Five essential books for company founders and early employees

These are the books which I’ve found the most useful and hopefully help others build successful companies. If you are a company founder or worked in large organisations, then you should read all of below. If you have a technical background and want to understand how startups build products then focus most of your time on lean startup.

The Customer Funded Business by John Mullins

Raising venture capital has become the preferred option for many new founders. This book explains how you can fund the early stages of your business without raising expensive venture capital. It doesn’t argue that you shouldn’t raise venture capital. Instead it makes the point that getting funded by your customers is a better and sustainable way to grow in the early stages. The book outlines several different types of business models which startups can use. Not all business models are suited to a customer-funded approach and in some market situations, you cannot survive without raising venture capital. John outlines when a customer-funded approach makes sense with lots of interesting case studies. A must read.

The Hard Things About Hard Things by Ben Horowitz

If you’re a new founder of a new company then this is your operational bible. It’s an honest account of a founder who is now a VC. This book will tell you about the challenges you could face and how to deal with them. It’s split into different chapters covering everything from hiring, firing, pivoting, keeping your customers, raising funds in a bearish market, managing teams in a rollercoaster environment and the mindset you’ll need to keep going.

Four steps to Epiphany by Steve Blank

It’s been a long time since I read this book however the key messages have stayed with me. Building a company is not about building a product. It’s about customer discovery. It’s about talking to your users or customers to figure out what causes them pain, what fix you can uniquely provide and whether your customers will pay for it. The core message is get out of the building and talk to customers. This book coined the term ‘customer development’ and made it the default approach for building new companies.

Lean Startup by Eric Ries

Eric Ries Lean Startup combines the customer development and agile development methodology into a ‘build-measure-learn’ loop. The main idea is simple. Build technology in small iterative steps. In each iteration, build something tangible and get feedback from customers. This way, you don’t over-invest in building a product no one wants. This book coined the concept of a minimum viable product which is how most small companies market-test products.

Crossing the Chasm by Geoffrey Moore

This is a classic book from the 90s. There were two key principles which I took away. The first, the lead customer and how to get one. The book talked about finding a champion with an innovator mindset in a large organisation who would pay for the early development of your product. The second was that the characteristics of your early or lead customer would differ from the mass market. As a product builder, you would have to ‘cross the chasm’ of product requirements to go from early traction to a mass market product.

If you’re looking for a more specialist topic, then Steve Blank has a good list here.

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Traction for early stage startups

Experienced founders will tell you that it is important to invest time in not only building a product but also planning out which channels will drive traffic best. As I build a new business, I’m spending equal time on product and traction. Several key product choices are driven by my anticipated choice of traffic channels. Getting early traction for a new business is often a very different exercise to scaling a more mature business. Thankfully, there are excellent resources on the web which are sometimes hard to find. Let me summarise some of the best ones.

Here’s what the founder of infogr.am had to say: “Content marketing is the easiest, most necessary and often most attainable and feasible to all startups. It is usually free, and can result in rewards long into the future. Paid traction is the second topic. That means advertising, for instance, and the reason that is only slightly less feasible in some cases is because it costs money, which is something we all may not always have. At least as much as we’d like. The third is targeting a platform which helps you spread your product. It may not be applicable to all products, but if you are only starting out and have the luxury of making decisions on your direction, this is a good thing to keep in your toolbox. The top of the pyramid and the fourth topic is organic traction and viral marketing. This is what we most commonly think of when we speak of growth hacking, which is what brings us here.” More here.

“For mobile apps, the App Store is still the centre of app discovery and unless you’re in the top 25 of a given ranking, it’s hard to get noticed. We asked our users who discovered us by searching on the App Store, what keywords they searched for specifically. It allowed us to fine-tune our app store description. For our website where we have a more professional online survey tool, SEO wasn’t easy at the beginning. What helped over time was to get featured on websites with good domain authority (a news site or popular forum) thus getting a nice SEO boost.” More here.

“Publish insanely great content that’s highly relevant to your core audience. Email marketing will continue to reign supreme as a traction channel. Foster communities one person at a time. Pick high-growth segments to target and develop short product viral loops.” More here.

“The obvious free channels viral/referral, SEO, and blogging/bloggers all take considerable time to build and can actually slow down the speed of iterating through Customer Validation. When they do kick-in, the payoff is well worth the effort but I’ve found it better to invest in a few small-buy paid channels for early traffic while building the free channels in parallel.” More here.

“To gain some initial traction with our online presence we went to forums and posted answers to questions while using the opportunity to get our web address out there. We currently sell on our main ecommerce site, Amazon, and eBay. In addition, we are active on Facebook, Twitter, and Instagram. While we have yet to run a PPC campaign, this is planned for the near future.” More here.

“Although Google paid ads keyword competition may be fierce and unsuitable for early stage startups, it may still be the quickest and fastest way to get early customer feedback.” More here.

“Look for any additional marketing channel that will guarantee at least some stability in downloads; Facebook helped us to gather followers pretty fast until the majority of friends have become our users, so there is no hope that followers and likes will grow progressively (hint: you can put money to FB, or create really viral content – it will work); Contests attract a very “specific” audience, “professional players” – likes grow, but sales and downloads- NO; Organic downloads from Google and AppStore are working well.” More here.

“If you’ve conducted customer interviews, you should try and convert those leads into sales opportunities. Post highly targeted ads on niche blogs. Find channel partners with a shared audience.” More here.

“Reward social media engagement. One of the most loved features of the Birchbox experience is the generous rewards scheme that is offered loyal customers. Shoppers gain points from referring friends, and personal referrals are one of the most effective ways of generating new customers in both online and offline retail. In addition, they reward customers that use social media to share their Birchbox subscription purchases.” More here.

