Its been quite a while since my last blog post the day after the Super Bowl. A lot has transpired in the past 3.5 months.  After weeks of relentless / obnoxious customer development, my co-founder & I validated the pain point we’re addressing, productized our solution, and by the grace of god (and hard work and luck) the stars aligned for us to get accepted into class 5 of Launchpad LA.  For those of you who aren’t familiar, Launchpad LA is a startup incubator program based in Santa Monica, CA that was originally started by Mark Suster.  39 of the 41 Launchpad companies have gone on to raise Series A money and beyond and the program was recently ranked #5 globally by Forbes magazine. Launchpad offers you $100K in funding, amazing office space in downtown Santa Monica, and a network of incredible mentors and investors.  

Below is an outline of the factors that I believe helped us the most and I wish someone would have outlined in a blog post when we were researching incubators.

Recommendations: Getting a recommendation / referral to an incubator can definitely optimize your chances of getting accepted, provided that you check the box on all the other criteria they look for in teams they fund.   For Launchpad, we had two strong recommendations from current Launchpad mentors who happened to be people we had worked with in the past or have built a strong relationship with over time. The quality of the reccs you get matters much more than the volume of reccs..Harj Taggar has a great perspective on this that he shares on Quora.  If you’re interested in an incubator, or generally working with a seed investor, a spray and pray approach of asking for referrals from folks you’re not genuinely in touch with typically yields very low results.   Regularly keeping in touch with, and finding ways to be helpful to people in your network is the path to least resistance to getting a strong introduction to seed investors.  When you don’t expect anything in return..the return tends to be multiples more than the time you invested. :)

Team:  There is an abundance of great content all over the web about how much the quality of your team matters to investors so I won’t reinvent the wheel here.  My view is that seed investors, who are taking on a lot of risk by giving you your first capital infusion, tend to look for teams that have a track record of building things, or working together in some capacity, and complimentary skills. Having at least one co-founder with a strong technical background is a must as well. In the early stages, things change all the time and if your team doesn’t have the skills to react to data, learn, and adjust your approach by iterating quickly, that generally makes investors nervous.

Timely Market Opportunity: While the idea or solution you’re building tends to matter less in the early stages, the problem you’re trying to solve matters a great deal to investors. Seed investors like to back teams that are building a product in a space that they fundamentally believe is big enough to justify venture $$ and frankly a space that the investors you’re interested in working with believe in.  Building a solution in a space that the VC community has expressed interest in tends to help your chances in raising seed capital.  Putting yourself in a position to recognize a timely problem, and building a solution to address that problem, is what Paul Graham calls being the type of person who “notices startup ideas” because you “live in the future”.  Examples of people like this that come to mind for me are Sahil Lavingia from Gumroad, Dennis Crowley from Foursquare, and Drew Houston from Dropbox. Building mobile apps for enterprise? I’m sure there a lot of investors right now that would be interested in hearing about your business. Building a daily deal widget? umm….

Size of the Opportunity:  Having a thoughtful/defensible number with respect to either the size of the opportunity in $$ or number of companies you can sell to is imperative. In my experience, a lot of times people burn the midnight oil building products for which the addressable market is what a lot of investors will call a “small idea”.  If you can’t convince investors that you’re attacking a billion dollar opportunity the road ahead may be bumpy.  The opposite end of the spectrum, which is also a kiss of death, is throwing out a number recklessly that inflates the size of the opportunity your product can realistically address. “I’m building an app for frequent fliers to trade seats and the airline industry is a $40 billion / year industry”…well you’re not making airplanes. Strategy consultants do this for a living and we did a ton of it at Disney (although I had a banking background).  I would find a strategy consultant willing to spend 30 minutes with you walking through a market sizing exercise….Mckinsey, Bain, and the rest of the usual suspects have some great videos/articles online about market sizing estimations as well.

I trekked up to Sacramento yesterday to attend a family gathering. My khala (urdu for aunt on your mother’s side) and her family are moving to Chicago, as her hubby just accepted a position with the University of Chicago. They are quite elated about the move. My cousins are more/less grown up and Chicago offers my aunt and uncle a new city to explore, a chance to make new friends, and everything else considered, a cheaper cost of living. It’ll be nice now to have someone to visit in Chi-town and drag along with me to all the foodie spots I end up paying homage to when I find myself in the windy city. 

