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The Startup Pyramid

The Startup Pyramid
Every six months I rethink the optimal startup go to market approach based on new insights gained at recent startups. Lately I’ve been using a pyramid to represent the process I’m using. Startups require a solid foundation of product/market fit before progressing up the pyramid and scaling the business. Achieving Product/Market Fit Product/market fit has always been a fairly abstract concept making it difficult to know when you have actually achieved it. Paul Graham: The mantra at Paul’s successful startup incubator YCombinator is “make things people want.”Steve Blank: In Steve’s book Four Steps to the Epiphany he writes: “Customer Validation proves that you have found a set of customers and a market who react positively to the product: By relieving those customers of some of their money.”Marc Andreessen: A couple years ago Marc wrote the following on his blog: “…the life of any startup can be divided into two parts – before product/market fit and after product/market fit.”

How to bring a product to market / A very rare interview with Se Nivi · December 14th, 2009 Sean Ellis recently sat down with us and explained how to bring products to market. You should listen to this interview for ideas on how to get to product/market fit, how to measure fit, and how to survey your users so you can improve fit. If you don’t know Sean from his blog or tweets, he lead marketing from launch to IPO filing at LogMeIn and Uproar. This is the first time Sean has done an interview on the record. SlideShare: How to bring a product to market Audio: Interview with chapters (for iPod, iPhone, iTunes) Audio: Interview without chapters (MP3, works anywhere) Transcript with highlights: Below This inteview is free — thanks to KISSmetrics We’re bringing this interview to you free, thanks to the kind support of KISSmetrics. KISSmetrics built survey.io with Sean — now they’re collaborating on KISSMetrics, a new tool for funnel optimization. Prerequisites You’ll get more out of this interview if you also read: Outline Transcript Nivi: Right. Sean: Yeah.

200+ Podcasts, 100+ Articles, 20+ Books… In 11 Bullet Points — Life Learning 200+ Podcasts, 100+ Articles, 20+ Books… In 11 Bullet Points For the past 8 months, I have spent my time doing what I’ve wanted to do for years: listening to podcasts, reading books, and reading articles. In total, I listened to 207 podcasts, read 22 books, and read 113 articles. All on the topics of business, marketing, and self-help. I wish I could say this was some sort of “divine pilgrimage” I set out on. I’m not bragging about it. During the journey, I began to notice a number of common themes frequently rising up. Gary Vaynerchuk, Seth Godin, Tim Ferriss, Lewis Howes, Mike Dillard, Arianna Huffington, Mark Cuban, John C. These people have become my Aristotle; my Shakespeare. I cannot take credit for any of the knowledge that I’m about to share with you. Here they are: 1.) All of the successful people I’ve studied have said this in one form or another. The fact is, in order to make something you must give something up. How bad do you truly want to achieve your goals? 2.) 3.) 4.) 5.)

Graphs cdixon.org – chris dixon's blog A graph consists of a set of nodes connected by edges. The original internet graph is the web itself, where webpages are nodes and links are edges. In social graphs, the nodes are people and the edges friendship. Edges are what mathematicians call relations. Two important properties that relations can either have or not have are symmetry (if A ~ B then B ~ A) and transitivity (if A ~ B and B ~ C then A ~ C). Facebook’s social graph is symmetric (if I am friends with you then you are friends with me) but not transitive (I can be friends with you without being friends with your friend). Twitter’s graph is probably best thought of as an interest graph. Graphs can be implicitly or explicitly created by users. Over the next few years we’ll see the rising importance of other types of graphs. Taste: At Hunch we’ve created what we call the taste graph.

Customer Service Matters for Mission Critical - Continuations Customer Service Matters for Mission Critical Saturday night I arrived late at our house having taken our older son to his first tennis “tournament.” Everyone else was already asleep and the house was dark. That’s where the fun really started. Never heard back from our regular electrician, who no longer is that (I left a follow up voice mail). This little episode really brought home (so to speak) how important responsive service is for anything that’s mission critical.

