Dave Concannon

Icon

In Pure Water, No Fish

Inside the Skin of a Dog, Outside the Hide of a Tiger

There is a fantastic samurai maxim from the Hagakure:

A samurai will use a toothpick even though he has not eaten. Inside the skin of a dog, outside the hide of a tiger.

This applies as well to startups as it does to personal development.  There’s a lot of sacrifices needed when bootstrapping, and then you need to put on a confident face as you try to sell a half-implemented idea or pitch to investors. You might be as hungry as a mangy dog, but outside you need to project the appearance of a tiger.

Confidence

Confidence goes a long way. All the raw talent in the world isn’t going to carry you very far if you’re so humble or shy and it comes across as uncertainty. A lot of technical people consider Marketing ‘evil’, yet a little dab of it applied to their own careers might do them the world of good. You need to push your ideas past your immediate circle and it’s not going to happen by itself. The Million-Dollar homepage didn’t just ‘go viral’, Alex Tew relentlessly pestered everyone he came into contact with to spread the word.

The Flipside of the Coin

There are two cases which are contraindicated. Firstly, from the lips of Lady MacBeth:

Look like the innocent flower, but be the serpent under ‘t.

Nobody likes a manipulator. Confidence is one thing, but duplicity is a totally different story. It might work in the short-term, but over the long game integrity wins. Mark Suster touches upon a similar subject in his latest article on ‘Grin F***ing‘.

The Smartest Person in the Room Syndrome

This is something I’ve definitely been guilty of in the past (but hopefully not recently). As generalizations go geeks tend to be smart, and are paid to critically analyze things. This well-written blog post has a good explanation of why this isn’t usually a bad thing, but the ‘Smartest Person in the Room Syndrome’ is that critical analysis applied in less acceptable ways.

The smartest person in the room has to be correct in everything that they say, and usually for that to happen everyone else needs to be wrong. This can be from as simple a level of ‘rightness’ as shoe-horning an unnecessary degree of detail into a conversation,  blatantly contradicting someone who’s either making a joke or speaking hypothetically, right through to loudly shouting down any contradictory opinions. It could be some sort of insecurity that needs  constantly validation through one-upmanship, or just a lack of awareness of how it comes across.  Be confident, but don’t be that guy.

Schools and Creativity

An interesting quote from “Tribal Leadership” on how industrialization changed the school system:

The solution was to train a new generation of workers by teaching them inside a system that looked a lot like a factory. In school, bell rings, go to class; bell rings, recess; bell rings, go back to class; bell rings, eat lunch; bell rings, go home. At school, children with the “right” answer get a gold star, then an A. A star pupil is one who does the homework and has the right answers. This new system undid the classic liberal education which said that value was in the well-designed question.

As data becomes more and more accessible and available, how valuable are these sorts of skills? Ubiquitous access to information means memorization of things like specific dates or formulae is an over-rated skill. The real skill is in understanding the underlying series of systems and actions that formed that memorable date. It is in knowing that a formula exists in the abstract, and can be applied specifically in different and possibly unrelated areas.

Creativity

Sir Ken Robinson had a fantastic talk at TED on why applying a system across the board marginalizes certain creative personality types, and why he believes that nurturing creativity should be held in equal regard to skills like writing and numerical literacy. Paul Graham briefly mentions why apprenticeships make sense for some people. How will technology advances influence teaching?

Finally, here’s a great video on the importance of a good teacher from one of Seth Godin’s recent posts.

Book Review: Tribal Leadership

Add to Cart

Tribal Leadership is a guide to using natural groups within an organization to create more effective leadership. This concept in this book is slightly different to that of Seth Godin’s “Tribes”, but is an effective complement with a similar core message – an effective organization needs happy people all working towards a focused goal. Seth  mentioned Tribal Leadership in Tribes, and I happened to stumble upon it in a discount book store.

The authors gauge organizations into five tribal stages, starting from misanthropic groups of “Stage One” tribes, through to the sort of altruistic “Stage Five” tribes which the authors describe as “pure leadership, vision, and inspiration”. Interestingly, this isn’t some sort of self-help checklist you’re supposed to follow to reach enlightenment but a way to recognize the motivations and concerns of the tribes at various levels of a company.

