Your new product’s key milestones

December 15, 2020 by Luke Szyrmer Leave a Comment

While it would be presumptuous of me to say that all startups have exactly the same milestones, there are certain key moments in the life of every high growth tech startup.

made first sale to someone you didn’t know beforehand
make sales repeatedly
enter high growth phase, where sales grow exponentially

The first sale

The first key moment in the life of a startup is the first sale, because you’ve solved all of the above problems. If you’ve successfully done that, you’ve essentially proven you have an attractive offer. You’ve proven you’re serving a niche willing to pay for your product or service. You’ve proven that your product description and positioning are effective enough to start building a business. For startups focussed on high adoption and user growth initially in order to become more valuable, this means you delay this first sale significantly (for example to advertisers). While it does work, it’s a much riskier strategy because you can’t answer the above questions. You need to think through how you can mitigate that risk initially as much as you can. For example, you can speak with potential advertisers to learn how big of a user base they want before being willing to purchase ads. Alternatively, you can try introducing a different payment scheme, such as a transaction-based cost, where you make a few pennines on each transaction so that users barely notice they’re paying you. These details are very much dependent on the type of business you want to run. If you are starting a multi-sided market, such as an exchange, you need to address the needs and concerns of each group, i.e. both buyers and sellers, which will typically be very different, in order to get that first sale.

Repeated sales

After you celebrate the first sale, your next major milestone would be to make sales repeatedly. At this stage you will need some kind of product or solution which you offer, at least a minimum viable product which focuses on the biggest pain point your users have. While it may be of prototype quality, you have enough to continue talking with customers about their problem in much greater depth, as they gain experience with your product. The time frame depends significantly on the size of transaction. The larger the transaction size, the more objections you need to overcome. So for example, for a low priced product like an iPhone app, a startup should be aiming to sell multiple times per day. This is pretty much an impulse buy. For a much higher priced product, such as a B2B software solution, you’d want to see a few sales per quarter. Convincing a number of people across a business, each with their own agendas and needs, to buy a $70,000 software package requires you to overcome a lot of objections. Total revenue should be financially significant, where you are able to cover your operating costs for example or quit your day job if you’re a solo founder.

Hockey stick

Phase 3 means that you’ve hit message-market fit within a particular niche. At that point you need to scale. Your biggest bottleneck stops being marketing, and starts to be fulfillment. You make promises in your marketing which were easy to fulfill at the first stages, but become difficult to fulfill at this stage. Often this will mean major changes are required. For example, you may need to perform a complete rewrite of your technology to be able handle the growth. While a prototype-quality product was ok to prove the business concept, you need to ensure that you keep a high standard of performance as new customers are pouring in. For example Facebook needed to rewrite a significant part of their original PHP code into highly optimized C++ code for the key components of their architecture, such as the social graph construction so that their newsfeed could keep up.

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How to ensure robust decisionmaking

December 5, 2020 by Luke Szyrmer Leave a Comment

The Toyota Prius was a fascinating car from a marketing perspective. At the time of launch, it was the first mass marketed electric hybrid car. It was initially aimed at the green and eco-friendly crowd: people keen on minimizing their carbon footprint. As a result, the marketing leaned heavily into using the ethical angle. They deployed guilt to reach eco-hipsters.

Photographer: Raivis Razgals | Source: Unsplash

It was like this for a few years, often with “manly man” types ridiculing both Priuses and their owners. Then, at one point, Uber took off in popularity. At the time, when we lived in London, it seemed that every time I hailed an Uber, the Prius was the most common car used. At first, I almost missed it. Eventually, I asked one of my drivers why he was driving a Prius. And he said:

“it’s actually the most economical car possible, in terms of running costs, because I get twice the mileage on the same tank of petrol.”

The Prius appealed to these drivers on a completely different business level. If your livelihood depended on your cost structure, you became more competitive. To some extent, the typical London-based Uber customers may have preferred taking a Prius because of the original eco-hipster argument. A hybrid car was not only cheaper but also better for the environment. So in addition to the cost angle, there was an indirect marketing upside for the drivers.

