Thoughts On...

Your Version 1.0 Doesn’t Have to Look Like Crap

I am a big proponent of getting your product out there as quickly as possible, shipping early and often. Matt Mullenweg put it best:

“Usage is like oxygen for ideas. You can never fully anticipate how an audience is going to react to something you’ve created until it’s out there. That means every moment you’re working on something without it being in the public it’s actually dying, deprived of the oxygen of the real world. It’s even worse because development doesn’t happen in a vacuum — if you have a halfway decent idea, you can be sure that there are two or three teams somewhere in the world that independently came up with it and are working on the same thing, or something you haven’t even imagined that disrupts the market you’re working in.”

If you’re not consistently shipping you’re losing. The lean start up movement also contributed significantly to this line of thought. Get the most valuable minimum increment of a functional product out the door. What I find though is that some semblance of quality gets lost when this line of thought is taken to an extreme. I came across a tweet the other day that quoted angel investor Dave McClure of 500 Startups that echoes a sentiment that I’ve heard from a number of people:

“You want to get to the market as fast possible even with the shittiest product and get feedback to improve.”

Although I agree with getting out to the market as fast possible I don’t agree with shipping garbage. As to Matt’s point, there are probably multiple teams around the world working on the same product. Design becomes a key differentiator as it ultimately leads someone to choose one product over another. The goal is to build half of a product, not a half assed product (Jason Fried quote). There are some very simple solutions that don’t take that much time in your development cycle:

1. Use a grid system
2. Consider proportion
3. Have a professionally designed logo.
4. Focus on basic building blocks.  

The goal here is not perfectionism but a clean look and feel that positively contributes to your user experience. No over investment in design time is required. The goal should be to build a solid foundation that you can evolve and design on top of going forward. If you’re building an iPhone app by virtue of using Apple’s standards and style guide the app should look relatively decent although undifferentiated. However if you are developing a web application (mobile we or otherwise) some additional care will need to be taken as it should work across platforms.

1. Grid System

I can’t stress the importance of leveraging a grid system. It makes a world of difference in terms of organization and visual appeal. Khoi Vinh and Mark Boulton are a great resource when it comes designing grid systems for the web if you’d like to dig deeper. With that being said you don’t need to over think it. There are plenty of CSS frameworks out there that you can leverage that are fairly straightforward to use.

I’ve used the Nathan Smith’s 960 grid system for a while until responsive web design and media queries came along. With the popularity of responsive web design a number of responsive CSS grid system have cropped up. Some notable examples include: cssgrid.net, columnal.com, getskeleton.com, lessframework.com, and goldengridsystem.com. I like goldengridsystem.com as the “Golden Gridlet” overlays grid columns and a baseline grid so you can maintain vertical rhythm as screen resolutions are adjusted. A great tool as you are developing your layouts.

Anyhow, if you’re laying out a page it doesn’t take that much more effort to lay it out in a grid.

2. Proportion

In any composition proportion is key. People tend to favor compositions that are proportionally structured over ones that are not. It is always more pleasing to the eye. David Kadavy in his book “Design for Hackers” has a wonderful case study on the MailChimp logo as a study in proportion. I wish the kindle would let me share the whole thing but it only let’s me share the 1st paragraph. Anyhow, I might re-post the whole case study at a later date. It’s located in chapter 5 on proportion.

Apply proportions not only to your grid system but to your typography, logos and other elements. There’s the golden ratio 1:1.618… but I would recommend playing around with other proportions as David outlines, the root 2 rectangle: 1:1.41, the 2:3 rectangle and the 3:4 rectangle. Our canvas is the screen and screens follow some of the proportions outlined above. The 1024x768 screen is a 3:4 ratio (0.75), Apple’s iPhone 4 with a resolution of 960x640 is a 2:3 ratio (0.66) while the Nexus S and MacBook Pro come close to the golden ratio 0.618.

As you a putting your CSS together keep your calculator open and crunch some numbers instead eyeing sizing of typography and site elements by eye. Chose a ratio and stick to it.

