Posted by & filed under Customer development, Entrepreneurship, innovating, Product development, Startups.

How to be a successful entrepreneur? How to create the next Airbnb/Uber/Dropbox/startup unicorn? Hands up, who hasn’t googled something like that even once? Or at least clicked once on those millions and millions of articles about creating the ‘next big thing’.

But if that’s what you are asking you won’t succeed. Might sound harsh but it’s true. Hey, I do understand; who wouldn’t want to be the founder of the next SpaceX. But the thing is that if you just want to have a successful startup for the sake of having a successful startup, you are focusing one the wrong things. You are focusing on the fame, money or whatever fancy thing you are imagining, not on what can get you there. And that is having a startup that is actually worth it.

All successful startups give people something they are dying to get. They are solving a problem, a crucial need people have. The more people your startup can help, the more desperate they are to get that problem solved, and the better you solve it the bigger your success will be.

So, how do you create a successful startup then?

Didn’t I just tell you to stop thinking about it!?!? …juuust kidding. In all seriousness:

 

Have an idea (well, duh)

Often what happens is that the founder(s) sees a need. That something could be done better and figure out a solution for it. They start thinking ”why is it like this. Why can’t it be like that.” Boom: an idea is born! (in a very very simplified form).

 

Validate that idea

Ideas are an essential part of founding a startup. But we all have ideas and only a few of us are successful entrepreneurs because of them. That’s because not all brilliant ideas really are brilliant. You need to validate your idea. Is it something that would make only your life better? Is it crucial enough and for enough people? Or just ’nice to have’?

Is the need big & crucial enough?

I.e. are people actually willing to pay for you solution and are they enough of them. If they want your solution but not to pay for it (=the need isn’t crucial enough for them), you won’t make any money and your business will die. Or if only a few want your solution (=the need isn’t big enough), you won’t make enough money and again: your business will die.

 

”But everyone needs my solution…”

 

Stop you fool!

 

If that’s what you think, stop! Stop, sit down and think again. You might still be able to save your startup.

Unless you have found a way to capitalize air, there is nothing everyone needs. ”Everyone” is the easy answer many go for, and the answer that will ruin their all chances of success. When you think that everyone will be your customers, you try to please everyone. And that doesn’t work. You will end up doing compromise after compromise and then your solution fits no-one. Or you just don’t even try and create a solution that only solves your problem and nobody else’s.

Bad validation is one of the most common reasons startups fail. They get so blinded by their ’brilliant solution that everyone in this world will buy’ that they forget to check the facts. Don’t be like them. Validate, and do it properly. Here’s an excellent post from Startupgrind to help you with that.

The best case is when your product is not just a ’nice to have’, but a must to have.

 

Execute it awesomely

”Ideas don’t matter, only execution does.” – pretty much every successful entrepreneur.

No matter how brilliant your idea is, the idea that is executed the best will win. After all brilliant idea is just an idea, still a long way from becoming reality. And rarely there are any truly unique ideas (there have been search engines before Google, social networks before Facebook and so on). We now ’google’ things because Google had the best execution of the idea, same with Facebook and many many other businesses.

No-one will see the brilliance of your idea if the reality of it just screams bad execution.

And a key thing to remember is that execution is 100% up to your team. It’s about their skills, experience, connections, everything. Many entrepreneurs just hire their relatives, friends, old acquaintances who need a job. That’s very noble of them but only works if they have the qualities needed to make that brilliant idea into reality. And if you ever dream of getting investments, you better have the kind of team that gets them. After all, investors usually look at the team even more than the idea itself. More about that here.

Learn from the unicorns – real-life examples

Let’s look at Airbnb. The economy was (and unfortunately is) tough, and many were looking for extra income. They also had empty space in their homes. Unused rooms, or whole apartments due to traveling. At the same time, people wanted to travel but not spend that much money on their accommodation. There was a demand and then there was a solution: Airbnb.

Or Uber. Again tough times. People need an extra income and they have an idle car. At the same time, others need convenient transportation, like taxis but without the price tag. Again: big need many really want to get solved.

In short: they had a great idea, an idea crucial for many and they knew how to execute it well. And now Airbnb is worth 31 billion dollars. Uber 62,5 billion dollars (as of March & April of 2017).

