If there’s on thing I understand the value of it’s learning from failure, with experience of working on a start-up which failed to deliver on it’s initial promise to exiting from Shopping.com after a change in strategy. The good news is that failure is an important part of what being part of a lean start-up, when you go out and test customer assumptions through validation and experiment only to discover assumptions are wrong and you need to change strategy – pivoting to use the jargon.
Indeed the validated learning approach to quote our onsite mentor Gordon Guthrie, “gets companies only to build things customers want and helps startups get to cashflow and traction earlier. Most startups fail in cashflow – burning through any money (from funders, from founders, from family) before reaching a definitive conclusion on their proposition”.
The learning I had working last weekend came from an idea called Spare Space – based on the assumption that companies would want to rent out spare office space in the form of meeting rooms. But when we looked at the customer assumption from the supply side, it looked pretty obvious businesses would not want folks using their meeting rooms. (That said renting out desk space is a winning business in the US known as Loosecubes, where the co-working supplier benefits with creative mix of new business people). The issue comes with meeting spaces.
Fortunately the team found there were a good sample of pubs and restaurants that had meeting rooms which they wanted to get more use from. So the supplier side seemed sorted. But then the consensus as to the demand side seemed to break down, and the end pitch was for any meeting rooms which didn’t seem to work. Did we fail? Sure. But what I learned was the value of the MVP approach to focusing in on what the customer wants.
I had a great time at Lean Startup Machine London this weekend, learning about using lean startup ideas and practice from a social networking perspective to build a business. It helped that I’d already been to hear Eric Ries talk, thanks to a tip off from Andy at Crocodile Clips (currently looking for investment himself I believe, and I picked up a good contact for him at the event). And also because I’ve been helping Barnaby with his Name That Place concept, thinking about how to get proof of concept and wondering about what the best way to take that forward (btw he’s not in the office today at Regus, but moving lodgings to a house boat near Vauxhall:-)
So while I promised myself a lazy day today I wanted to quickly note down two things. I still have to prepare for a talk at Cass next week on using MVP to help corporates build successful online communities, and I still have ot find a job/drive revenue before my severance from eBay runs out in X number of weeks. So time is short and comes with a cost attached, and before I pop into town to watch Mr Spacey in ‘Margin Call’ here’s a couple of quick creative thoughts.
Containers – in a container (paper page) – in a container (photo) – in a container (blog post) – etc
I like to try and simplify things where possible as that way you can get difficult things done more easily right? So in thinking about what works as a social business I came up with the idea of matching up ‘containers’ – that is simply a tool for mapping how a social concept might work. The example above is an attempt to show across 3 degrees of separation how in rough and ready terms a business like Airbnb works best.
In trying to find somewhere to stay you are first going to see if any of your ‘friends’ live in the city you are visiting (the idea behind Airbnb is providing cheap places for people to stay in other people’s homes). But the chances they have a room in that city are ‘unlikely’ as your friendship network is relatively small. So you turn to ‘friends of friends,’ and they are ‘likely’ as they are my the virtue of wider geo-distribution going to have a possible place to stay. But maybe the night you want to stay they are busy? So the next container along, which for the sake of 3rd degree of separation symmetry I’ve called ‘friends of friends of friends’ is very likely to provide the room you want, and for the time/date you want. (It’s a nice fact that the average user on Facebook is connected to everyone else by 3.74 degrees of separation, so you can see why Facebook based commerce using the social graph is so potentially powerful).
As a side note I really liked the pivot by lean startup participants ‘You never know’ led by ‘Easy Ed’ (alliteration really helps remember ppl’s first names:-) who started with the idea of an app where you could get matched up with single people in your immediate social network, but found that people didn’t want to do that for themselves. But then on pivoting realised that ‘smug married’ people would happily introduce single people to other single people. Neat change of the social networking dynamic, from ‘doing it for yourself’ as a single person not working due to fear of rejection for example to someone with a networking ‘doing it for you’. So maybe that’s why blind dates work, so long as someone you know sets it up for you!
Superbowl Sunday: data crunchers vs grandmothers
While I was talking to Javi he happened to mention one of LSM London teams ‘hstream’ had a real time Twitter analytics idea. I got excited at the idea of tracking sentiment around Patriots vs Giants and even had a look at the odds at Betfair. I also tried Twitter manually, so to speak, and found and favorited one tweet which from a gambler’s perspective seemed to stand out. It turned out to be right, the 94-year-old grandmother backed the Giants, the winners of the Superbowl XLVI. Wonder what the results of hstream’s real time data analytics were?
It seems a lot of people have got it wrong about Mark Zuckerberg.They scoff at his suggestion that with the impending $5bn Facebook IPO that he’s not in it for the money:
“We don’t build services in order to make money, we make money in order to build better services. Facebook was not originally created to be a company. It was built to accomplish a social mission–to make the world open and more connected.”
