,

What Lessons can Entrepreneurs Learn from Gold Rushes, Pickaxes, and the Titanic Effect?

,
What Lessons can Entrepreneurs Learn from Gold Rushes, Pickaxes, and the Titanic Effect?

So what do gold rushes have to do with the Titanic? To start, gold rushes—both literal and figurative—have the potential to create significant wealth for a few lucky/opportunistic ones who jump on board. Windows of opportunity, whether to exploit a specific limited natural resource or to leverage a disruptive technology, create ample potential for significant wealth--but also a plethora of sunken ventures. The Titanic was a vehicle for many aspiring immigrants to achieve their own dream in the new land of the United States, a gold rush of sorts.

,

What Does Academic Research Tell Startups about Advertising?

,
What Does Academic Research Tell Startups about Advertising?

Since we are business school professors, one of the things we do is read and review academic research on business topics. Specifically, Kim is an associate editor for the Journal of Advertising Research. Of course, this journal focuses on what makes advertising effective. And the bulk of academic research is on TV advertising which might be beyond the reach of most startups. Kim also gets to vote on the “best” article of the year. So we thought we might review the best articles from 2019 and give you the highlights that are relevant to startup advertising. Here are top four facts about advertising we learned last year:

,

Startups Need to Monitor Customer Usage Metrics

,
Startups Need to Monitor Customer Usage Metrics

We were recently asked how to validate that an MVP  (Minimally Viable Product) is working. When we say “validate an MVP,” what we mean is to have some proof that you have a product the market wants, that product has been acceptably configured, and it’s now time to start figuring out how to scale sales. If you want to connect this post to The Titanic Effect book, we are looking at the First Customer stage in Chapter 5 – The Technical Ocean.  One approach you can use is to do market research on the MVP. This takes the MVP from internal to external testing. There are two main ways to do this market research:

,

What are the Pros and Cons of Startup Crowdfunding?

,
What are the Pros and Cons of Startup Crowdfunding?

This week we got an update email from a Kickstarter project we backed in December 2016 – yes, three years and we are still waiting for the rewards. It was update #37 and here is what it said: “Until the last few weeks, we thought we were more likely than not to make product xyz (we blinded the product to protect its owner).  This is no longer the case.  There’s still a small chance we can do it, but we are less confident about that now.” So we thought we ought to address the pros and cons of crowdfunding campaigns…

Why B2C Startups Need to Understand Walled Gardens

Why B2C Startups Need to Understand Walled Gardens

Let’s start by making sure we all know what we are talking about. First, “B2C” means Business-to-Consumer -- startups that sell products to consumers as end users. We can contrast B2C with B2B, which is businesses selling to other businesses. Each type – B2C and B2B – have different selling processes. So today, we are going to focus on B2C and the challenges they might experience selling through e-commerce sites.

So far, so good. But, what’s a “Walled Garden?” It is just what it sounds like. It comes from olden days when rich people had beautiful, luscious gardens that they locked behind a wall so that others could not see in. We use the term to describe the big tech giants. Here’s a more specific definition from mediarithmics_what is:  “A Walled Garden is a closed ecosystem in which all the operations are controlled by the ecosystem operator.” Think Google, Facebook, Amazon to start. They’ve created a really interesting marketplace in which they make the rules and they have all of the data. Together, these three companies control 70% of the all the digital ad spend. 

, ,

The 10 Steps to Physically Starting a Business

, ,
The 10 Steps to Physically Starting a Business

Someone who read our startup book, The Titanic Effect, reached out to us to say, “I think I understand the decisions I need to make. Now, I am ready to start my business. What are my first steps?” While our last blogpost shared how to develop a process for making complex decisions, this one is for those of you who are ready to actually start your business. So, here are your first 10 steps. In case that number intimidates you, they are interrelated and can be done concurrently. You are already working on another step while completing an earlier one. And we assume you already have the business idea. These are the steps to physically start that business. 

, , ,

Decisions, Decisions: How Startups Need to Approach Decision Making

, , ,
Decisions, Decisions: How Startups Need to Approach Decision Making

We recently started reading Steven Johnson’s book Farsighted: How We Make The Decisions That Matter The Most. The essence of the book is that complex decisions require a thoughtful and intentional process to increase the odds of having a favorable outcome… Here are three key elements to good decision making in the startup context:

 

The logic is very similar to our framework in The Titanic Effect. Making important decisions under conditions of uncertainty can have unanticipated consequences—what we call debtbergs in our framework—in a variety of areas including people, markets, technology/product, and strategy. Understanding the tradeoffs and implications of these decisions is important for complex strategic choices like those that startups make on a regular basis. We map out many of the common mistakes founding teams make that can subsequently sink their startups.

 

,

Right-sizing Startup Funding

,
Right-sizing Startup Funding

In 2013, Fred Wilson (AVC) of Union Square (US) Ventures asserted, based on their portfolio’s data, that “the amount of money a startup raised in seed and Series A funding was inversely correlated with success. “ That is, the more money a startup raises, the more likely it is to fail. Or the less money it raises, the more likely it is to succeed. At least, that’s the pattern supported by US Ventures’ data at the time. 

CBInsights tested this assertion with their own data in 2013. They found “no relationship between the amount of money raised and success.” In other words, funding levels were not related to venture success or failure.

Many people assume that raising more money is better and that more success will follow raising more money. These studies suggest that it’s not about the total amount of money raised. It’s interesting that neither dataset supports the idea that more money = more success. It will take more time and data to know which is correct. 

We would argue that the strategic question is not how much you can raise - it’s about raising the right money at the right time. Start with the questions: “Do you raise money at all?  If so, how much and when?” Here are 3 tips for right-sizing your funding:

The 3 Most Important Ways a Startup Should Audit its Marketing at Year’s End

The 3 Most Important Ways a Startup Should Audit its Marketing at Year’s End

We frequently say that many decisions at startups should be viewed as experiments. This is especially true for startup marketing. You have ideas about what might work. You implement those ideas and you make more plans. The end of the year is a good time to step back and assess what worked and what didn’t. Here are 3 ways to look at your marketing before making next year’s plans.

, ,

Is the Startup Life a Sprint? A Marathon? Nope, it’s an Ironman

, ,
Is the Startup Life a Sprint? A Marathon? Nope, it’s an Ironman

“It’s not a sprint—it’s a marathon!” We hear entrepreneurs with some experience use this phrase to caution new founders about going too fast too soon and burning out. We absolutely agree with part of this expression—starting a company is certainly not a sprint. But as endurance athletes ourselves, we would put a twist on this. Getting a startup going is a lot more like a multisport endurance event such as an Ironman than it is like a marathon. Why? Because it takes several different skillsets to launch a successful venture, not just one. Like a triathlon, there are at least three major categories of uncertainties founders must navigate—working with people, understanding the market, both competition and customers, and developing the product. We call these the human, marketing, and technical oceans.