Sunday, June 2, 2013

Admittedly, I’m not a genius either. And most of my ideas are incredibly dumb. But don’t worry, you don’t have to have a brilliant idea or be particularly smart to be successful in business and web apps.

On that note, I’d like to share with you a few lessons I’ve learned in co-founding and managing a successful web development firm as well as the recent beta release of our app, Pushpin Planner (launched without a single dollar of outside funding).

Lest any of the following insult you, please understand that this isn’t my intent. More than anything, I’d like to remove the inexorably intertwined notion of ego from the process of creating a successful business and launching a successful web app. Bear with me here. Even if you disagree with some of the following, there is likely more common ground than you might think.

In the beginning, there was the genius who had *the idea*

In this narrative, the archetypal Entrepreneur Hero gets struck with a brilliant insight. "I must do this thing!". He immediately goes all-in, asking very few people (after all, Steve Jobs said no one knows what they want, right?), doing very little analysis (who has time for that!), toils day and night to produce his invention (quitting his job and possibly mortgaging his home or borrowing from whomever will lend - or maybe even getting funded) and releases his brilliance in the form of a product, which is immediately received with great fanfare. Boatloads of cash ensue and he retires at age 26 to give TED talks about his exploits in helping humanity with his vast wealth.

That’s how it generally goes, right?

It never goes like that

Now don’t get me wrong. The above does happen (or something like that) from time to time. But it probably won’t happen to you. Nor me. And it doesn’t have to. The lessons I’ll share with you below show a different way. One that’s more humble, more inquisitive, less sentimental, but ultimately more healthy and more balanced.

The 13 lessons I’ve learned the hard way

Don’t read all the books. But read these two:

Tim Ferriss’ Four Hour Workweek and Eric Ries’s The Lean Startup. Let me preface this by saying that these two books aren’t gospel. Ultimately, you can’t apply their lessons lock-step and wait for your million dollar check in the mail (or actually, you can if you want. No one will stop you).

But the takeaway from them can be distilled into three main lessons (Or at least, this is what I got from them. These three lessons are mixed in with a few of my own ideas too):

It doesn’t matter what you think. You can’t trust yourself. Successful entrepreneurs task themselves with coming up with assumptions about the market. They then test those assumptions in clear, measurable, and (most importantly) cheap ways to determine if that route is the right path to take. They do this over and over. There is no ego here. The market tells them where to go next.

You can’t trust your own judgement. Have you ever worn something that you thought looked totally cool but later it was revealed to you that it was hideous and that you have horrible taste? Been there. Likewise, as an entrepreneur, you think differently than most people. What makes sense to you won’t necessarily make sense to your average Joe. And for your idea to scale, you need to appeal to the average Joe in spades. So test your freaking assumptions.

If you’re not hopelessly embarrassed by your minimum viable product when you first roll it out, you’re doing it wrong. Technical folks like to get things perfect. They like things beautiful. But left to our own devices, we’ll blow our budget perfecting stuff that the mass market doesn’t want and doesn’t even care about. When in doubt, remember the mantra, "it’s probably good enough".

Pareto’s Law and You

Never forget Pareto’s Law. In a nutshell, it says that you’ll get 80% of the way there in 20% of the time. This has been shown to be true just about everywhere, but it’s particularly applicable in software development.

Think about how powerful this idea is. You can get 80% of your project done with 20% of the budget. Screw design (use Twitter Bootstrap). Don’t worry about a name, logo or polished website (we can worry about that later). When you bump up against a technical hurdle, back up and find an easier way. Or scrap the feature. Don’t waste time starting a new company or printing business cards yet. It doesn’t matter about any of these things. The only thing that matters is getting an MVP with which you can test assumptions. This MVP doesn’t even have to work (an MVP could be done in photoshop and just shown to people, for example). Think outside the box.

We must keep in mind that even with a mad dash and focusing night and day on Pareto’s Law, we’ll likely still roll past the finish line on nothing more than fumes. Or not at all. Failure happens all the time.

Never forget this:

Spend as little as you can on *EVERYTHING* (this goes for time and money). Problems solve themselves all the time and you can come back to it later if it’s important. This may be hard for you to do. But do it anyway.

Focus your energy into sprints and file a ticket for *everything*

We use Jira for our internal projects and client work, but there are other software suites that can let you do the same thing (Basecamp, Pivotal, etc...). The idea is to have a place where you can put your endless ideas into a big bucket (called the Backlog), and then on a regular basis review your Backlog to pull out the most important tickets and schedule them in short bursts of work. Your sprint can be a day or a week. Or two weeks. It doesn’t matter. But the act of filing tickets instead of doing them (and then doing them when they should be done) is important. It forces you to make decisions about what to do with your limited resources.

You’re not qualified. Test your assumptions.

