My daily readings 09/13/2009

  • tags: startups

    • When advising on startups, I often tell people that they should start with the assumption that the startup will fail and all of their equity will become worthless. Many people have a hard time accepting that fact, and say that they would be unable to stay motivated if they believed such a thing. It seems unfortunate that these people feel the need to lie to themselves in order to stay motivated, but recently I realized that I’m just using a different method of evaluating risks and opportunities.

      Instead of asking, “What’s the most likely outcome?”, I like to ask “What’s the worst that could happen?” and “Could it be awesome?”. Essentially, instead of evaluating the median outcome, I like to look at the 0.01 percentile and 95th percentile outcomes. In the case of a startup, the worst case outcome is generally that you will lose your entire investment (but learn a lot), and the best case is that you make a large pile of money, create something cool, and learn a lot. (see “Why I’d rather be wrong” for more on this)

  • tags: Customer, development

    • 5. The Outsourcing of Founders Responsibility
      The Product Development model separates founders from deeply understanding their customers and market. The responsibility for validating the founders original hypotheses is delegated to employees – the sales and marketing team.

      This means the founders are isolated from directly hearing customer input – good, bad and ugly. Worse, founders really won’t understand whether customers will buy and what features are saleable until after first customer ship.

      When an adroit and agile founder gets outside the building and hears for the nth time that the product is unsellable they will recognize, regroup and change direction. A process to give the founders continuous customer interaction – from day one – is essential.

      6. The Focus on a Finished Product Rather than a Minimum Feature Set
      The passion of an entrepreneur coupled with the product development diagram drives you to believe that all you need to do is build the product (in all its full-featured glory) and customers will come. A Waterfall development process reinforces that inanity. The reality is quite different.  Unless you are in an Existing Market, (making a better version of what customers are already buying) you’ll find that your hypothesis about what features customers want had no relationship to what they really wanted.

      Most startup code ends up on the floor.

  • tags: Mobile, Ads

Posted from Diigo. The rest of my favorite links are here.

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