We crowdsource innovations, product development, R&D and customer interactions. We are not replacing anything, we just provide the wisdom of thousands of people at the cost of fraction of a internal development team.
We follow the Lean Startup methodology, but from our strategic partners perspective it looks more like design thinking. We have copied some of the best practices from Google, Stanford and the ideas of analytics-driven and customer-focused product development. We go way beyond just posting the separate ideas on yellow stickers on the wall. Together with startups, we provide our partner companies ready and validated concepts to choose from. Post-it notes are excellent combined with some research and validations, but in most cases it really takes companies nowhere today. Average successful startup has 4-7 pivots. Consumers’ behavior changes faster every day and teams should learn and adjust the product based on the learnings. Only very seldom can we nowadays have step-wise process, but several simultaneous processes affecting each other with fast changes.
We bring customer and developer insight from over 500 persons per project. Because it’s their own business, they have done a lot of research themselves. What company can afford to mobilize such a huge amount of people for innovating, product development, R&D and customer interactions? Certainly many big companies do it all the time, but the expense is 100 fold compared to an accelerator program.
One has to let loose a bit to succeed in the future. Nobody can control the consumers – predicting the future usually goes wrong. At least with faster implementation of learned behavior and needs, organizations could provide more competitive products. If you plan for years to come and focus on implementation, that’s a sure way to fail. If you react based on learnings from open collaboration with your business ecosystem, you still can fail or succeed. However, if you fail, the failure is minimal compared to old school operations.
By opening up company’s ecosystem, learning is faster, financial overhead and risks are lower, and the number of of new product ideas is far greater than before. And we are talking about validated ideas, because quantitative assessment is crucial for us. I have to say that I am a fan of Mika Aaltonen’s work at Aalto-Strax. One thing they point out is the idea of not defining what success will look like in the future. Every company should be prepared to keep the door open for unplanned successes. Working with fast-moving and creative startups is one of the best ways to stay on top of the change and take advantage of the new business opportunities.
I was lucky enough to get a co-founder with solid scientific background from research backed by the Finnish Academy. Topi has also developed 100+ products for the biggest companies as well as for startups. Together with him we are creating a product factory producing learning and new revenue streams to large corporations. This creates also a laboratory and a collaboration environment inside the large corporations for the startups. The end-goal is of course to create the next airbnbs, twitters and facebooks. A win-win-win factory.
Antti Kosunen (twitter.com/AnttiKosunen)
Startups almost always begin with a great idea. In the euphoria caused by the idea, the would-be entrepreneurs often feel invincible and ready to conquer the world. It feels that if we just build it, users will come – as if by a miracle.
Sidney Harris has a great cartoon about wishful thinking that sometimes happens in the world of science (see, http://www.sciencecartoonsplus.com/). In the cartoon a scientist has drawn mathematical proof for the beginning and the end of a problem. However, in the middle there is just “then a miracle occurs”.
Sounds familiar to anyone who has worked in or with startups, right? We plan the beginning (the idea) and the end (the business) and hope that the miracle (people want it) happens in the middle. As the popular wisdom says, you just need to “Trust in yourself” and “Have perseverance”.
When you go down this path, you also quickly get worried about not being ready for the masses that are just around the corner. Therefore before even getting the first customer, you start optimizing the “money-making machine”. You want to be ready for the inevitable success by making sure the product is feature-complete, branding and marketing is world class, the functional organization and processes are well-oiled etc. In fact, you probably don’t even remember anymore that the miracle needs to happen, because you are so sure about your vision.
I’ve been down this road, and still too often I see startups that try to run before they can walk. They waste a lot of time and money just because they have a “killer idea” that’s a big business just waiting to be done. The problem with the “let’s wait for the miracle” -approach is that you are really not in control of what is happening. What’s worse, you have no data on what are the customer needs that you should solve.
A much better approach is to try to be close to the customer every step of the way. You should test your understanding of the needs and problems you’re solving, your idea, your solution to the need etc. After every iteration you need to ask if you are really producing something that is valuable to your customers. Valuable enough that they will pay for it either with their money or time. If not, you should pivot and find something that is valuable. Sometimes the change may not be very big, but it can still make all the difference in the success of your future business.
In other words, startups can avoid waiting for the miracle by taking a rigorous attitude towards testing and validating everything they do. Now, this doesn’t mean that it is a simple process where just by asking you can find the answers to questions, such as “what features the product should have?”. Instead of answers you will get data that will help you to assess if you’re going to the right direction.