You’re not selling to you. You’re selling to everyone else. So test your assumptions like a madman.

Use tools like Optimizely, Visual Web Optimizer and Crazy Egg to create some basic web page, or tweak your existing one, or whatever. Optimizely is particularly cool because it lets you embed a simple snippet of javascript on your webpage and then gives you a graphical interface to move around or create new elements on the page - which can then be saved into ‘variants’ to be randomly served to visitors.

You can then measure who clicks anywhere on the page, who clicks in particular places, or who doesn’t do anything at all. In the past, I’ve actually embedded Optimizely on BLANK web pages and created a bunch of quick and dirty MVPs right on the page to test my ideas in a hurry.

Take a tip from Tim Ferriss:

drive google ads traffic to your MVPs and see how many people click on your "CTA" (call to action). Ideally your CTA would be something like, "Sign up now for $5/month!" so that you know what people actually would pay. Better yet, have it load up an email signup once they click so that you can capture their email addresses for if/when you actually launch the idea, "Woops! We’re not ready just yet, but we will be soon!".

Don't show your mother

And while you’re at it, *don’t show your mother*. Never show your mother (unless you’re performing a usability test, in which case show your mother first). And don’t show any other friends or family either. If you want to raise money from friends and family, have at it. But don’t seek validation of an idea from them. You’ll get horribly skewed results that make you think you’re God’s gift to innovation. Only show strangers (as anonymously as you can) because they’ll have no problem voting with their pocketbooks. They don’t care who you are - nor should they. Your ideas should stand on their own merit.

Your ideas are cheap and don’t worry about who hears about them

Most ideas fail. Most people will think your idea is dumb. Most people don’t have the energy to ever try any business on their own. Most investors want to see traction before they will fund anything (and your lowly idea has *no* traction...yet). And most successful companies are too busy with what they are busy with to care about your idea - or anything new for that matter (See the book "The Innovator’s Dilemma" for detail on this).

So what have you got to lose? Nothing.

What have you got to gain? Lots! By telling anyone and everyone your idea(s), you’ll get insight, opinions and a feel for the market. You’ll possibly find other folks who want to help you, work for you, partner with you, buy from you, or beta test your product for you when it’s ready. More likely than not, the process of sharing your idea will allow it to evolve into something more viable, more realistic, or marketable...or just plain better.

Take away:

You literally have nothing to lose because your idea alone is in fact worth nothing. An idea is only worth something with a champion. That’s why Google and Facebook buy all these silly companies and then silently kill them. They are hiring champions. If you are a champion, you’re worth your weight in gold. Or diamonds. You are worth your weight in diamonds! People who can both come up with ideas and successfully execute them are incredibly valuable. People who successfully execute ideas recognize that they can only succeed through and with other people.

The bottom line is that, when it all comes down to brass tacks, if you feel that you’re so clever that you’ve come up with the next blockbuster idea and it’s so beautiful in its perfection that it needn’t change one bit and by the way, you can do it all alone - then you need to realize that you’re nowhere near as clever as you think. And you’re wrong. How do I know this? Because I’ve been this guy, and I’ve learned this lesson through several costly failures. But the proof is all around us.

Don’t be afraid to fail. And sometimes throwing out the baby with the bathwater is the right choice.

Failure builds character, wisdom, integrity and humility. When you lose money (especially over stupid ideas), it changes you. It helps you grow up. Things become more real. And it’s nothing to be afraid of. History is filled with folks who have lost everything and built vast fortunes immediately after.

But with that caveat, don’t forget that by testing assumptions and building MVPs it’s highly unlikely that you’ll actually fail. If you follow this path, you’ll more than likely be in the awkward position of having something that is just barely viable, but which ultimately isn’t worth your time. When I have been in this position, I’ve always kept in mind a quote from management guru Peter Drucker that goes something along the lines of, "If your business isn’t performing as well as you’d hoped, you’re not able to make it work (either due to market conditions or financial constraints) and you have a better opportunity elsewhere, take it. Immediately". The concept that is dangerous for entrepreneurs is the trap of "Sunk Costs". Read about it if you want to know more. It’s tricky and deceptive. Basically, when you find yourself saying, "But I’ve spent so much time/money on this problem/app/issue/business already - I might as well stick with it", let that be a red flag.

Always make sure you’re spending your time and energy where it’s most valuable. If you have a better idea, and this idea has run its course, take it out back with a shotgun and put it out of its misery. There is nothing wrong with admitting failure (with any particular idea) as long as you have ambitions for the next opportunity. But there is certainly no greatness in sticking with a failing business that’s barely clinging on to life for the sake of it.

Entrepreneurship should be a delicate balancing act between success and elective failure. You should dictate when you fail, not your business. Do it early, do it often.

