Talking with peers and companies, Chris Dixon

How secretive should I be about my idea?
Talk to everyone, as much as possible (amap), as soon as possible (asap).

You should talk about it to almost anyone who will listen.  This includes investors, entrepreneurs, people who work in similar areas, friends, people on the street, the bartender, etc.

There are lots of benefits to talking to people:

• You’ll get suggestions for improvements.  
• You’ll discover flaws and hopefully correct them.  
• You’ll learn a lot more about the sector/industry.  
• You’ll learn about competitive products that exist or are being built.  
• You’ll gauge people’s excitement level for the product and for various features.  
• You’ll refine your sales and investor pitch.  
• You might even discover your idea is a bad idea and save yourself years of hitting your head against the wall.

In terms of the risk of someone stealing your idea, there are at best a handful of people in the world who might actually drop everything and copy your idea.

First of all, most people will probably think your idea is stupid.  This does not mean your idea is stupid.  In fact, if everyone loves your idea, I might be worried that it’s not forward thinking enough.

People at large related companies almost always think they have already built or are in the process of building all the good ideas – so your idea is either something they are already building (which is a good thing to discover early) or else they will dismiss it as a bad idea.  (I have a personal diligence rule that when speaking to people at large companies, the facts that they tell you are very useful but their opinions about startup ideas no more valuable than any other smart person’s opinions).

In terms of speaking to other entrepreneurs, the vast majority are already working on something and are highly unlikely to drop everything and copy you.  Even if they are in the idea generation phase, high integrity entrepreneurs wouldn’t copy your idea anyways.

VC’s (investors) will either not like your idea, or else like it and possibly want to fund you.  They vastly prefer funding an existing team than taking an idea and building a team.  The one risk is if they have entrepreneurs they are working with in a similar area (see next paragraph).  Most VCs have enough integrity to disclose this and let you decide how much detail to go into.

The handful of people in the world who might copy your idea are entrepreneurs just starting up with a very similar idea.  You can probably just explicitly avoid these people, although by talking to lots of people your ideas will likely seep through to them.

Staying one step ahead of the game:

Even if your idea gets in the wrong hands, they will probably just get the high level “elevator pitch” which isn’t worth much anyways. Hopefully by that time you’ve developed the idea much further and in much greater detail – by talking to as many people as possible.

A note about NDAs (Non-Disclosure Agreements):
1) almost no experienced entrepreneurs/VCs will sign them (in fact, you asking them too is widely considered a sign of inexperience),
2) It’s not clear they have any real value – are you really going to spend years suing someone who signed an NDA?

I’ve personally never heard of it happening.

Keep always one step ahead. Do your homework! Domain Expertise and Execution Matter

Following the last post "What if someone steals my idea", the thing is to keep always one step ahead of the game.

Before talking to peers, companies, investors, customers, do your homework: Domain expertise and execution matter.

 

 

 

You’ve been thinking about this problem/solution for weeks and months. Anyone who steals your idea will always be one step behind, waiting for you to lead the way while they copy features. Your experience, execution and vision matter as much as your idea.

 

Read the testimony of Steve Blank on this subject (Never Get Even, Get Ahead):

 

Someone stole my idea - part 1.

Lessons Learned

If you present slides publicly, assume everyone including your competitors will have them.

If you present slides privately, assume a high probability that your competitors will acquire them

Do not put your trade secrets, proprietary algorithms, patentable technology, secret sauce, etc. on presentation slides – ever.

That still leaves you tons to talk about in a first and even second meeting.

For slides that contain diagrams or drawings that you created, make sure your initials and date are on them.

 

 

Someone stole my idea - part 2.

Lessons Learned

Your business concept is not a company. Lots of people have ideas. Typically they are just a set of untested hypotheses.

Successful companies are about the learning, discovery, iteration on your initial ideas. If someone can do a better job iterating hypotheses and executing than you can, you deserve to fail.

No business plan survives first contact with customers

The real value is finding the product/market fit.  That’s not found in a set of slides.

 

 

Someone stole my idea - part 3.

Lessons Learned

Protecting your startups intellectual property should be a strategy not an after the fact tactic.

You need a plan for trademarks, copyright, trade secrets, contracts/NDA’s and patents before you get funded.

Your intellectual property may be an additional revenue stream or may add substantial value to your company.

 

 

 

 

 

What if someone steals my idea?

During the first phase of customer development, the focus is validated learning: test our initial hypothesis "out there": talking, on one hand, with peers and advisors, and on the other, with customers and users.

While your idea might seem brilliant to you, until you validate it/show traction/make money, it’s just another idea.

