SXSW update - 8th Lean Startup Meetup

[Original post written @http://startupiceland.wordpress.com]

Kristjan Freyr Kristjansson was at SXSW2012 and he gave a brief talk about the show and more importantly shared his thoughts on attending many of the Lean Startup Panel. The summary of the SXSW update was:

1. It is very noisy, crowded and advertisements everywhere - it would be impossible to get your startup noticed or even to meet someone and follow up on the conversation. It is a fantastic place to get connected for the first time through the parties hosted by various brands, Kristjan particularly liked the one hosted by Startup Weekend, TechStars and Google.
2. Have a plan with regard to what you want to achieve when you attend SXSW, and it is something every startup/entrepreneur should experience once
3. There is an opportunity to have a big Icelandic contingency in the next SXSW, as the planners of the SXSW really liked the Thojdfunder National Assembly that was organized in Iceland and they would like to tap into the crowd of brilliant entrepreneurs and people focused on solving challenging problems attending SXSW next year and apply the same approach that was applied in Iceland. Gudjon Mar and Gunnar Holmstein were the instigators. I fully support the initiative lets see if we can gather enough people in Iceland to support this initiative and show some strength from Iceland next year in SXSW.
4. There were some very exciting interactive advertisement focused software that had face recognition software and based on your online profile was able to display ads that were targeted. The technology is here and it is just a matter of time before it becomes mainstream. The advertisements on the subway in Minority Report when Tom Cruise was running is going to happen sooner than you think.
5. There were many formats for the Lean Startup sessions, some of them were led by Eric Ries, but there were others where different startups shared their examples of applying the Lean Startup Principles. Kristjan, thought it was so incredible to be see so many startups starting to apply the lessons and are learning fast and pivoting into valuable solutions. It is amazing to me why this has not caught on sooner here in Iceland, we have a long way to go here.

The general discussion centered around how we can experiment and validate hypothesis, Kristjan shared the link to the Lean Startup Experiment website lean.st. The 5 minute corner was taken by Helgi þor Jonsson, Helgi has been following a blog site Unicornfree.com and how he has taken the first step to becoming an entrepreneur. He has started working on a prototype of a Project Management Platform for volunteers and non-profit activities. His insight working with this blog site is the concept of 30 x 500, which is get $30 from 500 people then you have a business or $500 from 30 people. He has been taking the online course which is almost over and he would be ready to move on to the next stage of launching his product. We discussed a lot about how to raise the bar on Startups being created in Iceland. Of course there were many suggestions, Gudjon Mar was of the opinion that we need to have big wins to establish a precedence that successful and profitable startups can be created out of Iceland. I feel we need to go one step further, successful and profitable startups need to created in a faster pace. We need to accelerate the process to actually make an impact and change minds in Iceland. I believe that if we can focus the entire startup community to pick topics from Paul Graham's Ideas that YCombinator will invest in and basically build companies for those problems we will get somewhere with the culture here. We need to make it attractive for someone to invest in, nothing against someone wanting to start a coffee shop it just does not create a buzz for Angel and Venture Investors to get excited about.

Ideal Startup Team Composition

[Original post written @http://startupiceland.wordpress.com]
A Startup team composition is like putting together a winning sport team. You need to balance the strengths and weakness for every team member so that the Whole is greater than the sum of the parts. It is easier said than done. I learnt this very early on in my career, I started working for a startup in India that was developing database applications for the Financial Services industry. Even though we were small, I started as an intern and I was 20th employee or something like that, the account teams that had the right mix of people seems to out-perform the other account teams. I did not realize that then but when I look back, it is obvious. I started seeing this in lot more detail when I joined Ernst & Young Management Consulting Practice in Houston, Texas after my Graduate Program at LSU. E&Y did not put a lot of emphasis on the majors, we had team members who were recruited with English or History major. I learnt that diversity was very important in a team. I got very involved in the recruiting teams for E&Y, we would visit many universities and take part in identifying, scouting and recruiting talented individuals to form high performance teams. If you think about it E&Y, had no product but Professional Service, so the team basically was the product. I also learnt the power of mentoring, coaching and on-the-job training. Every project that I took on while at E&Y was like a startup, I learnt very quickly that rapid prototyping is the key to keep your customer engaged, in our case it meant whether we continued to have billable hours or not. If you have been part of a professional services organization you know that you live or die by your billable hours or sold billable hours. I also got trained on performance management, goal setting, executing and metrics. If we could not communicate our value to our clients we just got fired as simple as that. I think Startups are just like that. So, what is an ideal team composition for a startup? I want to say it depends on the stage you are in. Lets assume you are starting up and you have this brilliant idea and you have done enough work to see there is a market potential and you can validate the hypothesis. 

