There isn’t a speed limit: Line up customers before you ship


After seeing a fantastic pitch from a startup I asked a simple question. “How many users do you have”? They replied with “We haven’t launched yet”. I reworded my question slightly and asked “How many customers have you talked to?” and they replied with the same line: “We haven’t launched yet.”

This startup was following a broken formula. It’s horribly inefficient and causes companies to fight a needless uphill battle building relationships with customers. The formula is done sequentially and it looks something like this:

1. Build a product.
2. Ship.
3. First contact with customers.
4. Convince customers to sign up.

Why the model is broken

The broken model I just described takes you a step away from your customer. By building your company in this way you’re essentially saying that you know the customer better than they know themself. If you’re not talking with your customers, how are you going to know the best way to position your product?

This is a better model

1. Build relationships with customers.
2. Build a product and convince customers to sign up
3. Ship.

Before you write a line of code, you should have a clear understanding of who your client is. It’s much better to build relationships asynchronously as you’re building your product. These early relationships are instrumental to your success. By talking to your customers early in development, you’re creating a fantastic feedback loop that you can easily leverage and bounce ideas off of.

There isn’t a speed limit, you can (and should) work asynchronously.

For more startup news, follow us on Twitter @startupfoundry or on Facebook.

Matt Tanase (a founder of Slicehost) on Rackspace’s decision to kill Slicehost

Earlier this week Rackspace announced that they were discontinuing the Slicehost brand, and existing customers would have to migrate over to their new platform. Many customers were frustrated by this announcement and didn’t understand why they had to change. I had the opportunity to catch up with Matt Tanase, a co-founder of Slicehost, to talk about his thoughts on the announcement.

In this interview Matt gives us a brief history of Slicehost, his thoughts on how Slicehost and Rackspace could have avoided this problem, and what it felt like to hear the news. Towards the end of the interview we also cover Matt’s latest project, Devstructure. You don’t want to miss this interview.


This video is sponsored by:
This is a really great eBook that takes you behind the scenes of some very successful startups. Use discount code “foundryfive” for $5 off. Check it out!

For more startup news, follow us on Twitter @startupfoundry or on Facebook.

Co-founder of Disqus explains why they raised a $10 million round.

At 1pm today, Disqus announced that they had closed a $10 million round with North Bridge and Union Square Ventures. Last night I had the opportunity to sit down with Daniel Ha (co-founder of Disqus) to talk about the news. In this interview we cover why Disqus decided to raise additional funds and the future of the platform. I also ask Daniel if Facebook entering the commenting world had any influence on their decision to raise money. Don’t miss this interview.

This video is sponsored by:
This is a really great eBook that takes you behind the scenes of some very successful startups. Use discount code “foundryfive” for $5 off. Check it out!

Details of the Disqus Deal:

Five hundred

With this latest financing, we will be expanding the team, our products, and on building our long-term business. In the last 12 months, Disqus grew at least 500% across all of our core metrics: traffic, users, and communities. In fact, just this past November we announced hitting 200 million uniques/month and we’re now already approaching 500M! We’ve taken our time to carefully build the foundations of our core platform, and it’s allowed us to handle — admittedly with plenty of challenges — the accelerating growth with a small team.

You can read the full press release on their blog.

For more startup news, follow us on Twitter @startupfoundry or on Facebook.

Weekly reader question: How can TSF serve the startup community better?


I cannot say enough how much I appreciate The Startup Foundry community. I started TSF three months ago as a side project and it’s morphed into a full time job (almost). This wouldn’t have been possible if it wasn’t for our vibrant startup community and I sincerely thank you for your support.

I’m dedicated to building TSF into a place where entrepreneurs can exchange ideas, learn, and most importantly, grow. I’ve outlined a few thoughts on how to make this happen below.

Future Plans:

1. Increase the amount of startups TSF covers.
2. Increase interviews with interesting people.
3. Instead of one post a day, try to make it closer to 2 or 3.
4. I would like to hire another person to help with startup coverage, but we’re not quite there financially. It’s important to me that TSF can sustain itself.

Please share your thoughts:

I’ve been mulling over these ideas for the last few days and I wanted to hear what the community thought. If you have better ideas please share them. Likewise if you have concerns with what I outlined above, let me know.

Again, thanks for all of your support. TSF has been a blast, and I can’t wait to get to know more of you over the years.

All the best,
Paul Hontz

If you go to a startup event to network, don’t play on your iPhone


If entrepreneurs go to startup events to network why do most people play on their iPhones the entire time?

One of the biggest mistakes I see entrepreneurs make at these events is that they expect something to happen just because they are physically at the event. Just being present won’t get you anywhere.

Entrepreneurs often mistake proximity for action.

