The Inquisition of the Entrepreneur

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I have reviewed nearly fifty books on ribbonfarm, but I’ve never yet been reviewed by a book. That’s what reading Steve Blank’s The Four Steps to the Epiphany felt like. Blank, a veteran serial-entrepreneur, doesn’t actually set out to grill you, like a brutal VC, till you sweat. It just naturally happens. I found the book while exploring the currently-hot Web conversation around the idea of lean startups. So, since I can’t possibly “review” the book,  let me try to turn the whole lean startup conversation, anchored by this book,  into a self-administered inquisition. For the two entrepreneurial ventures I am currently leading, I score a B+ (for ribbonfarm.com) and a B- (for trailmeme.com).  So here’s the test, a  round-up of the lean startup conversation, and a micro-riff on applying this to your life, since planning improvising a life seems to have become an exercise in entrepreneurship in this century.

This test only applies to an early-stage entrepreneurial venture in a generally new market. You can apply these concepts to a well-defined market with known customers, but that’s not something that interests me. A more basic and intrinsic definition of “entrepreneurial” is a subjective one: if you feel like your life is currently consumed by a project with deep uncertainties, yet feel driven to continue by some unclear force deep down, you are probably an entrepreneur of some sort. There are only 9 questions, so this is a quick zeroth-order test. If you are unfamiliar with lean startup concepts, take this test cold. And no, it isn’t random mind-candy I made up. I actually thought quite seriously about the questions.

If you are applying this to the startup phase of your life (also known as “the twenties”), you’ll need to transpose words like “market” and “product” to that key.

The Inquisition

Q1: What is the ratio of resources you spend on learning and exploring the market (M) for what you have to offer, versus building/engineering (E) it?

Your M/E ratio: (pick a number between 0.1 and 2)

Q2: Have you experienced an “Aha!” moment in thinking about your product vision, when confused, complicated and ugly brainstorming gelled into an elegant high concept?

a) Yes

b) No

Q3: How many times have you managed to trigger an “Aha!” moment (“I get it! This is exciting!”) for a potential customer?

Number of potential customer Aha! moments: (integer)

Q4: Have you conducted focus groups?

a) Yes

b) No

Q5: Did you

a) Design the product first or

b) Define a “customer” and a “problem” first?

Q6: Your job, during the very early days of an entrepreneurial venture, is to:

a) Build something that delights the customer

b) Build something that satisfies the customer

c) Build something that just barely gets the customer on-board, whining and complaining

d) Pretend to offer something to the customer, apologize to those who respond for not having it ready, and scramble to build out the vaporware only if potential customers bite

e) Mutter, “what customer?” and build something rudimentary just because you want to, to prove to yourself that you can

Q7: What portion of the product vision should you drive, as opposed to the customer?

a) 100% you, 0%  customer

b) 80% you, 20% customer

c) 50% you, 50% customer

d) 20% you, 80% customer

e) 0% you, 100% customer

Q8: You’ve built a basic, rudimentary product, a  non-embarrassing number of beta users are kicking the tires, and the thing basically works like you thought it would. Your product development roadmap is pretty much locked down (modulo the natural flexibility of agile/iterative development) for the next year or so, with things you know you have to do. For the same cost, who would you hire?

a) One seasoned serial entrepreneur as CEO/CTO/CMO/COO (choose!) who can help you, wild-eyed-visionary, scale the thing into a “real” business

b) A VP of sales who can hire a few biz-dev/sales type and go out there, pound the pavement, close sales, and grow the customer base

c) Two improv sales/PR/marketing “hacker” type, who likes to endlessly invent, improvise and tweak messaging and positioning ideas, but can’t actually close sales or manage a team

d) Four smart college interns who can listen and communicate with reasonable competence, but otherwise need to be told what to do

Q9:  In the early days, the types of potential customer you should talk to, and seriously listen to are (pick all that apply)

a) Those who have a problem you think you can solve, but don’t know it

b) Those who know they have a problem, and are framing it in ways not wildly different from you

c) Those who are looking for a solution

d) Those who are improvising a solution

e) Those who are unhappy with their improvised solutions and are shopping for something better

Computing Your Score

A1: If M/E is 0.9-1.1, give yourself 15 points, if M/E is 1.1 to 2, give yourself  10 points. Anything less than 0.9, you get 0 points.

Why: The justification is the Grabowski ratio. A classic (but somewhat obscure) study by Ralph Grabowski in 1995 show that M/E (properly defined) around 1 is the lowest risk zone. Below 0.1 the chances of failure skyrocket. Grabowski likes >1 cases, but for Web tech products in particular, I believe you can have too much of a good thing. Hence the lower value of 1.1 to 2.0 answers.

A2: Product Aha: Yes gets you 15 point, No gets you 0 points.

