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Landing Pages for your Lean Startup

Disproved: Stealth mode helps me crush my competition starting from day one

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Ahh, the late nineties.

A few guys in a basement or a garage. A desktop sitting next to you as the server. Slinging code and trying to get it to customers. At my first startup, we didn't even have an internet connection – we developed on a local LAN, and transferred the deliverable to the clients via FTP from home, or sometimes even via disk. We got a few customer and rented an office space, and then had 6 guys in 3000 square feet of open space with a few folding tables. Later, we were able to build out walls, hire more people, and make it a real office….Post launch, we quickly went public, had lots of paper numbers next to our names.And then it all crashed. [codingdave.com]

All of this pre-launch effort was done in "stealth mode". Namely, company officials made sound like they were doing something absolutely groundbreaking, largely to get as much PR as possible (for free). So if you read the glossies about what these guys were doing, the picture in the press would have been totally different than the above. This hyped up a product they were working on, often while still figuring out what they needed to build in the first place–but in a vacuum of feedback. The emphasis rested on information about what they were doing, especially around the competitive threat this implied. The assumption was that anyone could potentially catch wind of their idea, and replicate it, and take the market before them. So it was better to not let anyone know what is going on.

In fact, overfocussing on your competition wastes a lot of your attention and resources in places that aren't particularly important at the early stage. It's largely a distraction, unless if all you want to do is license an invention. And in that case your "competition" is basically your client, anyway.

The fact is: most early stage business fail due to internal factors, not external ones. There's lots of data points on this one:

Venture capitalists in one survey attributed 65% of failures within their portfolio companies to problems within the startup’s management team, according to Harvard's Noam Wasserman in Founder's Dilemmas.

Or premature scaling: over 40% of startup failures are caused by building something nobody wants. Corporates have a similar track record on both counts. Both of these from CBInsights' picnic in the innovation graveyard.

Notice how competitors are conspicuously absent from the above.

What is competition exactly and why does that matter?

Your competition is defined by who you are selling to. They are selling roughly the same value proposition to the same people. It's not everyone with a pulse. That's a really common early stage prioritization problem, which the Hero Canvas is meant to help with.

And this can vary significantly by product type or sector. For books and lower $ value products, many people buy a few items at once. Like a books on a new topic they're exploring. So authors don't really compete with one another, at least from the perspective of selling books. From a business model perspective, they can become partners, a distribution channel, a complementary offering. You name it. Of course, not every industry is like this, and I don't want to be suggesting this is the only way to do it. But it's useful to think this way in completely disparate industries like power turbine engineering, based on discussions with my clients and friends.

There is a very human tendency to compare yourself to others doing similar things. But for a totally new type of product, before you have:

  1. validated the product
  2. confirmed the market
  3. made sure that people are happy enough with your product to recommend it to others

The competition is largely irrelevant. Yes, you need to get through these steps, and then once you are thinking about growth, then competition starts to matter more. Until then, just get everything lined up first.

So what about stealth mode is a bad idea?

It keeps you from interacting with prospects and customers. So you don't get product feedback. Which can kill your product. It keeps you from aligning on the team. You risk creating something irrelevant which needs to change massively after you do go live.

But primarily, it's a distraction. The benefit of not alerting your competitors usually doesn't matter. For large competitors, you are a "rounding error". For small competitors, they're struggling to get validated and to start growing too. So just get on with it and start speaking to people!

Key Takeaways

  • Build the right team and validate the need for your product first
  • Be healthyfully mindful of competitors, while keeping a distance to this topic until you start really focussing on growth
  • Be open to collaborating and specializing within your industry, as there are alternative business models

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Disproved: I can just react to everything and have a productive culture

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Most people are familiar with the 4×4 matrix of urgency and importance that Steven Covey popularized. (Or actually misappropriated from President Eisenhower).

source: Wikipedia

Although it's true that the majority of high growth stories do include a lot of flexibility, agility, and adaptiveness, that doesn't mean that planning is worthless. Eisenhower quipped that “Plans are worthless, but planning is everything." What's most valuable in planning is being proactive–to prevent preventable crises. And if you really are going quickly, it feels like a car chase already.

How prioritizing during a rapid growth phase feels

Like cash flow crunches. The loss of an important resource. A consistent source of sales.

For example, to help prevent cash flow crises around bills for software and tools that I use in my own business, I realized I can buy annual or lifetime plans. Moreover, I can keep a cash reserve for multiple years' worth of using the tools. This way, I guarantee I'll have the option of being in this business for a much longer time horizon.