If you’re not genuinely interested in meeting new people your time would be better spent building your business instead of pseudo-networking. In my interview with Gary Vaynerchuk, Gary reminds us that people have insanely high B.S. radars.

A lot of good can come from networking events if you are an active participant. Entrepreneurship is very much a “pay it forward” community. Most people want to see you succeed. However, it’s a two way street. If you’re not interested in someone else, why should they care about you and your company? Be polite and curious. It will take you a long way.

What else have you found to be helpful when attending conferences?

P.S. Live tweeting the conference (hash-tag) doesn’t make you an active participant.

For more startup news, follow us on Twitter @startupfoundry or like us on Facebook.

I’m giving away 20 autographed copies of Guy Kawasaki’s book, Enchantment


Guy Kawasaki’s latest book, Enchantment, has had a profound impact on me. I want every entrepreneur to read this book. In fact, I believe in this book so much that I’ve spent just under $300 of my own money to purchase 20 copies for TSF readers. During my interview with Guy, I asked if he would be willing to send out autographed covers to the winners and he graciously accepted.

What the winners get:

An autographed copy of Guy’s latest book, Enchantment.

How to enter:

You can enter the contest in three different ways.
Option 1. Tweet our a link to this post by hitting the Tweet button by the title.
Option 2. “Like” The Startup Foundry on Facebook
Option 3. “Like” this article on Facebook.
Option 4. Leave a comment on this article.

If you do all four, you will quadruple your chances of winning.

Details:

I will select the winners a week from today (May 6) and ship the books out on Monday.

Be sure you checkout the interview Guy Kawasaki on startup metrics, mistakes, and enchantment too!

Readers: thank you for all of your support with TSF. I’ve really enjoyed our community. – Paul Hontz

Guy Kawasaki on startup metrics, mistakes, and enchantment

Guy Kawasaki knows his stuff. Before Guy became a VC, he was Apple’s original marketing evangelist. I had the opportunity to interview Guy via email and we talked about startup metrics and common mistakes entrepreneurs make.

Guy’s books have been instrumental in my growth as an entrepreneur. I believe his book is so valuable that I bought 20 copies of Enchantment (his latest book) with my own money to give away to TSF readers. Check it out after the interview.

What was the most profound influence on your life?

The most profound business influence was working in the Macintosh Division at Apple from 1983-1987. Those were the “wonder years” of my life when we were trying to make history with a new kind of computer. I hope that everyone has a chance to work for a leader like Steve Jobs on a project like Macintosh at least once in their life. 

Could you share a story of how a startup you were personally involved with overcame adversity ?

Most startups that are successful has overcome adversity. Starting a company is just plain hard–it’s hard to figure out what product or service to create, hard to actually create it, hard to get other employees to believe in it (this is called “enchantment!”), hard to get customers to adopt it (also “enchantment”), hard to cross the chasm from from early adopters to main street, hard to scale up, and then it’s hard to hand off your baby to people who can run a large organization. And this happens to only the lucky ones!

This is the process that most successful startups go thru. It’s not easy or clean. It’s a tough, messy business. If it were easy and clean, more people would do it and succeed at it. 

When you’re investing in startups, what is the metric you place the most value on?

There are three basic theories. First, some investors say they invest in people. The problem with this theory is that it’s impossible to know if the people are really good when you have to make the investment. Second, some investors say they invest in companies in large markets. The challenge here is the most successful companies usually create a market, rather than serve and existing one. Third, some investors say they invest in cool products or services. The tricky part is that most products or services are not done at the point of investment, and even if they are at least working, you really don’t know if people will adopt them. 

Entrepreneurs should dedicate themselves to reducing all three unknowns and challenges, and there’s a very simple way to do this: prototype a product and get it to market. If you’re right/lucky, then you can show that there is/will be a large market, that people like your product, and that you must be good guys/gals because you’ve come so far on so little money. 

Fortunately, you can do a lot more these days with a little money because tools are Open Source, people are cheap/free during a recession, Twitter and Facebook make marketing cheap, you can get cheap infrastructure in the cloud, and you don’t need office space because your team can be anywhere in the world with a good Internet connection.

Was there a mistake you made repeatedly with startups that you eventually learned from?

I used to believe the company’s “conservative sales forecast.” I’ve never seen a company come close to its conservative, worst-case forecast. In fact, now I take a company’s forecast and add one year to the delivery date and divide by 100 as an estimate of what will actually happen. 

Startups make this mistake because they do a top-down analysis like this: there are 300 million Americans, one in four owns a dog, ergo 75 million dogs, each dog eats two cans of dog food per day, ergo 150 million cans are consumed per day. How hard can it be to get, worst case, 1% of this market or !.5 million cans per day? 