Don’t hoard worthless equity. Build a team of people who balance you out. And do it strategically.

I use DiSC with everyone I know and meet. I find it remarkably accurate in determining quickly what people are generally good at, what they need help with, and where my team and I can help balance them out. For more details about how I use DiSC in my own business, check out this blog post where we were featured on The Forbes Blog.

But I’ll save you the time and give you three big principles you can put into practice immediately:

If you’re an introvert and consider yourself systematic, then don’t put yourself in positions where you’re in charge of stuff like sales, marketing and networking. No doubt as a clever and smart person, you’ll be able to do that kind of stuff. But you won’t enjoy it, you won’t prioritize it, it’ll exhaust you, and your business will suffer. Find someone who is good at this kind of stuff and help reign them in rather than trying to "be that guy".

If you’re an extrovert, most notably the kind of high-energy person people would classify as "salesy", understand that your brilliant ideas will most usually be half-baked and unrealistic. And if your company or team were to go in every direction you wanted, you’d be left with a thousand unfinished initiatives and no results. What you need is a systematic person to help ground you, balance you and keep you honest. Find this person as quickly as you can, for the love of God. Celebrate the way they balance you. Always value the relationship over being right and yield to the long term success of your partnership when in conflict.

You’ll be better partners with people who have an overlapping quality in DiSC. It doesn’t matter what it is, but you’ll likely have a hard time with people who are completely different from you in every respect - especially if you have to interact with them frequently and closely. You should agree on most things. And for those things that you don’t agree on, you should respectfully understand the merit of them.

The more people you have, the harder consensus becomes

Building a team of people is the most important thing you can do in any venture. As cliche as this is, it’s true. But understand that the more people you add to the equation, the possibility for dissent and deadlock increases exponentially. This is based on my own experience - and I’m sure that there are studies to this effect. I like having a single partner and we work together great. For me, more than three or four people would probably be untenable for ventures that need to move quickly to capitalize on a new opportunity - or to pivot or fail quickly so you can be on to something more viable when necessary.

That’s not to say you can’t hire people to help though. But in that case, you pay them for their opinions (or offer non-voting shares) and ultimately, you end up doing what you believe is right. Be careful who you give veto power to. Yield control in the interest speed whenever possible.

Make sure the numbers add up

Ultimately, our latest web app was born out of a desire to have a high level view of where our people are spending their time at our firm so that we can make decisions about where the best allocation of resources might be. We use this thing. We built what we needed and found that other folks need it to. But at its core, it allowed us to see how much profit we generated from billable work and how we could apply that responsibly to building our business or working on our apps. By doing this, we were able to grow organically, responsibly and meter growth/profit and mental space. It was huge.

Make sure there’s water in that pool you’re about to jump in

Entrepreneurs don’t actually have to take some grandiose leap of faith in their ventures with the hope that there’s a market for it. We can test the market and it’s easy. It’s actually quite ridiculous (and ironic) that we have the tools before us to do an amazing market analysis within minutes of coming up with an idea. Yet I don’t hear of many people doing this. I get the impression that people think that market analysis is something that is either "airy fairy" or performed by "Professionals".

Hogwash.

We simply need apply the lessons of SEO in a different way. Rather than optimizing our existing website, we just need to imagine we *already have* a site and then do the math.

Let me explain:

Let’s say we have a great idea for selling widgets. Rather than launching into the planning phase, we should mosey on over to Google’s Keyword Tool and see how many people are actually looking for widgets. I know - crazy, right? How competitive is this space. How strong are the websites that are ranking for widget selling? Would you be able to (with a lot of hard work) make it to the top of the search results for this keyword? If not, could you find some less competitive slightly different variations that have less traffic but which you could add up for a sizable amount of traffic to your site?

Assuming you think you can rank for a given keyword, you can do some basic math to figure out the market size and your potential revenue. I’ll walk you through it:

Let’s say "widgets online" gets 10,000 people searching for it every month. If you could rank #1 for that term on google, you’d get somewhere around 35% of that traffic clicking through to your site. That’s 3,500 people. Now, depending on your business, a small percentage of these people will actually ‘convert’ into a sale (called your ‘conversion rate’). Let’s pick 1% to be conservative, keeping in mind that with a little effort you could likely do better. But maybe not.

So now you’ve got 3,500 x 1% = 35 sales. Per month. How much is the average sale? If ‘widgets’ are an online service you’re selling for $5/month, then that’s $175/month in revenue, or $2,100/year. That’s not much - and it’s certainly not the next million dollar idea.

Time after time, I see startups pedalling services that I think, "huh?". Doing the above analysis, I wonder how they ever could have thought this would work. In a bombastic fit, your noble entrepreneur might say something like, "I’ll just *create* the market!".