It helps shift my own focus from an early stage mentality of "low monthly run rate" which made sense as I validated different business models–to one of an efficiently run business. It also means that I eliminate the occasional surprises around not having enough cash to cover this or that bill.

Note: this is an internal change in my business only. It gives me a good amount of flexibility. All it takes is setting up a business savings account and transferring over financial buffer, so that I can sleep easy at night. In short, I am eliminating a whole category of problem in my own business with this one small tweak.

In his classic 7 Habits of Highly Effective People, Steven Covey shared a quantitative benchmark around for highly effective individuals and organizations (based on his research and work with them):

Source: Steven Covey

As a matter of habit and culture, notice that proactive businesses spend the overwhelming majority of time in Quandrant II. The important and not urgent. Such as coming up with contingency plans and being proactive, without necessarily tying yourself down and committing unnecessarily before you know what you need to.

In the example above, I still have the option to raid the financial buffer. But then I am deliberately changing my decision.

Interestingly, for people who aren't effective the numbers more or less reverse on average. Most of their time is spent doing things of low importance: quadrants III and IV. This crowds out the time needed to do quadrant 2 work, namely important but not urgent work.

Inadvertently, I fell into that trap myself.

While running an agile and adaptive process–without any real external or existential threats–it was easy to just ignore the need to be proactive. If we were honest with ourselves, most of what we did was neither important nor urgent. And it showed on the bottom line unfortunately, i.e. a team spending 2 and a half years to redevelop a product that ultimately didn't sell much anyway. Most people have some kind of a similar story.

In practice, we only really planned one sprint at a time. And that was good enough for us. Over time, I habituated my stakeholders at the time to this pattern. And allowed myself to fall into it, too. Which wasn't healthy. This was the type of product that can't just be rolled out via the internet or directly. I had good reasons to be suspicious of committing to anything beyond one sprint. If we did commit to anything, the team would need to replan everything a sprint later.

In a way, lack of longer term planning paradoxically helped in this context. Most of the volatility around the work was in the latest news on their side. Even though we knew we needed a longer block of time to get to a truly releasable unit of work, at the end of every sprint I'd hear about a new business priority–before we actually released anything.

When confronted with the need for a plan, I mutinied.

I was pretty vocal about being adaptive, later when asked to provide detailed plans, I locked up. I had forgotten what that meant. I wanted the team to be self organizing, and to be left to our own devices. But, something bothered me.

Begrudgingly, I started to assemble bits and pieces and looked through other examples in the company of "good plans" submitted by other managers. And I realized that thinking through things in more detail was helpful, especially once new products or offerings are largely validated. I'd place small details in a larger context, so that the medium term plan was internally consistent, while still leaving myself the ability to back out easily.

But planning itself is good.

For all the trash-talking about "big planning up front", I think it's worth pointing out that in an agile and scrum context, I've never heard anyone claim that planning itself is bad.

In the agile manifesto, the signatories stress they value people over process. But planning is ideally done in a way that takes into account everyone's needs and opinions. Ultimately agile values the team's need to self organize. And that includes planning, if that's what the team needs. Or what a number of teams need to ship their work.

The main reason I've found planning helpful is to realign details around priorities. If you have a large enough team, there is a car chase of details coming at you in any given moment. Being clear on the priorities and knowing how to apply them is where a purely adaptive process breaks down.

I was afraid making plans would be constraining. And only after a while, I realized that it's the proactiveness in planning that was most valuable. Not the plan itself. The plan itself is just evidence of having been proactive.

It is dangerous to use a plan as an organizational commitment device, as that shut down the ability to respond appropriately as new learnings came up. But other than that, there is a time and place for a thought through plan for a team in "execution mode" as they're going to market.

Key Takeaways

  • Even though high growth requires you to be highly flexible, planning is still a high value activity.
  • Ideally, you want to aim for spending 65-80% of your time and resources on high importance and low urgency tasks, even as you validate new business ideas.
  • As a team matures, there will be a longer time horizon of planning ahead, especially if it isn't possible to actually release at the end of every sprint.

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Why improving requires change

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This isn't a how to post, as usual. Just an observation.

Photographer: Armand Khoury | Source: Unsplash

Quite often, an ambition to innovate is paired with an unwillingness to change.

Usually, the latter isn't conscious. But it blocks you from finishing or shipping anything.

It can be quite subtle. In how people speak or collaborate. In pushing back. In sub-par levels of trust.

It might seem obvious at the face of it. Yet, it's probably a common issue companies face when trying to become more innovative.

So before trying to convince anyone about a new product, you might be better off trying to introduce a smaller change of some sort, and seeing where the pushback comes from. And where the fault-lines actually lie. Even though it will create a conflict of sorts, it will highlight what you are up against.

