8. The minimum viable product is
“
the product that only has core,
tent-pole features so you can
ship a product that resonates
with early adopters; some of
whom will pay you money or
give you feedback.”
—Eric Ries, IMVU
18. When PayPal first launched, it
“
was pretty clear that their
product violated the operating
rules for Visa, Mastercard and
American Express — and
violated banking regulations is
more than 40 dierent states.”
Thanks for the intro Phil. Today I thought I’d quickly go over a few things I’ve learned or picked up over the past two years I’ve been doing this. So first, a little about my background. I’m a founder at BackType. Began working on startups two years ago.
Quickly, we always knew we were going to do a startup. IPartee was our attempt, while in 4th year, from our apartment in Toronto. We worked on it for a year before eventually giving up, applying to YC.
- I won’t speak much about YC, instead if you have questions about the experience, the application process, etc feel free to ask away at the end.- We applied with an idea, for a service to track where people comment on the web.- Prepared a demo.- We were accepted, got to work.
- BackType is a conversational search engine- Aggregating millions of conversations each day from blogs, social media sites, news sites, et- Let users claim their comments so they can share them- Business owners can setup alerts, very similar to google alerts, but for comments.- Funding from True Ventures in Jan 09
- Quality of initial idea doesn’t matter - it’s just a starting pt - Ideas change- What’s important is getting started- Generally speaking, Y Combinator is considered an “ideas investor,” but they don’t actually care too much about your idea - it’s more important to convince them that you can and will execute on an idea- Good people succeed with bad ideas
- Nobody cares about your idea, they think it’s stupid- Hard enough time convincing a co-founder, employees, investors etc, let alone competition- People pay attention to ideas when they become products and services- Execute- Again, get to work
- Seems simple, but very few products get this right the first time- The quickest way to validate whether or not people want something is with a MVP (minimum viable product)- This is an idea from Eric Ries (pron. Rees) - he’s a venture advisor at kleiner perkins, founder of imvu (pron. imview)- And the MVP is part of what he’s teaching entrepreneurs with Lean Startup Methodology- Read this stuff http://startuplessonslearned.blogspot.com/
- The most fundamental mistake we made with IPartee was that we built a massive product - 10s of thousands of lines of code - without getting any customer / user feedback whatsoever- In contrast, with BackType we launched what we thought was a MVP- We only had support for like 1200 blogs... it was pathetic... and Arrington wrote that we support millions of blogs. 8 months later we still don’t support millions of blogs- What was interesting was that from thousands of comments and tweets, only one person said something about our lack of support- but the point is... whenever you launch something, you should be embarrassed.- That’s the easiest way to tell if you have an MVP or not.- But the minimum viable product (MVP) is often an ad on Google. Or a PowerPoint slide. Or a dialog box. Or a landing page. You can often build it in a day or a week.- This is something we’re still getting better at and will really be a big part of our next products
- This is something we learned fairly quickly with IPartee- iteration is a crucial part of what you do in a startup- but we only made ~ 5 major iterations w/ that product- part of the reason was that it was such a massive codebase, it slowed iteration for us- would have been better off throwing it all out and starting fresh
- These come from Eric Ries’ blog - basically just illustrating the pt- Speed (time between iterations) is a startup’s advantage- As a startup, you want to maximize the number of iterations you can perform- “A novice chess player that takes two moves each turn can beat an expert that takes one move each turn.”- This is what we (as entrepreneurs) do well
- As an entrepreneur, you have to get used to failure- The faster you fail, the more you can learn- So with each failed iteration, you want to learn something- Don’t run experiments or watch metrics unless you can learn something significant about your product, your users, customers, or whatever- There’s a difference between vanity metrics and actionable ones- \"At BackType we focus a lot on retention and number of searches -- and there are very specific reasons why\"
If you fail smart, you will succeed, just make sure you fail in order to learn something
- This has always been something I’ve believed in - Chris and I made it an informal principle of our company a long time ago- Having a mission helps you keep focused
So here’s everyone’s favorite: Google
- It’s becoming easier and easier to start companies, especially on the web - so how’s anyone going to find yours?- If you have the opportunity to use AdWords, Facebook, the iPhone, Salesforce AppExchange, or those kinds of channels to reach your users or customers, you’ll be able to iterate much faster and gain traction
He also said:In real estate the wisdom says “location, location, location.”In consumer Internet, think “distribution, distribution, distribution.”
- Don’t be afraid to iterate on a massive scale - change your entire company overnight- The classic example is PayPal, which started out making some kind of software for PDAs- They took on eBay’s payment system
There was legal risk, financial risk and ebay had the pressures of a public company.
- A black swan is a highly improbable, high impact, and unpredictable event- The chances of raising money are low. You don’t know when or if it will happen, who will invest, or how much you will raise.- We started fundraising around Oct., which is basically the worst time you could have started- We weren’t getting anywhere so we stopped completely.. for at least a month and just focused on our product- The most important thing when raising money is leverage- The more leverage you have, the easier it will be, the better investors you’ll get, the better terms you’ll get, and the quicker you’ll close- Be authentic- Understand your market- Talk about a big opportunity in a small number of words- VCs generally don’t take market risks, they take people risk or some other risk- They won’t answer with their money: is this a big business opportunity?- Raising money can take up a serious amt of time- Time that should be spent on solving your customer’s problem- I’d recommend:- Splitting up: have one founder meet w/ investors until 2nd meetings- Make sure you have alternatives, even if they suck: we were basically prepared to come back home and bootstrap
- If you’re raising money, make sure you read VH- All the details, stupid things, tricks investors throw at you, read VH- VH was started by Nivi and Naval - they are advisors to and investors in dozens of startups, mostly in the bay area- but they run this amazing resource for entrepreneurs- They really like to help entrepreneurs- This is required reading
Released an e-book for $19 that contains everything you need to know
- Being a founder is not a 9-5 job- And if you’re passionate about what you’re doing, it will be sustainable- Startups founded today are going to fill a massive need for innovation and economic growth over the next decade