3. Have a professionally designed logo

It’s a relatively simple thing to do and it makes an impact. It’s a worthwhile investment. Don’t dwell on it though. Get something that’s of a reasonable level of quality and ship. Don’t let it hold up the launch of your product. If you do have some design savvy and would like to put something together yourself or if you’d like some guidelines in selecting an appropriate logo Marc Hemeon has an excellent blog post. David Airey’s Logo Design Love is also an excellent resource. This can be another blog post in and of it itself so I’ll keep it short. I’ve summarized of their key points below:

Keep it simple - Simplicity allows a design to be more versatile and allows to be used in a variety of contexts. The focus should be on one thing. It’s hard to create something distinct or iconic when you’re trying to do too much. Longevity and timelessness should be the goal.

Work in one color - Again keeps the logo versatile. Black and white is the best approach to start. The focus should be on legibility and contrast. 

Work on scale - The logo should work in both a small and large with little degradation. 

Be Symbolic  -   Incorporate some element of the product or service the logo represents. Relevance plays a role here. Again try not do too much.

If all else fails I would recommend creating a wordmark. Text only typographic treatment without any graphic elements. I would purchase a nice typeface if you decide to go the word mark route. Youworkforthem.com tends to have a great selection from various type foundries.

4. Focus on the basic building blocks.

A key building block that should not be overlooked is the user experience design. The screens or interaction someone needs to go through to accomplish a task. The focus should always the least amount of screen, clicks, form fields, etc. Efficiency is the key. Focusing on layout and proportion add an additional enhancement to the user experience. It will provide a solid foundation to add more design elements in the future. Color palettes, accents, illustrations, alternate typefaces, etc. should only be the focus after you’ve shipped your version 1. With basic structure in place you should release.

In short by focusing on the basics, using a grid system, keeping proportion in mind in the development cycle along with getting a half decent logo will go a long way to building a product with a decent look and feel that you can still get out the door. It doesn’t have to look bad. There’s no excuse.

Persistence… The Right Kind

Derek Sivers put it best, “if it’s not a hit, switch”. Persistence is a word used a lot when starting a new venture. For good reason. Most start-ups or new businesses never see the light the of day. It’s maybe because the founders weren’t persistent enough or gave up too easily on their idea, right? Wrong. The case is they didn’t change course enough times or worked hard enough to not only solve their own problems but other people’s as well. I think Derek sums it best in his set of videos for appsumo here.

The right kind of persistence involves getting multiple products out the door, testing them and learning about your market. It is not having one product idea and one product execution and “persisting” by trying to sell it hard, buying and constantly using push tactics to remind people that they should use your product. If people are not using your product and it feels like you’re pushing a boulder up a hill try something else. Pivot. Change course. Switch.

In my previous experience in co-founding Cameesa we had spent a couple of years constantly asking, what if? Example, What if we redesigned the interface? What if we added a couple of more features? What if we advertised more? We did end up undertaking a couple of major redesigns, we kept adding features, we did keep reaching out to potential customers and invested heavily in advertising. All of our efforts resulted in slight increases user membership, customers and traffic. We kept telling ourselves if only we commit more time or hustle a bit harder Cameesa will be the success we want it to be. We were wrong. What we should have done was pivoted and built another product.

What we didn’t realize was that we hit our local maximum. Joshua Porter and Andrew Chen refer to the to the local maximum in user experience terms. The point at which you’ve made every incremental change possible and what’s required is a complete redesign in order to get to the next level. A revolutionary change versus an evolutionary change. We had reached a local maximum with our idea and current model. What was needed was a fundamental change in our product and overall strategy.

Signs That You Should Switch

There are no hard and fast rules here. However, I would say if you’ve been live for a year and:

1. 1. You have to work extremely hard to acquire a modest amount of customers. If it’s not, you are not on the right track. It should feel easy. When you develop something the market wants you typically spend way less time advertising. When you’re on the right track, you’ll know. Trust me. :)
2. 2. Your core community helping promote your product is having difficulty referring their friends.
3. 3. You’ve found that your community and team have a hard time communicating what the product is in simple terms in addition to its benefits.
4. 4. Your customer acquisition costs are high and conversions are low.
5. 5. You no longer have the passion for the product you once had.

If you experience any of the above symptoms its time to try something else.