But as the recent BBC documentary ‘Mark Zuckerberg: Inside Facebook’ got right (and the film ‘The Social Network’ got wrong – cute screen-grab above) a billion dollars ain’t cool, turning down $1bn is cool. Which is what Mr Zuckerberg did when Yahoo made an offer of close to $1bn for the global social networking site (Facebook record 11 companies with 14 offers in total) in 2006.
Logically then if he was ‘in it for the money’ wouldn’t he have cashed in his ‘cash cow’ there and then? So now he’s both cool and soon-to-be-be very, very rich. What’s not to be jealous of?
This is the question I asked other community managers on the yahoo e-mint forum today – ‘How useful is an entrepreneurial approach to building online communities?’ And the reason why is because I’ve been working on a start-up idea since leaving a community management position at eBay, so it seemed a good opportunity to put together a presentation on how lean start-up methods can help build community, based on the methodology put forward by Eric Ries.
I’ve already had a couple of responses so I thought I’d share them more widely here too, starting with the reply from Benjamin Southworth:
This seems to be a slightly tautological question.
If you were building a community in other way than iterating on results you’d not be listening so your community would fail.
Eric Ries ideas regarding Lean, MVPs, testing, iterations and pivoting are solutions to the idea of silicon valley excess of funding runways, burn rates and throwing money as a solution to viral traction.
Ergo, all successful communities follow a listen, test, adapt, build, rinse, repeat model and always have.
And indeed Benjamin is right, building online community seems to follow very similar lines to the start-up building model – and that’s why I wanted to reflect on the subject. Eric Ries does aim with his method to cover corporate entrepreneurs, not just the Silicon Valley kind. Again why I thought it could be useful for online communities within organisations, not just for start-ups.
Fortunately I’ve signed up for a long weekend of lean start-up workshop this weekend, where I’ll get a good chance to reflect on this with my colleagues for 3 days. Should be fun from reading the introduction!
Lean Startup Machine is a competitive weekend workshop where you will apply Lean Startup techniques in the real world. Join a team and launch a startup–not by writing code– but by validating and iterating your key hypotheses quickly. Learn to identify the key risks in your business model through hands-on mentorship and our unique framework of tools.
Over the course of the weekend you will do the following:
Ideate a startup or work on the one you have now
Practice Customer Discovery
Research your Target Market
Practice Customer Development
Test your Assumptions in Iterations
Understand your Business Model
Iterate and Pivot (when necessary)
Build something you can Launch
Present your Validated Learnings
I promise I’ll post the fruits of my labour after my short talk on this subject at Cass Business School, ‘Applying lean start-up principles and practice to building corporate communities’ on 13 February.
So what’s the Name That Place all about? The elevator pitch is this – a simple game of ‘i-spy’ but brought u to date by playing with your mobile or computer. Looking at i-spy from the online p.o.v., it came with a ready made container – a car or a room; and a ready made community of players, passengers or fiends. And with mobile phones, mobile apps, and geo-tagging the possibilities technically mean theory an online Name that Place is superficially attractive to a wide range of people in a wide range of settings. But in reality it would only convert from the potential to the engaged game if people start to use it.
So how do you get proof of concept, through people using it? It’s already been shown to work in Barnaby’s home town in Sandbach through his Facebook Page. That’s because it was also with a limited container of 100 participants who all knew someone who knew someone.
So as per Facebook’s genesis take-up is down to a shared social network to compete with and a shared physical environment from which to source the pics.
There’ also a demo we did for Coffee Republic you can look at, to get a better idea of how it might work in action, with Facebook enabled comments embedded in to the entry page.
I was there!
I got to attend the BLN Lean Start-Up event last night, with Eric Ries presenting his thoughts to an audience of entrepreneurs. I talked to one attendee who’d flown in from an unnamed European country just for the event, and a lawyer who’d changed from smart casual into a suit and tie. In other words I was just there to listen, and here’s what I heard. (By the way I did get the chance to make friends with Davor Hebel from Fidelity Growth Partners, following Eric’s prompting to introduce ourselves.)
Essentially Eric said that the traditional tools of scientific management were not so much use to entrepreneurs, whatever type or size of organisation. That what was needed though was a validated means to manage entrepreneurial activity. This is what he suggests the Lean Startup methodology provides.