Sometimes this type of approach has even been described as “scientific”, but I find that a bit misleading. At its best it can be very rigorous in the quest for hard facts, but at some point the entrepreneur still needs to make the leap of faith. And a “leap of faith” is not in the vocabulary of any self-respecting scientist. In most cases, the entrepreneur cannot afford spending time with, for example, doing factor analysis of the empirical data. For the startup, the point is not to aim to find “statistically significant” results; the point is to learn about what could be a solid basis for a business by listening your customers. The rigorous process of assessing the assumptions and, if needed, “killing your darlings”, helps the startup to be in control of their destiny and not rely on miracles to happen.
— Topi Järvinen (twitter.com/topij)
LinkedIn founder Reid Hoffman was talking about startups when he said that “You jump off a cliff and you assemble an airplane on the way down.” There always seems to be too little time, people, money or something else for doing all the things that seem necessary. Even though that may be the fact of life for any startup entrepreneur, some of the hardship may be self-inflicted and unnecessary.
It’s probably true that you learn the most when you make mistakes. Also, startups shouldn’t fear making mistakes when trying new things and approaches. Having said that, I think it makes sense to try to avoid some of the most typical mistakes that provide very little value and concentrate on some new ones that create new learnings.
Below are some thoughts in no particular order on the kinds of things or even mistakes that I think startups should avoid. Some I’ve learned first hand the hard way and some I’ve seen to happen in the tens of startups that I’ve worked with.
Don’t start with a org chart
If you don’t have customers and revenue, but you have an organizational chart with VP’s or similar, you are most likely spending your time on the wrong things. There are some official roles that need to be there, such as a CEO, but even that should not be the same as a CEO in a big company (you know, mahogany chairs, corner office, secretary, etc.). Certainly, startups need to agree on roles (“Tom has the main responsibility for marketing, Pekka for tech” etc.) in order to get things done. Still, the founders need to spend their time learning together what the actual business will be about, not worrying about organizational boundaries and the chain of command.
Don’t make a 12 month roadmap and stick with it
A lot of times success in big companies is measured in part by being on time and on budget and delivering the project roadmap. If you are in an established business and you can predict, for example, demand with high certainty, this makes a lot of sense. Eric Ries has a great definition for a startup: “human institution designed to deliver a new product or service under conditions of extreme uncertainty”. In other words, it’s good to make snapshots of what you think will happen, but always expect change and be prepared for it.
Don’t do too much before you really know what your customers want
Startup founders need to have a great deal of passion and confidence in their idea. Sometimes they may get carried away in this and believe that success is just around the corner only if they just add a few more features. More often than not, you can’t make a bad product into a good one by adding more features or optimizations. For example, if you cannot attract customers for your iPhone mobile app, you are not likely to be any better off by adding the Android app. Or if customers are not interested in your product, adding new payment methods will not increase your sales. Make sure your customers love your core product and use the new features to accelerate the growth.
Don’t take your fancy spreadsheet exercise as a portrayal of reality
It’s always good to turn your idea into numbers, because it’s a great way to test the business logic behind it. The problem with these spreadsheet exercises is that too many times the founders see it as a proof of the business model and as a real forecast for the business. For big companies with a lots of data points and historical evidence, this may be a plausible conclusion, but for startups it is not. Just think about it: you make the assumption that customers love your product so much that they want to tell about to 10 friends, 50% of which will do the same, 20% of those will buy your paid product that costs $3.99. After some viral rounds you end up with a great business with millions in revenue. Logical? Yes. True? Impossible to know. Now, instead of rushing to investors with this plan, you should rush to your customers to validate your assumptions and logic. Do they have the problem you’re solving? Are they using or even paying for something else for the same purpose? Do they love your solutions? Would they they recommend it and to whom? Etc.
Don’t try to build several businesses simultaneously
Entrepreneurs see ideas and opportunities everywhere and that’s a good thing. The hard part is usually when you have to decide what to do right now and what to leave behind – at least for the time being. It’s easy to see, for example, your technology as a potential solution to many different problems and target segments. Usually the reasoning is that it makes sense to leverage the investment for different use cases. Again, possibly a good idea, but not at the same time. Startups need to spend all time and effort to learn what is the problem and build a unique solution as fast as possible. Also, even if the underlying technology is almost the same, the business logic and the way you’d run the company may be very different. Just consider how different, for example, sales, marketing or customer support functions are for a B2C and B2B companies.
