Startups and Entrepreneurship – Burt, John Sjölander, COO


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I gave a talk at the IT University of Göteborg in a course about Innovation and Entrepreneurship where the class was, as part of the course, was supposed to write a business plan. My claim was – the plan is useless but planning is essential. And if you should focus on anything, focus on the Business Model instead.

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  • Your point about the plan vs. the planning process is very similar to U.S. General / President Eisenhower's quote: 'Plans are nothing; planning is everything.'
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  • \n
  • These are my opinions. You may or may not agree with them. You may or may not have use for them. They may or may not be right, or politically correct. But they’re mine.\n\nThings I believe to be true:\nHoodies are the best piece of clothing ever invented.\nWomen are better than men.\nLisp is the best programming language ever.\nThere is no god.\n\nI can’t prove any of them. An neither can you prove me wrong. :-) So let’s agree to disagree.\n
  • So, I'm John Sjölander, and I'm a geek. Yes, I mean as in computer-nerd. Yes, I mean i spent my child hood in a dark room with a computer that was pretty much useless by todays standards.\n\n
  • Luckily I'm in good company. Because in reality the world belongs to the nerds. Ever since we introduced democracy and a free market, nerds were free to roam. And by doing that they created massive fortunes, millions if not billions of jobs, and built foundations for societies to stand on.\n\nYes, I'm holding myself to a pretty high standard. I'm not saying I'm as great as these guys, but I'm hoping that I'm getting closer by the day.\n\nSo it turns out that these guys (as well as many successful people) have a few things in common – apart from throwing the occasional barbeque using dollar bills for fuel...\n
  • I spend my days building a company called Burt. As the CTO i handle anything tech, and recruit and organise the technology team.\n\nAt Burt we create tools and services to create better online advertising. \n
  • Rich is a tool to track online banner campaigns. Using Rich advertisers gain insigths about where were the ads visible. How many saw them? For how long? How many times? How many engaged? How did the creative perform? How good was the media buy? etc.\n
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  • Advertisers and creative agencies use Rich to power the quick feedback loop of test, analyze and scale what works.\n\n
  • Burt introduced the idea of Agile Advertising at the Cannes Lions fair in 2010, and has since been a forerunner in creating tools that support the agile advertising methodology.\n
  • Our customers are advertisers (names), and we acquire them through partnerships with creative agencies. For people who are not in advertising, a creative agency is equivalent to an Advertising Agency. In reality the eco-system is a lot more complicated and there are media agencies, production agecies, web agencies, marketing agencies, communication agencies, etc. etc. \nThe creative agency is usually the ones that come up with the idea for the ad.\nWe’ve been around for a year and a half. So far three hundred agencies have created accounts with us. Out of them, about seventy have started actually using the products. Today, three monts after launch, we have about 40 active accounts. We track 20 - 30 million ad exposures every day, and a handful of advertisers are paying for a subscription service.\nBurt employs seven people in three cities. Our HQ is in Göteborg, and we have people in London (not for long) and Stockholm. We’re looking to grow about six people in 6-9 months.\n
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  • The most simple of businesses rely on something rather simple. 1) Offer a service someone is willing to pay for 2) get paid 3) buy Piña coladas.\n
  • ... for instance an hair dresser.\n
  • If you’re not selling a service, you’re selling a product. A service is consumed at the moment of offering it. A product may or may not be consumed, but not necessarily at transaction time.\n
  • The best way is of course to offer the product and ensure you have buyers before you actually create the product. For instance this is how modern car manufacturers work (in Europe, those crazy americans still buy cars of the dealers lot).\n
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  • But not all products are that simple. Successful startups are successful because they disrupt markets – by introducing something geniously created.\n
  • So for startups, you first conceive of an idea that’s novel and brilliant, and that people will be wanting to buy.\n
  • But since we’ve come up with so many ideas and innovations, many new ideas are complex and require resources to be built. Usually time or money, and since time == money that speaks: $$$\n
  • To do this, there’s a whole eco system that’s surrounding startup companies to finance them. Venture Capital funds invests larger sums, for smaller “seed” funding there are Angel Investors, people with money, who privately invest in small businesses – since very small sum investing isn’t sustainable for the VC firms.\n
  • This is basically how it works. The blue line is an organically steadily growing business. The red line is a business that require venture capital in order to survive the years where they loose money, in order to thrive in the years where they make money hand over fist.\n\nThe idea is that the area below the 0 line, above the red line for the first years is smaller than what it is above the 0 line the later years.\n