Suits vs engineers
Of course it’s not perfect, as he admitted when he presents to engineers they blame the lack of success on the business people, and vice versa. So there’s still some magic required to apply in bringing the business and tech people together, but how to do that seemed to lacking? Fortunately not long after I spotted a nice example of a lean approach to product development in the recent edition of Wired UK, with the piece about German games company wooga’s approach, which mixes e-commerce, usability, and games design to great effect: ‘Test. Test. Test: How wooga turned the games business into a science’. Love wooga’s slogan for sure: “Be fast and be bold. Only do features that increase DAU monetisation.” DAU stands for daily active users, btw. Which if you think about it is also a great way to get engineers and business folks to agree, using the real time data to guide product development. Certainly this holding entrepreneurs to account is a big theme with Eric Ries, that you need to do small scale testing to get validated results. So there it is the accounting method is the means to unite suits and engineers!
A. It has to be quantifiable or this is all a waste of time
This idea of value is what Mr. Ries means when he talks about accounting. “It has to be quantifiable or this is all a waste of time,” he says. We can draw a lot of valuable lessons from science. The proof in science is that you have learned how to do experiments that show the right results. The same thing is true for validated learning. If we have learned something interesting, then prove it by building products that are in line with that learning.”
This is the development cycle Mr. Ries calls “build-measure-learn”. Build your product, see how people use it, what do they like, what do they click on, what do they hate, and use that to inform your next decisions.
But in order to know how successful or otherwise you are, you need a system of evaluating value.
“That is accounting. We have all been indoctrinated with thinking that accounting is about tracking money, but money just doesn’t work very well when the numbers are so small, like in an early stage start up. There is no RoI, there is no profitability. Everything is close enough to zero that the accountants don’t care.
If 10 people in a row hate my product, isn’t that telling me something?
“The units of innovation accounting are not the gross numbers. Rather than focus on how much money we make, we might look at what is the percentage of customers who pay. We have to look at other things.
“The nice thing about those metrics is that they are not market-size dependent. If you have 100 customers you can already say what percentage are paying. If it is zero then I can already start to be a bit worried about the model.
“If 10 people in a row hate my product is that statistically significant? It is is not conclusive evidence, but it is certainly telling you something.” [note: this is the validated means to create a minimum viable product or 'MVP', one which has been tested and validated using accounting techniques]
Judging from the size of his audience at the Business Leaders Network event on Monday, the buzz afterwards, and the fact that Mr. Ries has had almost 20 meetings in his brief time in the U.K. and Ireland (including a meeting at 10 Downing Street), he is preaching to a receptive audience.
Update: a couple of things have happened since 16 January:
1. I am attending the lean start-up weekend starting 3rd February to better understand the Ries methodology (and jargon;-)
2. Using insights from the evening and this weekend I am presenting at Cass Business Business School on 13th February on using this approach in building online communities on existing platforms that is, to clarify!
Kudos to the organisers who published a full list of the attendees here.
“Named one of Time magazine’s top 100 most influential people, Wael Ghonim, is credited with having sparked Egypt’s revolution with a Facebook page he dedicated to a victim of the regime’s violence.
“The ‘We are all Khaled Said’ Facebook page that he created after the young man’s brutal murder and torture by police in Alexandria became such a focal point of the uprising that Ghonim was imprisoned for 11 days. The former Google executive will be talking to Ben Hammersley, Wired UK’s, editor at large about the revolution and the role of technology in mobilising people to take to the streets.
“He will also be bringing us up to date with what’s been happening since the jubilant celebrations a year ago and his work since he left Google in April this year. Wael Ghonim’s new book Revolution 2.0 is published by Fourth Estate on 17 January.”
As side note I saw someone tweet that the 2011 crop of revolutions were not especially significant, or words to that effect. However, political changes in the Middle East over the ages can be disproportionately influential, imho.
“Since 2006, Amazon Web Services have been providing on demand, pay-as-you-go infrastructure to businesses of all sizes. This talk will introduce Amazon’s cloud platform and discuss how organisations can make use of Amazon’s massive scale and operational experience to iterate quickly and build highly scalable services.
“Your presenter, Matt Wood, is the Technology Evangelist for Amazon Web Services, where he discusses the technical and business aspects of cloud computing at events throughout Europe and with teams of all sizes.
“With a background in the life sciences, and a PhD in Bioinformatics, Matt has previously built web-scale search engines at Cornell University, genes in Hinxton and was responsible for the software that drives next generation DNA sequencing platforms. Matt is an advocate of agile development, big data analysis and the productivity benefits of elastic computing.”
Now this sounds like an interesting BCS event covering cyber-security with Gareth Lapworth from De Montfort University, clearly surveying the collateral damage with an expert eye. Should be epic!
“2011 was a fun year in computer security. The term “epic” doesn’t quite do it enough justice, but it’s the best term we’ve got. The lulz were had by the bad guys, the overtime was pocketed by the good guys and it was gripping for those sitting on the sidelines.
“One of the most public and explosive attacks of the year was aimed directly at the Sony corporation, not just once, but at least four different times. In order to solve their problems they simply laid off a significant number of their security team. Epic.
