Categories
startups

Company Culture & Trouble in Basecamp

The team at Hey recently decided to publish an announcement about their internal company operations. You can read it here.

The blog post itself clearly articulates both a cultural and societal point of view.  However it also points out that such discussions don’t make sense within the company.

First and foremost – Basecamp gets to choose their culture, and how they cover such topics.  That being said they are using their platform to signal a significant shift and choosing to do so in public. It would seem that they are inviting debate.

No more societal or political discussions – The point of a company is to create a profit and generally provide some type of benefit. These benefits tend to be for the benefit of society. Not being able to discuss society seems problematic.  Politics and company product decisions tend to go hand-in-hand.  Privacy, security, censorship, are both product questions and political discussions.  On January 6th Amazon, Twitter, Apple, Google, Facebook and others made technical product decisions that had massive political implications.   The politics of a company speak to its culture and values and it helps both employees and customers decide if they want to support a particular company.  Staying silent, actually speaks volumes. 

I’m not suggesting that internal company discussions should focus on politics. It’s reasonable to encourage such discussions to move to other platforms but asking for zero political or societal discussion seems broken too. 

No more paternalistic benefits – Benefits are there to help employees.  When done well, benefits allow employees to concentrate on work.  Health benefits, medical, dental, child-care, 401K, fitness benefits, etc.  The whole point of these types of benefits is to provide mutual benefit to the employee and company.  If done well these can provide huge financial, health, family and mental wellbeing and productivity impacts that individuals are unlikely to seek out on their own.

Focusing on financial funds implies that money is not just an important thing, it’s the ONLY thing that matters. 

No more committees  – It’s great to be able to have accountability within a company. The problem can be that individuals can impose norms onto an entire company.  Committees can provide a voice to people who are otherwise either un-heard or marginalized.  There are many topics that benefit from diverse voices. Having one person steer the ship makes sense but having many people helping plot the course and looking out for icebergs is even better. 

No more lingering or dwelling on past decisions – Lingering on past decisions is not productive but it’s also a signal that something else could be wrong.  This tends to happen when you don’t have team consensus or commitment to a decision.  If you have consensus culture rather than an authoritative culture then decisions that are unpopular will end up being toxic to the organization.  Organizations that are top-down will tend to repel employees who seek to be heard.  The “My way or the highway” attitude can work for some things but it can close you off from hearing the problems.

tldr;
Basecamp’s is very unique company.  I don’t always agree with them but they spark good discussions.  This is one where I think they missed the mark in terms of culture, values, and vision. I suspect this was prompted by something internal but the “fix” seems to be misaligned with the root-cause.  

Companies have politics, committees and dwelling on decisions… Even if you say that they don’t, they still will. Solving the root issues around accountability, trust, and product vision will be the only thing that actually helps the company spend more time building better products.

Follow up video as more news emerged…

Categories
design innovation startups

Find Product Market Fit Fast

Product Market Fit is one of the hardest things for an early-stage startup to achieve and it’s a critical step for companies looking to scale and be successful.

Product/market fit means being in a good market with a product that can satisfy that market

Marc Andreesen – Andreessen Horowitz

So the first thing you need to do is to understand your target market. Are you building a product for the automotive market, the food & beverage market, the software or technology market or something else? To find product-market fit, you really need to narrow your market and niche down. Don’t try to make your product solve the problems of multiple markets early on. Identify a core initial target market.

Once you know your target market, make sure you really understand and research it. You can’t possibly expect to satisfy your customers let alone a target market unless you really understand their problems.

In researching a market and the problems within that market many entrepreneurs will start to identify problems. Once you have a couple conversations you’ll see patterns emerge in terms of problems that people are experiencing.

In the early stages of a startup it’s typical to build early solutions to those problems. And when these solutions solve those specific problems you have product-problem fit. You’ve identified a problem and you’ve provided a solution… many entrepreneurs think that they are set and they stop there but finding product-market fit is more complex. You need to ensure that your product doesn’t just solve a specific problem, but rather it solves a problem that is repeatable and consistent across a large market segment.

To do this you need two core things:

  • First: You need a good cross-section of customers across your market. Not just your friends’ circle, but knowing that a good portion of any customers in your target market have a similar problem you can address.
  • Secondly: Your product has to be sticky enough that people are upset if you were to take the product away.

Finding and solving a problem is a great start but to really find product market fit you need to make sure that the problem you’re solving is widespread and impacts a large enough market in a scalable way and that the solution doesn’t feel like a NICE-to-Have but rather a NEED- To-Have.

It’s better to make a few users love you than have a lot that are ambivalent.

Paul Graham – YCombinator

You need people to care and the best way to find out if they do is to ask them. Ask your users how they’d feel if they could no longer use your product. The group that answers ‘very disappointed’ will unlock the product/market fit.