Key takeaways

  • An ambition to innovate is often paired with an unwillingness to change.
  • Introduce a small change to test how a culture will deal with a bigger innovation.

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How the infamous 1984 Apple launch commercial was canned…almost

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From the very beginning, Apple always had a flair for marketing. Mike Markkula believed that a fledgling venture needed to act like a successful company if it wanted to become one, at least in terms of external perception, and Steve Jobs always insisted on the highest possible production values, even while Apple was still in the garage. The Apple II was featured in an expensive, two page spread in the September 1977 issue of Scientific American, for example, even though Apple had less than twenty employees and minimal sales at the time.

Apple's advertising agency was Chiat-Day, founded by Jay Chiat in 1968. Jay Chiat was compulsively innovative, brash and irreverent, much like an older version of Steve Jobs, and the two hit it off great when they were introduced in 1981, just before Chiat-Day acquired Regis McKenna's advertising operations. Jay and his talented team, featuring Creative Director Lee Clow and star copywriter Steve Hayden, crafted Apple's first TV commercials, recruiting talk show host Dick Cavett as a spokesperson, and created the campaign that launched the Lisa, including a TV commercial that starred Kevin Costner while he was still unknown.

Toward the end of 1982, art director Brent Thomas and Steve Hayden came up with the idea of doing an ad campaign based on the timely tagline "Why 1984 won't be like 1984". Chiat-Day shopped it around to a number of clients, including Apple, where it was proposed to be used for a print ad in the Wall Street Journal promoting the Apple II. But Apple didn't go for it, and the idea was filed away until the spring of 1983, when they met with the Mac marketing team to start working on the launch, which was scheduled for January 1984.

Steve Jobs wanted to launch the Macintosh with an inspiring commercial that was as revolutionary as the product itself. He loved the Orwellian tagline when it was presented, and he encouraged the Chiat-Day team to pursue it. Steve Hayden and Brent Thomas put together an intriguing story board, envisioning a visually striking, highly symbolic, miniature science fiction epic featuring a young female athlete who liberates the subjugated masses from totalitarian domination by throwing her sledgehammer to smash a huge screen displaying Big Brother.

Macintosh marketing manager Mike Murray and Steve Jobs loved it, but they needed to get new CEO John Sculley's approval for such a large expenditure. Sculley was a bit apprehensive (after all, the commercial hardly mentioned the Macintosh), but he gave his OK for an unprecedented production budget of over $750,000, to make the one-minute commercial.

Chiat-Day hired the best science fiction oriented director they could find, Ridley Scott, whose previous movie, Blade Runner, possessed the visionary dystopian feel they were striving for. Ridley was based in London, so they decided to shoot it there, at Shepperton Studios. Several Apple and Chiat Day executives, including Mike Murray and Steve Jobs, travelled to London for the week of filming.

By the time the Apple folks arrived, Ridley's team had assembled a cast of almost 200. To play the oppressed, downtrodden baldheaded workers, his people recruited dozens of authentic British skinheads, paying them $125 dollars a day to participate. It was harder to cast the young heroine, since most of the models who tried out had trouble spinning with the heavy sledgehammer. Luckily, one named Anya Major was an accomplished discus thrower, and she could do it faultlessly, so she got the part.

When he arrived at the studio, Mike Murray went looking for Jay Chiat, who was supposed to already be there. He found him lurking off to one side, seemingly hiding behind some scenery. Apparently, some of the skinheads were in a nasty mood, and they were looking for trouble during breaks in the filming, so Jay thought it was prudent to make sure he stayed out of their way.

While the filming was taking place in London, I got a call from someone at Chiat-Day asking if I could write an Apple II Basic program to flash impressive looking numbers and graphs on the screen, to be overlayed on the image of Big Brother. I spent an afternoon cooking something up, and I sent it off to them, although I was never sure if it was used or not.

Lee Clow and Steve Hayden presented a rough cut of the commercial to the Apple team a few weeks later, and everyone was ecstatic. The commercial was classy, suspenseful and enigmatic, and seemed certain to garner lots of attention. It was shown for the first time at Apple's 1983 annual sales conference in Honolulu in October, with Steve preceding it with a clever rap positioning Apple as the industry's last alternative to IBM (see The Times They Are A-Changin'), to a rapturous reception, almost as apocalyptic as the commercial itself. The response was so great that Apple booked two expensive slots, for sixty seconds and thirty seconds, costing over a million dollars, to show it during Super Bowl XVIII, which was just two days before the Mac introduction.