Instead companies should do a bottom-up analysis. How much traffic can you get to your dog food website per day? Let’s say 5,000. How many will buy a case of dog food from you? Let’s say 1% or 50. How many cans are in a case? Let’s say 20. So it looks like you might sell 1,000 cans a day. The truth is that your sales will be a lot closer to 1,000 cans/day than 1.5 million cans/day.

What should a company do to enchant it’s customers?

It’s simple. The three pillars of enchantment are likability, trustworthiness, and quality. In a nutshell, you should aspire to the likability of Richard Branson (he got down on his knees and started polishing my shoes when I told him that I don’t fly on Virgin), the trustworthiness of Zappos, and the quality of Apple. High standards, I admit, but at least you know the goal. This is the right starting point, and you’ve got to start somewhere.

Startup Myth: A good product is all you need to be successful


Having a good product won’t make your startup successful.

Listen to this unfortunate story I recently heard. Entrepreneur X and his team spent months building a “perfect” app. They poured over every line of code and aligned every pixel. They kept their heads down and worked hard. The project wrapped up and they pushed it live. On the precipice of launch day they hired temporary help to handle all of the buzz they were sure they were about to receive.

When the startup launched the next day, sales were completely flat. This company bought into the myth that a good product is all you need to build a successful business.

A good product is simply not enough. It’s an ingredient but it’s not the whole cake. Multiple things need to happen asynchronously with development to maximize your products launch. This is why having a hustling co-founder is so important. Let the engineers focus on building platforms and let the hustler focus on these things.

Marketing:

Marketing begins well before the product launches. If you want a good example of a marketing plan, checkout Mint’s Original Marketing Plan (circa 2007). This is a fantastic place to start.

Narrative:

Who is your product for? You need to tell your products story in a way that makes sense to your target market. Your narrative isn’t a bolted on feature, it’s the heart of your product. Your narrative should effect everything from design decisions, to customer support, to which features you implement.

P.S. If your target market is “everyone”, you need to focus.

Relationships:

You need to be continuously talking to your customers. Find out what makes them excited about your product. Discover their pain points. Doing this makes it easy to line up customers before you even launch. It’s a mutually beneficial relationship. I can not overstate the importance of relationships in business.

Your turn: What else does a hustler need to do to help his startup succeed?

For more startup news, please follow us on Twitter @startupfoundry or like us on Facebook.

How About We Disrupt Online Dating


This is a guest post written by Jason Lorimer.

When I first read about a NYC start up called How About We, I was doubly stoked.
First, I have an affinity for East Coast entrepreneurs being one myself and then add in the
concept that someone was finally out to disrupt the sluggish and otherwise dull online dating vertical — I did a little happy dance in the confines of my office.

My cheer was short lived as I came to learn over weeks of watching their activity that they are seemingly another start up in a long line that start with supremely disruptive ideas only to end up creeping towards the middle. I’ll come back to this particular company and how I think they can have a tremendous impact in the coming months but let’s take a cursory look at the online dating space: All but wholly owned by E-Harmony and Match for over a decade, this market is just now turning ripe with the wide spread acceptance of internet dating as a social norm. It is likely that most everyone reading this has met or knows someone who has met and had a relationship of some measure through an online dating site. While there are a considerable number of niche sites, the foremost freemium player and even a few that border on strange, I could not find a single company that was out there taking a stand that people can get behind. Solving a problem that exists in a world where online networks are the base of our social operations. That is, bridging the online/offline divide in an engaging way. Motivating people out from behind their monitors in a mostly passive way. The company I single out herein, their name rings these attributes. It breathes simplicity. I absolutely love it. Unfortunately my affection ends there. The truth is that this company seems to be doing just enough differentiation to get the attention of their largest counterparts. Which seems to have worked as they are all rumored to be implementing similar “plan making matching” features.

Look no further then the advertising How About We has implemented to see how halfway out of the box they are positioned:

“It’s the Modern Way to Date”

I don’t know these guys and the people I have met in the course of doing business say they are very sharp. I am sure they are. It is a great opportunity. I do not single them out for any other reason then they are the closest among the infiltrators to making a significant dent on the market by providing real utility for people. I think they will grow no matter what they do if for no other reason then the online dating inclined are looking for a new place to park their profile. I do not however imagine they will bring new people into the process though and that is what you need to do if you want to have success that won’t just be copied by the competition. Bring a half million new people into the process and you will have the biggest companies in the space banging down your door to buy you. The market is flat. It needs new customers. It needs you to innovate.

The model I would design for How About We would be all of two pages. A registration page with a fun 45 second video explaining why the service rocks along with a button to log in via Facebook. See how social travel site GTrot does the log in with FB Connect flawlessly.
Notice how they say underneath  — “No need to register. Just connect with Facebook.”

