CalCPA startup conference 2014 - Execution
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This document discusses the importance of execution for startups. It argues that while ideas, products, teams, and luck are important factors, execution is the most critical. Good execution means having a plan but also being flexible to pivot if needed. The document recommends obtaining actionable customer feedback through metrics to guide execution and improve products based on trends. Overall, the key message is that startups must focus on taking action and iterating quickly based on learning.
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CalCPA startup conference 2014 - Execution
- 1. Execution The Most Important Part* Kurt Sussman kls@merlot.com @neophiliac * except for all the other parts
- 3. The slides have changed goo.gl/S28vwz
- 4. "A good plan, violently executed now, is better than a perfect plan next week." (General George S. Patton)
- 6. What is execution? Mission inspires Goals which lead to Projects that are made up of Tasks
- 8. A little closer to the truth... (Idea * Idea Luck) * (Product * Product Luck) * (Team * Team Luck) * (Execution * Execution Luck) * Non-specific Luck = the outcome of your startup
- 9. What's most important? ● Idea? ● Product? ● Team? ● Execution? YES.
- 10. But I thought the idea was the most important thing‽
- 11. Rigid plans invite failure ● Lucas Carlson (PHPFog, no, AppFog, wait, CenturyLink Labs) planned multiple paths to each goal, and switched if (when!) he got stuck ● “No plan survives contact with the enemy” (Helmuth von Moltke the Elder) ● “Everyone has a plan until they get punched in the face” (Mike Tyson)
- 12. Pivots ● Flickr: MMORPG → Web photo sharing ● Google: Enterprise search → Web search → Advertising ● IBM: Punch card equipment → Computers → IT Consulting ● Nokia: Paper mills → Cell phones ● Sony: Rice cookers → Various electronics ● Suzuki: Silk looms → Vehicles ● Twitter: Podcasting → Microblogging ● Fab: Social network → Fashion ● Instagram: Check-in app → Photo sharing app ● Android: Camera → Cloud photo storage → Smartphone OS
- 13. The Lean Startup ● Attributed to Eric Ries ● Adapted from lean manufacturing ● Widely misunderstood
- 14. Boyd's OODA Loop ● Observe ● Orient ● Decide ● Act ● … do it again
- 15. Market Timing Late to Market? Early to Market? Both are risky Being early is probably riskier
- 16. Actionable Feedback ● Before traction – Customer development – “Do you have this problem? Will you pay to solve it?” ● After traction – Metrics (aka KPIs, 'the numbers', etc.) – But not vanity metrics
- 17. Pirate Metrics: AARRR ● Acquisition : users arrive through channels, don't bounce ● Activation : happy visit, signup ● Retention : users come back after their first visit ● Referral : customers tell others ● Revenue : users pay for something
- 18. TLA Metrics: CAC, LTV, MRR ● What does it cost to acquire a customer? ● What is the lifetime value of a customer? ● What is your monthly recurring revenue? ● Also: churn, viral coefficient
- 19. Everything Changes ● Watch your metrics for trends ● Always be testing! ● Don't over-analyze
- 20. Thank you. Questions? These slides: goo.gl/S28vwz
Editor's Notes
- I might not think like you, ASVAB story Your startup clients don't think like you either. Everyone has said “it depends” today. That is true, but sometimes there IS a correct answer, but you won't know what it is until after you make your decision.
- I've enjoyed all of the presentations today, and while you grab the new slides I have a couple comments. 1. Most new talks at tech conferences are edited within an hour of their presentation. I understand why a CPE conference needs the slides early, but it's tough to be as relevant that way. 2. How many people are using Macs? I'm normally in the minority with my Thinkpad. 3. Is anyone here NOT better dressed than me? Some stereotypes are being reinforced here. Everyone has said “it depends” today. That is true, but sometimes there IS a correct answer. You just won't know what it is until after you make your decision.
- This paints a relevant picture, but plans don't drive startups, customers do. Execution is doing the right thing at the right time, and recovering quickly when you don't get it right. In the early weeks (months? years?) of a startup, violent execution is the cover charge. Imagine that every week in a startup is like the second week of April (for those of you who prepare tax returns). Except there is no tax code, few precedents, and no one to follow; you make it up as you go.
- There is no one definition of a startup. So let's just use mine for now. There's not a lot of mystery in how professionals and retailers and plumbers (etc.) start a business. The only risk is execution. Rigid planning is OK, because there are so few decision points that can crash the business. Regulation is on your side (e.g. GAAP) and in some cases, regulation defines the boundaries of your business (e.g. law). Your customers know they need what you're selling. Pointcast had a push-notification screen saver that showed ads and news. They had a ton of traction, but poor management decisions caused them to fail. A startup is an experiment; plans are useless or worse. Regulation is irrelevant or outdated or in active opposition to your business (e.g. Uber, Airbnb, Bitcoin startups). Customers have never heard of you and don't go looking for your product. Risk, the value of plans, effects of regulation, age of the industry (old products have an existing market, by definition) Who are your customers? What would you do if you didn't know? That's how every startup begins, and it's the first problem they have to solve.