Don’t ask for an NDA everytime you talk to someone about your idea
Feedback and talking to potential customers and partners are the lifeblood of startups. Without them very little learning will happen. If you require an NDA (non-disclosure agreement), you will loose many opportunities to learn. Also, think about how unique your idea itself is really. For example, before Facebook launched in 2004, there were already tens of companies offering social networking services over the internet (for ex. MySpace, Friendster etc.). In other words, the idea wasn’t unique, but how they did it was. If you really think that you have some unique intellectual property that should be protected, submit a patent application. That will protect you much more and it will also look good in the eyes of the investors.
As always, your experiences may be different. In the spirit of learning, I’d like to hear if you agree or disagree or if you have in mind some other mistakes startups should avoid. Finally, my apologies for all the negativity. Next time I’ll try to find a more positive spin :-)
— Topi Järvinen (twitter.com/topij)
The popular wisdom tells us that entrepreneurs need to love and have passion for whatever they’re doing. While that’s certainly a great and essential underpinning for any startup, there are a couple of other ingredients needed when trying to become the next great thing.
For the past week I’ve been talking to lots of startups that applied to our Nestholma startup program and made it to the interview round. Really interesting stuff and I can’t wait to get started working with them. Anyway, when talking with them, I thought about a lot about the qualities and aspirations of the candidates and what would make them successful. In the interviews we asked, among other things, why they want to be entrepreneurs and why the product they’re working on is so exciting. Building and running a startup is filled with so much uncertainty, so many nay-sayers combined with scarce resources (funding, people, time, etc.) that you absolutely need to have a passion for it to. However, that’s not enough.
Some time ago there was an excellent post by Michael Fertik in LinkedIn about finding your startup’s sweet spot from your personal point of view. He makes a good point about the need to find something you love and something you’re good at. Fertik advises that aspiring entrepreneurs should look for the overlapping area of the two and think about building the business around that. Excellent advice in the beginning, but to me it would seem that very soon the entrepreneur should start thinking about a third ingredient that’s actually even more important than these two. That is, what customers find valuable, want to use and pay for. Here’s my take on the startup sweet spot.
When you combine your passion and expertise, but don’t have customers, you end up with a hobby
First, think about the situation where you have a passion for something and you’re really good at something that is needed. For example, you have a passion for stamps and you are good at building ecommerce sites. Your idea could be to build the Amazon for stamps. Maybe there’s a great unmet need that you have discovered and can fulfill with your site? If not, it will turn into a hobby that may be fun for you, but there’s really no business to be build. Actually, when thinking about this, I finally understood why Steve Jobs and Apple have been talking about the Apple TV as their “hobby“: they can do it well, they love entertainment and TV, but they don’t know yet what is the product they should build ie. what the customers want.
When have a passion for something that others would like to use or buy, but don’t have any relevant expertise, you may be better off by becoming someone else’s customer
What about if you have a passion for something and you are certain that lots of others people have the same passion and need? The problem is that you don’t have any relevant expertise. For example, you have great passion for electric cars and think that there will be a great business around them in the future. However, without any engineering skills or in depth understanding about electric cars, the uphill battle may be too steep for you in such an industry. You may try to find the expertise, and buy your way into the new business. Still, you may be better off just to save up the money for the car done by someone else and enjoy it as a customer. Elon Musk has made the unthinkable and penetrated the fierce car industry with his Tesla Motors, but then again, he seems to poses phenomenal engineering and business skills.
When you’re good at something that customer like, but you don’t have a particular passion for it, you’re doing a 9-to-5 -job.
What about if you’re really good at something, and customers love what you produce, but you don’t really have a passion for it? Most working people in the world fall into this category. For example, you may be really good at writing code for enterprise backend systems, and your customers get a lot of value out of your work. If the pay is good, you may even work late nights. Still, thinking about new ways to improve, for example, the SAP and legacy system integration doesn’t keep you up at night and consume your free time. You’re happy to exchange your free time for the pay check, but you want to fill your free time with other activities and interests.
Sweet spot where startups should aim.
Now, when you combine these three things, passion, expertise, and customer demand, you arrive at the startup sweet spot. Most likely you’d start thinking about an idea in an area that you feel passionately about and combine that with some skill set or expertise that you have. However, in order to get closer to any meaningful business, you need to spend most of your time by learning what the customers really want to use and pay for and align everything else with that. As many startup advocates have said, startups are about learning what your business should be about. To me that learning is what makes working at and with startups so exciting. You get to discover what is your startup’s sweet spot and what opportunities it entails for your future business. If the connection with your customers is strong enough, you may have an actual business that you dreamt of when you started.