 

Related post: Startup mistakes to avoid

 

Posted by & filed under Accelerator, Corporations, Entrepreneurship, Innovation, Mentoring, Startups.

Most collaboration between startups and corporations shows very little results. The reason is that they are just trying to improve bits and pieces of, for example, the offering. That’s not enough. The winners will be the ones that can renew their attitude, learn to adapt and embrace the change. Startup collaboration is the best tool for that, but it needs to be done right.

Startup collaboration is not an innovation band-aid

Startups are not innovation band-aidMany corporations still try to filter out the perfect startup candidates before starting to work with them. They usually end up with companies that have a product that can be easily integrated with the current offering. Good for them if they can provide something useful for their customers, but that approach rarely ends up in changing anything. It usually just turns into an incremental improvement.

It doesn’t help you if you do the same thing a bit better than before. Not when in most industries you don’t know how your business will look like in just a few years. Corporations need to break the familiar ways of doing things, break the patterns to get ready for the unknown. Companies need to build skills to be ready for the future. The old skills may not become obsolete, but everyone needs to find new ways of using the old skills in new environments. We need to be experts at finding new uses for the things we’re good at. We also need to become experts in the new things that are needed to solve our customers problems.

While startups can learn a lot from corporations, also the startups can teach the corporations many things. So, why do many corporations go only for the incremental improvements and one-by-one collaboration with startups? Because this way fits their existing way of working. They have used subcontractors and other types of partner forever and startups are no different. Corporations are really good at buying products and services. They have developed efficient procurement models and processes that they want to use also with startups. But that is not enough. In fact, I think that this way of working totally misses the point and the big opportunity.

Turning from individual innovation partnerships to powering the renewal at corporations

Nestholma started with the idea of helping startups and corporations to build new innovations and make deals together. In our accelerator model, we make the startups and corporation work together with clear business goals in mind. That has worked really well in the 20 accelerators we’ve done. Still, over the past two years, we’ve realized that it’s much more than making a few deals happen or arranging a great Demo Day pitching events.

Couple of interesting things have happened: HRD and entreprenership

To make the impact of the accelerators as big as possible, we’ve ended up coaching not just the startups and also the corporation’s employees. Regardless if you talk in the context of change management or broader transformation, our work has been more and more about helping the employees to learn from the startups. This has helped them to become better at facing whatever challenge may lie ahead of them.

Many times the management is a bit worried that the employees may not have enough time to work with the startups. Our experience is that the employees love to work with the startups and find the time if there’s good support for them. Also, we’ve found that it’s not just the innovation people, but everyone in the organization that wants to join from customer care to sales and tech. After working with startups many corporate employees have told us that the work with startups has given them new boost on working with the other things, as well.

The other interesting thing has been the work we’ve done for the ex-employees of Microsoft and Nokia. These companies have laid-off thousands of employees in Finland over the past couple of years. As a Finnish company we wanted to see if we could use our business coaching and accelerator model to help them to find their new path in life as entrepreneurs. In great co-operation with both Microsoft and Nokia, we’ve coached hundreds of ex-employees from these companies. Some have become entrepreneurs, some have gone to work in small companies and some are just using the entrepreneurial mindset to pursue whatever else they want in life (read more in Finnish). Not everyone has ended up being a growth company entrepreneur, but we have found it important give back a little by using our expertise to help them.

Nestholma's startup accelerator and entrepreneurship coaching model.

Business leadership and HR can drive the change with startups

Still, what started out as an interesting experiment and an effort to share our knowledge, turned out to be one of the biggest learnings for Nestholma. This experience in coaching the entrepreneurs has helped us to develop a deep understanding on how to help also the employees still working inside a corporation to change. In fact, we find ourselves increasingly in the same tables with the business leadership and HR. They want concrete business results fast, but they also want to make sure it’s not just what I sometimes call an innovation band-aid. They want to see sustainable impact in the entire organization and business as well as sustainable renewal of the company.