Dilution There has probably been more capital looking to invest in private technology companies in the past five years than any five-year period before. An obvious consequence of this increased supply is that company valuations (i.e. prices) have gone up, and so has the amount of capital raised by most companies. A non-obvious consequence is that although people raise more money at higher valuations, they still end up selling much more of the company. For a long time, when the early-stage fundraising market was much tougher, YC’s standard advice to companies was to raise as much as they reasonably could. It sounds like a better deal to raise $5 million on a $10 million pre-money valuation (selling 33% of the company to investors) than $615,000 at a $2.4 million pre-money valuation (selling ~20% of the company to investors, which is what Airbnb did). Today, each percentage point of Airbnb is worth about $300 million. Of course, it’s easy to take this advice too far.

How New Ideas Almost Killed Our Startup Odysseus resisting the Sirens Vinicius Vacanti is co-founder and CEO of Yipit. Next posts on how to acquire users for free and how to raise a Series A. On my three year startup journey that lead to Yipit, I had over 30 other completely unrelated ideas. To be clear, the “ideas” I’m referring to are the ones that have nothing to do with your current startup. In our case, Yipit had always been about organizing local information and we had been working on it for a while. Social version of delicious (summer of 2007)Tool to recommend the best version of the online video you were currently watching (spring 2008)140it.com: Bookmarklett that smartly shortens your tweet to less than 140 characters. I now think of these new ideas as the Sirens of the startup journey. The Temptation To understand why these new ideas can be so tempting, I refer you to the incredibly insightful startup transition cycle. The gist is that when you have a new exciting idea, you are in a state of “uninformed optimism”.

Milestones to Startup Success Update added to end of post When your startup accepts outside money (such as venture capital), you are obligated to focus on maximizing long-term shareholder value. For most startups this is directly based on your ability to grow (customers, revenue and eventually profit). Most successful entrepreneurs have a good balance of execution intuition and luck. Several startups later I have a much better understanding of the key milestones needed for a startup to reach its full growth potential. Day 1: Validate Need for Minimum Viable Product (MVP) Before any coding begins it is important to validate that the problem/need you are trying to solve actually exists, is worth solving, and the proposed minimum feature set solves it. Eric Ries offers more details on the minimum viable product concept in this post/video. Where’s the Love? Vinod Khosla, one of the most successful Silicon Valley VCs in history, once suggested to me that startups should think of their early users as a flock of sheep.

Code For Cash signup Maybe you've tried launching projects independently already. If so, now, you understand that "if you build it, they will come" is not truly a viable approach in of itself. Even the best successes like Basecamp and Facebook had killer marketing teams. So marketing is necessary, and we coach you. We also help you with legalities. Here's an advanced article by Richard Burt on legal terminology that every freelancer should know, including crystal clear explanation of concepts that belong in each of your contracts.

Six strategies for overcoming “chicken and egg” problems cdixon. Products with so-called networks effects get more valuable when more people use them. Famous examples are telephones and social networks. “Complementary network effects” refer to situations where a product gets more valuable as more people use the product’s complement(s). Network effects can be your friend or your enemy depending on whether your product has reached critical mass. Here is a high level summary of the 6 strategies we describe with a few updated examples. 1. 2. Virtual machines and Bootcamp gave Apple’s hardware some sideways compatibility with Windows. 3. 4. On the other hand, when Sony and Philips launched the CD, they succeeded because they did a significantly better job influencing complement producers. 5. Providing a stand-alone use is the strategy that VCR producers used to achieve a successful launch and avoid fighting the difficult chicken and egg startup problem. 6. Vertical integration is risky – as witnessed by the Apple computer in the late 80s and early 90s.

Add Another Zero Talking about scale and growth is hard. Many people talk in percentages in pre-determined time periods (e.g. let’s grow revenue 100% next year). I find this to be relatively useless. Instead, I like to challenge people to think on a bigger scale over a variable time period. I used to call this “increase X by an order of magnitude” until I realized that lots of business people don’t actually know that an increase in an order of magnitude is equal to multiplying by 10. For example, I’m an investor in a company that is growing its user base as they had planned. In another case, I’m an investor in a company that had a great year on all accounts. This question can apply to any metric. While there are natural limits to this when you approach it top down, it becomes very powerful when you approach it bottom up. The variable time period is a key aspect of this. So – as you go into your annual planning cycle for 2010, try the “add another zero” approach on some of your numbers.

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