Startup Focus Book - The science of turning an idea into a business

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Transcript of Startup Focus Book - The science of turning an idea into a business

The science of turning an idea into a business

FOCUSSTARTUP

© 2012, Mick Liubinskas & Phil Morle

Pollenizer Pty LtdSurry Hills. Singapore. San Francisco.www.pollenizer.com

All rights reserved. No part of this book may be reproduced in any form or by any means, electronic or mechanical, including photocopying, recording or by any information or retrieval, without prior permission in writing from the publisher. Under the Australian Copyright Act 1968 (the Act), a maximum of one chapter or 10 per cent of the book, whichever is the greater, may be photocopied by any educational institution for its educational purposes provided that the education institution (or the body that administers it) has given a remuneration notice to Copyright Agency Limited (CAL) under the Act.

Any views and opinions expressed herein are strictly the author’s own and do not represent those of The Messenger Group. The Messenger Group will not be held legally responsible in contract, tort or otherwise for any statement made in this publication.

PwC’s Private Clients team refers to a business of PwC. PwC refers to the Australian member ÀUP��DQG�PD\�VRPHWLPHV�UHIHU�WR�WKH�3Z&�QHWZRUN��(DFK�PHPEHU�ÀUP�LV�D�VHSDUDWH�OHJDO�HQWLW\��Please see www.pwc.com/structure for further details.

PwC content included in this publication remains the property of PwC. PwC content is for general information only and should not be used as a substitute for consultation with professional advisers.

A CIP catalogue of this book is available from the National Library of Australia.

Liubinskas, Mick & Morle, Phil

Startup FocusISBN: 978-0-9808097-4-9

Published and Project Managed by The Messenger Group

The Messenger GroupProject & Creative Director: Jade Dunwoody (GLWRULDO��/DXUHQ�%DUNHU��6DUDK�0HJJLQVRQ'HVLJQ��.HQGDOO�%RUD��7RGG�'XQZRRG\��(GLWK�6ZDQ

Published by The Messenger Group Pty LtdPO Box H241Australia Square NSW 1215www.themessengergroup.com.au

The Pollenizer team has grown in size,

stories, lessons and wisdom since 2008.

This book is a compilation of many

of our thoughts, with the hope that

by sharing them we help entrepreneurs

create more successes through focus.

Pollenizer would like to extend a huge

thank you to PwC’s Private Clients

team and Ninefold for their wonderful

support and contribution which has

made this book possible.

Enjoy.

4

This book is dedicated to the

Pollenizer team and family who

make this dream a reality every day.

Plus, very importantly, Kellie Morle,

Karen Liubinskas and all our families

for supporting us in the challenging

adventure of startups.

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focus1.

The short version of this book:

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“I got told time and time again by people on the

outside of my startups to be more focused. ‘Yeah,

yeah, sure,’ I’d reply. It wasn’t until a few failures

hit me square in the face, and I started to learn

from other people’s mistakes that I really got focus

drilled into me. Lessons are repeated until learned.”

Mick Liubinskas, Co-founder, Pollenizer

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Focus can make you:

- Stronger

- Faster

- Safer

- Loved

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1. FOCUS ON IMPACT

If we want to have the biggest impact,

we always focus on solving the most

important problems. It sounds simple,

but we think most companies do this

poorly and waste a lot of time .

FIVE CORE VALUES FOR HOW WE RUN FACEBOOK

- BY MARK ZUCKERBERG

2. MOVE FAST

Moving fast enables us to build more

things and learn faster. We have a

saying: ‘Move fast and break things.’

The idea is that if you never break

anything, you’re probably not moving

fast enough.

3. BE BOLD

Building great things means taking risks.

This can be scary and prevents most

companies from doing the bold things they

should be doing. We have another saying:

‘The riskiest thing is to take no risks.’ Make

bold decisions, even if that means being

wrong sometimes.

FOCUS ISN’T EASY. It takes guts.