You can certainly make a small fortune building a market. But usually it’s the result of starting with a large fortune. (*rimshot* - I’ll be here all night, folks). There certainly are people who succeed at doing this. But it’s kind of a big deal.

Some tools that can help?

Google’s Keyword Tool

SEOMoz

SEMRush

Longtail Pro

Serpfox

Guard your mental space like it’s the only thing you’ve got

You can’t buy more mental space. You can only find folks to leverage your existing capacity. In general, you’ll encounter three types of employees and partners in your life:

Those who do nothing but consume your mental space, adding little value. Avoid these people if at all possible. You can’t always do this. But you can limit your interaction as much as possible.

Those who give you an even trade for mental space, but at the end of the day, let you do more things that you enjoy, giving you a net positive. That is to say, the relationship costs you mental space (maybe in instruction, editing or reviewing their work, giving direction, etc..), but at the end of the day, most of what that person does is stuff you didn’t want to do anyway, so it’s an acceptable trade if you *must* make it. But better yet is the third class of people.

These folks greatly multiply the effectiveness of your mental space because they operate mostly autonomously, solving problems, resolving issues and basically getting stuff done. These people are generally expensive (in equity, salary, or investment in the relationship) - and if they’re not expensive, it’s only because they haven’t yet realized their own worth. And if you’re going to be successful, these are the people who will help you get there. If at all possible, surround yourself with these people as much as possible. Partners, friends, business partners, employees...everywhere.

Applying this to your personal life specifically, try to only be involved with people who are hungry, honest, humble and smart. Avoid everyone else like the plague. This principle alone frees up a tremendous amount of mental space.

Try to achieve multiple objectives at once

I’ve been working on a theory for the last decade or so and I’ll save you the crazy details, but it goes something along the lines of this:

There is no such thing as life balance. But there is if you add or compound the number of hours you have available in a given day. Wait...what? To expand on this a little bit, whenever you can do more than one thing at once, you add more hours to your day. Do a quick survey of how you spend your waking hours each day broken down into these main categories:

Physical well-being Spiritual health (doesn’t have to be religious) Intellectual Social / Community Professional Family Filler, or little or no value (I cut out a lot of this out of my life when I got rid of cable)

Once you add up generally how your activities in a given week end up falling into the various categories above, do the math to figure out your current life-balance in straight percentages. Now think about those percentages for a moment.

Are you satisfied with the proportions? If not, before you despair, there’s some magic you can perform here. The interesting bit is where you can tweak the percentages of where you spend your time by overlapping things. For instance, it’s hard to find time to go to the gym after a busy day at work and watching TV with the wife - let alone get some reading done on top of everything else. But what if you were to listen to an audiobook while jogging on the treadmill with your wife at the gym? You’ve now turned what otherwise would have been one hour into three (admittedly minus some overhead in this case, but you get the idea).

So my point is, in your business, how are you spending your time? Can you engage more than one of these at the same time in order to strike an explicit balance? What if you could for example do something good for underprivileged kids through a social mentorship platform that helped connect successful people to kids with an interest in that field? Well, every hour you spent on that venture would solve Spiritual, Intellectual, Professional and Community aspects of your life. A major win. And you’d be happier for it.

Less impactful, but similarly strategic would be launching your app in a new platform or technology that you need to learn anyway. You kill two birds with one stone. At Ricochet, we were able to spend spare capacity hours working on Pushpin Planner in the Meteor js framework. And you know what? Within two months, as a function of our mastery of the framework, we earned business in projects with Meteor that paid for the development costs of Pushpin Planner many times over. It was a major win.

Don’t let ego dominate you

Whenever you feel the need to react strongly to something, it’s most probably the result of Ego rearing its ugly head. It’s almost *always* wiser to just keep your reaction to yourself and make sure you understand what’s being said, the intentions of the person saying it, the possibly validity of the claim (and by proxy, how much of your reaction is a function of your own insecurity or arrogance) and instead respond in a calm, thoughtful manner. And if you can’t do that, then keep your mouth shut altogether.

There is almost always a nugget of wisdom or truth in something that someone has taken the time to tell you. Your self worth, the validity of your ideas or logic, and the path you are on are independent of anything anyone ever says or does to you. Take what you want from the interaction and it’s most likely not worth your time to try to convince anyone of anything otherwise.

This is particularly true in business. Take all the advice you can get. Actually do something with very little of it.

In conclusion

You may not agree with all of the above. In fact, you personally may have achieved greater success doing the opposite of these things. But the bottom line is that I’ve had great success with these principles.

If I had to distill all of the above into a single sentence for folks to apply immediately to their lives, I’d say the following:

"Be mindful of how ego controls your actions, guard your mental space like it’s all you’ve got, and make sure your actions have an explicit purpose that is supported by people with similar objectives and shared values; don’t ever float."

I’ll leave it at that.