  • But the venture capitalist (or angel) isn’t doing it for charity. They want something back. So they’re expecting what’s called an Exit event. Which is to say when the company is sold, or possibly introduced on a stock exchange – an IPO – initial public offering.\n
  • As a business goes from idea to successful exit, the company passes a number of phases.\n
  • The phases usually correspond well to a number of times where the company raises money.\n
  • At first, the company has to pass through a phase of building a (prototype) product. At this stage, the most important thing is to minimize product risks. To prove that the product can actually be built, and that there aren’t any technical obstacles that can’t be overcome.\n
  • The next phase, usually when the company raises their first money, the company tries to achieve less market risk. By proving the sales process, that there are market segments that will buy the product, that the pricing model is sustainable etc. This is when most of the first Business Modelling is put into practice. \n
  • After there is a clear and obvious product/market fit (see M.Andreessen the company needs to scale. A lot of time is spent to streamline the company processes and to trim the business model at scale.\n\nIn the last step the company has achieved market success, and the last risk is to do away with the competition. Once the company is at this stage, it’s rather common that their well positioned to be acquired. This is the stage where most of us will read about company X being bought by Google for an insane pile of cash.\n
  • It’s very important to understand that the four stages require different mindsets. \n\nAt the first two stages it’s very important for the company to be very cost efficient. The company isn’t really earning any money yet, and there are still changes in the product and the market segments that require the company to be very resilient, and to spend their money very carefully.\n\nAs Marc Andreessen writes, once product market fit is achieved, the company has to focus on growth efficiency. Money still has to be carefully spent, but usually at this point money is spent at much, much higher pace – since the company is now supposed to be in a place that every $100 spent generates more than $100 back. And thus – the quicker you recycle those dollars, the quicker, supposedly, you earn lots of money.\n
  • So basically, the first to is concerned with efficiency in costs (while still improving quickly), while the last two stages are concerned with speed (while still spending money wisely).\n
  • I’d like to finish by talking some of the principles that have fueled my own entrepreneurship.\n\nFirstly, keeping your company focus is important because it helps define your goals. Any entrepreneur will know they’ll have lots of great ideas. In order to be successful you just can’t do them all – you have to focus.\n
  • From a technological standpoint, there are two things that we try to be the very best at. (Best data) We collect the best, and most comprehensible data set about online ads. Using this high-fidelity data set, we do the very best analysis of the data. (Best analysis)\n\n
  • This creates value for our customers in two ways: (Deep insights) First, we can answer a broad range of questions, and are not limited to answering “how many clicked” types of questions. We’ll tell you how moving from the second to the third ad-view impacted user engagement.\nSecondly, our data and analysis can be trusted. This is important because of loss in data fidelity over transformation steps. Imagine that your data is 90% accurate and you have five transformation steps to answer a question on the data (Session transformation, purge outliers, data flattening, modeling, analysis). Your result will be less than 60% accurate. No one will trust you. \nAnd people are funny. If they identify one data point in a report that’s fishy, they think that all data in that report is fishy. \nSo it’s REALLY important to have trustworthy data.\n
  • ... That is, if you’re a techie.\n
  • If you market your product early, and get people excited, you get a chance to hear what people are excited about. By getting early access to your users and customers you can build what they want, and not what you want to build. Us techies are phenomenal at building stuff that people don’t want. \n\nSince I’m a techie, I can’t give you that much advise. I’m just saying it’s more important than you think. \n\n“Build it, and they will come.” is a myth.\n
  • Say that you’ve got your customers excited. How do you keep them excited? \n
  • First, talk to them. Listen well and PROPOSE (don’t build, yet) solutions to their problems. A sketch or a powerpoint slide that shows the concept is often good enough. If they seem happy with the solution first build the most basic feature that actually works.\n
  • Also, be careful about how you listen. You want to find your “earlyvangelists”. Early adopters that evangelize your product. Many startups listen to the HIPPO – Higest Payed Person’s Opinion. He/she is rarely right. Neither is the people who talk the most.\n\n
  • Frequently we get suggestions for often obvious product improvements. We often respond with “we don’t have that, but when you need tell us, and we’ll do it for you”. Funnily, there are rarely actual requests for these things. So why is this? People want to be smart. Often you’ll talk to someone who’s overwhelmed with how cool a thing you’ve built. So they spot something that they think will be needed, and they’ll point that out to you, so that they can be as smart as you. Don’t fall for that. \n
  • You’ll want to spend 90% of your time with the 10% of the features that people use the most. Really, really polish them and make them exciting to use. \n\nListen well to your users, back what you build up with data and spend your time well.\n