The book emphasizes that for an organization’s workers to be truly motivated, the organization has to be driven by a noble cause. “Core Values” is not just some Dilbert-esque item to be checked off for a company to be complete – There has to be an actual reason for the people you work with to want to continue doing what they do. As the organization grows and creates tribal leaders at the stage four and five levels, they create what the authors describe as “triads”.

Triads

The concept of the ‘Triad’ will be familiar to anyone who’s read Keith Ferrazzi’s ‘Never Eat Alone’. The Triad is an influential person creating a relationship between two people they know, and then politely moving on. The distinction is that this creation holds no immediate benefit for the person making the introduction and indicates that tribes within the company are moving beyond the individualistic culture of “I’m great” of stage three type tribes towards the “we’re great” atmosphere of stage four and five.

Summary

I’d recommend this book as a separate viewpoint from Seth Godin’s work on the power of tribes. The motivation is more of an internal analysis of an organization than a rabble-rousing call to escape corporate life. The book has several interesting case studies of people and organizations at various developmental stages, and insightful commentary on how to influence tribal direction. Particularly amusing is an interview with Gary Cole, the actor who plays boss-from-hell Bill Lumbergh in the movie “Office Space”. If you were going to pick between this and “Tribes”, I’d say I enjoyed ‘Tribes” more – but got a lot out of both.

Add to Cart

Weekly Retweet 26/03/2010

Twitter Bird Icon

The weekly retweet

Interesting links from the week of March 26th. This week, Sean Ellis gave a talk on “The Keys to Explosive Startup Growth” for the Lean Startup Circle which was very well received.

Quick fix as a Competitive Feature Set

This season’s must-have startup feature set is the quick fix. At the crossroads between the attention deficit disorder of internet users and voyeurism we have the phenomenon that is Chat Roulette. In some sort of mix between the visuals of the classic 80’s board game Guess Who and some sort of stalking application we have the recent StartupBus winner DateBrowsr.

Under the category of mobile applications there is the simple check-in use cases of Gowalla and FourSquare. And of course, the standout heavy hitter in the category of quick fixes that I’ve yet to mention is of course Twitter, fueling the zeitgeist one minuscule update at a time. There is an element of both bragging and voyeurism to all of these services, and the major usage is built around the fact that the user can leave at any time – the user workflows are very short and there’s a lot of fun to be had in that short time.

Chris Dixon has an excellent article about why for a lot of business models having the user stick around for a long time may not help the revenue model. On a consumer web app dependent on advertising revenue having the user hang around not clicking on ads is just burning up your server cycles. More and more, the simpler web applications are tending towards just a single feature. Foursquare has an interesting revenue model, bringing game mechanics and analytics dashboards to real-life businesses. Twitter has ubiquity which should eventually lead to decent revenue,  but it remains to be seen whether there is a sustainable business in the other ideas.

Leave your Ego at the Door

Jiujitsu clubs have a motto – “Leave your ego at the door”. When you walk onto the mat, you’re going to meet people of different sizes, speeds, and skill levels who in one way or another are going to kick your ass. You approach each fight differently, and with a large amount of humility or else you’re going to end up frustrated at best, and just plain broken at worst. The goal is to learn what works in each different situation and ignore what doesn’t. In Jiujitsu, if you hold on to an idea too long you get choked out, or get your arm snapped.

Business and Ego

In a company, people have ego attachment to different areas of the business. You might love the grand vision, the content team might love the type of data they’re creating, marketing might be really proud of their positioning strategy, and the development team is smitten with the fantastic technical solution they’ve created. None of this matters if there’s no customer who also loves it and is willing to pay for it. On the road to developing a successful business, every part of the business can do what they’re told and the system as a whole will still be a complete failure.

Lean Philosophy

The Lean Startup philosophy is designed to minimize this ego involvement. You validate with the customer that you understand their problem. You validate that they think your solution is the answer. You measure that they’re actually using it the way they said they would. You constantly test and tweak, and abandon that which doesn’t work even if you’ve poured your heart into it.  Gradually from the shattered remains of your ego, you have something that people love. You just have to learn to let go.

Henry Ford and Customer Development

Henry Ford famously said:

If I’d listened to what my customers wanted, I’d have given them a faster horse.

