How do you go from idea stage to having a startup?

The Idea Stage Startup Trap

I spend a lot of time talking to Idea Stage Founders about their fictional startups. Often they’re stuck thinking about their business instead of building it.

The key to initial forward momentum takes a less than 10 hours of work. In fact, I recommend you stop reading after these bullets and start right now.

  1. Fill out a Lean Canvas
  2. Build a Pitch Deck
  3. Pitch
    • To experienced Founders, just e-mail them and ask them if they’d help you with their pitch. You’ll be surprised at how accessible they are to other founders and how much help they will provide.
    • Search for early-stage pitch events. I host one called “Pitch-In.”
    • Seek out Angel Investors or Economic Development Agencies.
  4. Rinse & Repeat until your Company exits
    • No, Really. This never stops being part of your job as a Founder – unless you bootstrap.

Pitch your Idea Stage Startup

In gardening, you can’t contain the exuberant growth of a seed in a small pot for long. If it doesn’t have room to grow, it runs, distorts in unhealthy ways, gets root bound, then dies.

The exact same thing happens to startup ideas trapped in your head. Like our fictional plant hero, your startup idea requires transplanting. The freedom to grow despite adversity leads to healthy plants that bear fruit.

Pitching your idea in public is equal to planting it in the wild. During your pitch at least one of the following will happen:

  1. The audience will spot the gaps in your plan.
  2. You will feel embarrassed about something you said, despite audience barely noticing.
  3. An expert will tell you about an “Unknown Unknown“. That is to say, a risk that you don’t know about, nor do you know it’s potential impact on your business.

Challenges like these are required to go from Idea Stage to a functioning Startup. In fact, every time you adapt and overcome a challenge to one of your ideas, the startup gets stronger.

There is Magic in Public Accountability

Standing on stage presenting a slide deck takes the idea out of your mind and makes it tangible startup. It’s a promise to the audience. You’re not lying to them – this business is real. You have transfigured an idea to an early stage startup. The audience bears witness to the artifacts, proof-of-life, you are now a Founder.

The journey of 1,000 miles has started with these first steps. Now take the next step, and the next, and the next, until your arrive at your destination.

Remember to be mindful and enjoy the journey.

Scaling Operations: Simple but not Easy

Scaling Operations for your SaaS startup by Kat Carter from Squire. Focused on the foundational elements of scaling and highlighted Kat’s knowledge. The Q&A at the end goes deeper and shares her wisdom gained from time in the trenches.

TL;DR: The three lessons that she focuses on are:

  • Priorities matter
  • Tools are more than just software
  • Communication is the key to everything

Priorities Matter when Scaling

While Scaling Operations, executive leadership teams need to set clear the priorities for the company. Clearing your schedule, turning off e-mail, and work through a framework. Determine what the goals for the company are and how each team supports them.

Now that you have your priorities, you need to stick with them. You also need to communicate them repeatedly to all your employees. Every manager should know the company’s goals and use them as a guide for their decision making. The impact of each team’s work on the company’s goals should be reinforced during team meetings. The goals and how teams contribute to their success should published company wide.

Tools are more than just software

“There’s an app for that.” Its tempting to search for software to fix your scaling issues. But often what you need to do is collect data and review your processes. Then put together reports and controls that maintain the improvements.


Bits are cheap. When you build new functionality for your software, record relevant meta-data. Do this even if you don’t have a use for that meta-data currently. In the future an “Unknown Unknown” will pop-up. When it does you’ll be in a much better place to solve it if you can run analysis on historical data.

Communication is the key to operations

Your tools and communication plan allow you to effectively respond to novel situations. Kat shared a story about a severe issue that hit Squire while she was on PTO. The issue affected a large part of their customer base. But, the teams followed processes they built resolving prior issues. They communicated cross-functionally to identifying the issue. The team resolved it, and communicated the solution to over 100 customers within 24 hours. She found out about the event the day she returned during a retrospective briefing. The issue was already closed due to an empowered team who knew how to communicate.