Business leadership and HR want to make sure the entire company is able to quickly

  • adapt to new market conditions
  • find out what are the problems worth solving
  • learn new skills while they are working
  • move effortlessly between different types of internal and external operational models (startups, internal ventures, line organization etc.)
  • reinvigorate the employees to pursue new paths in their personal professional growth
  • turn high level strategic goals into real business initiatives

And we’re very happy to be there. With our two-part accelerator and entrepreneurship coaching model, we can provide the tools to tackle these needs and more. The great thing is that this is also the best way to help the startups learn and succeed.

Topi Järvinen @topij

Start renewing your business today!

Let’s talk how Nestholma can help to renew your entire company and find new businesses with startups and beyond.

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Posted by & filed under Entrepreneurship, Mentoring, Startups.

As an entrepreneur, you’ve probably been mingling in startup events. You have probably met knowledgeable people, with experience in areas where you and your team are quite lost. And you should take every chance to talk to them. Many of those events — or accelerators, or incubators — call such people ‘mentors’. They are likely to share with you their opinions on your ideas, as well as give you interesting tips.

But tips are… well, the tip of the iceberg (sorry for the terrible pun). Tweet this. They might be missing context information about your business. They might not know about your market. They might not understand your idea, maybe even because you don’t understand it. Or you might just not have the time to get into the juicy details.
We believe that mentoring shouldn’t stop there. Tweet about this!

You need to build a relationship

It’s much more valuable for both sides — the mentor and the startup — to have a longer discussion, where both sides have something at stake. This makes sure that the mentor understands well the startup. It gives the mentor a reason to look more into the specific market or business of the startup. It gives the startup the chance of knowing the rationale behind the mentor’s thinking, and when and how to apply it to their business.

Of course, our mentors also attend events to meet the startups, but that is often only the beginning of a relationship. At the end of the day, for entrepreneurs, it also pays off to go beyond one-night-stands with some people.

 

When we match startups and mentors, we try to make sure that both of them will benefit, one way or another. And that requires knowing their needs and motivations very well. They typically discuss a few times about the startup’s business, to see of they are a good match. At the end of the day, with a good advisor, you want to make sure that there is some “chemistry” between you. Tweet this.

At that point, both have gotten a bit better, but there’s still a long road to go.

You need to make it stick

If you really want a mentor to contribute to your startup, you need to be serious about it. If you’re asking the person to give you tips every now and then, it will stay like that: tips every now and then. That means that the entrepreneur is treating mentoring as a hobby. Even if the mentor is happy to do that for a while, on a midterm they’re likely to find another hobby.

If you want to be high on the mentor’s priority list, you need to make the mentor be an extension of your team: an advisor. Tweet this.

Our expectation when we match startups and mentors is that, if things work out, the mentor becomes an advisor of the startup. They explicitly discuss how much dedication the mentor will have: it can range from a meeting per month to having a secondary role in the company.

They also explicitly discuss a compensation, e.g. a percentage of shares of the company, provided the advisor stays with the company for a number of years. It’s important to find a level in which both parts feel that the compensation is fair and that the relationship could go on indefinitely. You want to make sure that if the company wins, everybody involved wins as well. Tweet this.

You need to know what you’re getting

Advisors can be very different to each other. There are several roles that they can take. Advisors can be:

  • Great coaches for the founder team, and making them think about the right things. Tweet this. They will make use of their experience to make sure you are considering the right factors, but they will not push you in any particular direction. They are likely to focus on your development — as an entrepreneur or as company — instead of the direction that you’re taking.
  • Great sounding boards: you can tell them what your plans and ideas are, and they will give you a reality check based on their experience and industry knowledge. Tweet this. Everybody believes their own ideas, sometimes you need somebody else to confirm or defy your thoughts.
  • Great door openers. One thing you need in a startup is contacts, and some people are particularly gifted at connecting you to the relevant people. Tweet this. It might be potential customers, it might be companies that can help you grow, or it might be people that you don’t know yet how they will help you.
  • Investors in the company. And some of them help you in funding rounds later on. In any case, some advisors are particularly useful for you to find resources for your startup.

 

Most of them end up being some combination of all of those. It’s important for entrepreneurs to understand the value that different advisors are bringing (and to look for the right ones). At the end of the day, your advisor is part of your extended team, and that’s one of the most important success factors in a startup.