Product Design and Development Approach for My Minimum Viable Product

When I’m putting a web application together I start with wireframes and a rough sketch of the main screens. This is after I’ve done some initial research. Ex. competitive analysis and some landing pages to gauge interest. I typically focus on the desktop version and then an alternate mobile version. Not really a good approach. In addition, when developing mobile prototypes for apps I initially thought that developing mobile web version that had the look and feel of a native app was also a good approach. It’s not. This also took significant time and effort in the early stages. In the spirit of being “lean” I’ve found a better approach. I’d like to stay true to my “minimal viable product” for my first couple of iterations. Deliver the most value with a focused set of features in an easy to maintain fashion.

It also helps to understand visual design and have knowledge of front-end development. It will allow you to make informed decisions on how to get your product out there in the most effective way possible. You are better able to make design trade-offs with an understanding of the constraints.

Luke Wroblewski and Ethan Marcotte have shaped my thinking on this. Luke with his Mobile First philosophy and the Responsive Web Design approach as noted in Ethan’s recent book. The key to this approach is using flexible width CSS grid systems and CSS media queries to target specific browser widths and serve up the appropriate styles in scalable fashion. Although there have been some posts in regards to the downsides of this approach, an example is scalable images, I think the negatives apply more to content rich sites versus web applications. I think benefits far outweigh the negatives when using this approach for web applications. Especially for your first few iterations.

Approaching your problem from a mobile first mindset forces you to focus on the essentials and key tasks. You typically have less real estate and every interaction needs to be economical. The responsive web design approach will make your build flexible enough to be used across devices. Mobile, tablet and desktop, without having to maintain multiple builds. There is nothing more painful than having to maintain multiple versions of your minimal viable product in the early stages. It gives you less freedom and flexibility to pivot and change course. Which is crucial in the early stages of developing your product. Speed and agility are key to keep your momentum moving forward.

Over Consumption and Under Production

A couple of items sparked my thinking surrounding over consumption. Particularly, my current over consumption of media in comparison to my production. I’ve made reading part of my of lifestyle thanks to my handy iPod Touch. In combination with the Amazon Kindle App and my Audible account I’ve been able to read one and a half books per week this past year. For the past few years with my older iPod I’ve been consuming at the same rate using Audible audio books and iTunes. Now that I have my iPod Touch I’ve noticed my consumption increase. I read magazines using Zinio, Listen to Audio Books with the Audible app, read books with the Kindle app and watch documentaries with the Netflix app. The increase stems in part to me having the device on me at all times so it’s become habitual. When I’m on the train I read a couple of pages, when I’m at the gym I’m listening to a book, etc.

I love learning and I guess I’ve made the connection in my head that the more and more I consume the more and more I’ll learn. This is assumption is false. Whoever told you knowledge is power lied. The practical application of knowledge has power. Not the knowledge itself. If what you’ve learned isn’t applied or synthesized in some fashion it is not as valuable. I have decided to change my habits a bit and incorporate mobile production into the mix. I’ve set the goal of writing twelve “substantial” blog posts per year. This will allow me to at least synthesize some of my findings if there is no avenue to apply the new knowledge in my daily work. Tweets, Re-blogs, Quotes videos, etc. do not count as substantial blog posts. What does count is something I’ve taken the time to think through and hopefully provides value to others (Ex. my startup lessons learned). Now I know why the VC Fred Wilson has made a commitment to writing a blog post everyday. My friend Andrew wrote a post in a similar vein to this one and highlighted the following quote from Fred “I write every day because it makes me think every day”.

I would like to tip the scales closer to the production side of things in my spare time. When one consumes more relative to what what they produce in economic terms they are in debt. If it is a nation they run a deficit. I’d argue that over consumption on an intellectual level creates a cognitive debt. If the consumed material is not applied or synthesized you wind up doing a great a disservice to yourself and the people around you. When read you something in a book you know of it, when you apply it in the real world you know it.

Also, with the ubiquity of mobile devices and all the distractions that come with it, it becomes very easy to consume and becomes more difficult to produce something of substance. Nicholas Carr, when he wrote “The Shallows: What the Internet Is Doing To Our Brains” had to hide away in the mountains in order to limit his connectivity. How long can you go without checking your BlackBerry or iPhone? I’ve checked mine a couple of times while writing this post.

