Category Archives: entrepreneurship

Entrepreneurship and the Possibility of Real Failure

In 2007 Vini­cius Vacanti quit his highly-paid job in fin­ance to take on life as an entre­pren­eur. In a short post describ­ing his reas­ons for doing so, Vacanti says that most of us haven’t faced the pos­sib­il­ity of real fail­ure, and entre­pren­eur­ship is a way to test your lim­its by attempt­ing to cre­ate some­thing of real value:

A scary idea star­ted creep­ing into my thoughts: what if I could build some­thing? Wouldn’t I always won­der? Wouldn’t I regret it? Wouldn’t it eat away at me over the years?

And, that’s when I real­ized that I didn’t actu­ally know if I was good enough because I hadn’t really failed in life (at least not pro­fes­sion­ally). Most people don’t really fail. We tend to take the job that we think we’ll suc­ceed in. We are hes­it­ant to reach. And, if we do reach and suc­ceed, then we don’t reach again.

The only way to know how good you might be at some­thing is to fail try­ing it.

And, that’s when I decided it was time to test my lim­its. It was time to really reach. It was time to quit my safe job and walk straight into almost cer­tain star­tup fail­ure.

There’s noth­ing mind-blow­ing here, admit­tedly – I just love how Vacanti phrased this.

A “Felt Need” Is What Makes Us Buy

A “felt need” is what dif­fer­en­ti­ates a vit­am­in from an aspir­in: when we crave some­thing (relief from pain), a product that sat­is­fies that desire becomes a must-have rather than a nice-to-have. Real­ising this and re-fram­ing a product in terms of this crav­ing is an import­ant step in ensur­ing a pro­duct’s suc­cess, say Dan and Chip Heath, authors of the excel­lent Switch and Made to Stick.

Becom­ing aware of this idea is what led to the suc­cess of Net­flix and NetApp… as well as the demise of count­less oth­er com­pan­ies. In a brief art­icle describ­ing how re-fram­ing a nice-to-have product as a must-have is all about dis­cov­er­ing and exploit­ing a spe­cif­ic “felt need”, the Heaths look at Ray Bards failed attempt at get­ting his “vit­am­in” book pub­lished and how real­iz­ing this idea of a felt need led him to become a suc­cess­ful pub­lish­er.

If entre­pren­eurs want to suc­ceed […] they’d bet­ter be selling aspir­in rather than vit­am­ins. Vit­am­ins are nice; they’re healthy. But aspir­in cures your pain; it’s not a nice-to-have, it’s a must-have. […]

That aspir­in qual­ity is what Bard now looks for in a book. He says that suc­cess­ful books address a deep “felt need” – that is, read­ers hun­ger for the answers the book provides. Clas­sic examples would be diet books, per­son­al-fin­ance books, and books that prom­ise you mega suc­cess if you’ll just radi­ate pos­it­ive energy to the uni­verse, indic­at­ing your receptiv­ity to mega suc­cess. Bard has become a tal­en­ted diviner of felt need. Fully half of the books that he pub­lishes become best sellers. […]

You’ve heard the old say­ing “If you invent a bet­ter mousetrap, the world will beat a path to your door.” Don’t bet on it. The world’s felt need isn’t for a bet­ter mousetrap. It’s for a dead mouse. […]

When engin­eers or mar­keters or entre­pren­eurs get too close to their products, it’s easy to mis­take a vit­am­in for an aspir­in. If your team is flirt­ing with delu­sion, a little love might point you in the right dir­ec­tion.

Marketing Lessons for Startups

When Ilya Licht­en­stein offered free mar­ket­ing advice to star­tups (as a way of thank­ing the Hack­er News com­munity) he received over 150 requests and set to work. Cer­tain pat­terns star­ted to emerge in his advice, and so he decided to pro­duced a three-post ‘star­tup mar­ket­ing les­sons learnt’ series (parts two and three).

There’s some fant­ast­ic advice to be found in the series – for both those inter­ested in mar­ket­ing gen­er­ally and those begin­ners act­ively involved in the craft. For example in the Artic­u­late a Clear, Spe­cif­ic, Com­pel­ling Value Pro­pos­i­tion sec­tion:

I’m sure you’ve heard the old copy­writ­ing man­tra of “list bene­fits, not fea­tures”. Take that to the next level. Take the single most import­ant bene­fit of using your ser­vice, and make that your head­line. […] If you’re build­ing a B2B app to man­age payroll, “Cloud hos­ted SaaS payroll for your busi­ness” is not a good head­line. “Spend less time wor­ry­ing about payroll” is a bet­ter one. “Cut payroll man­age­ment costs by 37% instantly” is even bet­ter.