In short, the best mentors are the ones that will become advisors of your startup if things go right. Tweet this.

Dr. Daniel Collado-Ruiz, @ErCollao

Do you like the content? Do you disagree? Are you interested in hearing more about other related stuff? Drop us a line in the comments or on twitter, and let’s chat!

 

You might be also interested in: One-night stands, dating and marriage – 3 phases of working with startups

 

 

Posted by & filed under Customers, Entrepreneurship, Startups.

You’re an entrepreneurial individual, and you have an absolutely brilliant idea. Should you talk to others about it? And how much should you tell? Of course you should! At the moment, your business idea is only in your head. And everything makes sense there. You need to cross-check with reality. It’s going to be hard… but also necessary.

I know what you’re thinking — many people ask it in our workshops — “what if somebody steals my idea”? But… really, is that a risk at all?

In the early stages of your startup, people are not likely to understand your business idea at all.

NDA product startup idea

 

Sure, they’ll get a general vague idea. And they’ll tell you they understand. Because they’re nice (or IF they’re nice). But they’ll be missing the big picture. And why is that?

  • Firstly, you’re probably hiding most of the information. There is so much you take for granted. So many assumptions. All the know-how that you need to make sense of the idea. All those things that seem so obvious to you, that you have problems articulating. Talking to others, you will find out what your assumptions are. Tweet about it!
  • Secondly, you probably don’t have such a clear idea as you think. You’re probably quick to imagine details of your solution. But that doesn’t mean that you know about your business, that means you can imagine very fast. Others won’t. It’s a good sign if others they believe in your startup idea half as much as you do! Tweet about it!
  • Finally, they’re not going to drop everything to pursue your idea. Everybody’s doing something, be it our job, starting our own company, etc.. If somebody is so inspired by your business idea, you might be better off getting them to be a co-founder before they get busy with something else. People don’t have the time, the understanding or the skill set to steal your startup idea! Tweet about this!

Think about it: if after talking with you for a couple of minutes, somebody can steal your idea and beat you, you don’t really have such a great idea. Tweet about this! As Mark Cuban said, ideas are overrated, it’s the execution that counts.

This doesn’t mean that you should be that annoying guy that keeps constantly blabbing about their business. That won’t get you anywhere. The person talking can only learn from him or herself (and they rarely do).

So, how should we talk to people?

The whole purpose of talking to a lot of people is to get to listen to a lot of people. Tweet about this!

Entrepreneurs have the tendency to explain their business, to try to prove how smart they are. By doing that, they defeating the purpose of the conversation. Instead, try to really understand the person in front of you. How do they feel the problem that you’re solving? Do they know people who have that pain? How do they currently deal with that? What experience do they have? What ideas do they have?

Listening talking to your customers your idea

You’ll soon also run into the question:

Who should you talk to (or rather listen to)?

I personally think you should listen to many. Take any chance to get more understanding about anything related to your business. And worst case scenario, you’ll be training your skills in asking questions. Don’t look for confirmation of your own ideas: you’ll only end up tricking yourself. Instead, ask questions and understand how the person in front of you thinks. You’ll be surprised how much information you get. Tweet about this!

Now a different thing is how many people you should listen to. You should only pay attention to some. If the person in front of you is your customer, then you should definitely listen to them. If they know your customer, you should listen to them a bit less (and go to the original source instead). You should end up speaking your customer’s language fluently.

And if they’re not at all your customer, you shouldn’t care too much about their opinions. Tweet about this!

They might give you some insights, or some pointers to interesting stuff. But their opinion is no better informed than yours (and often worse). Even if they’re friends or family. Especially if they are. The fact that they’re related to you doesn’t make them an expert on your startup. It only means that they care about you, which is likely to bias their answer in one way or another. Even if you listen to many, you should follow the advice of very few. Make sure you always check for yourself and go to the source: your customers. Tweet about this!

 

Millenials talking to your customers idea false information

 

In short: listen to many, pay attention to some, follow the advice of very few. Tweet about this!

Dr. Daniel Collado-Ruiz, @ErCollao

Do you like the content? Do you disagree? Are you interested in hearing more about other related stuff? Drop us a line in the comments or on twitter, and let’s chat!