Leverage the most effective communication tool for the task. By investing in training materials (such as an internal CRM), Squire reduced their new hire on-boarding time by 75%. Review the problem areas of your company and see if there’s a way you can improve communication.

Scaling Operations is simple but not easy

If you want to scale operations at your startup, focus on building good tools and frameworks. Record data and analyze it to see where the bottle necks exist. Build processes and tools to help you increase workflow. Communicate priorities and changes to employees in several different formats. Share the most important messages more than once.

Equity: Three Mistakes Founders Make

Shareholders' Equity

The Equity Mistake They Make With Each Other:

If you’re founding a company with other people. All founders should vest in their stock over time. Typically, you should use a one-year cliff and 4 year vesting period. The one year cliff solves the problem where one founder drops out because of changing life conditions or lost interest. If you don’t vest into your own company, you often end up with a big chunk of equity you can’t sell or redistribute to other parties who are going to add value to the company. Secondly, they tend to split up the company equally, instead of based on people’s abilities to contribute and relative scarcity of the skill sets they provide. Fairness is setting percentage ownership based on the amount of lift each Founder provides to the company’s valuation, not splitting it equally per capita. If you’re too afraid to discuss how much value different activities, backgrounds, and networks, add to the company – you should reconsider your co-founder relationship; the conversations are only going to get harder from here.

The Equity Mistake They Make With Outsiders:

You’re not going to know everything about your business, your market, or your team. That’s OK, but you should seek out Mentors, not Advisors. Mentors give of their time and their talent freely, knowing that they will learn from their mentees. Advisors require an equity stake in the company. I’ve seen some insane term sheets offered to early-stage founders with advisory fees between 5-10% of common stock. That’s predatory, unless that’s contingent upon a huge investment, international brand recognition through celebrity influencers, or some other exception to the rule – I would run for the hills if I saw something like that. A reasonable advisory fee for an advisor/firm who is working unpaid for you in an early stage startup is somewhere between 0-1%. Founder’s Institute Founder / Advisor Standard Template lays out a great table to align close to market value.

The Ownership Mistake They Make With Insiders:

We all hear about how hard it is to be an early-stage founder. But what about the first few hires on the founding-team? They tend to get significantly less equity than founders and even later stage C-level hires, but they’re taking the risk with you because they believe in the company. You should treat your first employees like Angel Investors. They accept the biggest risks early on, so it’s only fair to provide them a multiplier on their ownership stake. They help to set and reinforce the culture of your organization and deal with all the chaos you create while thrashing around trying to find product/market fit and funding. Your first employees end up being friends and family, so treat them well.

What other distribution mistakes do you see repeatedly?

Let’s chat about it in the comments!

Employee Heatmap – The Simplest and Most Effective Tool in the Management Arsenal

One of the hardest things for senior managers to maintain Situational Awareness across their entire organization. Ego and averaging often obscure the reporting up through your hierarchy.

Mid-level managers don’t ask for help because they don’t see how their team’s problems are impacting the organization as a whole. This lack of reporting or “the blame game” can hide the root causes of cross-functional problems.

Whenever I face uncertainty, I collect and visualize data to gain a deeper understanding of the problem.

Capturing Data Efficiently

Every week, managers are required to report their individual team members “stress load” in a shared google sheet. In aggregate, over-time, this Employee Heatmap data becomes immensely valuable in understanding your teams’ performance.

This quick report (~2 minutes for a team of 5) allows both you and your managers to visually see changes in employees status across your entire organization. This insight allows you both to determine where to focus your analysis and assistance as leader.

The Employee Heat Map

Spreadsheet Heatmap of Employee Stress over time.
A quick review during the weekly management meeting visually helps you determine where you need to ask questions and assist.

Download the Employee Heatmap Example.xls

What is Stress Load?

The Employee Heatmap is built on a quantitative value that we call “Stress Load”. “Stress Load” is defined as Workload + Familyload.

As a Human-First leader, I view my employees capacity as the combination of two things. The 8-hours they spend on the clock and the issues they’re facing during the 16-hours a day that I don’t pay them for.

My managers collect these data points during their monthly 1-on-1s with their direct reports. They adjust the monthly self-reported “stress load” number based on their direct observation when reporting it in the management review weekly.