“2011 also saw a rise in malware related attacks. Whilst most computer users were worried about receiving viruses and attempting to solve that problem, computer security dudes in the power and water industries were trying to secure centrifuges and utility supplies. They failed. Miserably. Epic.
“It was a win for those that did manage to secure their computer systems, but not those that chose Symantec anti virus. We found out recently that the bad guys had access to the source code of some versions of this software. Of course, the same bad guys helped the world by uncovering that the Indian government requested that Apple, RIM and Nokia placed back doors in their hardware/software solutions. It’s always pleasing to know that a government has access to all of your private data. Epic.
“Don’t have nightmares, though. William Hague wants you to know that we’ll strike first in any cyber war. Super Epic.
“This lecture discusses some cyber security related activities and gives a taste of things yet to come in the next 12 months. It is hoped that you will walk away from this lecture with a feeling of helplessness and fear that will instil in you the correct level of paranoia when conducting yourself online.”
It appears Gareth has left out the FBI arrest of 16 suspected ‘Anonymous’ hackers in July, not long after the PayPal Twitter account was hacked. Which in turn came not long after news that PayPal had dropped online banking for WikiLeaks.
Also see ‘Six security forecasts for 2012′ written by the BCS’s David Lacey, starting with Space weather creates concern: “…increased solar activity will probably cause a few minor annoyances to GPS users. The larger concern, however, is that it might take out mobile communications, power supplies or perhaps anything with a GPS chip. Not quite Y2K in impact, but longer, less predictable and much less researched and publicised”.
I’ve picked up on a few articles recently in the likes of WSJ and TechCrunch in particular, suggesting that the rise of mobile price comparison apps has finally come of age:
“How brick and mortar stores are going to be able to personalize and make the in-store shopping experience unique is through data, in my opinion. It’s no longer about creating a mobile web site or offering coupons; the experience centralizes around making customers feel as if they are being treated like a VIP just by walking into a store. And how brick and mortar stores are going to do that is the same way Amazon was able to create a business out of personalized e-commerce.
“Some retailers are attempting to use video and heatmaps to try to see how people shop, what they are buying and more. But this data is limiting because while stores can figure out what is working when it comes to placement, advertising, and marketing of products in-store, retailers still don’t know who is buying and how to get them to return.
“Personalization really gets interesting with transaction data. Shopkick recently teamed up with Visa to allow consumers a way to receive rewards points for retailers at the point of sale when they use their Visa credit cards. This is part of closing the redemption loop...Thus far start-ups, tech companies and credit card companies have started to use transaction data as a way to close the redemption loop and drive future purchases but this is relatively new to brick and mortar retailers.”
And of course Bay’s PayPal are getting in on the act by teaming up with high street retailers “to create a suite of tools and technologies that help use technologies to level the playing field when it comes to data” according to PayPal’s Anuj Nayar.
So much for the TechCrunch view of the subject. To add value to their answer I asked the question ‘Is the threat from mobile price comparison apps over-hyped?’ on the G+ community. Here are a few edited responses to date that have come in which underline that this trend is certainly something to watch out for in 2012, hyped or not:
“In my opinion there is more a trend than a threat, the search for better pricing and offers for all kind of items either by the web or any other means.” Daniel Suzuki, Consultor, Bufete Tecnologico Latinoamericano, S. C.
“Retailers also need to understand what other value streams the act of ‘scanning’ has within a retail environment. If 500 products are all tagged appropriately, retailers can gain insight to what was scanned, when, and where (sometimes even by who.)” Barry Hurd, Managing Director, 123 Social Media
“For all high ticket items, anything over $100, consumers already do price comparisons on the internet before they even go to a retail store. So, if they are in the store, looking at a product they have a high interest factor and their mobile app will only make them a more educated consumer. They can then use this knowledge to ensure they are getting a good/fair deal from the Main Street retailer. It is up to the retailer to ensure that they don’t lose a willing and able consumer.” David Lieber, Staff Product Manager, Qualcomm
“..the better question is how does the high street respond to a marketplace with reduced overheads, reduced staffing costs and easy access for a significant proportion of the populace FRONTED by comparison sites that direct the consumer to the best place to get the cheapest deal.” Michael Strefford, Director, JoinedUp Consultancy
“Mobile based purchasing more than doubled this holiday and was over 10% of the online purchase on several days, so the question of impact is not over hyped as this is now ongoing..this is part of the broader effect of easy access to price and product information. We have now seen the effect in the strong pricing stance of retailers such as Walmart and Best Buy who both went out of their way to ensure that their offline pricing was “in the top box” when compared online, or else fled to exclusive and therefore non-comparable sale items.” Robert Heiblim, Co-Founder & Principal, BlueSalve Professional Consulting
