No dead weight, but avoid the "superstars-only" attitude. If your company can only hire superstars, I don't like your chances. It's about helping people find the right roles to shine, not expecting every employee to be as passionate and dedicated as an owner. Dave Kellogg, CEO of Host Analytics, often hits on key management topics, in this case the "dead weight" issue - You Can Never Fire Someone Too Early.

Figure out a collaboration model that works, and provides flexibility for the lifestyles and locations of your talent. Advantage goes to startups that can pull in remote workers, and utilize far-flung talent and/or subcontractors - without requiring expensive relocation. At diginomica we've tried a lot of tools but have primarily returned to Google Apps and gmail for our virtual team. Slack is the only other collaboration tool that has stuck (for some uses). It's not about what's sexy but what works.

I probably overlooked a couple; remember, I only had one napkin. If you have a real keeper I didn't mention, would love to read it in the comments.