Guidelines: Building A Successful Startup
- 2. Startup Failure Agenda What is failure? What is success? How can an entrepreneur enhace his or her chances of success? How to approach the market and get the best out of your investment DefiningFailure Gotomarket The importance of having the right mindset, using the right frameworks, and doing the right research Ideation
- 3. Best practices to ensure that your project makes it to the market with the lowest technical debt possible Outsourcing–The Dilemma How to set SMART KPIs and align them to the outcome you committed to your stakeholders while getting your teams buy-in SettingKPIs The importance of having the right mindset, using the right frameworks, and doing the right research Selling&Overselling How to turn your failure into one big success Making an ROF
- 4. Linkedin.com/in/marioramadan 4 Eric T. Wagner, Forbes 2013 “8 OUT OF 10 STARTUPS FAIL” Not having enough cash to launch the product in the market or not being able to sustain the startup’s operations Runningout of cash Not having a minimum year-on-year growth of 20% for a minimum period of 3 years and a minimum baseline of 1,000,000 USD Notbecominga Gazelle Not becoming a company with a minimum valuation of 1 billion USD Notbecominga unicorn
- 5. Linkedin.com/in/marioramadan 5 Eric T. Wagner, Forbes 2013 “8 OUT OF 10 STARTUPS FAIL” • A startup that does not make it to market • A startup that does not perform up to expectations WHAT IS A FAILING STARTUP? 50% to 60% of startups have a 5 year survival rate Runningout of cash 1.5%-3% of startups become a gazelle Notbecominga Gazelle <1% of startups become unicorns or decacorns Notbecominga unicorn • Your expectations • Success and failure are concepts tied to ambitions • Ambitions are tied to business expectations WHAT DEFINES SUCCEESS? • Success is a journey where expectations end up materializing • Failure is a journey where you end up unable to commit to business expectations WHAT DOES THAT MEAN?
- 6. 6 The probability of success is irrelevant What is relevant are the choices you make throughout the journey. These choices end up putting you on either side of the static. What’stheprobabilityofsuccess?
- 7. Linkedin.com/in/marioramadan 7 Common pitfalls in ideation Ideation
- 8. Linkedin.com/in/marioramadan 8 Common pitfalls in ideation Ideation Idea • You have an idea, and you think it makes sense • Don’t assume, know • Your idea is a hypothesis that needs testing • It is NOT a high demand product until the market says so
- 9. Linkedin.com/in/marioramadan 9 Common pitfalls in ideation Ideation Research • Invest in market research to validate your thoughts – set a timeline and a budget • Analyse your hypothesis from a product risk, customer risk, and market risk perspective • Learn and use the right financial terms – if you don’t know how to use them, hire someone to help you
- 10. Linkedin.com/in/marioramadan 10 Common pitfalls in ideation Ideation Research Product Risk • Is there an actual problem you’re trying to solve? • Does the ‘solution’ you’re offering solve the problem you’re trying to address? • How does that translate into a value proposition? • What are the best metrics that allow you to measure your performance?
- 11. Linkedin.com/in/marioramadan 11 Common pitfalls in ideation Ideation Research Customer Risk • Who are the people that need your product? • What are the characteristics of your early adopters ? • Where can you reach your clients in the most efficient way?
- 12. Linkedin.com/in/marioramadan 12 Common pitfalls in ideation Ideation Research Market Risk • Who is your competition? • What are the existing alternatives in the market today? • How does that affect your revenue streams and cost structure?
- 13. Linkedin.com/in/marioramadan 13 Common pitfalls in ideation Ideation Research Your Mindset • To get the right outcome, have the right mindset • Ask the right questions • Is my idea a successful business? • How can I turn my idea into a successful business? • Don’t succumb to your internal bias • Accept the outcome of the research
- 14. Linkedin.com/in/marioramadan DigitalCameras Kodak decides to pick pennies while standing in front of a pot of gold 14 Kodak was a leader in the film photography industry. Steven J. Sasson – A Kodak Engineer developed the first digital camera in 1975. “My prototype was big as a toaster, but the technical people loved it” “But it was filmless photography, so management’s reaction was ‘that’s cute, but don’t tell anyone about it.’ ” – Steven J. Sasson Case–Pivoting
- 15. Linkedin.com/in/marioramadan PicturePhone The videophone that never sold 15 Don’t decide on the behalf of your customers – Accept their feedback; they are the market Decision makers thought that being ‘prestigious’ was what mattered most and ‘being relaxed’ was of lower importance “PicturePhone had no analogue to the mute button on a speakerphone; users had no way unobtrusively to get off camera. An interesting anecdote in this regard is that the president of Bell Labs kept a black cover over his picturephone.” – Bandwagon Effects in High- technology Industries Case–CustomerRisk
- 16. Linkedin.com/in/marioramadan ZUNE Microsoft develops more of the same 16 Don’t approach pure competition People will see you as ‘more of the same’ Microsoft’s product did not offer anything different from Apple’s iPod. This made ZUNE a copy instead of a subsititute. Case–MarketRisk
- 17. Linkedin.com/in/marioramadan 17 The do’s and don’ts that make or break your product Go To Market Entrepreneurs sometimes have products that aim at a global market. If your product is fit to serve the globe, make sure that it survives to serve the globe. How to deliver your solutionx% y% m% z% k% n% Develop a product that is enough to satisfy your early adopters and capture back some value. Identify and engage your early adopters. It is important that you engage these individuals early on even if that means not reaching all your customer segments.