Technology in you DNA - Maven One of the team member has to have technology in her DNA, I don't care which business you are creating if you don't have one of the founders with a technical background, I strongly encourage the team to go and get one. There is no substitute, you cannot outsource it and I don't care how efficient or skilled the team you have outsourced your solution to, it will not work so don't bother. Find and convince a technical team member to join your effort. I am big fan of the book Tipping Point by Malcom Gladwell. The technical team member should be a Maven in the technologies that you are using to build the solution.

Vision, Spokesman - Connector and Salesman The second team member should be a Connector and Salesman, she should be able to communicate the vision, the solution and why you are doing what you are doing in your Startup in any medium. She also needs to be a fantastic networker and connector, she needs to know everyone and be able to relate to different cohorts in the community.

Discipline, housekeeper and operations This team member should be the one that takes care of all the other stuff i.e. are the books in order, are we making sure our legal stuff is in order. Is everyone being fed, is our house clean. Keep the other members in line with regard to executing and being disciplined about the milestones and tasks as it relates to the overall agreed objective of the Startup. This is in my opinion one of the important and over-looked role within a Startup, understandably because you have so many moving parts that it is hard to be efficient and disciplined, but it is a paramount requirement. All the team members need to have the qualities as described by Paul Graham in his post on How to Start a Startup, look under the heading People. Or try to have your team members like the A-Team.

How to make your startup survive

[Original Post written @http://startupiceland.wordpress.com] 

The post is motivated by the answer I saw in Quora to a question that went like this "Where is this startup hype going to end?" The author went on to describe why he wants answers to the above question. His premise was that everyone and their mother is starting a startup and that is a clear indication of a boom and even people who know nothing about Internet are working on something. He was more interested to learn about How is this trend going to evolve, how is it affecting our society and where will it end up? All valid and relevant questions but these should be the least of the worries of any startup. The biggest worry should be how well you are iterating the Build-Measure-Learn cycle to improve your Product-Market fit and how quickly are you scaling up your customer base, market share and revenue, in addition, how efficient are you with the cash in the bank so that you can continue to extend you runway. 

Remember the biggest challenge a startup faces is Running Out of Money! the usual stuff. I really like the top answer on the topic as well. If you have time go read it, it is insightful but I don't really agree fully with the assessment that Interest Rates drives the engine of the startup world, sure it helps a lot when the cost of capital is low to be able to raise money but the biggest value while building a company is how cheaply you are able to run the business. 

The author to the answer refers to Paul Graham's Cockroach Essay. It is one of the classic essays from Paul Graham. I could not agree more to that essay, the reason a startup succeeds or fails is 99.99% dependent on the quality of the founders. This means "what matters is who you are, not when you do it. If you are the right sort of person, you'll win even in a bad economy. And if you're not, a good economy won't save you." The second point that Paul makes is how to make your startup recession-proof, it is "exactly what you have to do anyway: run it as cheaply as possible". The most important lesson in building a startup is getting into the discipline of bootstrapping and Paul puts it "be the cockroaches of the corporate world. The immediate cause of death in a startup is always RUNNING OUT OF MONEY. So the cheaper your company is to operate, the harder it is to kill. And fortunately it has gotten very cheap to run a startup. A recession will if anything make it cheaper still". Paul wrote this in October 2008, It is even cheaper today to run a company. 

I distinctly remember those days in October when the whole financial system in Iceland had just collapsed and I got fired, one of the most liberating and conflicting experiences of my life. I need to thank the one who decided that I am not worth being part of the "team". I did not do the conventional wisdom thing of either going back to school or trying to get another job. I did what Paul recommends that is be an Investor when the times of tough. I had no money, but found ways to raise the money convinced my partners that we should be building equity when the times are bad. The jury is still out on whether the decision was right or not. But we run a very tight ship with our operations, our partnership in my opinion has the lowest cost to run, it is about 0.6% of the capital we have invested. I know that we are cheaper in running our investment company than even Vanguard. This last couple of years has been a humbling lesson in building my discipline to endure the pain and sacrifice. I don't have any sympathy for anyone who wants to do a startup but does not want to sacrifice. Like they say it is like running a Marathon, there is no short cut.

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