- Mission is a powerful aligning force. “Make lots of money” is not a mission. “Facebook's mission is to give people the power to share and make the world more open and connected.” These tasks are the building blocks of execution. They should generate resources or eliminate risk, or (preferably) both. Projects and tasks can consume resources and they can create resources. You have to create resources before you can consume them. People are typically not resources but their abilities are, and hiring increases the pool of abilities available to use in the next step and beyond.
- Sam Altman (president of Y Combinator) said in Stanford 183B opening lecture http://startupclass.samaltman.com/ “Your startup's outcome is Idea * Product * Execution * Team * Luck where luck is a random number between zero and ten thousand” Luck story – friend's RE site
- This is also a simplification. In reality, it's much more complex. Non-specific luck is 'Acts of God', surprising new technologies, stealth competitors, fads, memes. You can't have zeros anywhere. Luck includes timing, availability, cooperation and competition, events, errors and many smaller factors Inspeqtor DMCA takedown story
- A startup is a balancing act. Everything is important, so what do you focus on? The simple answer is to focus on getting the resources you'll need for the next step. Assuming you have defined your mission clearly and you're prepared to adapt to changes in the market, available tools, etc.. Funding is a resource, but funding comes with other benefits and costs. LA funding for tech startups offers fewer benefits than bay area funding, for example. Dumb money costs more in investor hand-holding as well. Startups can't forget the connection they have to the real world: legal and financial advice is critical. We can't all be Uber and Airbnb and ignore the law (even when the law doesn't exactly fit the real world) and we can't ignore our responsibilities to keep our books straight and pay our taxes.
- You can't get funding for an idea any more. You can get funding for a prototype that has gotten traction. That means your idea is not enough. You need a product that
- Lucas got tired of getting stuck on unexpected details, so to complete his tasks, he planned 3 ways to do each one. Startups get punched in the face all the time, unlike most traditional business ventures. He actually said "No plan of operations extends with certainty beyond the first encounter with the enemy's main strength"
- The alternative to rigid planning is adapting to your customers' needs as you discover them. 'Pivot' is a word from the Lean Startup vocabulary. In 'Being Wrong' Kathryn Schulz says research shows that people can't accept that their belief is wrong until they have something else to believe in. A pivot is a way to say “I was wrong, but now I think this is right”. The 'new best idea' comes from paying attention (to customers, the market, regulatory changes, new materials and methods, etc.).
- Lean manufacturing eliminates waste by taking action only in response to customer orders (this is an oversimplification) “Does this create value for the customer?” Kickstarter can help you to answer this question. Lean startups first use 'validated learning' to find out what customers really want. Once you have a definition for 'value for the customer', then you can build a minimum viable product (MVP) as a platform for refining your understanding of value. During this phase, the startup normally doesn't spend a lot on validated learning, but reducing spending is not the goal! The goal is to take small steps very fast, with the result of each step being a refinement of the startup's knowledge of what constitutes value for the customer.
- John Boyd was an American Air Force pilot and strategist who described and optimized air combat.. If you can get through your loop faster than your opponent, your outcome is likely to be better. A dogfight with multiple opponents is not a bad metaphor for a startup. https://en.wikipedia.org/wiki/John_Boyd_(military_strategist) The Lean Startup movement uses the OODA loop like holy water; sprinkling it on everything drives out the demons (or so we like to believe).. A startup's strategy has to be fluid, at least until product/market fit has been achieved, pricing optimized and distribution channels ranked..
- RadioMail story, contrast with Phone.com success Timing is important for more than just the market, e.g. 83b election, prepping for due diligence for funding
- First make sure you have identified a problem that is worth solving. You can do this without developing a product and without disclosing your idea. This is what the Lean Startup is all about. Don't ask if they want your product. Ask them to commit to buy it. Steve Blank suggests non-binding letters of intent. Vanity metrics don't help you to make decisions. Number of registered users, hits per day, numbers that make you feel good but are active distractions from the important metrics.
- Dave McClure, 500 Startups http://www.slideshare.net/dmc500hats/startup-metrics-for-pirates-long-version These are categories of metrics that are probably actionable. You must adapt these to your business, and many businesses will have industry-specific metrics, and maybe company-specific metrics. You really want to know revenue by channel, connecting the top of the funnel with the bottom.
- Churn is part of the LT in LTV; how many customers do you lose each month? These metrics drive execution. If your CAC is high, you need to lower it or find funding to fill in until MRR can pay for customer acquisition Low LTV suggests that your product may not be useful enough to the customers you're targeting. Pivot or target customers who will get more value from it.
- Test everything all the time: color, size, shape, text, images, layout, pricing, what else? If there's a clear winner, make it the default. If not, eliminate losers (if any) and keep testing. Track metrics for your competitors, as much as possible.