Today my wife and I attended my high school buddy Allan Knight’s superbowl party. Him and his wife had gone to great lengths to setup their home with multiple screens and lots of delicious food and drinks. All the guys in our HS cohort, we grew up eating the cooking of all of our moms…these guys will forever have a place in my moms heart for loving Saag and Aloo gosht. haha. So needless to say we had Aftab uncle (the cook at East West Junction) whip up some traditional paki dishes for the party.  I wish I had taken a pic of the spread..it was funny to see karahi chicken and beef seekh kabobs next to Nachos, Jalapeno Poppers, and Buffalo Wings..oh and naan. But it was a hit. I even got fusional and created a kabob wrap stuffed with jalapeno poppers and tamarind chutney. It was quite delicious if I can say so myself. But thats not why I’m writing right now…I’m writing to brain dump the Super Bowl and this season for the 49ers.

For more reasons than I can probably get to, I had quite the sentimental attachment to the Niners season this year. Apart from the 2nd year of the Harbaugh era, and high expectations etc etc…the fact that the Niners have resurrected their storied past as one of the elite franchises in professional sports..it goes without saying that all that feels amazing. and it should.  But the 49ers return to being title contenders is credited with their installing Jim Harbaugh as head coach.  I can’t help but draw parallels between the pivotal nature of a head coach in professional sports with that of a great leader in business. 

What do great leaders do? Attract and retain talent…spot talent thats ripe to be mentored/coached to an exceptional level…and often times choose to lead not by consensus.

Phil Jackson inherited Kobe Bryant / Shaq / Glenn Rice and the rest of the Lakers of 1999. Him and his coaching staff led by Tex Winters took great players and transformed them into a high powered scoring machine as a team with the triangle offense.

Jim Harbaugh and his direct reports took a talented 49ers roster and transformed them into an efficient offense and one of the best defenses of recent times (I don’t care what you say Kenan!). Further, Jim Harbaugh made a bold decision to promote Colin Kapernick to starting QB, recognizing that an already talented player could become a force to be reckoned with under his tutelage. To me, this is no different than Paul Graham, Jim Goetz, or Vinod Khosla making a bet on a company purely based on the entrepreneur himself and less so the market or product. 

Steve Jobs was reinstalled as Apple’s CEO in 1997 and installed several new GM’s of business units (attracting and retaining talent) and made several decisions that would face staunch criticism in the early days, terminating Newtown, Cyberdog, and OpenDoc (not leading by consensus). 

Playing the game of entrepreneurship has instilled in me a new found appreciation for professional athletes and, perhaps even more so, the coaches and personnel who nurture and mentor that individual talent into a stellar team whose potential greatly exceeds the sum of the parts.

Its a team game. Startups, Football, Life. All of the above.

Below is my review of Crossing the Chasm by Geoffrey Moore.

This was by far the most helpful and insightful book I’ve read to date on startups, entrepreneurship, and positioning. 

Crossing the Chasm was referred to me by a friend who used it in his startup to develop a marketing roadmap for his beachhead segment. 

Moore divides the technology adoption lifecycle into distinct customer segments based on each group representing a unique psychographic profile-a combination of psychology and demographics that makes its marketing responses different from those of the other groups. The five segments are innovators, early adopters, early majority, late majority, and laggards.

innovators - buy technology because they love technology and many times will just make  a purchase to tinker with a product or device’s properties

early adopters - like innovators, buy into new product concepts very early in their life cycle, but unlike innovators, they are not technologists. Rather they are people who find it easy to imagine, understand, and appreciate the benefits of a new technology, and to relate these potential benefits to their other concerns. Because early adopters do not rely on well-established references in making these buying decisions, preferring instead to rely on their own intuition and vision, they are key to opening up any high-tech market segment.

early majority - The early majority share some of the early adopter’s ability to relate to technology, but ultimately they are driven by a strong sense of practicality. They know that many of these newfangled inventions end up as passing fads, so they are content to wait and see how other people are making out before they buy in themselves. They want to see well-established references before investing substantially. Because there are so many people in this segment— roughly one-third of the whole adoption life cycle-winning their business is key to any substantial profits and growth.

Late majority - shares all the concerns of the early majority, plus one major additional one: Whereas people in the early majority are comfortable with their ability to handle a technology product, should they finally decide to purchase it, members of the late majority are not. As a result, they wait until something has become an established standard, and even then they want to see lots of support and tend to buy, therefore, from large, well-established companies. Like the early majority, this group comprises about one-third of the total buying population in any given segment. Courting its favor is highly profitable indeed, for while profit margins decrease as the products mature, so do the selling costs, and virtually all the R& D costs have been amortized.