 

You might also be interested in: How to pitch to investors to get funding?

 

Posted by & filed under Entrepreneurship, Startups, Team.

An often undervalued part of building a successful startup is the team. Many entrepreneurs just hire their friends and people around them without giving much thought on what they can really bring to the table and if the combination of skills, experiences, personalities etc. is right at all. They forget that it is an important if not even the most important part of becoming a successful startup.

Like Guy Kawasaki famously said: “Ideas are easy. Implementation is hard.” And successful implementation is all dependent on the team. It does not matter how great the idea is if they cannot pull it through. Actually, it often is better to have just a “good enough”  idea and a great (or promising) team as a starting point than the opposite.

It doesn’t matter how great your idea is if your team cannot pull it through. Tweet!

 

Even more important than the business idea?

You are going to hear the same gospel about the importance of the team also when talking to any VC investment professional or experienced serial entrepreneur. In fact, it is often seen even as the main asset of the startup. You might even get the impression that the value of the” obvious” core i.e. the business idea or product, is downplayed. This is not the case, but the team is as much core as the value proposition and product.

Building the team and company is like institutionalizing the right thing to do to do things right. You build an engine to do and repeat what seems to resonate with the real, validated market need. Steve Blank talks about startup as “ … a temporary organization looking for a repeatable and scalable business model.” Building a great team is one important step in getting the engine working. Unfortunately for many entrepreneurs, it is not that obvious.

Why the importance of teams is so misunderstood?

One of the reasons for that is that many (if not most) of the commonly used business tools don’t cover the team properly. Take for example the Lean Canvas. From it, we learn that a well-functioning business model with all the ingredients in place calls for the right balance: value proposition and solution resonating with the real market need, channels built to paying customers and so on. However, the Lean Canvas only regards the team as cost element. But why? Don’t they see the importance? Yes, they do, but you must keep in mind what the canvas is about: helping to iterate and find the right product-market fit. So, it does not downplay the role of the team, you just need to remember to cover it separately.

So, remember to not only focus on building the business model, product and what have you, but also building a team that can execute it all. After all, it is all about execution.

Posted by & filed under Accelerator, Entrepreneurship, Funding, Investing, workshop.

Pitching to investors to get funding can be scary. Typical professional investor listens to hundreds of pitches every year, and this makes them busy and impatient. If you don’t make it easy for them to understand why you are the next big thing, they’ll throw you out. You have to earn every second with the investor. Here’s the simple pitch deck structure that the Nestholma startups have been using successfully when pitching to investors for funding.

When you get a meeting with an investor for 20 minutes, don’t expect it to last for 20 minutes. It’ll last as long as the investor thinks you’re interesting. If you have five minutes to pitch on stage, don’t expect the investors to listen for the entire time. If you’re not making sense, they’ll start looking at their phones while waiting for the next pitch. Investors value their time – make sure you value it, as well.

You need to deliver the punchline right in the beginning: what is your big idea, what is the real problem you’re solving and how you do it. Tweet this!

If these seem interesting, only then the investors want to listen to the details and consider funding you. Start with these three first:

1. The elevator pitch needs to say the essentials in 10 seconds

Bankiton pitching for funding at Nestholma Demo DayIn the first 10 seconds you need to convince the listener that you have something interesting to say. Saying your value proposition is a great starting line. Personally, I’m fond of Steve Blank’s value proposition formula “We help X do Y by doing Z”. You need to get the investor excited and curious to hear more why you should get funding from them. The investor may only listen to this!

2. Problem worth solving and funding

What is the problem that needs to be solved (not all problems are like that)? How have you validated that the problem really exists? Don’t over-do this, but make sure that the investor can understand what you are solving and why. If you want to tell a short personal story, this is the place to do it – not in the beginning.

3. Solution that customers are willing to pay for

How can you solve the validated problem in a way that customers are willing to pay for? Be as concrete and specific as possible. Screenshots, workflows or even a short video are great. Stay away from meaningless jargon, such as “Our solution provides unprecedented ease of use and scalability”.

Now you’ve covered the most important things. If you’re still in the room, you can go into details in your pitch to get funding from investors.