This is an excellent example of promoting social change through rational arguments. For an ethical argument to go “mass-market”, an innovation needs to appeal to the pragmatists, as per Geoffrey Moore’s classic book Crossing the Chasm. For this to happen, it needs to overcome a lot of skepticism. And it needs to have clear practical implications, in order to be a “common sense” choice. Even for an ethically superior product, most buyers need a practical rationale. Only then, it can spread and stick among the majority of people.

The practical argument for diversity

For years, I was looking for something similar in the context of diversity. I’ve been looking for hard evidence of the benefits of diversity. As an idea, diversity itself always resonated with me. Especially as a bootstrapping serial immigrant, I often felt out of place and disadvantaged relative to my peers. I felt empathy for minorities and outsiders. And often including them benefitted everyone. Yes, I acknowledge I did have it easier–growing up in the US as a white male. There were lots of pressures related to skin color, which I never felt.

Your riskiest assumptions are probably related to your prospects and customers. Establish empathy quickly with your target prospect, figure out what's valuable, and get your innovation into the market.

This year, #BlackLivesMatter and racial unrest in the US has sped up this social change. Other minorities have also made progress. Women, in particular, which have been a “minority” despite being half the population. The conversation has already shifted, and the denial has stopped.

I still believe these changes will be to everyone’s benefit. The main reason is that we all benefit from a clash of different perspectives. The more homogenous a group of people, the more they will be subject to bias and blind spots. The more variety you have, the greater the chance of reducing those distortions when making group decisions. It’s worth considering the impact of diversity. Include more perspectives and achieve a more robust outcome.

Opinions are like stocks

As a shorthand mental model, you can view diversity in organizations analogous to modern portfolio theory. In an investment context, owning a larger number of uncorrelated financial assets leads to better overall outcomes. There is a quantifiable benefit from this. The more stocks you have, the less you are exposed to company-specific risk. To some extent, the same is true with industries. If the travel sector gets hit hard by a pandemic, if you have some technology stocks, you’ll come out ok.

In a management decision making context, the same holds true for uncorrelated opinions. Having a number of uncorrelated opinions helps a group come up with a more robust view.

remove individual bias with diversity of opinion

There are many ways to benefit from this. One way I’ve seen this done explicitly is using personality assessment tools like DISC, Myers-Briggs, or Kolbe. Everyone is different. You can baseline how much natural preferences might skew the team perspective. Different people notice different details. It’s worth being mindful of potentially missing yet complementary perspectives. For example, in IT there tend to be a lot of data-driven logical people. Having someone who is more relational or “heart-driven” participate can incorporate more intuition into a decision.

Also, personal background, race, or orientation can also provide useful angles which a homogenous group of proverbial old white men could miss. Many businesses started to serve minorities, which the “white establishment” thought wasn’t viable. For example, Black Entertainment Television. Or major podcasts aimed at the Latino community.

Implications for managers

In the context of a specific company, we also often deal with people from different departments. They have different backgrounds, a different personal network, and often different goals. All of these would additionally influence their perspective. Converging onto a shared company-wide perspective helps create a common understanding of what best.

Often problems or challenges go unresolved, simply because we aren’t aware of them. Or we don’t see the full importance of resolving the problem, because we underestimate the full implications.

You can also go too far, according to the picture above. If you start to gather too many opinions, it stops adding that much extra value. The incremental value of a 201st opinion will be much smaller than a third one. You will have heard most of what’s worth taking into account much earlier than 201 interview earlier. There may be patterns in the data.

But you don’t have much risk of missing something obvious due to your own blind spots and “unknown unknowns”. With any decision, there will always be some risk which you can’t diversify away. Regardless of how many opinions you gather or who you ask, you still have to live with it. At minimum, you’ll achieve the main benefit of diversity in opinion: more robust outcomes. Ones that take into account all facts and which are less subjective.

If you’d like to read more, the above is an excerpt from my book Align Remotely. Bringing together diverse remote teams is an art, one you need to master if you want them to achieve high performance. Read on over here.

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Here’s an example of an Extreme Product Launch

November 26, 2020 by Luke Szyrmer Leave a Comment

Extreme product launches are focused on getting you to that first sale as quickly as possible. By figuring out what works on a business level, you can then proceed to with the business growth because you’re already proven that a business case exists (at a small scale) for your product.

This type of proof is much more powerful than any business plan you could write. In most types of business, making your first sale is the one thing you can do to make everything else easier or unnecessary.