Sean Ellis, who ran early early growth in the early days of Dropbox, LogMeIn, and Eventbrite and adviced that if 40% of your customers would be “Very Disappointed” then you’ve found product market fit.

When thinking about product market fit, it’s worth also considering founder-market fit. Some founders have deep experience with a particular market. Maybe they spent a decade at a large company within the target market so they know the right people and they know the problems that are un-solved. Sometimes having a good founder-market fit can be a huge advantage and investors will consider how well a founder is aligned to a market. On the flip-side sometimes founder-market fit can be road-block. Consider how sometimes only an outsider to a market can realize just how broken a market is. If Uber had deep market experience in the Taxi market they may never have build as disruptive a company.

Finding product-market fit is both one of the most misunderstood and difficult steps for any growing startup. Keeping yourself focused on the customer and how that relates to the larger market will keep your company on track.

Categories
innovation startups

Ideas Are Worthless

You may thinkyou have the best, most amazing idea but I’m sorry to tell you that your idea is worthless…. But it’s Ok, most ideas are worthless.

Now before I get too deep, I’ve seen hundreds of pitches with a wide range of ideas and I’ve signed stacks and stacks of NDA’s to keep someone’s ideas secrets. Want to know the best secret idea I’ve ever heard?

There are none. We’re you listening at the beginning? Ideas are worthless and I’ve never been blown away by an amazing idea. Never! I’ve heard interesting ideas and clever ideas but most of the time amazing ideas are not the exciting part.

If you just think about the ideas behind the world’s most successful companies, the ideas aren’t that exciting.

  • A phone that doesn’t have any buttons
  • A car that uses electricity instead of a motor
  • A new search engine

These ideas by themselves have no value and even if you were able to rewind the clock 20 years, the ideas themselves weren’t worth anything without the entrepenours to drive them.

Nokia had phones without buttons before Apple. There were plenty of electric golf-carts before Tesla, and Google was late to the game as far as search engines go.

It’s the execution that creates value and these companies executed exceptionaly well.

While ideas are worthless, working on your idea is the thing that starts to create value. Some examples of value creation:

  • A list of potential customers willing to try or buy a finished product
  • Sales or purchase orders for a product or service
  • A prototype of the future product
  • Testimonials from people who have tried the prototype/product
  • Partners willing to stock or sell the product/service
  • Patents on the product/technology. (more on patents here)

You don’t have to be an engineer or designer to make progress on an idea, but you need to take action.

The other reason that ideas are worthless is that the idea instantly changes as soon as you start working on it. Once you put a pencil to paper your idea starts to spawn new ideas. Once you have a customer using the product you start to get feedback on the idea and what needs to change about it. Once you try to sell a product you learn all the reasons people don’t want it. It’s this learning/feedback cycle that creates real value because it’s based on real applications, not just theoretical ones.

The execution of the idea is the essence of the idea. Want to make something amazing, take action to make it real.

Why are ideas worthless
Categories
innovation startups

Angel investors vs Venture Capitalists

Angel vs. Venture Capitalists.

Startups looking to raise money may not be too picky in terms of where they get it, but finding the right fit for your company is often more than just financing and may reflect some of the differences between angel investors and venture capitalists.

First let’s start off with where Angel Investors and Venture Capital Investors get their money.

  • Angel Investors are typically individuals – They typically don’t have other decision makers in their investments and they are usually investing their own money. This gives them flexibility in terms of deal terms and it also means that they often don’t have external requirements on how they get their money back.
  • Venture Capital investors are typically not individuals, but rather companies or firms. They are most typically investing other people’s money in a Fund. VC’s will raise this money from people referred to as Limited Partners or LPs. LP’s are typically writing million-dollar checks and expecting VC’s to invest that money and get a return.

Both Angels and Venture Capitalists look for companies that can grow and be successful but each may look at companies at different stages and be interested in making different types of investments. Because VC’s are investing other people’s money they have general expectations on how long it may take to get their money back and will structure most returns and investments to have liquidity.

Angel investments are typically investing in early stage companies and are most often writing checks between 5-50 thousand with some angel investors going even higher. It’s most typical for angels to invest in the early stages of growth.

Angels and VC’s may take different amounts of interest in the operations of the company too. While Angels will often be available and interested in helping companies VC’s are likely to insist on a board seat. As companies continue to raise funding founders should be aware of balance in the board of directors.

Generally the board and the founder are aligned however if the founder and board disagree it’s possible for the board to fire the CEO so just make sure you consider the long-term direction of your business as you take on investors and board members.

Ultimately both VC’s and Angels want companies to succeed and depending on the stage of your business angels or VC’s may be a better fit for growing your business. Lastly remember that you don’t have to take investment and there are plenty of successful companies that have never raised funding and did it all on their own. There’s no right or wrong so consider the pros and cons of the different paths as you go on your startup journey.