What is Workload?

Workload in the Employee Heatmap is quantified on a scale of 1-10. 1 being almost completely unsaturated to the point of boredom and 10 being complete saturation at an unsustainable pace. 4-6 is the Goldilocks Zone.

Depending on your team composition, you may regularly see 6-7 . Challenging workloads tend to keep Type-A employees more engaged and therefore might not be a negative indicator. Sustained values in the 8-10 range usually indicate an underlying issue that needs attention.

I encourage my managers to restate the number and ask “What does that mean to you?”. If the self-reported number is out of the Goldilocks Zone for that employee, I instruct them to ask “Why do you feel this way?” It’s important that the direct manager understands what is driving the stress level of their employee’s workload numbers.

Qualitative reasons often drive higher workload numbers. Employees doing work that they don’t enjoy or having to work with someone they dislike is more often the culprit than being overwhelmed by volume. Managers tend to be better at recognizing tasking issues than rooting out qualitative drivers.

My astute friend Mike Canzoneri solves this problem by breaking down his version of this process into 3 values: Workload Emotional, Workload Quantity, Family Load.

What is Family Load?

Family Load is also measured on a scale of 1-10. 1 being almost completely stress-free to the point of boredom and 10 being overwhelming stress that detracts from the employees quality of life.

We respect our employees’ privacy as a cultural value at my company. Managers are instructed to not ask for the “Why?” with this number. If their employees volunteer the information, they are told to keep it in confidence. This qualitative input can help the manager to bias the monthly number appropriately for the weekly reporting as the employees life-situation continues to develop.

Long Term Value of the Employee Heatmap

Trend Analysis of Employee Heat Map
The trend, leading, and trailing, indicators all provide valuable insights on your process and people.

If you graph the data in the Employee Heatmap, you can start to determine leading and trailing indicators as well as recurring trends in your team’s functioning.

I’ve used this data to make staffing plans, deconflict teams before they were in a negative feedback loop, and change how we schedule work. It’s pound-for-pound the most powerful tool in my personal management toolbox. I highly encourage you to try it, modify it, and share the results.

Questions of the Day

What’s your favorite tool for managing your employees? Do you have any other tricks for keeping a pulse on in-direct reports?

Premature Optimization is the Root of All Evil

"We should forget about small efficienceis, say about 97% of the time: premature optimization is the root of all evil" - Donald Knuth
H/T: @lpolovets

Donald Knuth was specifically talking about algorithms in computer software, but the lesson applies broadly to product development, startups, and self-improvement.

Perfection is the Enemy of Progress

Wikipedias worth of man-hours have been spent building features that the customer never requested and rarely use. Companies have spent millions on inventory to achieve economies of scale on products that crater in the market. They should have shipped first and asked questions later.

Stop futzing around and ship it! Premature optimization is often procrastination in disguise. If you’re “making it better” before someone has used it, you’re letting fear of judgement keep you from learning.

Don’t worry about scaling, don’t worry about “nice to have”, just start! Start going to the gym, spearhead a new process at work, ask someone to buy your barely functional prototype. Even if you fail, you’ll be at the same place as if you were still planning; the only difference is, you’ll have a data point from the real world. Now you can adjust, incrementally better, then ship it again.

Questions of the Day

What aspect of your life should you be shipping instead of optimizing? Is there a feature in your product or startup that’s a good idea but you haven’t had a customer ask for it yet? Tell me about the time you sunk days of oyur life into solving a problem that didn’t exist.

Good Neighbor – A Hackathon Retrospective

Every year, I try and participate in at least one Hackathon.  As a Product Manager, I find  building and shipping a product as fast as possible is a great way to work on your ability to scope and prioritize features.  This year’s hackathon was Buffalo’s Civic Innovation Challenge.  Which consisted of building an Android App called “Good Neighbor” utilizing Open Data from the City of Buffalo.