  • I just wanted to take a minute to address some of the more and less common “Truths” about company building, and my take on them.\n
  • Firstly, money solves nothing. In reality it creates new problems. What will you do with the money? How long does it have to last? How do you spend it? etc. Money raises the bar, creates some limited room for you to act in, but imposes a lot of expectations. Raising money is necessary evil.\n
  • Funnily, people don’t solve anything either. Of course you need people to get things done. But more people means more overhead. So you’ll spend less time on what you did before, and more time managing people, communicating values, visions and expectations, solving conflict, correcting mistakes, etc.\n
  • From anyone and everyone who isn’t involved in the everyday business you’ll often hear “Doing X will solve everything”, or “If we just Y then we’ll be a huge success”. I’m talking advisors, mentors, board members, on and off consultants, customers, investors, etc. etc. \nDon’t. Ever. Believe. Them.\nThere just isn’t a quick solution to anything. The solution is to get your hands dirty and work hard. This is the startup business, it’s supposed to be hard. That’s why so few do it, and so few succeed. \n
  • For the same reason, getting the RIGHT people for your company is a matter of make or break. So you need people who are driven, smart, and gets things done. In any organisation, the difference between a good and a great programmer is an order of magnitude. In startup, you’re so strapped for cash and time that this is absolutely essential. There is just no time for correcting people mistakes. In fact, for a startup, bad programmers kill the company. (It’s the difference between Spotify and Voddler). \n
  • As your company grows, the best skill to acquire is learning how to prioritize. Running a startup inherently means that you won’t have time for everything, and you can’t be everyones friend. That’s normal. Having a clear vision will GREATLY help you understanding what you need to spend time on, and what you can omit. And you’ll drop a lot more stuff than the stuff you actually do.\n
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  • The main point is that the only thing that’s important in the business plan is the business model. Everything else are phrases with incorrect assumptions stated as facts.\n\n
  • But the model can’t be out-dated. It’s a model that describes how your company will do business.\n\n\n
  • A business model consist of ten areas.\n\nFor each area – state your assumtions\n
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  • Startups and Entrepreneurship – Burt, John Sjölander, COO

    1. 1. John Sjölander @jsjoStartups and entrepreneurship
    2. 2. RichMetrics that matter.
    3. 3. Google Analytics is hugely popular
    4. 4. Drill down to see detailed information on individual sites and ads.
    5. 5. See where ads were placed and where they could be seen.
    6. 6. Exposures, reach and performance by location.
    7. 7. MAKE speed speed speedLEARN MEASURE
    8. 8. ”AGILE ADVERTISING” The process of being quick learn, adapt and improve.
    9. 9. Advertisers as customersAgencies as distribution 10+ billion tracked ads 20-30 M / day 40 active agencies Repeat pay customers
    10. 10. How the startup game works.
    11. 11. Offer serviceEarn money
    12. 12. Make productOffer product Earn money
    13. 13. Offer productMake product Earn money
    14. 14. Have ideaOffer productMake product Earn money
    15. 15. Have ideaRaise moneyMake productOffer product Earn money ...
    16. 16. Organic VC funded201510 5 0-5 2007 2008 2009 2010 2011 2012 2013 2014
    17. 17. Have idea Raise money Make product Offer product Earn moneySell company (exit)
    18. 18. Valuation Competition Scale Market Product Time
    19. 19. C Competition B Scale A MarketSeed Product Time
    20. 20. C Competition B Scale A MarketSeed Product Time
    21. 21. C Competition B Scale A MarketSeed Product Time
    22. 22. C Competition B Scale A MarketSeed Product Time
    23. 23. C Competition Growth efficiency B Scale A Market Cost efficiencySeed Product Time
    24. 24. C Competition Speed B Scale A Market CostSeed Product Time
    25. 25. Focus
    26. 26. Know what you’re good at, and do that really well.
    27. 27. Know what you’re good at, and do that really well.
    28. 28. Marketing is the hard part
    29. 29. Build something people want
    30. 30. Befriend your customer.
    31. 31. Befriend your customer.Find your earlyvangelists.
    32. 32. Befriend your customer.Find your earlyvangelists. Listen smart.
    33. 33. Befriend your customer.Find your earlyvangelists. Listen smart.
    34. 34. Juggling a company
    35. 35. Money solves nothing.
    36. 36. Money solves nothing.Neither does people.
    37. 37. Money solves nothing. Neither does people.There are no quick solutions.
    38. 38. Money solves nothing. Neither does people.There are no quick solutions. Your team is everything.
    39. 39. Money solves nothing. Neither does people.There are no quick solutions. Your team is everything.
    40. 40. te pIm ac or he tan r a t: pp No ro t ve dBusiness plans are useless
    41. 41. Plans are useless, planning is essential.
    42. 42. Whatʼs important is the Business Model
    43. 43. Business model: 10 areas cover the importantassumptions about your
    44. 44. While weʼre on the topic: Steve Blank, Eric ReisCustomer Development & The Lean Startup Read their books & blog!
    45. 45. READ LOTS OF BOOKS!!!
    46. 46. Great entrepreneurs drop out! We’re hiring!
    47. 47. Thanks!
    48. 48. Some recommended reading:The Lean Startup - Eric ReisThe four steps to the epiphany - Steve BlankBusiness Model Generation - Alexander OsterwalderNail it, Then scale it - Nathan Furr, Paul AhlstromGetting to plan B - Randy KomisarMost of these also have blogs on the tpoc.