— Topi Järvinen (twitter.com/topij)
Download the Nestholma whitepaper
Corporations need to renew themselves. One of the best ways to do it is by working with startups. This white paper explores the benefits on branding, innovation and learning. It also reviews alternatives and best practices on collaboration.
Every year billions of dollars are wasted on producing and marketing products and services that no one wants. And every year thousands of startups fail to find customers for a product that at first seemed unique and valuable.
Over the past 15 years I’ve had the opportunity to work on 100+ new products and services with a lot of brilliant people in many types of companies. For a long time I couldn’t figure out a consistent way to turn new ideas into successful services that customers actually value. In every industry there seems to be a few people like Steve Jobs and Richard Branson who seem to succeed just by relying on their vision and intuition. But what about the rest of us? Is there a way to achieve better results? I think there is. Here are some of my thoughts on it.
So many ideas, but what to do with them?
How do you decide what is important, what are the features, who is your customer? If you’re at a bigger company, there tends to be more emphasis on things like trend analysis, focus groups, portfolio management etc. In a smaller company, things are usually not as systematic. But the way they make decisions is strikingly similar.
Take a look at the image below that illustrates the kind of discussion that I’ve heard in product planning or decision meetings over the years. I’m pretty sure that everyone who has ever participated in such meetings have heard some of them.
In product meetings, there’s a plethora of ideas, opinions and even data. But what to do with them?
To me, it seems that the hardest part is not how to come up with the new ideas. It’s actually more difficult to turn all the ideas, opinions and data into something that the customers actually want to use. After all, Facebook wasn’t the first one with an idea about a social networking service.
Let’s look at two different approaches for attempting to find great products and services. First approach is what I call here the old way of doing things. Surprisingly it is still common both in big companies and startups. The second approach is the new way that has been advocated by people like Eric Ries and Steve Blank.
The old way:
“We know what to do”
In the old way decisions on what the user needs and what to do are done based on what the product owner, an executive or the decision board believes in. Whatever seems to be the most plausible alternative wins. This is a one-time decision and rest is just project management and execution based on the agreed timeline and budget. Customers may be involved in the final stages to check for usability problems, but the real – and only – test for the product is the commercial launch. Then the company can finally see if they made the right decisions months ago. They can only hope that everything turns out OK.
Many times product and services are not validated until the commercial launch.
In other words, the old way relies on the assumptions that are based on insight and foresight from “wise men and women”. These are used to make an executive decision on the user need.
The new way:
“We don’t know, but we’ll learn from the customers”
Every product and service is based on certain assumptions like: who is the customer? What is their need or problem? What is the appropriate solution? How much the identified customers are willing to pay for it? What if we actually involved the potential customers through-out the process? Tried to validate our assumptions as we are building the product?
For example, we may have an assumption that people would like to get better pictures of their children when they are playing sports. And that they’d like to pay for such a service. These are pretty simple assumptions that you can easily validate by talking to real potential customers. That means not just your roommate, wife/husband, neighbor etc. At the same time, you actually get some really important insights on the real-life use cases. In which situation they have this need and how often? Are there ways/services/products that help them to do it now? What are the problems they have with the existing ways? This is not same as asking from customers what kind of product they’d need. Figuring out the solution to a validated customer problem is your job as a product developer. So, less guessing, more validated information you can use to build better products.
It’s important to note that talking to potential customers is not a one-time thing you do early in the development process. Also, it’s not something that you outsource entirely to an outside agency. You as the product developer need to hear it from the customer. Otherwise, it’s too easy to dismiss the data if you only see a dry summary of the user responses.
You should continuously validate your assumptions and deliverables with the real customers that you are targeting.
Talk, learn & create your first advocates
All this should be a continuous dialogue where the product developer tries to learn as much as possible about the need, the suitability, and usefulness of the planned solution. This is nicely illustrated by the continuous Lean Startup “Build-Measure-Learn” -loop in figure 3. When you slice the work into short iteration, you can easily make product and business decision based on validated data, not just on the best guess of the decision maker. This way also pivots are easier without wasting much time and money.
As an added bonus, the customers you talk to will be your first advocates. When you launch your product, getting the word out will be much simpler, because you already have people that trust you, like your product, and think your product solves a real need. That is if you listen to them carefully.
Of course, this is not a simple recipe for success. You still have to have great ideas, make great design and usability, figure out a business model that carries the business etc. But this new way of developing products enables you to use your time, money, and expertise on things that actually matter to your customers.
— Topi Järvinen (twitter.com/topij)