- 18. Linkedin.com/in/marioramadan 5 Vocal about being part of your solution 4 Excited to test and participate in your R&D 2 Are aware of the setbacks created by the problem 1 Have the problem you’re aiming to solve 3 Are in need of a solution 5 Interested in enhancing your solution 18 Why engage early adopters? • Have the highest threshold to accept mistakes • Have the lowest bargaining power. They need - not want - a solution • Perceive no substitutes that solve their current problem to switch • Perceive a differential advantage in your product that currently available substitutes fail to live up to Early Adopters: Your guinea pigs
- 19. Linkedin.com/in/marioramadan If your product is global, make sure that it survives to serve the globe Focus – Develop a beachhead strategy 19 Make sure that you exploit your value proposition in your communication Identifyyourcontentplatform channels Make sure that you have the essential resources to ensure a successful product launch Identifyyourkeyresources Map down the activities that have to be done by every member to achieve the planned strategy Identifyyourkeyactivities Rank & prioritize the segments you intend to serve Identifyyourprimarycustomers
- 20. Linkedin.com/in/marioramadan 20 It’s more than a product, it’s a process that you should always use DevelopingyourMVP Has the minimum features that your customer needs Minimum Is functional, reliable and idiot-proof Viable It’s ready to go to the market and capture back some value Product
- 21. Linkedin.com/in/marioramadan 21 The Entrepreneurs’ Dilemma – How to guarantee a successful delivery Outsourcin g Guarantee your outcome Cost is secondary to functionality. If you don’t have the skills, hire a third party to follow up on the development of the product. Find the right supplier Do your scoping, get an overall idea about the suppliers in the market, and get multiple offers. Inquire about their process Understand the operational process they’ll use to get your work done. Learn if they use traditional, agile, or mixed methodologies to develop your product. Engage your supplier Become closely related to their affairs – establish a human relationship that transcends the dollar value they’re aiming to make out of you. Optimize the output Make sure that the project includes seniors overseeing the work of juniors developing your project. Draft the requirements Be as specific and detailed in your requirements. Explain your vision, and WHY things need to be done in a specific manner or order.
- 22. Linkedin.com/in/marioramadan 22 The Entrepreneurs’ Dilemma – How to guarantee a successful delivery Outsourcin g Communicate your expectations Make sure that you are aligned in the timeline set for deliverables Maintain Full Visibility Make sure that you have full visibility at all times over the task being delivered and the tasks that are in the pipeline – ask for regular demos Bind payments to milestones Make sure that you break down the project into phases and bind the payment schedule to the delivery of the phases set Control your document repository Make sure that the document repository is tracing all check-ins and check-outs and that the platform supports versioning Document progress Make sure that the progress is documented on the go and that all stakeholders have access to the documentations at all times
- 23. Linkedin.com/in/marioramadan 23 How to guarantee that your KPIs are SMART Defining & Acheiving Your KPIs Agree on the vision Develop a common, clear, and assumption-free target that is understood and agreed upon by all stakeholders – including your board, investors, key partners, and your team Determine your goals Map out and define the objectives that need to be met in a year’s time Perform Work throughout the quarter to achieve the KPIs that you have committed yourself to Set your target To achieve your vision, set out a long term target that aims for the next 3-5 years. Be as specific as possible from this point on Identify your actions Define the activities that need to be done within the next quarter to achieve the goals you committed yourself to by the end of the year Revise & Appraise Revise the performance throughout the quarter and appraise yourself or the team.
- 24. Linkedin.com/in/marioramadan 24 Make your brand promise clear, big, and emotionally relatable Brand Promise BrandGuarantee Ensure that your customers’ satisfaction is managed in case you fail to deliver ResolveRootCause Identify the cause of failure and take corrective action so that the error does not reccur. Are you selling or overselling your product? “People want to buy, no one wants to be sold” is cliché, but it is also true. If your startup is perceived as a company that wants to sell rather than fulfilling clients’ needs, then it will be the company that no one wants to buy from. Making sure that your client is in the heart of your actions Howtoavoidoverselling
- 25. Linkedin.com/in/marioramadan A list of guarantees that you can use to boost your users’ trust Guarantee Types 25 Money Back Guarantee Return the user’s payment within a predetermined period of time Risk-Free Guarantee Ensure your user that his transaction is safe and that your user will get the worth that he or she has paid for. 100% Satisfaction Guarantee Return your customer the value he or she has settled if your customer is not satisfied Lifetime Guarantee Replace or repair the product your customers purchase free of charge Low Price Guarantee Guarantee to your client that you can match a price lower than yours in the market Free Trial Guarantee Give your customer the chance to experience your product before conducting a purchase
- 26. Linkedin.com/in/marioramadan 26 How to use failure as a means to succeed Maximize Your Returns Through Failure Fail in novelty, not in certainty Fail in what has not been done before Don’t do the same mistake and expect a different outcome. • Avoid sunken cost bias • Avoid survivorship bias • Engage in ‘Productive Failure’ – Sort your investments in small portions to pinpoint your biggest ROI • Don’t move before taking a step back to retrospect. • Share your failure with your community and your team, as this creates a multiplier effect