Good Neighbor – Pitch Video

Rapid Prototyping Tools

The other benefits of Hackathons is the challenge of learning a new tool or language in a low cost setting. I played around with Monaca and Onsen UI 2 while building this app.  Monaca’s web based IDEA for HTML5 apps was outstanding, I could make an update and instantly see it’s impact on my devices running their Android Debugger App.  Onsen UI allowed me to quickly utilize their Cordoba modules that translate to Android and iOS native UI elements.  I’d recommend both for your mobile prototyping needs.  I built the entire Proof of Concept in about 6-12 hours total.

If you’re hackathon code would pass a peer code review, you probably didn’t push yourself far enough into uncharted territory.

Good Neighbor Features

With Good Neighbor, we wanted to create a multi-lingual app targeted at new immigrants and refugees to the City of Buffalo.  The app acts as a portal in their native language, provide curated links and maps to essential civic services.

Good Neighbor Home Screen
A tappable home screen with easy to identify iconography.

Swipe Menu
A swipeable/tappable menu that uses the same iconography to provide navigation assistance from all views.

Police Precinct Map
A map view showing the different police stations in Buffalo, NY

What was descoped?

“No matter how tightly you try and scope your hackathon app, you’ll always run out of time and have to cut features.”
-Veteran Hackathoner

On the user facing side, we ended up having to bail on the integration with google translate.  It would have been an awesome feature, but we decided that there was more value in adding more content to flesh out the app for the English speaking judges.

On the technical side, we didn’t get to refactoring the app into multiple files, due to a fear that Angular.js might barf and we’d lose a ton of time on a technical “nice-to-have”.  A trade-off we weren’t willing to accept for time that we could have been spending on building out content.  Hackathons breed hacky code, but that’s the point.  They reinforce the “Ship It!” mentality.

Check out the code (Ugly and Hackish)

Fork Good Neighbor on GitHub

Sideload the Good Neighbor App for Android

Violence of Action for Startups

Violence of action means the unrestricted use of speed, strength, surprise, and aggression to achieve total dominance against your enemy.  – Cade Courtley

The Praying Mantis utilizes Speed, Suprise, Strenght, and the Violence of Action.
(c) 2007 Oliver Koemmerling

A Strategy for Startups

Founders, internalize this concept and apply it to your startups’ strategy.  Startups  can operate in ways that established businesses cannot.  Adapt some of the principles of asymmetric warfare to your business.

Speed

Startups can release new features to market before larger competitors could even schedule the initial meetings.  You can adapt to changing market conditions and respond in real-time to current events. In a 5 person company, a change in strategy requires a 15 minute meeting with everyone in attendance.  In a 5,000 person company it takes a quarter of planning and a quarter to execute.

Surprise

Startups by their very nature operate in relative stealth. Most likely you lack the budget for extensive PR and Marketing. Therefore, your competitors have limited information as to your existence, intent, and strategies.  Use this advantage strategically and only come out of stealth when you’ve got your product, marketing, and sales process honed.  You want to gobble up market share before your competitors have time to actively respond to your offerings.

Strength

You’re unable to overpower your competitor in a toe-to-toe slugfest, but you can use a precision assault to overpower their weak links.  Startups can do things that don’t scale, over service your initial accounts, provide concierge support and custom development for your initial customers.  Large companies can’t compete with the level of personalized service a startup give to their customers due to the amount of overhead they have to pay for and their larger customer base. So use the fact that you have lower overhead and a small initial group of customers to wow them into word-of-mouth referrals.

Aggression

“Fight through the objective” by setting challenging weekly goals.  Don’t stop short of whatever you planned, exceed it week to week.  In your first weeks of existence, your objective might be completing a pitch deck or doing a certain amount of market research.  Once you’re building your product, it might involve completing a certain number of story points in a sprint.  As you ship MVP, you should set a challenging cadence for how many leads you call or follow up with each day.   Pick a key performance metric that will drive the success of your business at its current state of maturity and CRUSH IT.

Conclusion

Building something from nothing is a no holds barred fight.  Be relentless and capitalize on any advantage you have over your competition.  Most importantly, don’t quit –  you will fail a thousand times during the creation of your business – but as long as you get up and try again, you’re not out of the fight.