You will be pushed to diverge by your team,

customers, investors and people you have coffee

with.

4. BE OPEN

We work hard to make sure everyone

at Facebook has access to as much

information as possible about every

part of the company. People with more

information can make better decisions and

have a greater impact.

5. BUILD SOCIAL VALUE

Once again, Facebook exists to make

the world more open and connected, and

not just to build a company. We expect

everyone at Facebook to focus every day

on how to build real value for the world in

everything they do.

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(http://bit.ly/N0j097)

In this game, momentum equals success, and validated learning equals productivity.

The length of time it takes you to learn something is your speed of learning. Our guess is that most startups go through at least 10 major learning laps. If your speed of learning is six weeks, then it will take you 60 weeks (more than a year) to work it out. But if you can focus and go faster, and get your speed of learning down to six days (very doable) then you can do your 10 laps in two months. Anything you can do to increase your speed of learning pays back exponentially, and focus is crucial.

��

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You will make

mistakes. Do it

fast, do it cheap,

learn from it and

move on.

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“Time wastes away without focus. At Skype, we focused on users, users, users, and set upon a growth curve beyond expectations.” Tristen Langley, Former Business Development and Marketing Manager, Skype Technologies, North America

Who are we?

Before we go much further, we should introduce

ourselves and explain how we came to feel so

strongly about focus.

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An overview:

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Some founders don’t like this idea

of testing and they feel like it’s

diluting their idea. What we say

is, “Your dream is still there, but

let’s start here and make sure you

have something to build from.”

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You are here

IDEA

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DISCOVERY

VALIDATION

EFFICIENCY

Founders that learn are

more successful. Make sure

you’ve got tough skin and

get ready to learn.

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SCALE

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The beauty about focusing

on a

niche market -

if you get it w

rong,

there is another

one next door.

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Loose dreams are just thin air goals.

Visualise where you want to go, be

prepared for the long journey and know

where you are right now.

4. 5.

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44

90% failure rate

There’s a reason why nine out of ten EXVLQHVVHV�IDLO�LQ�WKHLU�ÀUVW�\HDU�RI�operation — starting your own business is very hard and not everyone can do it.

It helps to be intelligent, good-looking, socially-skilled and well-connected, but there are people who have succeeded without any of those advantages — and others who have failed despite having them. There is success and there are bad excuses.

“Just working on a startup takes inner strength, belief in yourself and passion. Having the discipline to focus is what will make this effort successful.”Clare Hallam, General Manager Operations and Finance, Pollenizer

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Look at someone you consider to be successful. Ask that

person how many failures he or she had before success

came. Business, life - it’s all the same. Sometimes you’ve

got to do it wrong to get it right. And failure is never the

end of the road. That is, if you learn from it.

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Quick tips:

- Have a huge dream.- Solve a huge problem.- Put in a huge effort.

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Entrepreneurs have ideas all the time, but

you can’t pursue them all at once. You get

‘un-synergy’ - where you dilute your efforts

and diminish the results. Focus on one idea

like a laser and put all of your efforts into

it until it succeeds or fails.

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The launch date is never certain and often late.

It doesn’t come out the way you expect it to.

It costs much more than you think.

There are lots of bugs along the way.

No matter how hard you try, you can’t accurately forecast the future.

It’s the cause of many sleepless nights.

It dominates your conversations with everyone.

It can lead to considerable stress between the ‘founders’.

Everyone has advice for you, but inevitably you find your own way.

When the baby reaches a certain maturity, some perverse part of you actually considers doing it again.

STARTUPS AND BABIES

CHRIS HITCHEN, CEO, GETPRICE.COM.AU

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54

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START

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WHERE TO BEGIN

WHERE WE

ARE HEADING

VALUE

TIME

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How hard is it to get a new customer?

- Very easy, if you create seriously massive value.

- Very hard, if you create marginal value.

10x value = a $10 product should deliver $100 value

57

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Source: The Innovator’s Solution by Clayton M Christiansen and Michael Raynor.