And from Find Your Tar­get Mar­ket, and Seg­ment the Hell out of Them:

When asked who their tar­get mar­ket was, many people respon­ded “small busi­nesses” or, worse, “any­one”. Alright, fine, you sell your SaaS products to small busi­ness in the US. But what kind of small busi­ness own­er con­verts the best for you? Which cus­tom­ers are most likely to be prof­it­able cus­tom­ers? Who is most excited about your product? You have been track­ing these things, haven’t you? You don’t have the budget to tar­get all small busi­nesses, so start with a spe­cif­ic niche or industry you think your product has par­tic­u­larly strong appeal for. Selling time track­ing soft­ware? Start pos­i­tion­ing as time track­ing soft­ware for account­ants, or dent­ists, or land­scapers. How about tar­get­ing a spe­cif­ic task or fea­ture and find­ing people look­ing for that fea­ture only? […] Build super niche land­ing pages or, even bet­ter, micros­ites tar­get­ing each spe­cif­ic mar­ket seg­ment you want to go after, emphas­iz­ing the spe­cif­ic bene­fits of your product to that group only.

WordPerfect Business Advice

In 1980, as a $5‑an-hour part-time office manager, W. E. Peterson joined the small com­pany that would go on to become Word­Per­fect Cor­por­a­tion. Then, twelve years later, after help­ing grow the com­pany to half a bil­lion dol­lars in annu­al sales and becom­ing the Exec­ut­ive Vice Pres­id­ent, Peterson was forced out of the com­pany and set out to chron­icle the rise and fall of Word­Per­fect in his book, Almost Per­fect.

You can read Almost Per­fect online like I did after hear­ing about it from Jeff Atwood two years ago. Why am I post­ing this now? Now that the book has a Kindle ver­sion I’m re-read­ing it and liked this para­graph of busi­ness advice from the after­word:

If you read [Almost Per­fect] hop­ing to learn more about run­ning a busi­ness, then I hope you noted the parts about teach­ing cor­rect prin­ciples and allow­ing employ­ees to gov­ern them­selves. In spite of the prob­lems I had under­stand­ing and imple­ment­ing this philo­sophy, I am con­vinced it is the best way to run a busi­ness. In today’s com­pet­it­ive envir­on­ment, busi­nesses can no longer afford the over­head of one super­visor for every five or six employ­ees. As organ­iz­a­tions flat­ten and super­vi­sion decreases, employ­ees will make more decisions on their own and gov­ern them­selves much more than they have in the past. If a com­pany is to func­tion effect­ively, its employ­ees must have a good under­stand­ing of what is expec­ted of them. Very small organ­iz­a­tions may be able to find suc­cess without defin­ing and teach­ing cor­rect prin­ciples, but any busi­ness with more than 25 or 30 people must get organ­ized.

Preventable Startup Mistakes (That Caused the Downfall of Seven Startups)

Veri­fi­able, Wesabe, Storytlr, TwitApps, Vox, Swiv­el and EventVue: All com­pan­ies or products that no longer exist after pre­vent­able prob­lems caused their down­fall.

37signals col­lects their stor­ies so that we don’t repeat the same mis­takes, present­ing a set of brief post-mortems on failed star­tups.

The recur­ring issues seem to be: solv­ing prob­lems that the world isn’t ask­ing for, not hav­ing a feas­ible rev­en­ue mod­el (spe­cific­ally, the dif­fi­culty in mov­ing from a free to a paid ser­vice), the com­plex­ity in scal­ing an idea from a pro­to­type to a func­tion­al product, fail­ing to artic­u­late clearly the bene­fits the product will bring and fail­ing to focus on the most import­ant product/feature.

In addi­tion, there’s the issue Wesabe encountered: com­pet­ent com­pet­i­tion in the form of Mint:

Mint focused on mak­ing the user do almost no work at all, by auto­mat­ic­ally edit­ing and cat­egor­iz­ing their data, redu­cing the num­ber of fields in their signup form, and giv­ing them imme­di­ate grat­i­fic­a­tion as soon as they pos­sibly could; we com­pletely sucked at all of that… I was focused on try­ing to make the usab­il­ity of edit­ing data as easy and func­tion­al as it could be; Mint was focused on mak­ing it so you nev­er had to do that at all. Their approach com­pletely kicked our approach’s ass.

You’ll hear a lot about why com­pany A won and com­pany B lost in any mar­ket, and in my exper­i­ence, a lot of the the­or­ies thrown about — even or espe­cially by the par­ti­cipants — are utter crap. A domain name does­n’t win you a mar­ket; launch­ing second or fifth or tenth does­n’t lose you a mar­ket. You can­’t blame your com­pet­it­ors or your board or the lack of or excess of invest­ment. Focus on what really mat­ters: mak­ing users happy with your product as quickly as you can, and help­ing them as much as you can after that. If you do those bet­ter than any­one else out there you’ll win.

via @zambonini