Lean Startup Chapter 6

Here are my notes from Lean Startup Chapter 6

What is an MVP?

A minimum viable product (MVP) helps entrepreneurs start the process of learning as quickly as possible. It is the fastest way to get through the Build-Measure-Learn feedback loop with the minimum amount of effort.  It is not suppose to be perfect. Early adopters (your first batch of customers) are suspicious of something that is too polished. It leaves the question to be asked “ Why isn't everyone using this?   As a result, additional features beyond what early adopters demand is a waste of resources and time. The lesson of the MVP is that any additional work beyond what was required to start learning is waste, no matter how important it might have seemed at the time.

Example of different type of MVP

Dropbox made an MVP to test its leap-of-faith question: if we can provide a superior customer experience, will people give our product a try?  The challenge was that it was hard to demonstrate the working software in a prototype form. So, Drew, the founder, did something unexpectedly easy: he made a video. “It drove hundreds of thousands of people to the website. Our beta waiting list went from 5,000 people to 75,000 people literally overnight. It totally blew us away”, said Drew.  Today, Dropbox is worth more than $1.5 billion. In this case, the video was the minimum viable product. The MVP validated Drew’s leap-of-faith assumption that customers wanted the product he was developing because they actually signed up.  

The low quality Misconception

One of the most confusing aspects of the minimum viable product is that it challenges traditional notions of quality. It is natural for people to aspire to build the best quality product. A “low-quality” MVP can act as a catalyst for a future high-quality product. Yes, MVPs are an opportunity to learn what attributes customers care about, making a foundation on which to build future products.

Customer still can love “low-quality” products  

Ex. What if Craig Newmark, in the early days of Craigslist, had refused to publish his e-mail newsletter because it lacked sufficient technological design.

Fear of Competitors

Many startup are afraid of other companies stealing a their ideas. The thing about being a startup is the near impossibility of having your idea, company, or product be noticed by anyone, let alone a competitor. Ries suggest to take one of your ideas and write your competitor a memo. The truth is that most managers in most companies are already overwhelmed with good ideas. Their challenge lies in prioritization and execution, which gives a startup hope of surviving.

Startup #3 How to Divide an Imaginary Pie Analysis

This reminds me a conversation I had at Endevvr with my team.  It was an equally awkward experience. The only difference with us is that we had this conversation late in the game, so we already had a feel for everyone’s work ethic.  Because of this, some people thought they should get more because they bring more to the table.  I agreed with this because some teammates did work harder than others.  However, to avoid conflict we decided to split it equally four ways.  Startups are like relationship. It needs to cultivated and everyone needs to committed to it.

Startup #3 How to Divide an Imaginary Pie

Pitching a business and suffering mood disorder is the about same. You are trying to convince someone that they should give you millions for this ambiguous thing that only you can see in the future.    Convincing other is hard, but convincing yourself is harder.  Blumberg was starting to get second thoughts about his business.  His wife was trying to be encourage him, knowing it is a lot to handle with a family of four to take care of. She suggested he needed a business partner.  This idea was reinforced when Blumberg decided to pitch to a potential investor. The Investor said that he thinks startups are a team sport, and he would be more ready to invest if there was more than one person with skin in the game.  However, finding partners are so hard that ther is even a website called Founderdating.com.  Matt Lieber was someone he shared his business idea with casually.  Lieber showed great interest in the business.  He would be a great business partner because he is a consultant at a big firm.  Lieber start helping Blumberg the business, sending him emails at late hours without being asked.  Startups are like relationships, and Blumberg finally popped the question.  Before Lieber said yes, he asked about about equity.  It was a weird conversation. Lieber was thinking 47%  to 50%, and Blumberg was told by others 12%     His main concern is he didn't want to be seen as a sucker who gave all his company away. But he knew Lieber would have to leave his job and sacrifice a lot as well.   Blumberg learned that there was no right way to split equity.  It was important to make sure everything is fair for everyone. In the end, they decided to split it 60-40.

Startup #2 Is Podcasting the Future or the Past?

The second podcast in the Startup series is “Is Podcasting the Future or the Past?”.  This installment focuses on the idea that dreaming big is harder than you think.  