So here is my “lifehack” that will help develop my new habit. Seeing as I have my iPod Touch on me at all times. I can now write on the go using Evernote, with a premium account so I can write offline and sync once I get wifi access. Why I’m using Evernote. I can write on multiple devices and sync. That way if I get started on something on my laptop I can continue to work on it via my iPod touch and vice versa. I don’t ever have to worry about where my files are and waste time finding them. They are all in the cloud and can be easily accessed using Evernote irrespective of location and device. Once I’m done I can upload using the Tumblr app from my iPod Touch. In my spare moments I will try producing vs. consuming. I will most definitely write my 12 blog posts. 11 more to go :). Once I reach this milestone I will double it for the following year.

I have also signed myself up for the following goals as well. Produce one new application per year and help one startup per year in my network.

I’ll keep everyone updated on my progress.

Startup Lessons Learned with Cameesa

We embarked on this journey a long while back and learned a lot about crowdfunding and startups. Crowdfunding lessons learned from can be found here. This post is geared towards startup lessons learned. 

1. Always engage in customer development and obtain the validation up front and throughout your development cycle. 

I’ve made mention to Steve Blank’s “Four Steps to the Epiphany” in a previous blog post. The methodology encourages interaction with your customers and market so you can quickly find out what the focus of the product should be or whether the product is worth building at all.  Solving your own problems is always a good start as you will be addressing one of your own needs that you have intimate knowledge of. Even in this scenario I would highly recommend getting prototypes up in a quick fashion to solicit feedback prior to making a significant investment. In addition, obtaining feedback throughout the product life cycle and analyzing metrics will allow you to improve the product in a way that’s valuable to your customers. 

Some may argue that the customer development model doesn’t produce revolutionary products as customers don’t know what they want. People typically reference the following Henry Ford quote: “If I’d asked people what they wanted, they would have said a faster horse”. A modern day is example would be Steve Jobs and Apple. Their tightly controlled product design approach under Steve Jobs is void of any customer collaboration. However, many of us are not Steve Jobs or Henry Ford. These are extraordinary individuals. A number of factors and circumstances had to come together for their success to occur. In addition, they may have held tight reigns on their product ideas but they certainly did not isolate themselves from people and ideas that ultimately shaped their products. They understood the “why” of their products. In Ford’s case that people would like to get from A to B efficiently and in Jobs’ case the idea that technology products are cultural products where design plays a critical role. In short nothing is created in isolation and it takes extraordinary circumstances to develop successful products in the absence of customer development. Keep in mind that customer development does not replace vision. It can’t. You need a vision. Customer development will help you figure out whether you are on the right track. 

With Cameesa we identified a couple of key trends trends that were going on. Micro-finance sites such as Kiva and music funding sites such as Sellaband were collecting small increments of funds from the public to achieve a larger goal and had traction. In the case of Kiva the funding of third world entrepreneurs and with Sellaband the funding of musical acts to get their album professionally produced and promoted. The other was the rise of crowdsourced T-Shirt sites such as Threadless and Design By Humans. The basis of the Cameesa idea was taking Sellaband and Threadless and putting them together. Sellaband was attracting financial supporters which they called “believers” and Threadless was growing at a fast pace and provided a unique product in the T-shirt space. We thought that taking both models and putting them together would create a successful product based on the fact that both of the models above were successful. So we did any eager entrepreneurs/developers did. We started building and went online. We didn’t do customer development. Despite our lack of customer development our initial customers gave us amazing feedback and some great ideas. With that being said our fundamental assumption was wrong. That crowdfunding would be produce a better product. It doesn’t. Curation is extremely important. More on this can be found in my Cameesa lessons learned post. 

What we failed to consider was the following: 

We were web guys starting a retail business. One in which margins increase with scale. Inventory management and logistics are crucial to success. None of us had retail backgrounds to leverage.  In addition, T-Shirt sales are and always will be a low margin business. Volume is required to keep the business afloat. Our model involving artists, supporters and buyers required all three to have significant volume for the business to scale. 