A broad summary of ecommerce marketing practices. Probably relevant to other business models. More here.

Finally, here’s a great book on product viral loops worth reading.

If you know of other good resources on traction techniques, please share them in the comments below.

London investors making more mobile investments

Two interesting and big things are happening in the London venture capital scene.

Firstly, there’s more money available at seed and Series A stages. New funds such as Hoxton and Google Ventures have emerged. Existing funds such as Index, Balderton and Seedcamp have raised more money. This will mean more London startups will stay in London and not seek moves to San Francisco where the investment rounds tend to be bigger.

The second is a shift towards mobile investments.

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In 2014, mobile was easily the most invested category. A similar graph from last year, shows that mobile was a much smaller 14% of all investments.

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Following trends in venture capital is important. Venture capital accelerates startup growth. Entrepreneurs looking to build or scale their businesses usually always seek outside investment at some stage. A healthy supply of VC money is a good health indicator for an ecosystem.

 

 

 

 

UK secured most exits in Europe

A successful exit is often the unstated dream for most tech founders and the investors who back their businesses. The exit usually comes in the form of a bigger company acquiring the startup usually for its product or its engineering team. Figures for Q1 2014 show that UK tech businesses were the most prolific in selling out across Europe.

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These figures interestingly reflect the relative maturity of the tech ecosystems across Europe and perhaps where acquirers prefer to base their R&D teams. As a side note, London secured 42% of the exits in the UK.

Clearly, London is a good place to base a tech business.

Mobile learning is addictive and zzish!

I’ve been working with the Zzish team who are going through Techstars in London. Techstars is a highly regarded accelerator programme that’s created many successful technology businesses. I’m finding that being part of Techstars is a really valuable learning experience. I’m surrounded by energetic entrepreneurial teams who have come from all over the  world.

Through my work with Zzish, I’m also learning a lot about the mobile education space. I don’t think mobile education gets the same coverage in the tech press like other areas in mobile such as payments, commerce and navigation. So I’m pleasantly surprised with what I’m discovering.

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For a start, the mobile education industry is expected to undergo a lot of growth globally. Not only in the US and Europe but also in Asia, Latin America and Africa.  Much of this growth will be driven by both the increasing use of smartphones and tablets and parents desires to find more effective ways to improve learning for their kids.

Image Based on current predictions, the biggest change we’ll experience will be the growth in e-books and e-courses. I love reading paper-based books. However, it seems that the next generation of school kids and university students won’t be turning as many paper pages. Increasingly publishers will digitise more education content and adapt it so it can be read on mobile devices.

The other big change that we’ll see especially in North America and Europe will be the use of game and simulation tools in education. Educational content will be mixed with concepts such as augmented and virtual realities to create engaging, competitive and social environments where learning something new becomes fun, interactive and accessible from anywhere.

If learning becomes stimulating and even addictive, I wonder what implications this has for the world we’ll be living in in 2020.

I hope to write more on mobile education and what Zzish is doing in another blog post. It’s great working with Charles, Samir, Ed, Buket and others at Warner Yard.

By the way, Zzish are looking for a web developer. Email Ed if you know someone who’s interested.

 

The retailer tablet race

Tesco launched a tablet and sold 400,000 in three months till Christmas. Soon others like Aldi and Argos followed suit. This promising marriage of retail and tech piqued my interest so I dug deeper.

As we consumers have changed our shopping habits, retailers have invested heavily in online. Roughly 11% of our total shopping expenditure in the UK happens online and it’s growing fast.

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Retailers like John Lewis have been aligning their brick and mortar stores with their online operations. Two thirds of John Lewis customers now interact with the company’s website and a store before making a purchase. And a third collect their online orders in store.

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Smartphone and tablets use is on the increase as we browse, compare prices and buy on the way to work, in the shopping mall and on the couch while we watch TV ads.

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Amazon was the first retailer to launch a tablet back in 2007. Today, Kindle owners are big loyal spenders on Amazon.com. No surprise then that Amazon reportedly prices its tablets at break-even prices.

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So it makes sense for a retailer to be in the tablet business. Households will own a tablet on average for two years. During that time, the retailer will have an opportunity to influence buying behaviours.

As to what happens next, I guess that more retailers will launch tablets. Buoyed by initial success, they will get better at making tech hardware and experiment with software experiences. As tablets get lighter, smaller and easier to carry around, retailers will also start to experiment with in store experiences.

Payment wars

I took a look at mobile payments space and specifically, offerings from Square and Paypal in the US and iZettlePaylevenSumUp in Europe. Here’s what I found. Firstly, they have similar business models.

imageSecondly, all of these companies have deep pockets.imageThirdly, all of these companies are rapidly expanding. Square and Paypal started from US. imageiZettle was founded in Sweden. SumUp and Payleven were founded in Germany.image

Update 27.01.14: I assume below that “entry-level” customers are small businesses or free-lancers with low volume of payment transactions who would want to try the card readers on a no commitment or contractual basis.

Fourthly, until now, these companies had priced their product in a similar way for entry-level customers. However recently, SumUp dropped its entry-level price which led some to speculate if a price war was looming.

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What happens next? Let me try and guess. Rapid international expansion will continue. New players like banks will enter this space. New partnerships will be forged and new teething issues faced. Increased competition and pricing pressures will squeeze margins. So some players will strengthen their product proposition.

I believe execution will be key. Players with effective sales, targeted marketing, and strong logistics will gain scale and look to consolidate.