Why: new tech-market innovations are product-driven, not customer driven, and are especially not a union of all feature requests by potential customers. But even if the product vision is your own, but is not driven by an Aha! moment, it will lack the conceptual integrity that can serve as a filter to accept/reject feature requests/feedback.  A product without an Aha! moment behind it will succumb rapidly to entropy even if you manage to fill a need and attract customers.

A3: Customer Aha! Moments: You get 1 point per customer with an Aha! with a maximum of 15.

Why: The customer’s Aha! moment is one data point/piece of evidence towards what is known in the lean startup world as the product-market fit, a term coined by Marc Andreessen. PMF itself is an aggregate phenomenon across the hypothesized market base, but in the early days, you won’t see any signs of it unless you happen to be ridiculously lucky and smart. But if you aren’t at least seeing hope-sustaining evidence in the form of individual Aha! moments through your “customer development” work, the chances are very high that your Product Aha! Moment (PAM) was just some self-indulgent geek-masturbation.

A4: Focus groups: +15 if you HAVEN’T conducted traditional focus groups. -15 if you HAVE and actually been influenced strongly by them. 0 if you conducted focus groups but decided to discard the results.

Why: This one is straight from Blank’s book. Focus groups only work for defined markets with defined customers, who frame their problems in terms of products they already know and understand, which you are trying to incrementally advance in some price/performance ways. The temptation to cover your behind with focus-group due-diligence is very strong, especially if you are an “intrapreneur” in a mature company that evolves its main offerings this way. The small problem is that focus groups might distract you and waste enough time to kill your project. The big problem is that you might not get killed and actually live long enough to be guided by the focus groups, and waste a lot more money before you kill yourself (the opposite of “fail fast”). The classic example of ignoring traditional market research is actually Joe Wilson, the founder of my mother ship, Xerox. Wilson ignored focus-group style “market research” entirely (which said nobody wanted copiers) and bet his photo-paper making company, Haloid, on his belief in the product vision. Of course, you do need to be talking to customers/potential customers, but not through focus groups. That’s just too easy. Half your work will be finding the right people to talk to.

A5: Product first/Problem and Customer first: +15 if you designed the product first, +5 if you defined the problem and customer in detail first.

Why: This one I had the most trouble with. Blank’s model suggests that in hi-tech, the vision should be product-led (and then you go around looking for a problem to solve with it, in a “when you have a hammer in your hand, everything looks like a nail” mode). I think this is true of technology-inspired entrepreneurship where the founder is at least partly excited about building something. But Jeff Bezos stands apart as a major counterexample, given the systematic way he found a problem/customer first. But then, in a sense, he was filtering based on an existing “meta product” vision (I have the Internet in my hand, what retail categories can I hammer with it?). So maybe product-led should be a true axiom. I don’t know. Giving the “customer first” option a +5 is my uncertainty hedge. But I genuinely believe that tech-inspired people simply cannot get excited about a problem simply because somebody is actually experiencing it and will pay for a solution. The drive and motivation can only be sparked by an elegant product idea.

A6: Minimum Viable Product: d or e get you +15 points.  c gets you +10, b gets you +5, a gets you -15.

Why: This question probes your intuitive understanding of the idea of Minimum Viable Product due to Eric Ries.  Your goal in the early stages has nothing to do with making the customer happy. It is to find out if there is a market for what you might build. Example: running an AdSense campaign for “Anti-gravity machine for $100″ which takes people to a vaporware page that tells them “Not ready yet, but sign up here if interested.” This is the absolute cheapest way to get the market intelligence you need. But I have enough of a tech-geek in me that this purely business-minded data-driven approach leaves me cold, so I also put in the “passion option” (e) where you build something above the MVP level just for the hell of it. I think this is actually a better idea because you not only discover whether customers might want it, but you also discover if the idea excites you enough that you might want to build it and run with it for years. So (e) is a good answer if you are geeky enough to be happy building something and accepting the risk that you might have to throw it away. So long as you don’t build an over-engineered monstrosity that goes way beyond probing potential marketability.

A7: Vision ownership:  b gets you 15 points, c gets you 10, a, d and e get you 0.

Why: Straight from Blank’s book. Feature requests should be accepted by exception, not as a matter of standard practice. If your product vision is not self-indulgent masturbation, most of the things you hear from potential users should be on your roadmap anyway. If  more than 20% of your backlog ends up occupied by surprising requests that you agree with, you need to revisit your vision, and check it for conceptual integrity and completeness. If it is more than 50%, your product vision is downright incoherent and you have no clue how to prioritize anything. You should drop the effort and head back to the drawing board, and not talk to potential customers until you have an idea worth defending.