Retail challenges aside we had another major hurdle. We never actually knew whether the crowdfunding model was actually sustainable and whether or not it would be able to sustain the business moving forward. Sure, Sellaband had a large handful “believers” donating money to artists but does Sellaband make enough to keep the platform running? Kickstarter, the poster child for crowdfunding has had tremendous success in terms of growth, user base and the number of successfully funded projects. Is the transaction fee they charge on successfully funded projects enough to keep operation moving forward without outside money? I am by no means trying to single these companies out. What I am hinting at is that the model is new, unproven and presents another risk in terms of sustainability. We are all still trying to figure it out. 

Crowdfunding although an excellent tool for getting projects financed is not ideal for products with a low price point. The most common piece of feedback we’d receive was as follows: “The project is still trying to reach the goal but I want the T-shirt now!” or “I don’t want to support the project to eventually get a shirt. I just want to buy it now.” Crowdfunding is great for fund-raising for creative endeavours however I don’t feel it has the same impact in the consumer products space. When people want to shop they don’t want to support a project. They want to buy now. Not tomorrow. 

In the end our experiment came down to a question of reliability versus validity. We obtained feedback and refined Cameesa to be a better Cameesa. The validity of Cameesa should have been questioned sooner. Should we have even created Cameesa in the first place? I think if we had done the initial customer development we probably would have come up with a more valid idea to run with. 

2. The right model.

If you are able to get paid from day one than you are on the right track. I made reference to this when I discussed standalone utility vs. network effect utility in a previous blog post. If you cannot generate revenue from day one it will be extremely hard for you to keep working on the product or working on finding the right answers. The funds generated buy you enough time to pivot and change course by creating a product that is valuable to your customers. We had never gotten the model right with Cameesa and it limited the amount of time we were able to put in. Revenue is also a good feedback mechanism. It’s a points system more than anything else. If you’re not making the money you thought you would, chances are you’re working on the wrong thing. This leads me to my next point:

3. You can’t do it part time.

We’ve had Kamil and Andy work on Cameesa full-time during certain periods. I would also set aside weeks at a time to help out. The problem was these moves were a gamble as we were not on the right track to begin with. As a result of not having the right model that could give us the funds to all work on the product at the same time we’d work on it when we could. By not being able to work together we lost out on some great opportunities to collaborate and make the best of each others skills. Making releases became tricky as well. One example is when Kamil wanted to improve the platform, he would undertake back-end development and ask me to put together a UI and the front-end templates. A lot of the times I wasn’t around to do this work and Kamil would have to take it on himself. Kamil didn’t like doing this as it was outside his skill set nor was it an effective use of his time. It also caused a lot of frustrations for the team that could have been avoided. If we had been able to work on it full time versus part time, we could have got our answers and initial prototypes vetted in a couple of months versus the eight to ten months working on weekends. 

4. Stay lean and keep iterating.

Keeping lean and evolving your product as mentioned above are critical for any startup. You are forced to be lean as you have limited resources and need to focus your efforts and funds on activities that deliver the highest value. The likelihood of success is also based on your ability to keep evolving the product (Or pivoting). You need to make the right moves early on that generate the funds necessary to keep the business moving forward. The getting paid on day one principle. Depending on what stage you’re at with your product you will need to test the validity and reliability of your assumptions. 

Testing validity happens before you start building. As mentioned above. The step we skipped :). You identify what type of product you’re going to build versus what you’re not going to build. It should have an associated model that can sustain the business. As you produce the product and iterate with customer feedback you are testing for reliability. Taking your valid assumption and fine tuning to make it more reliable. 

In our case we never tested the validity of our idea. We also didn’t have a model that could sustain the business in the long term. We thought the idea was good enough and iterated on the product to see if it would improve things. We kept focusing on improving the product. Outsourcing to different vendors and re-designing the site when what we really needed to do was change course. In the process we wasted a significant amount time. What we really needed to do was search for a more valid service offering.   

