Wednesday, May 9, 2012

The Greatest Start-up Book Ever?

I've read dozens, maybe almost a hundred books on start-ups.  I've loved many of them, but none of them really seemed like 'science' to me, more like opinion.  After reading The Lean Startup by Eric Ries, I now understand what I've been missing!  I really do feel like The Lean Startup is the greatest start-up book ever.. and here is why you MUST READ THIS BOOK NOW!

  1. It teaches entrepreneurs the "Scientific Method" for building a startup.
  2. It teaches entrepreneurs the proper ORDER of building a startup.
  3. It teaches INVESTORS the propper criteria to evaluate a startup.
  4. It explains in detail the right time to 'get funding' and more importantly 'spend funding'.
  5. It explains very clearly why so many startups fail.
  6. It has dozens of examples of the process being used successfully.
  7. It truly teaches you about scale-able business models.
  8. It builds a great foundation for managing people and teams in a startup.
  9. It even applies to big organizations that want to be more startup-y.
DO NOT WAIT, get this book now.

Monday, May 7, 2012

7 reasons to Fail Early & Cheaply

Since everyone knows 19 out of 20 start-ups will fail... why not fail as soon as you can and as cheaply as you can?  In fact, recent evidence suggests that the #1 reason start-ups fail is trying to scale up too quickly/too soon.  Here are 7 reasons to FAIL as quickly as possible, and as cheaply as possible:

  1. Whenever you fail, you almost always learn more than if you succeed... especially if you start out with the goal of learning/deciding if a hypothesis will work.
  2. If you can fail quickly, you will likely have time and energy enough to try again!  (not necessarily a 'new' start-up, but instead another "hypothesis"/product variation to test in the current one).
  3. If you fail cheaply, you may have money enough to try again!
  4. If you fail early, you avoid spending too much time on a bad idea.
  5. If you fail cheaply, you haven't invested too much "sunk costs" into the idea, and can let it die more quickly.
  6. If you can fail quickly, it means you have wisely set criteria for failure (a rare thing indeed!)!
  7. If and when you succeed, you KNOW you have something, because you have defined (wisely) what success is, and your past failures prove that the current situation is "Worth" scaling up!
Final word of warning: Scaling up itself is a difficult challenge, so use the term literally, and slowly increase the rate of growth, rather than step function.

Thursday, May 3, 2012

Know how you plan to grow!

Here's the deal.  If you have a business, and you don't have a plan for how to grow.. you are already failing.  You need to at least have a hypothesis by which you believe you can achieve SCALE-ABLE GROWTH.  And there is not reason to not grow.. here are the top strategies.. the key is always test ("Is your strategy working?"):

  1. you will grow by viral behaviour.  Once you get a boost of new players, you will auto-grow because your virality is above 1.0.
  2. you will grow by advertising.  You make enough profit $$ per item/customer (after acquisition costs) that it justifies continued ramped up investments in advertising.
  3. you will grow by retention and word-of-mouth.  Similar to virailty, but more personal.  you will retain your customers so well, they keep buying more and more and even bring friends occasionally.
  4. you will grow by 'free' marketing.  People are searching for what you got, and your SEO will help them find you in a scalable fashion. (p.s. this is very difficult)
  5. you will grow by hiring a sales-force and hunting out the best customers.
What's your strategy?
Got any others to add to this list?

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