A8: Hiring and staffing: c gets you 15 points, d gets you 10 points, a or b get you -15 points

Why: Again, straight from Blank’s book. There is absolutely no point in hiring a professional manager type to grow the business if you don’t have unmistakeable evidence of a working “product-market fit.”  In other words you need to know which direction to grow in. Experienced sales VPs are about executing a validated sales roadmap through staffing and growth. Your ideal hire, before your PMF stage, is c, an improv artist or two, who might not close sales (or hook users, for traffic-as-proxy-for-monetizability Web outfits), but has the creativity and persistence to keep tweaking the message and positioning till he/she gets it right, and can reliably trigger “Aha!” moments in customers. Interns get you some points because you can always coach ‘em just enough to add value, and avoid doing the kind of heavy-hitter damage a or b might do.

A9: Listening to customers: Give yourself 15 points if you picked only (e). Subtract 3 for every other option you picked.

Why: And again, straight from Blank’s book. At an early stage, you are testing and validating a problem/market hypothesis and users who are at varying levels of ignorance or misframing of their own problems aren’t useful. Only those who understand and frame their problems well enough to be jury-rigging a solution can guide you in useful ways. These people should be providing the 20% “exceptional feature requests” that are guiding you. Everybody else is basically too hard to sell to, and will anyway only be convinced by “social proof” (other adopters).

Inflexibility Tax Calculation:

• If you hate the way this inquisition frames entrepreneurship and are boiling over with indignation, subtract 50.
• If you are saying “Wow! This is brilliant, awesome stuff and I agree absolutely,” subtract 50.
• If you are saying “Yeah, I mostly agree, and I’ve been doing this in my own improvised way, but I disagree on a couple of points,” leave your score alone.

The -50 cases mean you are either getting defensive in knee-jerk ways because you are married to an alternative theology OR you are buying THIS theology without question. In either case, you may be lacking the ability to critically think ideas through,  and do the “structured improv” act that is being an entrepreneur. If I were a VC, I wouldn’t bet on you.

Scoring:

135+: You get an A-.

120-135: B+

105-120: B

90-105: B-

75-90: C

60-75: D

0-60: F

There is no A or A+. You only deserve those grades if you get past the early stages and hit cash-flow-positive (A) and recovered investment (A+) stages, respectively.

The Lean Startup Theology

Okay, I dropped some of you off the deep end there, except for a few links. Here’s the 411, with reference to this Ultimate Guide to Lean Startups trail.

1. Start with the single most important idea, which Andreessen explains in this exceptional post about Product-Market-Fit
2. Eric Ries is the main cheerleader for the MVP (Minimum Viable Product) concept; tackle this next
3. I haven’t seen Eric mention Grabowski in his blogging, but that’s the hard empirical evidence behind what he preaches, so take a quick look and test yourself for a potential Inventoritis infection
4. The 101 level stuff: the Lean Startup conversation assumes you understand Geoff Moore’s ideas at least at a rudimentary level. Read either Crossing the Chasm or Dealing with Darwin (preferred). Or at least the Amazon reviews.  And review Christensen’s ideas about disruptive vs. radical innovations that you think you understand, but likely don’t.
5. Then tackle Steve Blank’s Four Steps to the Epiphany, and work real hard to understand the somewhat mind-numbing step-by-step recipes and flowcharts. Unlike most such recipe/flowchart oriented books, a great deal of thought has gone into these. This is a detailed tactical manual with lots of deep insight about the right sequencing of moves behind it. Yes, it is self-published, is rife with typos (which Blank disarmingly forgives himself for, with the line “the horrifically bad proofreading, design and layout is now a badge of honor”), but it is worth the slog. It is an extremely left-brained book, but informed by deeply right-brained sensibilities. In fact it opens with a discussion of Campbell’s monomyth as a script for entrepreneurs. The book had me at “monomyth.”
6. Speaking of Campbell and right-brained stuff, the whole lean startup movement (despite the connotations of lean six sigma) is surprisingly art and design oriented. Though not an official part of the lean startup dogma, Paul Graham’s famous Hackers and Painters is probably required reading.
7. You’ve done the bottom-up thing. Read Eric Ries overview of lean startups
8. Fittingly, this trail guide begins and ends with Andreessen. A set of videos he did is worth viewing.

I’ll wrap with a quote from item 7 in your Lean Startup coursepack:

“…the process of planning is very valuable, for forcing you to think hard about what you are doing, but the actual plan that results from it is probably useless” — Marc Andressen

This is nearly identical in spirit to Eisenhower’s famous line, “Planning is everything, plans are nothing.” But it is good to hear this truth restated for the startup world. The heart of the lean startup religion is a certain predisposition towards improvisation over planning.