5. You don’t need five founders.

When we first started Cameesa we had more founders than we needed. I think all that is required are two founders. However, I wouldn’t say three’s bad either. One of the founders should have a strong technical background in engineering the other should be a products person (Fred Wilson described it well). You both need to be business savvy. I think anything more than this to start is overkill. If your initial assumptions are right and there are funds to start scaling the team than you can bring on additional team members. However, they do not need to be founders. 

6. Ensure that everyone on your team can make an impact today.

As related to the previous point. We had more than enough founders but a couple of them did not have the skill set to help with an early stage company. They had corporate backgrounds and were employed at very large organizations. Ones that need “professional management”.  Our little start up did not require professional management. What we needed were people who could get their hands dirty by either working on the product, crushing it by blogging and reaching out to the community, working with our third party outsourcing companies to develop a better product, etc. We didn’t need people to help get us funding, to manage us or do spreadsheet modelling. I think having someone work on pitching VC’s would have been better if we were on the right track to begin with.

7. Getting coverage in major publications does not mean you are on the right track.

As with any company in a new space such as crowdfunding there is a lot of hype and publicity. We managed to get into the print and online editions of The New York Times, The Wall Street Journal and Time magazine. However, the amount of traffic we received from those publications was minimal and didn’t usually result in repeat visits. Every time, we made it into these publication we somehow felt a sense of validation and thought there was still hope if we could get enough people onto our platform and things would eventually work themselves out. This is not the case. It is far better to get favourable reviews and write ups in niche publications. The referrals from these sites tend to have a higher likelihood of conversion than those from a larger more general publication. I think it hindered more than it helped us. It made it harder for us to let go of our initial idea and experiment with new ones.  

8. Forget about funding. 

I think if you are a second or third time entrepreneur it probably makes sense to get funding if you’re trying to tackle a bigger problem. With that being said, you should have a viable product and the funds should be used to amplify your success. In other words they should be used to scale  up. This is typically a good option for second or third time entrepreneurs who have significant experience in successful start-ups. David Hansson of 37Signals tends to have a really strong view on not taking funding and I understand where he’s coming from. But, I do believe the silicon valley adage “If you want advice ask for money and if you money ask for advice”. I would personally give a large portion of my equity away in order to get the coaching, advice, mentoring and support network that comes with having investors. I think the learning experience would be great irrespective of the outcome. In the case of Cameesa, we were never in a good position to obtain funding. All of us were 1st time entrepreneurs, none of us had been funded and I don’t think Cameesa was the platform to invest in. I think we needed to focus our efforts on exploring a myriad of sustainable product ideas versus being concerned with funding. Get your product working first and produce strong results. Then go seek funding if it’s needed. For us it was a distraction more than anything else. There’s also a lot to be said about running a lifestyle business. 

9 . Passion

As with any endeavor you must be super pumped about working on it. You need to live and breath the product or service. Or live and breath the process of getting a start-up off the ground. Passion can take you a long way. If you are not passionate about what you’re doing you should stop immediately.  Time is extremely precious. I think you can always find a way to recover money. Time however is not recoverable. Once its gone, its gone. There is no way to get it back. This is why I will always feel worse about wasting time versus wasting money. I can always find a way to get the money back. 

I was very passionate about starting a new online product and experimenting. I was also very passionate about working along side like minded people like Andy and Kamil. The one thing I wasn’t that passionate about was running a retail business. One that involved t-shirts. I had always wanted run a pure play services site for crowdfunding such as Kickstarter. We were slow moving and they beat us to it. We held on to our initial assumptions when we should have changed course. I want to make one thing clear. When I say “I wasn’t passionate” it doesn’t mean that I was unwilling to learn or even had a dislike towards running retail operation involving T-Shirts. I liked it, I just wasn’t head over heals in love with it which could have limited my ability to crush it. It’s also the reason why we’ve decided to close up shop. 

To Conclude

In retrospect, do I feel like I’ve wasted my time? Not really. I’m glad to have worked on this project with Kamil and Andy as I’ve gained a wealth of experience that will better prepare me for future endeavours. I do think we could have used my time more effectively if we had done more customer development from the very start. 

The Pivot

Pivot is a term used to describe the ability for a business or product team to change course in response to feedback and certain market conditions.