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Here is an example:

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Five root causes of value

1. Make me money.

2. Save me money.

3. Save me time.

4. Make me happier.

5. Reduce my risk.

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Big mistakes to avoid

1. Not talking to customers.

2. Not learning fast enough.

3. Not building a product that solves a problem.

4. Thinking you haven’t made any assumptions.

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Activity: Brainstorming methods

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(Though we’d add that you want

to find the bad ones fast.)

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Activity: Ideas tournament

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It’s quite alright for a business

not to score highly on all lines.

You are looking for a pattern and

not the highest number.

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Is there a business idea that looks like this?

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Started as Became Company

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“The value of an idea lies in the using of it.”Thomas Edison, Co-founder, General Electric

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Activity: Share your idea

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74

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75

Activity: Pitch right now

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Mick Liubinskas.

Pollenizer.

how to start a web startup fast, with less risk.

a company as a technical co-founder with a strong process and global network.

web startups can create billions of dollars of value for founders.

experienced, non-technical entrepreneurs.

finding your own team, off-shoring.

our team is trained and we are a technical partner

in your business.

taking equity in the business and making it a huge success.

we have built 35 startups, raised $15m and returned $40m to shareholders.

grow globally so we can start more successful

companies.

partners around the world who can build startups.

Pollenizer co-founds great startups and we’re going global.

77

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Your pitch needs to answer a few key questions:

1. What are you doing?2. Is it a huge opportunity?3. Can this team do it?

(Yes, yes, you need focus, but that’s execution, right now you’re selling.)

Startups are very, very risky. Everyone knows it. Understanding what you are and believing that it could be very big one day is great, but most importantly, the audience needs to think there is a chance you can pull it off.

1. What are you doing?

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2. Is it a huge opportunity?

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3. Can this team do it?

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Callout

“Pitching is so much about

momentum. If you can say ‘We

started back here, did this, we’re

doing this and we’re going there -

which will be huge’, then it feels

like there is momentum. If you

say ‘Well we’re going to do this,

we just need money and help’, then

it feels like it might happen but

isn’t moving. Make your idea like

a train, moving at pace. Pitch

it with the conviction of ‘Get on

board or get out of the way’.”

Mick Liubinskas, Co-founder, Pollenizer

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Best thing first:

If you’ve got something that will blow

their socks off, do it early. You may

not get past the first slide.

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… Pitch, pitch and pitch again.

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… Be prepared to back yourself

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(Hint: bring

throat lozenges,

you’ll talk until it

hurts.)

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TALK DOLLARS AND CENTS

If you’ve already raised money, you need to tell potential investors how much you’ve brought in, who invested and what you did with the cash.

If you haven’t raised money yet, talk about what you have accomplished with no funding.

If you have personally funded your startup, make it known. Investors like to see entrepreneurs who have invested their own money. In fact, if you don’t have skin in the game, they’ll want to know what’s committing you to this business. It’s easy to spend other people’s money.

If you’re pitching to raise capital, list how much you’re looking to raise and how you intend to use the funds.

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From PwC’s Private Clients team

www.pwc.com.au/privateclients

Manoj Santiago,

Partner

PwC, Private Clients

“Don’t take the

first cheque

you’re offered.

Make sure it’s

smart money.”

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Required reading

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“I will fail.”

Start with the comfort of knowing that you are going to fail. And fail. And fail. Hopefully, it will happen on your way to success. So embrace the failure. Love it. Celebrate it.

Most importantly, do it fast and cheap.

95

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Too many founders don’t answer the

first question, which makes the other

ones hard to get right.

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:KHQ�ZH�ÀUVW�VWDUWHG�3ROOHQL]HU��ZH�WULHG�WR�launch a small product called Goalsy. After more than a year of tweaking, Goalsy was never released. Why? We never thought it was ready. We shouldn’t have waited.

