Category: Strategy

At a Flashpoint event several weeks ago one of the startups was giving their pitch. After the pitch was done there was two minutes for questions. Not quite understanding what they did I asked a simple question: is your product like candy, vitamins, or pain-killers for your market?

After a long pause with no response, I volunteered a quick definition of each:

• Candy – a nice-to-have that people enjoy and can be wildly successful if it becomes a fad (like Beanie Babies)
• Vitamins – used to help augment and improve things but sometimes harder to quantify
• Pain-killers – critical problems that need to be alleviated

Startups need to think through this question early on and incorporate thoughts around it in their strategy and marketing.

What else? What do you think of the candy, vitamins, or pain-killers analogy for startups? Read Stephen Flemming’s post on painkillers from four years ago.

I’m not a fan of focus groups — I’m a fan of focused focus groups. Steve Jobs famously said that he didn’t use focus groups or market research because customers don’t know what they want. Well, for B2B tech startups that are solving customer problems (ideally providing the equivalent of pain-killers) the good news is that customers do know what they want.

Most focus groups are an assembled set of semi-filtered people (e.g. people in IT) whereas a focused focus group is one where relevant leads are generated and those leads are used as a focus group (e.g. CIOs in healthcare companies with over 10,000 employees deploying iPads to doctors).

Here are three ways to develop focused focus groups:

• Buy Google AdWords and drive the visitors to a simple landing page
• Reach out to your LinkedIn network and ask for one referral from each contact to someone in a relevant industry and position
• Ask your friends on Facebook and followers on Twitter for recommendations of people that can help
• Bonus: Go to the most applicable networking or professional association event for your audience and start talking to people

Building a focused focus group to ask questions is hard, just like acquiring customers is hard. Doing the extra work to talk to these people on the front-end significantly increases the likelihood of startup success.

What else? What are some other ways to develop a focused focus group for B2B startups?

Recently, one of the Flashpoint teams was telling me that their most recent revelation was that they need to stop building and start learning. Think about it: stop building and start learning. Most startups that are just getting started would benefit from this advice. Human nature, especially for entrepreneurs, is to think you know what the market needs, and start building something without external input.

Instead of spending time building the product, startups are better off learning what the market needs and what potential customers want — stop building and start learning. Unfortunately, learning takes more effort and energy because you have to get out there and talk to people. Finding the right people to talk with, and getting rejected along the way, isn’t as fun as brainstorming features on a whiteboard or hacking out some code. Instant gratification it isn’t.

The next startup idea you have, resist the urge to start building the prototype and instead use that energy to talk to potential customers. Learn first then build second. It’ll actually save you time in the long run by focusing the startup on the core functionality and avoiding extraneous features.

What else? What are your thoughts on stop building and start learning?

Earlier today I had the opportunity to meet with a local college student that’s working on a web startup. Being a non-technical founder he had a ton of technology questions. I quickly pointed out that technology isn’t what he needs to focus on right now. Rather, his ability to acquire web traffic and customers will decide the fate of the business.

To help him feel more comfortable with building a web-based startup I recommended he read four books:

• Getting Real – the best product management book for web apps
• The Four Steps to the Epiphany – great how to guide for bringing a new product to market
• The Lean Startup – best practices for testing and iterating in a new business
• The Art of the Start – Guy Kawasaki is the wizard when it comes to startups and what you need to know

Reading these four books will put him ahead of 99% of the other first-time web entrepreneurs and will significantly increase the likelihood of success.

What else? What other books would you add to the list?

Tonight I had the opportunity to judge the business plan competition for the MBA program at GA Tech (the site is powered by Hannon Hill). Personally, I’m against doing business plans as the time and effort required to do a quality one is better spent on a two page executive summary combined with talking to 50 potential customers. There is value in thinking through the different sections but I’ve never seen a business become successful by doing exactly what they set out to do with their original plan. Unfortunately, too many people start believing what they wrote in the plan and not spending time finding out what the market needs.

Here are the common mistakes we saw tonight while judging the business plan competition:

• Not clearly articulating the pain or problem being solved
• Not providing a memorable anecdote or hook for the idea
• Not painting a clear picture as to what they wanted from the presentation (e.g. a second meeting with investors)
• Using slides with too many words and too small of a font (the slides were designed as handouts and not for presenting)

Writing and presenting a comprehensive business plan is difficult. The students did a good job, the event was well done, and I was honored to be invited.

What else? What other problems do you commonly see in business plans?