I’ve heard this reasoning applied as a justification for ignoring user validation for product changes and features. While there is a definite need for visionary ideas to avoid the “Me 2.0!” mindset of blindly emulating other ideas, at some point a customer needs to actually pay for the product. Henry Ford had some amount of ‘modest’ commercial success with his cars, so what’s the problem?

Customer Development Process

Customer Development might have helped him out here. Instead of asking what customers want he might have spent his time figuring out what problems they had: the inconvenience of feeding, stabling, and re-shoeing their horses. Weariness of the bone-jarring discomfort of long journeys on horseback. The desire to get to their destination that little bit faster.

You start with a fuzzy problem set that may or may not really bother the user, and gradually smooth out the assumptions and inconsistencies in actual conversation with your potential customers until the problem is more accurately defined. Once this is done, you can look at how to apply technologies or processes to the challenge and then return to the customer again to validate that the solution you’ve designed solves the issue, and is important enough for them to actually pay for it. It may be the easiest it’s ever been to develop online solutions.

Vision

Did Ford need to apply Customer Development, or was the writing already on the wall that horses were on their way out? Recognizing an opportunity is a completely separate skill. Vision is absolutely necessary to access new markets, but visions are sometimes hallucinations. Running headfirst into a solution before you can validate that the solution fixes a real problem that people are prepared to pay for is wasted energy at best, and self-gratification at worst.

Risk vs Reward

I think my interest in entrepreneurship is firstly that it’s a nicely contrarian view to the “Go to school, go to college, get a job, retire in 45 years” type of life planning, and secondly that I find different people’s attitude to risk fascinating.

Reward Focused

My reasoning is that you should take every opportunity that you have to do something you’re wildly passionate about. It might not be practical to just jump into this passion straight away, and if so your plans and goals should somehow put you closer to getting there via either an amazing learning experience or some really good reward in exchange for your time. This view is a sort of backwards-reasoning – less focus on the risk, more on how to get to the desired result from where you are. Some people take it to extremes – One Mixergy interviewee quit a job in a very promising startup, figuring that the fractional percentage equity stake he had been given was never going to change his life as much as holding the reigns to a business himself.

My ideal long-term dream situation isn’t overly materialistic – No mortgage, and never look at the right-hand side of a menu again. I’m not even talking about Roman Abramovich-level gastronomic excess, just somewhere straight across the middle of Jason Cohen’s ‘Rich vs King’ matrix. I see myself still working away at something I’m really interested in long after my gray hair has turned white, but I’m happy to take a little risk to get there.

Risk Focused

The opposite view people tend to take is in weighing everything in terms of risk and loss.  What happens if you try to reach for the goal and fail: Will you lose a secure job? Will you have to dip into savings? If you’re a guest in an awesome country, would you be deported or have to frantically find another job? They only press forward when they’re absolutely certain that the opportunity is safe.

Here’s a completely unscientific chart:

For most people the sane strategy is to do anything possible to move towards the “Low risk, high reward” section and do anything to avoid the “High risk, low reward” quadrant.  Things that will help move you towards this “golden quadrant”:

  • Learn. Eric Sink’s Career Calculus says it far better than I can. Mark Suster’s “Earn or Learn” lends a fantastic perspective directly related to startups. Learning more reduces the risk in decision making.
  • Networking and Mentors - Get to know people who’ve been there and get advice, and people who are trying to get there for support. I’d recommend Keith Ferrazzi’s “Never Eat Alone” as a great primer on effective and authentic networking.
  • Goal Setting. Some people have a plan hard-wired into them, and some people need to create one. Either way, setting SMART goals is a great way to make sure you’re heading in the right direction.

The ‘Crazy’ Zone

The top left quadrant (Low reward, High risk) is an interesting place. On one hand you have The Saints – e.g. Aid workers and volunteers in dangerous locations. Next to them, you have desperate people with no other choice – e.g. a Drug Mule,  Then you have the insane or unaware – People who are either deliberately making life hard for themselves, or who don’t even know they’re in a bad place. If you wake up one day suddenly realizing that you fit into that last group, it’s time to bail ASAP.