Laggards - These people simply don’t want anything to do with new technology, for any of a variety of reasons, some personal and some economic. The only time they ever buy a technological product is when it is buried so deep inside another product— the way, say, that a microprocessor is designed into the braking system of a new car— that they don’t even know it is.

Moore advocates that successful tech companies market their products to each segment one at a time, taking into account the needs and eccentricities of each profile and using that segment as a reference base to swing to the next segment seamlessly. However the challenge occurs when companies try to transition from early adopters to the early majority..there is a crack in this part of the adoption curve and getting past it is “crossing the chasm”.  

What is the crack? The crack is an incompatibility in the needs or desires of the early adopters or the early majority pragmatists. Early adopters are looking for change agents that will give them a jump start on the competition, a break through technology or product that capitalizes on shifting user behavior that will give them an advantage for as long as they can sustain it. Early majority pragmatists are looking for evolution not revolution. They are weary of disrupting the status quo and want the products they adopt to be continuous innovations (i.e. they play nice with existing systems). They want a productivity improvement not a change agent.

Because of these incompatibilities, early adopters do not make good references for the early majority. And because of the early majority’s concern not to disrupt their organizations, good references are critical to their buying decisions. So what we have here is a catch-22. The only suitable reference for an early majority customer, it turns out, is another member of the early majority, but no upstanding member of the early majority will buy without first having consulted with several suitable references.

This is where it gets fun!

How do you develop a referenceable segment in the mainstream market?

Moore uses the analogy of a d-day invasion for crossing the chasm. Cross the chasm by targeting a very specific niche market where you can dominate from the outset, force your competitors out of that market niche, and then use it as a base for broader operations. Concentrate an overwhelmingly superior force on a highly focused target. It worked in 1944 for the Allies, and it has worked since for any number of high-tech companies.

Define the war. Start small. Don’t get distracted. If you can’t take Normandy you definitely can’t take Paris. More than anything else, you need a pragmatist customer base that can be referenced. So the only approach to take, it seems, is a “big fish, small pond” approach.

Defining a beachhead successfully leads to the bowling pin effect of niche marketing, there are several examples that Moore uses to illustrate how companies successfully used the strategy on their way to market dominance. Chris Dixon talks about it in the blog post I linked above.

This piece could get very long so I’ll wind it down here..I did my best at summarizing the salient points and the most impactful learnings for me personally.

This is a bit of a dense read but I can’t recommend it enough for anyone serious about startups. My only regret is that I hadn’t read it sooner.

If you’ve read Crossing the Chasm or the sequel “Inside the Tornado”…lets discuss!!

Best,
Salmaun
 

Happy New Year Everyone!

Below is a quick review of “The Hidden Wealth of Customers” by Bill Lee. Bill is a professor at Harvard Business School and the book is more/less a synopsis of his research over the past few years. 

The thesis of the book is that now more than ever, customers have demonstrable value far more than what they represent in revenues paid. This value is in the form of being superb advocates, influencers, evangelists and references to prospects. More than ever before the importance of access to peers and the opinion of peers is surfacing at every stage of the sales cycle. Whether this is a result of the proliferation of social media is up for debate but its indisputable that customers are doing 70% of their research on your solution before they even engage your sales team.  This tends to hold true in both consumer and enterprise and I definitely see it first hand with my own purchasing patterns. 

Along with sale and marketing, customers are increasingly playing pivotal roles in product development and support as well. Bill points to examples of 3M, Apple, and Salesforce who have shifted to platform strategies, in essence empowering an ecosystem to create add-ons and extensions of their core product offering where its physically impossible for the companies internal product development effort to meet the needs of a large heterogeneous customer base. Another way to think of it is the rise of PaaS (platform as a service) products. 

The book excels in highlighting case studies of companies that have created an unfair advantage by recognizing the hidden wealth of their customers.  These include:

Salesforce — Recognizing that peers want access to one another and are more comfortable in learning from each other, given a natural level of trust that they have with their counterparts at other companies over internal product evangelists. The result of this learning was the launch of Chatter which they credit to increasing Dreamforce attendance by 40% in a recession (nevermind Chatter launched 12 months after a strikingly similar product, Yammer ;) )

SAS Canada — Saw its retention numbers slip from over 90% a few years ago. They realized a knowledge gap existed with customers not realizing what sort of solutions their software could create for them. The created a network of “Super Champions” or powerhouse accounts who were using the product in inventive ways and pushing the envelope to share their learnings with other customers. The program was a tremendous success and retention rates started to climb again.