We worked on it ‘for free’ and ‘in our spare time’, which is a recipe for failure. The longest part of a product release is the last 1% — and to succeed, it needs the kind of focus that can’t come from someone who’s just doing it on the side. It needs your sole focus.

To deliver, people need limits, rewards and consequences. So we’ve since shifted to working on projects that require our full attention to meet tight deadlines. This helps us to focus on getting the job done and allows us to feel the pain of spending money and the threat of missing the deadline and the opportunity.

Activity: Speed of learning

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STEP 1: MANUAL TEST

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STEP 2: BUILD

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5 THINGS TO THINK ABOUT

BEFORE YOU START YOUR

BUSINESS

You’ve started testing and you need to do a few

contracts, so you need to set your company up.

Think about these points before you sign anything.

Winding things back can be a huge headache.

From PwC’s Private Clients team

www.pwc.com.au/privateclients

WHERE IS THE RIGHT

JURISDICTION?

Think about the right state and

country. If you plan very quickly to

move to Japan, maybe start there.

Moving companies can cost a lot.

WHAT IS THE RIGHT STRUCTURE?

Your foundation structure will have a

big impact on capital gains tax, asset

protection and government assistance.

Each structure has options with pros and

cons. What are you doing now and what

are you likely to be doing in the future?

You want low risk with enough flexibility.

WHO IS INVOLVED?

Do you have investors and key team members? Have

you offered anyone any equity in the business? Who

they are, where they are and the type of deal they

have can impact how you set up your company.

WHAT COMPLIANCE IS REQUIRED?

Compliance covers tax, accounting, employment,

corporations law, contracts and more. With planning,

you can keep it simple.

DO YOU NEED TO REGISTER

PATENTS OR TRADEMARKS?

It’s tough when you’re really

learning as you go, but it’s

important to consider protecting

your intellectual property (IP).

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Activity: Core utility

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Categorise your features

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STEP 3: FEEDBACK

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STEP 4: ITERATE

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TALK TO YOUR CUSTOMERS

“A client once wanted to roll out a new product feature that they knew customers would love. So they built it, and they launched it. And no one knew.

Then they brought in a marketer, who called all 100 of their biggest users to spruik the new feature. During the interviews, she learned four things:

1. Customers didn’t know about the new feature, or where to go for new features.

2. The current documentation for the company was so poor they didn’t use it and just called customer service .

3. They were happy to receive emails, tweets and even sit on a customer council in order to learn about new features.

4. They wished that someone had contacted them sooner.

The moral is simple: talk to your customers consistently, in every way, through every channel — and your company will grow.”

Erica Lee, President, StrategicLee Inc.

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Activity: Who are your customers?

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Try it. You start to get really creative

after the first 10!

Activity: Find your focus segment

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Don’t be afraid of failure.

Bad feedback is a good thing - it

encourages you to tweak your product.

Every time something doesn’t get

traction it means you’re one step

closer to finding something that does.

Failure isn’t the end of the world if

you fail quickly and learn from it.

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Focus Do (few) Don’t (many)

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STEP 5: REFINE

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The worst thing that can happen to some startups is that they have too much money, so they build the big vision, and fail, and have nowhere to move. Our advice? Invest 20% in your ÀUVW�SURWRW\SH��OHVV�if possible, and bank the rest to use further down in the process.

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Opportunity validation

Remember, it’s about adding value as well as solving problems. Ask:

��Is there a real problem? (Pain point validation)

��Are you solving that problem? �3URGXFW�PDUNHW�ÀW�

��How big is the problem to your customer? (Customer validation)

��Will people pay for the solution? (Pricing validation)

��Can you build a business by solving this problem? (Market size)

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Source: The Startup Owner’s Manual by Steve Blank and Bob Dorf plus some additions from Pollenizer*.

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Option A — Validation Per Target and Model:

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Option B — The Bank Loan Method

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“My 60-year-old

Dad’s blog had

1,000 visits per

month, so if you’re

below that, you’re

probably not there.”