The ‘Crazy’ Zone and Startups

If you’re running an early-stage startup you might be in the top right quadrant, rightfully hoping for a high reward for putting your money and long hours on the line. While this is true, entrepreneurs should bear in mind that some of your employees may actually be closer to the upper left quadrant (bootstrapped wages, job insecurity) unless they have a meaningful stake in the company or a fantastic opportunity to learn.

According to Seth Godin, the bottom left ‘Low Risk, Low Return’ quadrant may not even exist any more in terms of ’safe’ jobs. This puts what would have formerly been a safe ‘job for life’ closer to the Crazy zone. In my mind, this is clear motivation to start a business.

Why Ben Horowitz’s Article has nothing to do with ‘Lean Startups’

Ben Horowitz has a great contrarian article about ‘Fat’ startups which has caused immediate reaction around twitter and the Lean Startup community. Unfortunately, his article has very little to do with the Lean Startup concept and a lot to do with reactionary CEOs flipping out about the infamous Sequoia presentation. It also has a little to do with how choosing a name is important. For the record Ben Horowitz is right, but let’s backtrack a little bit.

What is the ‘Lean’ in ‘Lean Startups’

The ‘Lean’ in ‘Lean Startups’ comes from ‘Lean Thinking‘ as used in the streamlined production process pioneered by Toyota. This process is designed to banish waste in a production process. In the specific context of the Lean Startup process, it is to ensure that if you’re going to add a feature to your product there had better be a customer there to love it.

What the ‘Lean’ in ‘Lean Startups’ is Not

‘Lean’ in this context has nothing to do with spending less money. It is about effectiveness. It is about preventing your developers writing code that will never be used. It is about making sure that when you only have only one hundred hours to spend writing code, that as many of those hundred hours as possible are spent creating features that customers actually want. Fundamentally, it is about increasing the amount of validated learning you can get out of your process. To do this might involve increasing the amount of money you spend. It may require spending more money on people who are continually testing that your hypotheses are correct on actual users.

What’s the difference?

In Ben’s article we see CEOs reacting to the Sequoia memo, which makes a lot of sense. Around the startup community it was like a meteor had hit. Guy Kawasaki said that if you weren’t paying attention to this memo then you were clueless. Any available investment money dried up overnight. What Horowitz sees in these investment pitches is CEOs trying to display their cluefulness to potential investors by preaching the ‘Low Cost’ mantra. But he’s claiming that sometimes you need to spend big. Is there a disconnect?

Where the ‘Lean Startup’ becomes a ‘Fat Startup’

The critical mission of a Lean Startup (from Eric Ries’s concept) is to get to Product-Market fit.  Horowitz’s VC partner Marc Andreessen describes it as the only thing that matters. This is where the two stories link up. It’s the next stage in the same process – when you have product-market fit and there is a scalable and repeatable sales model you crank up the volume! All that validated learning turns into a method where a smaller amount of sales effort turns into a much larger amount of money. You spend to get there, and then you spend a whole lot more.

Facebook

Pumping too much money into a small start-up is unhealthy for both the company and the investor. On the other hand, Facebook has raised several hundred million dollars and is on track to produce fantastic returns for all of its investors. So what’s a start-up to do?

The difference here is one of timing. Facebook had phenomenal growth – users on college campuses all across the country were signing up at an amazing rate. That’s a pretty good indicator of product-market fit, and a different ballgame entirely. At this point the organization needs to scale to meet the demands of the market, and to do that you need money. A lot of it.

Hypergrowth Markets

Both Opsware and Facebook had product-market fit and were racing to gain a dominant position in a market where no clear leader had emerged. The decision to shoot for break-even revenue vs land-grab for market share is a strategic play at this stage. They both chose the process that Geoffrey Moore describes for capitalizing on hyper-growth markets in “Inside the Tornado“, which is a place that most startups can only dream of getting to.

Final Lesson?

Sorry Eric, “Lean Startups” is a terrible name for this movement. There’s been too much confusion with people translating “Lean” into “Spend zero money”.

Weekly Retweet – 17/03/2010

Twitter Bird Icon

The weekly retweet

A recap on some interesting links I’ve seen this week:

Customer Development Guide

Support the Startup Visa

Startup Visa Logo
Scrabble Word Finder Crossword Solver