Originally, I released Launch Tomorrow as an “extreme product launch” myself, by pre-testing the interest in a book on this topic.

It got great initial reviews, like:

“In my corporate consulting days [with McKinsey & Co], I used to tell my clients market research is a waste of time, because projects usually took 3 months and required a budget of $50-150K. But this stuff really changes the equation!” –Robert Grossman, Marketing Expert, Former Managing Partner, McKinsey & Co.

“I really liked the fact that you with your strategy a person can evaluate if a business idea is worth pursuing for just a few hundred dollars, rather than risk $25,000 and most likely fail.” –Scott Dudley, Direct Response Copywriter

Now it’s in prime time. It’s about using landing pages as minimum viable products. Clarify your value proposition. Validate that your customers will pay, before you start building a product.

If you’ve enjoyed this content so far, I know you’ll love Launch Tomorrow. You can pick up a copy of Launch Tomorrow over here.

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The Secret to a Successful Extreme Product Launch

November 20, 2020 by Luke Szyrmer Leave a Comment

If you could only do one thing before you launch, what would it be? I know what I would do.

It's simple. It takes a few hours tops, to make it worthwhile. It's inexpensive, affordable even for a threadbare entrepreneur.

Senior caucasian man holding blank empty banner covering mouth with hand, shocked and afraid for mistake. surprised expression — Photographer: krakenimages | Source: Unsplash

This is what it'll give you:

You easily create a product or service which actually appeals to your chosen prospects.
You describe it in language which resonates with your audience.
You prevent wasting time on counterproductive work (which you can't know about without actually doing this first), both in your business processes and in any software you might build.
You make it much easier for people to buy what they already want (cha ching!)
Your customers immediately understand your product, which means they're more likely to buy it, get excited, and promote it afterwards
Your product's good reputation explodes naturally
You keep your whole team aligned around the customers' needs

What is it?

Photographer: Mimi Thian | Source: Unsplash

Talk to your prospects. Intentionally don't sell them. Just learn about how they buy. How they live. What they need. That's it.

People like to buy, they hate being sold to. If you can engineer your whole sales and marketing process so that it's pleasant, engaging, and persuasive, you will have all of the above. You just need to ask. At the right time. In the right way.

Oh yeah, you'll also have a sales process that scales rapidly.

Seems like a big gain for so little work. High impact. Low effort.

Which reminds me…

There's a whole chapter going deep into exactly how to do this in Launch Tomorrow. What questions to ask…what order to ask them in…what to listen for…and most importantly how to find people to interview.

Grab your copy, and get crackin'.

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What’s cookin’ for Launch Tomorrow

November 6, 2020 by Luke Szyrmer Leave a Comment

This week I have a few updates to share. I think the main one is that it looks like my immediate family and I are recovering from covid-19. We don't really now how we got it, despite largely working from home in the last month or so. But in our case it kind of passed like a nasty flu and it seems to be kind of running in the background, too, even still. The testing took a long time, due to major spike in cases domestically here, so by the time I was certain we had it, the symptoms were disappearing.

I'm writing this to primarily just reassure everyone that this is a real thing, real people do get it, and there are varying levels of complications…so avoid it if you can. At the same time, I find it easier to have a more sanguine and less fear-tinged view of the pandemic, knowing how it ran its course in my personal context. It's not fun, especially in the early days of confirming you have it, as you know it can develop in any direction. But if you live, you have antibodies for this strain of the virus. If anyone wants to talk about having covid or dealing with it from a practical perspective, just drop me a line.

Fittingly, this week I appeared on the Working from Home show with Nelson Jordan. Nelson and I chatted about my experience managing remote teams before the pandemic. This is primarily in the context of working on the book called Align Remotely and helping to get the word out. The book is looking better and better and I want to release it officially in about a month.

visual workshops with remote innovation teams

Other than that, I have various facilitation sessions to help remote innovation teams deliver better and faster. I am starting to see that in many cases there is just not enough detail, particularly at the early stages, to be able to execute on a high level vision effectively. And that stops any efforts in their tracks. Such is the nature of the dreaded unknown unknowns. At the same time, the fastest way to start making progress is to go and deliberately explore them. If you'd like to get help with your riskiest assumptions or just to help your team identify the best way to spend their time, then give me a shout.

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