4. Real and addressable market and customers

Your opinion about the market doesn’t matter. Numbers are great but explain clearly what is the significance to your business. “We are working in a $3 billion market” may sound nice, but it is meaningless fluff. Show your traction or explain the logic for getting the customers (deals in place, access to customers or distribution channels etc.). Testimonials are always good. When you have a paying or just a potential customer (at early stages) say nice things about you, it’s always powerful.

5. Revenue model for monetizing the value you provide

If you solve a real problem, the customer will want to pay for it. It can be with money, their data, time or, for example, with services that they provide in turn. Give a clear outline of how your company makes money with the idea. What value are your customers paying for, how much and often and who are your partners etc? Focus on the logic. The details – such as $4.99 or $9.99 a month – may change.

Especially at early stages, it’s more important to convince the investors that the logic behind the revenue model makes sense. Tweet this!

6. Your unfair advantage that keeps others away from your market

Do you have something that competitors don’t have or cannot get easily? Be critical about this! It has to be something unique, or don’t say anything. It can be existing deals, IPR or, for example, unique experience. It’s not “great and committed team”. Not everyone has an unfair advantage in the beginning (just think about Google or Facebook in the early days). For an investor, it’s an added benefit but not a showstopper if you don’t have it.

7. Marketing and getting customers

How do you reach your customers? This not a list of the obvious channels (blog, some, Adwords, PR etc.), but your recipe for success. Everyone uses social media channels, but how will you make them work for you? Explain in your pitch what are the most important channels to reach your specific customer base. What is the cost or, for example, conversion rate you’ve validated? Does your product have a growth engine or can you use some clever growth hacking tactic to boost your growth?

8. Why are you better aka positioning

The thing about what makes you unique and why your customers are paying for your product. Make a 2X2 matrix the two most important things in your product as the x- and y-axes. Place your company and the competitors on the matrix. The aim is to give an easy way to see how you compare with others at a glance. You can provide the feature-by-feature comparisons to investors as background materials if requested.

9. Running the business with the numbers

Provide an overview of the business with a simple cash-low estimate. Don’t just make Excel fantasies. Justify the numbers with deals, traction, benchmarks, sales funnel, customer development etc. Your business logic is more important than the plain numbers. Remember that these may end up in the actual funding decision, so don’t treat them lightly.

Don’t show Excel fantasies to investors! You need to justify the numbers with data. Tweet this!

10. The team worth funding

Explain why you have the perfect mix of people and way of working. Why can make a big business out of the idea? Show the core team, but also mention interesting advisors, investors or board members. Unless you have 100 people and a real organization, don’t use titles like SVP of Product. That may sound nice to your mother, but for an investor, it sounds funny. Most investors will tell you that the team is one of the – if not the – most important thing in funding decisions. Therefore sometimes startups start with their team slide. I’d advise against this unless the investors know the team members. Another “greatest full-stack developer in the world” is interesting only if you have a good idea. But if you have Mark Zuckerberg in your team, put that on the cover slide.

11. Roadmap and how you’ll use the funding

Present a timeline that shows what you are going to do and how much money you need for each step. Explain how you are planning to use the investors’ money. Pay also attention also to working capital needs if your solution has, for example, hardware unit costs. Make sure that the roadmap and spending is aligned with your overall message. It sounds strange if you claim to have the best developer team, and now you say that you need to hire more developers. You may need them, but you need to have justified the new hires with, for example, the market opportunity.

12. Make the last words count

We remember the first and last things. Don’t waste time and space on Thank you’s or contact details. They’ll find them if needed. Instead, end with your value proposition. It reminds the investor why you are interesting, what value you provide. And why they should join the ride.

Collectly pitching at Nestholma event

 

Every investor has their own preferences for the pitch content. Depending on your company stage, you will be expected to deliver different types of things. Also, take into account who are the persons in your audience. What interests them, do they like technical details, numbers or something else? Before every investor meeting, make sure you find out what is the expectation. Talk to their portfolio companies, read their blog posts and tweets or just ask the investors.

This blog post is based on one of the more than 20 workshops run during Nestholma’s accelerator program.Check out also how our startups pitch to investors at our Demo Day.

Topi Järvinen @topij