It is extremely rare that your first idea or startup will be successful. It is usually the case that after a few tries you get closer to success. You increase your chances of success by undertaking customer development and identifying patters in the ways people interact with your product. A good team paired with a lean or agile philosophy is in the best position to pivot. This why you usually hear that investors will usually bet on an A team with a B idea versus a B team with an A idea. The A team will find ways to adapt and eventually turn their B idea into an A idea.

There are far too many examples of startups changing course. Many of which are documented in Jessica Livingston’s Founders at Work. However, I’d like to share some notable examples below.

Groupon the social shopping and group discount promotion platform started off as The Point. The Point is a community site that allows that helps individuals organize for collective action. Examples include getting everyone to petition for a cause or to collectively pool money together to support a cause. CEO Andrew Mason and his team quickly identified a popular use for The Point platform. The community would form groups for collective purchasing which would result in a discount. The team quickly realized that this would be a good opportunity to create a site that solely focused on discount group purchases. They realized there was a positive response and large uptake in the new solution and started diverting staff from working on The Point to working on Groupon. Nice pivot!

Other notable examples Flickr, PayPal and Youtube. Flickr was originally a video game that had a photo sharing component to it. Caterina Fake and team realized the photo sharing was the most popular part of the game and spun it off into Flickr.

Max Levchin started PayPal as a Palm Pilot cryptography and payment processing company. They built online component so that people could manage their Palm Pilot money transfers and send money via email. The majority of customers were enamoured by the online component and Max had pivoted to become an online payments company.

Youtube, started off as a hot or not with video. Chad Hurley and Steve Chen realized that their site had a broader application as a video sharing site and successfully repositioned the site.

Rarely will your 1st products be the best. The point is to get something out there, get feedback, identify usage patterns and use this information to build your successful product. Might take you have few tries. Go out there and build something great.

Developing Products for The Fortune 1000 vs. The Fortune 1,000,000

When brainstorming new product ideas to build businesses around it is important to consider what kinds of customers you’ll be servicing. They tend to fall into two categories: the enterprise and the small business. Both are good but each has a tremendous influence in how you develop your product and grow your business. In both scenarios you must undertake customer development and be agile. 

If the goal is to build a product for the enterprise customer development will include reaching out to the decision makers and CIOs. In this scenario the couple of enterprise customers you are working with will have a tremendous influence over your product and may influence your platform decisions. Example, most IT departments do not want their data in the cloud and would like to host their own information. As a result your development team maybe larger. As a result of having a larger team you may have to implement a more formal agile methodology such as Scrum. In addition, you will eventually need to bring in sales and account managers to grow and maintain accounts. Pricing for such products tends to be higher as it is partly reflects the overhead involved in servicing an enterprise client. Overall, it’s a larger scale operation with more management overhead. It also very likely that you will need financing to scale and grow the operation.

If the goal is to build a product for the small businesses you may be reaching out via social networks, community sites, etc. to undertake your initial research. You will also probably meet with many people face to face to gauge interest in your idea and ultimately have them evaluate your product demo. The application will most likely have a smaller footprint as small businesses are more likely to use cloud services (aka software as a service). With hosted solution you are able to choose the technology platform, Ruby on Rails, Django, or any other rapid application development framework. As a result your team size will be smaller. The smaller team size allows for agility. With the smaller team size you most likely will not need additional management overhead. In addition, you are aiming to service a larger client base that most likely will not need professional services. Which in turn allows you to charge for the service at a lower price point. There is no need for sales and account managers for products of this scale. If you are developing a product for this segment it can easily be turned into a lifestyle business. 

In speaking with entrepreneurs I find that they dismiss opportunities that are possible when attempting to build products for the small business segment. Their idea of success is go big and get funded, get an office, hire lots of staff because that’s what successful businesses do. It is very possible to build a lifestyle business that earns enough revenue for you and your team to continue working on the product full time. Also, it allows you to grow the business and product organically without significant pressure from a large client or investor with minimal risk. At a fundamental level I think it’s people’s belief on what constitutes a successful product. It all depends on your definition of success. Will you build something that millions of people will use? Probably not. Is it possible to develop a product that 5000 people might find useful and wouldn’t mind paying $20.00 per month for? Possibly.