There are a bunch of other case studies that Bill outlines. The biggest learning for me was the need to align the interests of your customers (career development, expanding their network, develop peer relationships, achieve industry recognition) with those of your company. If you can execute against that you can unlock the hidden value of customers. 

The book has a lot of cheesy illustrations as well but I’m all for pictures :)

Its a quick read. You can probably knock it out in a day or two.

S

Greetings beloved readers..its been a bit of a challenge to maintain a regular frequency wrt blogging. My perpetual quest for self improvement has led me to believe that the best use of my time as of late is time spent working to minimize gaps in my skill set that will, in turn, optimize my chances of becoming a successful entrepreneur.  That was a very drawn out and convoluted way of saying that I’ve always been comfortable with my writing abilities so I’m focused on improving in other areas. To that end, I’ve been reading a ton lately and between that and my year long off/on battle with Rails there is little time for networking or writing.  

To quote Will Smith, everyone has talents and skills. Talents are god given and skills are those abilities that you perfect with relentless hard work. Thats not to say if you don’t strive to improve upon your talents that they’ll remain intact.  As President Obama said, “Hard work beats talent when talent doesn’t work hard.”    So long story short, I would chalk writing up as one of my few talents..its always been a bit of therapy for me..to write out and sort through the random thoughts zig zagging through my head.  But its quite easy to become overly confident in your talents and rely on them to carry you through or offset the gaps in your skillset..a similar phenomenon is what Ben Horowitz refers to as “looking for the silver bullet”.

So I’ve been reading a lot this year..not the typical pieces of fiction or biographies that I’m partial to for leisurely reading..or the economist..but rather books on subject matters where my demonstrated abilities are not on par with the standard I hold myself to.  I’ve read books on engineering, team management, product management, product design, leadership, perseverance, and time management amongst a few other topics.  For every book I read, it becomes increasingly clear that the sea of knowledge that I’m not acquainted with is VAST.  

“The more you know..the more you know you don’t know.” - Aristotle

I’m just finishing up the 5 dysfunctions of team and will post a review of the book in short order.

This post was originally entitled “the manifesto” but I changed it to fit the theme that it grew into.

Greetings gooberish readers!

I just finished my September reading (albeit a week late), Rebounders by Rick Newman, and wanted to quickly jot down my thoughts on the book while they’re fresh in my head.

I’ve been using evernote to do this for the past few months as I’ve fallen victim to the Evernote mouse trap of providing a digital, ubiquitous, repository for any and everything I think, feel, or generally need to remember. Its astonishing really. Over the past few months Iram and I have gone from “we’ll try this out” to “how did we ever live without this?”.  That is what great products do.  In any case, on with the review:

I first learned of Rebounders on my drive home from somewhere through an interview with Rick Newman on NPR. Rick, a journalist and correspondent for U.S. News, came up with the idea for the book as a result of his own frustration with his progress towards the goals he had set for himself personally and professionally. A divorce, being forced to move to a new city, and lack of steady work all worked in tandem to force Rick to question “where did things go wrong?”.  Was this the end for him? should he switch careers? or accept things as they were and scale his ambitions back??  Needless to say, Rick profiled numerous figures in history and the present who have achieved extraordinary things: actors, investors, inventors, entrepreneurs, musicians, athletes…and sought to detect any underline character traits they might share in common.

Having left the world of a steady paycheck almost a year and a half ago to pursue my dream of building products of my own, I braced myself for a book that wouldn’t be much more than an elongated version of a Paul Graham essay, a Tim Ferris chat, stories congruent with the sorts of character profiles that frequently make their way to the home page of silicon valley news outlets.

I was pleasantly surprised.

My experience w/ entrepreneurship has molded me to tune out noise (i.e. fundraising, partnership announcements, PR juice) but study successful serial entrepreneurs and most importantly their failures. Rebounders did me a great service by studying and summarizing some of the most prolific failures by people who would go on to achieve extraordinary things. Thomas Edison, James Blake (the Tennis Player), Tim Westergren (Pandora), Reed Hastings (Netflix), Majora Carter, John Ratzenberg, Thomas Keller (French Laundry), Joe Torre (Yankees manager) and the list goes on and on. 

Over the course of the book, Newman makes a very compelling case that people generally fall into two categories: Rebounders (those who learn from setbacks and generally view failure as a form of feedback) and Wallowers (those who drown in self-pity and find 101 excuses for their adversity and bend over backwards finding others to blame).  While some are born with natural rebounding abilities, others hone these skills over time. Ultimately, they are traits that can be learned if one is willing to try.