Upon clicking the button and approving the terms from Facebook, the now fully connected visitor would be taken to a real time stream, complete with FB profile photo and their fellow visitors suggestions for things they would like to do. You could sort at the top of the stream by the typical filters like distance, age, etc but sorted right in the stream. Clicking on a name would show their FB profile in a new window and you could contact them by shooting them an email that you would mask on their behalf.

When the user is ready to post their own suggestion for something fun to do together, it pushes out to their FB wall with a url back to the site. Other interactions could push as well. Say there were functions that let you advocate for another persons suggestion by clicking “Cool”. This gesture meaning that you are not in that area or so inclined to attend with them but you still think their idea rocks.

You get the idea. Simple, socially integrated and ultimately disruptive.

I know what you might be thinking — only log in with FB connect, no profile hosted on the site, leaving the site, people want to keep profiles separate, etc. Yes, this will turn some people off — exactly my point. It is not the people you turn off you should need be concerned with. Those people already use other dating sites. It is those new ones you can turn on you want and will make the bigger players want you too.

Think about it.


More about Jason Lorimer:

Jason is an entrepreneur @CulturaHQ, advocating on behalf of those with the ambition to do more than just entertain ideas. He builds things armed with an insatiable curiosity and a healthy dose of impatience. Developing socially integrated platforms where people can participate and add their own value to their experience, Jason and his team transform pre-internet business models into post-internet companies that scale.

At the office, when he is not working with partners to incubate their early stage ventures, he posts on his blog and loves kicking around ideas with other entrepreneurs from around the world. Occasionally disconnected from the world wide web, Jason is a music lover and amateur artist with several creative outlets including photography and painting.

You can find Jason on Twitter: @CulturaHQ

For more startup news, follow us on Twitter @startupfoundry.

TSF Next Level: Learn the simple copywriting system to double conversions

Background:

My goal with TSF is to help entrepreneurs and founders grow. I’ve been doing this by hosting interviews, writing articles, and covering brand new startups. The communities response has been fantastic and I’ve been looking for ways to improve my content and go even deeper in subject matter.

I talked with Andrew Warner about my aspirations for TSF and we have decided to run an experiment. Andrew and I have teamed up to provide hour long courses for entrepreneurs that get results. We will bring in an expert and have them teach actionable steps for entrepreneurs to implement in their startups.

We are looking for feedback on this course. If you love or hate this idea, I want to hear about it. Feel free to leave a comment on this article or email me at tipbox@thestartupfoundry.com. If you’re on the fence for this course, buy it. If you’re unhappy with it, let me know and I’ll refund your money and you can keep the course for free.

Note: This course has already been recorded so the audience won’t be able to ask questions live.

The Course:

Andrew’s story:
A few weeks ago, while getting ready to sell the first product on my site, I had a painful realization.

I realized that it didn’t matter that I worked hard for weeks to create my product. It didn’t matter that I paid extra for the best software to deliver it. It didn’t matter that I tested my online shopping cart over and over using every family member’s credit card to be sure it worked well.

None of it mattered.

The only thing that mattered — the only thing that determined whether my product was a hit or flop — was the text I wrote to sell it. (Haven’t you found that in your work?)

The realization freaked me out because I spent hundreds of hours getting everything right and now it all came down to this one sales page.

So I sat at my computer and started to write. Well I tried to write. What I ended up doing was futzing with the design of the page and the size of the font. Then I made myself endless cups of coffee and … well, you get the idea. (Have you ever done that?)

Around that time, I interviewed Dane Maxwell on Mixergy (my site). I asked him, in essence, “Dane, you’re not a professional copywriter. You create web apps. So how do you create sales pages that sell hundreds of thousands of dollars worth of web-based solutions to real estate professionals who are notoriously reluctant to buy online?”

What I discovered is that he has a mindset and a framework that help him write irresistible copy and gets people to buy. To him, copywriting is actually fun because he knows the fundamentals of how to do it right. (Haven’t you found that in your life? The better you become at something the more fun you have with it, right?)

Sign me up!

What are other people saying about it?

He opened my eyes to a new way of doing things, and he did the same for my audience. Check out the comments from people who heard the interview:

“Have Dane come back EVERY WEEK!!” — Michael Weiss

“Excellent. Love to hear more on sales strategies from Dane.” — Reedge

“Just awesome” — Bob Hiler

“Andrew, I’m a techie dude.. and turned off from lead generation. But this guy is on the money!” — Amul Patel

You can understand why they’d get excited, right? I mean, how much are good copywriting skills worth to a company? $5,000? $100,000? More?

So that’s why I asked Dane to teach this course.