Blumberg started of by saying he improved his pitch from last time.  He added his personal story, fancy numbers like market share, and a name “American Podcasting Corporation”.  He talks how he feels so much more prepared than before.  He meets with Matt Mazzeo, Chris Sacca’s business partner.  He created the Funny or Die website.  Blumberg gave his pitch and believed he did a good job and had good answers to questions.  Though he was skeptical about some of the numbers and time lines he was stating.   He was making some audacious claims.  Mazzeo complimented him on his pitch, but had a few critiques.  He first did not really like the name.  Second, he gave suggestions on the logistics of the company itself.  Mazzeo said he should focus more on the technology, more than the process. Blumberg’s business is making his own podcast publishing company. Mazzeo suggested that he make the Instagram of podcasting.

This reminds me of the time at Endevvr when we had to create our virality model and estimate our market share and size.. I remember feeling weird about the numbers and skeptical of assumptions.  I learned that it is okay to assume you just have to have evidence to back it up with. 

Startup #1 How Not to Pitch a Billionaire Pt. 2

I listened to the second half of this podcast today. Here are my notes. 

After the interview, Blumberg decided to give Sacca his pitch. Sacca agreed, and made Blumberg come on a walk with him, away from his pitch deck.  Sacca thinks pitch decks can be crutches.  Blumberg’s pitch did not go well.  I was cringing as i listened to him spill over the detail of his business.  Sacca then gave him so constructive criticism.   He said you need to invoke a conviction of success  You also should make your audience feel FOMO: Fear Of Missing Out.  He also advised of being more transparent.  Sacca then repeats Blumberg’s pitch back to him, and it sounds AMAZING.   Some other advice he gave was

1. What is your unfair Advantage
2. What is your exit strategy
3. Who would buy you

These are questions he gave to Blumberg to think about and then come back and pitch to his partner.  

I really enjoyed listening to this podcast.  I appreciated Blumberg’s openness and his documentary style experience.  It was great to not only hear the story but also his thoughts along the way.  I will definitely be listening to more of these.  

Startup #1 How Not to Pitch a Billionaire Pt. 1

I listened to the first half of the podcast in the Startup series called How Not to Pitch a Billionaire.  He first started about interviewing an angel investor named Chris Sacca.  He has invested in many multi-billion dollar business, such as PhotoBucket.  Sacca left a high paying job at Google to do this. His first big investment was in a company that he really believed in the concept and the people behind.  He did not have enough money to give them,so he had to get loans for $24,000.  After giving them the money, he became their biggest advocate.  Sacca went a step further and started to buy all the stock he could in the business, which required more money he did not have.  However, his investment paid off because the business he was investing in was Twitter.  He is now a multi-billionaire that has been the one of the first investor for many companies like Kickstarter, Instagram. and Uber.   

I will listen to the other half of this podcast next class.  

Presentation Day

We presented our Midterm Presentation!

I am very satisfied with our presentation.  I was glad me and Benny had our proof of concept presentations for the final questions. We wore our ATV and O Hub t-shirts.  

Judges Confirmed

Today, we had a conference call with Martin Miller, one of the instructors at Endevvr.  Benny and I agreed to talk at the upcoming PTSA meeting about our experience, so we talked to Martin about Endevvr 2015.  He told us about all the exciting things that are in store for the this summer.  With the camp being at University of Pennsylvania this year, there are a lot of new things in store.  After that we asked him to be a mentor, and he agreed! He also has a friend who would also being willing to another judge. 

Something New

At Benny’s recommendation, I have decided to add another element to my thesis experience.  I plan to start listening to the Startup, a podcast by Alex Blumberg.  Alex Blumberg is an American producer for public radio and television, best known for his work with This American Life and Planet Money.  StartUp is a  series about what happens when someone who knows nothing about business starts one.  I never listened to podcasts before, so this will be a different experience.  This podcast is suppose to be about the creation of business, start to finish.  I hope to find some similarities between Blumberg’s experience and my own at Endevvr.  I can then analyze the method in which he created his business and compare it to the lean startup method.