Do I believe this theology out of the box? No, and I think if you aren’t able to understand and apply this stuff critically, it will simply not work. For Trailmeme, I’ve had to sell my own unique mashup of this model’s elements, with my own beliefs, to stakeholders within Xerox. If you are not capable of hacking this model, you are not capable of using it.

So here’s a test of your ability to hack this: email me/post a comment about an important missing concept that adds to, or modifies, this theology in some way. If you can’t make an original contribution (mine, for instance, was connecting the dots to Grabowski), you aren’t ready.

Ribbonfarm as a Lean Startup

I won’t share the detailed scoring that got me a B- for Trailmeme, since that is being driven by a team, not just me, and we don’t want to give away our game plan, but it is interesting that without realizing it, and entirely by gut instinct, I’ve been growing both Trailmeme and ribbonfarm according to this theology. In both cases, I was fumbling along, making stuff up as I went along. Exploring  (and now attempting to join) the lean startup conversation has clarified my thinking a lot, but I am still fumbling quite a bit.  Anyway, highlights from the history of the nearly 3-year-old “ribbonfarm as a lean startup.”

1. Product-driven, not audience-driven: I started blogging with only a “product vision” and zero customer input. I just had a huge backlog of stuff I was itching to write about, and didn’t care about whether it would get read at all. I also ignored every “focus group” type of advice I found. I don’t blog within a niche, I do 2000+ word posts once a week as opposed to 300 word posts twice a day, I make no attempt to SEO my post titles. All in all, very much a lean-startup, hackers-painters kind of start.
2. Listening very selectively to readers: When I did start listening to readers, I basically ignored (sorry guys) all but a very small handful of people for whom my writing seemed to resonate particularly deeply. Not quite a single-muse strategy, but call it a small “advisory panel.” And I wasn’t doing this in any disciplined way until 2 years into the game. I just liked the comments/emails from certain readers and wanted to talk more to them. The informal ribbonfarm advisory board (you know who you are) has about a dozen people now.
3. Following the MVP model: Here’s the bullet-point story behind Tempo, which will be my first book. Following the MVP model for this was entirely an accident. Installing the “Email this” plugin showed me what articles were getting emailed the most. I discovered to my surprise that the most emailed and the most commented lists weren’t the same. My post on strategy, tactics, operations and doctrine was an early email hit, but saw relatively little comment action, and also happened to map perfectly to a larger book concept I wanted to work on. The post was a fairly crappy early MVP draft of the ideas in the book it is growing into, but it still seemed to scratch a market itch in its primitive form. I turned the book project itself into an MVP by putting up a sign-up page very early (after I’d written a couple of chapters to convince myself I would be motivated to finish the thing). That list now has over 500 emails. That’s a pretty decent pre-sell permission list. I accidentally also followed Seth Godin’s advice (quote: “The best time to start promoting your book is three years before it comes out. Three years to build a reputation, build a permission asset, build a blog, build a following, build credibility and build the connections you’ll need later.”)  These days, I do MVP stuff a little more systematically, often probing a theme with a single post before putting out higher-effort posts around that theme.
4. Searching for Product-Market-Fit: Marc Andreessen’s product-market fit post talks about the visceral difference between the “before” and “after.” I had experienced this second-hand while I was first employee at Sulekha.com, but hadn’t experienced it as the principal/founder. The Gervais Principle article did that for me. That was a major “product-market fit” moment. I still couldn’t define my niche or write a “problem hypothesis” statement for it the way Blank demands,  but I now have a lot more clarity about what I am writing, for whom, and what is “core” versus “non-core” for my writing (to use Moore’s terminology). I’ll never be able to stop wandering randomly outside my putative “core,” but at least I know where it is now.

Your Life as  a Lean Startup

I’ll leave you with one major thought that I’ve been pondering lately. The idea of “planning” a career is now garbage. You can only improvise one. Listening dutifully to old-economy career counselor types at ages 18 and 22 and “first layoff” is now the stupidest thing you can do. To a large extent a) your career picks you, not vice-versa, and b) It isn’t about what you want to do, but which one of the things you like doing achieves a “product-market fit” with the labor market. This means, the new rules of life/career planning are:

1. Try on different careers for size at MVP level: dabble in stuff and do internships as early as you can, write blogs, contribute to open source projects, and so forth
2. Look for product-market fit: Your epiphany about “what I want to do with my life” while hiking in the mountains, is only half the story. The other half is what the market wants to do with you. If you can’t trigger an Aha! moment in someone outside of yourself, you don’t have a career
3. Fake it till you can make it, another MVP idea: pretend you can do stuff before you can actually do it. Sprint like crazy to acquire skills your “Aha!” customers decide to actually buy from you, thanks to your posturing

Okay, that’s enough lists. Gotta get back to my lonely pair of parallel Hero’s Journeys.

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