In my last post about startup cash management, smart people like Chris Dixon, Manu Kumar, George Grellas, and the Hacker News cabal all disagreed with my advice to put off incorporation until you absolutely have to.
While there are often investments that should be made upfront, oftentimes new founders and new startups will waste money and time on things that they shouldn't. I sure know I did during my first go-round. Don't make my mistakes. Here are three things you should put off as long as possible:
One of the things that I didn't think about before I started my first startup were all the parts of the infrastructure that weren't product. They've also consistently been the things that other entrepreneurs forget about when they come to me with their "ohmygodIhavethisidea" ideas. They're also vitally important because they allow the founding team to actually execute the pivots you'll need to execute quickly, intelligently, and without sacrificing development of the actual product that you're trying to pivot.
The first part of this infrastructure is the admin panel. This admin panel is what will allow you to do troubleshoot for customer support, engage in administrative actions, and audit your payments in and out of your system without having to mess around with your production database. I cannot impress upon the first-time web entrepreneur just how important it is to have a robust and well-functioning administration system. When you're building your administration system, it is important to make sure that you can disable and delete users, view and change payment regimes, and reset user passwords (because they will invariably not be able to find your reset password form and they *will* e-mail you). If your product takes off and you find yourself bringing on board a business person, they're going to be tasked with support, and you do not want whoever is doing support interrupting engineering to complete basic Level 1 and 2 customer support. If your product really takes off, you may find yourself bringing on board a dedicated support person. If you wait until traction to build out your administration panel, you're going to be ceding ground to the competitors that spring up when they see your traction. Django's admin panel is so well developed that you may not have to build your own, and is a reason to strongly consider the framework if you're familiar with (or interested in) Python. Even as your product pivots, the administrative support tasks generally don't.
Make sure you've built a functional admin panel before you launch.
Make sure you've built (or implemented) a content management system before you launch.
The third part of the infrastructure you need to build is a good metrics dashboard and logger. The standard piece of advice is "pick a few metrics, but log everything". The idea of logging everything when you've decided to focus on just a few Key Performance Indicators (KPIs) can often cause heartburn. But it's relatively simple; build a separate table (or database) that automatically logs all the various things that users do. Don't worry about duplicating writes that you're doing elsewhere in your database. Having a separate table (or better, database) will save ou on reads and JOINs and whatever else when you need to dig in. The one thing the logger needs to do is be *auditable* - that is, you need to be able to say that user_id=8273 did x on page one, then y on page two, then z on page three. These loggers are so important that there are venture-backed startups that exist solely to help other startups collect these logs and make sense of the data they're collecting. The KPIs are, of course, actionable metrics that exist in the aggregate, but the ability to see what any individual user has done will help you troubleshoot, audit, and make hypotheses for new features and functions. Also, one quick note: Google Analytics aren't auditable at the user level nor actionable in helping you make forward-looking hypotheses. Everything in Google Analytics is backwards looking. The product is free as in beer and all-but-free from an engineering cost perspective, which is great. GA does give you the ability to find exception cases and the basic funnel visualizations can be useful for getting conversion metrics up and running quickly, but don't kid yourself - Google Analytics is mostly data porn.
Make sure you build a real metrics dashboard and implement a real logger before you launch.
Ask a QuestionDo Background ResearchConstruct a HypothesisTest Your Hypothesis by Doing an ExperimentAnalyze Your Data and Draw a ConclusionCommunicate Your Results
- Are your customers time poor or just frustrated with the time they have to spend on a task?
- Are your customers cash poor or not seeing value for their money?
- Are your customers status poor or are they embarrassed to use your product?
I've started blogging about startup life, with some thoughts and actionable startup advice for founders and early employees at http://blog.meatinthesky.com. I'll be focusing on the stuff before product/market fit. This is the period of the most experimentation and the lowest burn you can do - it's the most perilous part of the startup process, as you're walking a tightrope without a net.
As for the name, see the first post.
And you can follow @meatinthesky on Twitter to be notified of new posts.
Let's face it - you love your family, but that's today, before you see them. By Boxing Day, you're going to want to curl up in the fetal position as your uncle yammers on about the Cleveland Browns. As long as you're hiding out in the basement, or drinking alone at the depressing corner bar, you might as well do something productive. Here's a special "must read" list of books, blogs, and presentations while you stew about in the hellhole your parents call home. Steve Blank - the granddaddy of them all. Steve coined the term "customer development" as a parallel process to product development. Steve's blog is fascinating (the man has done some very interesting stuff), but the must-read is his book, Four Steps to the Epiphany. In particular, it specifically talks about how to work when you're disrupting an existing market versus when you're building a new market for your product. You have to read Four Steps first. Eric Ries - the new hotness. Eric took Steve Blank's class, learned about customer development and had the insight to pair the customer development process with extreme programming to create a continuous improvement/feedback loop. Eric coined this process "Lean Startup". Eric's blog is great, but he has a MVP beta of his posts in an e-book, which may be easier to read. You should buy it now, since Lulu might take a while to ship. Dave McClure - the pirate. Dave's AARRR model is the best compilation of every driver you need to measure. You can't just slap on Google Analytics and think you're done, folks. He's kind enough to post new versions of his Startup Metrics for Pirates presentation as he revises it (video of an older presentation), but Dave's blog (while a bit all over the place) is chock-full of great insights. Sean Ellis - the Glengarry leads guy. You've built it; now what? Sean only works with companies that have raised venture money and already achieved product/market balance (see why I don't call it product/market fit). You don't even have a product yet. Why is he a must read? Because his approach to measuring product/market balance is better than anyone else's. His startup pyramid tells you each necessary step before you can turn on the growth spigot. Sean's blog is updated less frequently, but every post is great. Andrew Chen - the savant. Andrew's spent a lot of time thinking about viral loops. Virality isn't something that just happens to great products - although that does happen from time to time - virality is something that can be baked into your product's DNA. Andrew's blog is full of posts that go into viral loops in detail, and it's much easier to read now that he made a special categorized list of posts for you. You can't possibly read all of this before you come home, so I'll stop there.
Commodity national news is dead. Newspapers are dying. The AP wire on Yahoo News (or Google's more heterogenous and more cluttered version) and CNN.com are "good enough" that all other services providing "just the facts, ma'am" provide no incremental value. Most observers recognize that this leaves a void in the local space, and predictably you see newspapers retrenching into their neighborhoods, fending off competitors like Outside.in, EveryBlock, and ESPN's local sites.
In my time watching and working with startups as an investment banker, VC, entrepreneur, and consultant to startup teams, the notion of product/market fit has gone from a new insight to conventional wisdom.However, product/market fit never seemed like the right notion to me. After doing some thinking and working very closely with a handful of startup teams in the last year or so, I realized that a team isn't looking for product/market fit; it's looking for product/market balance. The notion of balance highlights the delicate task of getting a product to meet a market's needs:
Even if a team builds a robust, stable product offering, the product can fail to meet the market's needs and the product lands with a thud:
The notion of balance serves another purpose; balance provides a basis to extend the metaphor into the other important parts of a product experience: positioning and pricing. Here, you can see how the product supports positioning:
Likewise, the product + the positioning supports the price structure:
If the product itself balances with the market's needs, poor positioning can upset the balance and lead to everything tumbling down:
And a poor price structure can lead to defeat even with the right product and positioning strategy:
You can't decide to position a product as premium if the product is shoddy. Likewise, the price you choose reinforces and strengthens your positioning - you can't have a "value" product that is priced higher than your competition. Startup teams must make sure that everything about their product, positioning, and price structure maintains the delicate balance necessary for market success.