Mick Liubinskas, Co-

founder, Pollenizer

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“Startups are incredibly hard and become your life. You go to sleep and wake up thinking about it. You brainstorm in the shower. Run mental market studies on the bus. Even during the rare moments on your weekend where you’re not in front of a screen, there is still a part of your brain that is thinking about it. It hardly turns off. In other words, startups require obsession, dedication and above all, passion.

:LWKRXW�GHGLFDWLRQ�\RX�ZRQ·W�ÀQG�WKH�HQHUJ\�for a midnight conference call. Lacking obsession you won’t see your competitors coming. And if you don’t feel the passion, you won’t go the required extra mile, day after day.

If you don’t feel this way, you will fail. It’s that simple.”

Pierre Sauvignon, Head of Product, Pollenizer

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Activity: Customer validation plans

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Focus: efficiency is about preparing for

scale. It’s about exposing the leaks in the

bucket and getting them fixed.

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Efficiency in a nutshell:

- Capture the customer traffic.

- Capture the source of the traffic.

- Activate.

- Convert.

- Retain.

- Do all of the above repeatedly, even

as you grow.

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Our friends at Ninefold have kindly

passed on their words of wisdom...

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From PwC’s Private Clients team

www.pwc.com.au/privateclients

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9. scale

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Don’t start here.

Scale is the step that many entrepreneurs

jump into far too early, which is a very

dangerous and usually fatal move. New

entrepreneurs can believe that the process is

1) build, 2) scale. If you have not launched

yet, stop, and go back to the start of this

book.

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The fastest learner wins and

stays winning.

Activity: Are you ready to scale?

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… build a solid infrastructure of systems$V�\RXU�FRPSDQ\�VFDOHV��\RX·OO�REYLRXVO\�QHHG�WR�PRYH�IURP�¶PDQXDO·�WR�¶DXWR·��$XWRPDWH�WKH�EDFN�HQG�RI�\RXU�VWDUW�XS�WR�DYRLG�SODFLQJ�XQQHFHVVDU\�VWUDLQ�RQ�\RXU�EXVLQHVV�DV�\RX�VHOO�PRUH�SURGXFWV�DQG�DFTXLUH�PRUH�FXVWRPHUV�

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… establish a trustworthy team7KLV�LV�WKH�WLPH�LQ�WKH�OLIH�RI�D�VWDUWXS�ZKHQ�\RX·OO�EH�DEOH�WR�VWRS�DOZD\V�ZRUNLQJ�LQ�\RXU�EXVLQHVV�DQG�LQVWHDG�IRFXV�RQ�ZRUNLQJ�RQ�\RXU�EXVLQHVV��,I�\RX�DUH�GRLQJ�IXQGDPHQWDO�WDVNV�WKHQ�LW·V�D�MRE��QRW�D�EXVLQHVV��

Activity: Changing of the guard?

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,QYHVW�LQ�WUDLQLQJ�

PERFO

RM

AN

CE

VALUES FIT

HIGH

LOW

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LOW HIGH

Source: Cameron Herold, www.backpocketcoo.com

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5HDGLQJ� http://www.backpocketcoo.com/who-is-Cameron-pp.html

… keep learning

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-DVRQ�6HHG��&(2��7XUQDURXQG

Founders that focus obsessively on

the small things are more likely to

grow massive companies, and succeed.

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10. act now

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If you’ve got an idea and feel ready for the crazy

startup roller-coaster, you should send your pitch

to Pollenizer http://pollenizer.com/intake

If you’re a bit further along, you should get in

touch with the lovely team at Ninefold about

hosting and storage solutions:

1300 045 614

info@ninefold.com

Or if you’re looking to take your business to

the next level and need a trusted advisor, please

contact PwC’s Private Clients team:

Manoj Santiago, Partner

+61 (2) 8266 4494

manoj.santiago@au.pwc.com

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Mick, Phil and the Pollenizer team are

available to speak to companies and at

events, please email focus@pollenizer.com

for more information.

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