Mike Murray and Steve Jobs screened the commercial for Apple's board of directors in December, to get final approval for the huge Superbowl expenditure. To their surprise, every outside board member seemed to despise the commercial, with Mike Markkula suggesting that Apple begin a hunt for a new ad agency. One of the board members remarked that it was the worst commercial that he had ever seen. Steve and Mike were devastated.

The chilling reception from the board compelled John Sculley to ask Chiat-Day to sell back both time slots that they had purchased. But Jay Chiat was true to form, and only sold off the thirty second slot, telling Apple that he wasn't able to get rid of the longer one at so late a date. Apple considered using the slot for a more conventional commercial, but in the end decided to take a chance on the 1984 spot.

The Mac team was told that the commercial would air early in the third quarter, at the first commercial break after the second half kick-off. Burrell and I wanted to see a real audience's reaction to the commercial more than the commercial itself (since we had already seen it plenty of times), so we watched the Superbowl at a sports bar near Stanford called the Oasis, with some other Mac team friends. The game was boring, but the bar was packed, and the commercial looked great when it aired at the designated time. We thought we heard a small murmur in the bar after the commercial, but it was hard to tell if there was any significant reaction.

That evening, we were surprised to see the commercial run again on the evening news shows. Apparently, it made such a big impression on lots of viewers that, coupled with the fact that it only was supposed to run once, it became a news item itself, as well as increasing expectations for the upcoming launch. It ran dozens of times on news shows in the next couple of days, gathering Apple over five million dollars worth of free publicity.

A week after the Macintosh launch, Apple held its January board meeting. The Macintosh executive staff was invited to attend, not knowing what to expect. When the Mac people entered the room, everyone on the board rose and gave them a standing ovation, acknowledging that they were wrong about the commercial and congratulating the team for pulling off a fantastic launch.

Chiat-Day wanted the commercial to qualify for upcoming advertising awards, so they ran it once at 1 AM at a small television station in Twin Falls, Idaho, KMVT, on December 15, 1983. And sure enough it won just about every possible award, including best commercial of the decade. Twenty years later it's considered one of the most memorable television commercials ever made.

This was a repost from folklore.org, a collection of war stories from Apple's early days.

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Disproved: Politcians claim entrepreneurship is the economy’s job growth engine

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When I was close to finishing a degree in economics, I was still a bit unclear about what actually causes economic growth after 4 years of study. Economists have a complicated and sophisticated set of models to understand how economies work, on both a theoretical and empirical level.

When it came to the topic of growth, if I remember correctly, the key factor underlying economic growth was productivity. And the primary driver of productivity were external technology shocks. Which can't be modelled. They're just assumed to happen. So basically, the economics department at PENN pulled an intellectual bait-and-switch on me. And I ended up going into software anyway.

Ultimately improvements in technology drove productivity and economic growth of countries. This was true of both developed and emerging economies, with the latter often benefiting from imported technologies, rather than creating their own.

Is entrepreneurship a job growth engine?

This blog doesn't cover politics. That said, I thought it might be worth drawing your attention to a half-truth that often comes up among politicians (and that's often repeated as conventional wisdom):

Entrepreneurship is an engine of growth.

Unfortunately, it's not really true if you look at the data. It is true the primary engine of growth are…high growth startups. These tend to be high technology startups or highly innovative ones. These are most likely to be hitting growth rankings like the INC 5000. In the US, these consistently make up a whopping 3% of all new businesses, according to Scott Shane in The Illusions of Entrepreneurship:

"In fact, only about 7 percent of new companies in the United States are started in industries that the government defines as high technology, and only about 3% of business founders consider their new businesses to be technologically sophisticated."

Industry breakdowns of high growth companies also reflect this insight. For example, on the INC 5000 for 2019, there are:

Source: inc.com

The 3% of technologically sophisticated startups made up around 30% of the INC 5000 in 2019. Thus as the startups grew, they are likely to be hiring rapidly. And creating jobs.

Conversely, 97% of new businesses fall into the category of a new hairdresser's, convenience store, or a new pizza joint around the corner. Necessary everywhere. But not particularly likely to grow rapidly. And hire rapidly. And that's totally fine. Most of these are sole proprietorships; the founder created his or her own job.

To be clear, growth is not an end to itself. Not every business should be designed to be high growth business. If this is the ambition of the founding team, then great. But just because it's a convenient soundbite for a handful of tech VCs and politicians, it doesn't mean it's the right choice for entrepreneurs. There are many potential measures of success and self-accountability. Growth, including job growth, is only one of them.

Keep your ears peeled during the upcoming elections, as this convenient half-truth is repeated by politicians all over the spectrum. It is, however, more in the category of "what voters want to hear", rather than actually being true.

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