For this year, Rebounders is in the running for one of the best books I’ve read. I’d highly recommend it for anyone that has lofty dreams or anyone trying to achieve something where the chances of success are statistically low. There is probably a much more eloquent way to say that but sometimes saying less is more. :)

I just bought the kindle version for a friend. If you do end up reading the book, please shoot me a note so we can discuss!

Salmaun

Often times in the startup world you hear mantras for successful products..two examples that come to mind:

“build something people want”

“solve a problem”

Its my belief, based on experience and assessing anecdotal data points from other entrepreneurs, that these go hand in hand. If your product is solving a big enough pain point, people will want it :)

Perhaps the most disruptive products are those that solve hard problems in such an eloquent manner that they leave the user thinking “wow its so simple.”

Often times you will hear investors or other influencers criticizing incubators such as ycombinator for funding companies that make features and not businesses. Its easy to arrive to such a conclusion with so many acquihires or mancquisitions taking place. 

That was a bit of a tangent. 

Perhaps what I mean to say is —-> simple products solve hard problems? 

Dropbox — Existing user behavior (people saving files to a folder, the folder syncs across all devices and in the cloud). That is the poison on the tip of the arrow. No changing user behavior, everyone understands it, people need to share and transfer things, no more zip files or thumb drives or zip files. Just save or copy a file to a folder on your desktop. boom. done. thanks. All the magic happens behind the scenes. SO SIMPLE

Gumroad — Merchants, artists, essentially anyone with a social media presence can tweet, post on fb etc. Why does someone need a store front? that doesn’t make sense. Sell like you share. Create a link, click on it, enter your cc. boom you’re done. “But people like to have accounts with a merchant, people like to be able to log in and see past purchases”. No shutup. People value efficiency. click a link. enter your CC. done. thx. goodbye. No need for a store and letting people see their account info etc. But they’re only selling digital goods..not physical goods. But its simple enough. Why do you have a separate store or commerce section to transact with your followers? 

Both of these products, both in their design and the features they have prioritized, scream “dead simple”  But when you actually step back and think of all the problems they’re solving..its like WHOA.

Hey everyone..so I actually started composing this post over 2 months ago, on August 11. Not very surprising that I got distracted half way through either to put out a fire or tend to one of the twenty things that pops up over the course of the day in a startup as early as ours. In any case, my Lumosity brain assessment suggested that I allot time for writing at regular intervals as a conduit for “engaging leisure”…so this is my first stab at dusting the cobwebs off and working writing in to my regular routine.

In my experience to date, the startup lifestyle doesn’t lend itself well to leisure activities that call for a moderate level of mental exertion. You exert so much energy throughout the day with work that its tough to not just want to zone out to mindless TV or pick up the ipad and open up Pulse & the Economist when you do find time for yourself.

a good friend, who also writes on the side and founded a company last year, told me before I embarked on this journey that I’d be amazed at the similarities in writing and entrepreneurship. I can’t tell him how right he was. My thought is that it boils down to the notion of creating or building something from scratch. In startups you iterate. In writing you revise.

So I’ll share some brief thoughts on what we’re trying to do with Black Box:

The problem & size of the opportunity:

Men’s grooming products is a $20 bil market globally and $9 bil domestically that’s grown at a CAGR of over 20% the past 3 years. US Attitudes toward grooming products are shifting in favor of “prestige” brands which represent roughly 1/3rd of the market domestically ($3 bil) based on our estimates. The deployment channels these brands to have to reach male consumers are out dated and inefficient. Over 80% of the foot traffic at the Sephora’s and Ulta’s of the world is women.

With that being said, a subscription model may be a viable solution to 1) help male consumers interact with products they might not typically come across on a day-to-day basis given the retail partners these brands are forced to deal with and 2) help prestige brands reach male consumers who typically default to mass marketed products out of convenience.

We were heads down from March - June building our beta and launched our beta in the middle of June. Our growth has more than tripled month over month since June and we now have 16 brands on our platform. As we phase out of the proof of concept stage our time is consumed more by “big picture” issues..whatever that means!

Thats all I can share for now. Its been a wild ride and we’re learning every day. Every small victory we experience can only be described as a pie eating contest where the winner gets more pie :)

At the end of the day..for nothing else..the experience has been truly enriching and its only reaffirmed my appreciation for entrepreneurs that iterate all the way to elegant solutions for real problems consumers or enterprises face.

Best,
Salmaun