But the first question that pops on the mind of the entrepreneur is "what if someone steals my idea"?

Well think about it this way: the Lean Start-Up methodology allows you not only to test your business idea but also to test yourself. If your idea is easily stolen, then it is best to find about it right away, at the beginning, before you have wasted time and money: yours and what is worse, others.

If by just talking about the idea, someone else can go ahead and fully implement it, that idea is probably not worthy pursuing anyway.

Trying to stay in "stealth mode" (because you think you have the next Google or Facebook) will only make you waste lots of time on useless features and loose focus because you didn't talk enough about your idea.

Eric Ries provides a very clear answer to this in his book The Lean Startup:

 

"The most common objection I have heard over the years to building a minimum viable product is fear of competitors - especially large established companies - stealing a startup's idea.

 

If only it were so easy to have a good idea stolen! Part of the special challenge of being a startup is the near impossibility of having your idea, company or product be noticed by anyone, let alone a competitor. In fact, I have often given entrepreneurs fearful of this issue the following assignment: take one of your ideas, find the name of the relevant product manager at an established company who has responsibility for that area, and try to get them to steal your idea. Call them up, write them a memo, send them a press release - go ahead, try it! T

 

he truth is that most managers in most companies are already overwhelmed with good ideas.Their challenge lies in prioritization and execution, and it is those challenges that gives a startup hope of surviving. If a competitor can outexecute a startup once the idea is known, the startup is doomed anyway..."

 

 

So basically, if someone can steal your idea based on a 30 minute conversation,

your idea is not defensible.

 

Best to find it now than later.

 

Etnography - "get out of the building" and go where your problem/need really is

To validate your business idea first and foremost you need to "get out of the building" and go where the problem/need you want to solve/satisfy is.

When you examine people in context, synthesize their stories, and apply the results to solve a business or design problem you are conducting something people call ethnography, design research, user research, contextual inquiry, fieldwork, or whatever.

Ethnography can help investigate design or business challenges. A proper mindset (be it researcher/designer/entrepreneur) is essential when observing and/or interacting with target audiences (customers/users) in their real-life environment.

You need to develop a key skill for effective user observation: Empathy (ability to connect with others and yourself, being able to observe without judgment). The way to develop this higher awareness is through Mindfulness.

Mindfulness will be dealt with in later posts, but basically we want to remove our ego from the equation. You will see below how ego (that gives us a wrong view on reality and phenomena) impairs Empathy and Etnography, crucial in the first phases of Customer Development (see previous post).

Top 10 Ethnographic Research Videos

1. Introduction: Three videos that will give you a basic idea of what this type of research activity is, what it can help you with, and guidelines for conducting it.

#1 - What people are really doing: This is a 20-minute documentary, created by IIT Institute of Design students, which introduces some key concepts and approaches for effective user observation.

#2 - Getting people to talk: Another great primer from The IIT Institute of Design. Innovation starts with users’ needs and employs a set of reliable methods, theories, and tools to create solutions to their problems. Ethnography and interviewing are how designers see the world through other people’s eyes and get them to tell us their stories.This video focuses on how to get people to talk to you.

#3 - Interview with Victoria Bellotti (PARC): This is an interview held by Robert Scoble with Victoria Bellotti who manages PARC’s Socio-Technical and Interaction Research team. Victoria studies people to understand their practices, problems, and requirements for future technology, and also designs and analyzes human-centered systems.


2. Examples: The following brief videos provide excellent samples of what ethnographic research looks like.

#4 - Safety on the road: This video is one in a series of 4 videos targeted at learning about road safety for bicycle riders.

#5 - Reading ahead: What will reading look in the future? Will we be using printed books, rectangular electronic devices, embedded technologies? This competition challenged designers to envision a rich future digital reading experience, based on a defined set of design research.

#6 - Future of fish: The Central team discusses how they used ethnographic research to help apply design thinking to sustainable fishing.

3. Go deeper

#7 - Discover and Act on Insights about People by Steve Portigal: What do customers want or need? A permanent concern for entrepreneurs, designers, marketers and others seeking to innovate. Steve Portigal discusses methods for exploring both solutions and needs and he explores how an understanding of culture (yours and your customers’) can drive innovation.

#8 - Law and disorder in Lagos, Nigeria: According to Steve Portigal, some of the best user research techniques can be seen in great documentaries. This is one such documentary. It is fascinating to watch how Theroux stays open to people despite their weirdness, how he asks the questions that are really hard to ask, how he’s able to remove himself as an “ego” from the situation, and how he seems to genuinely like the people he meets.

#9 - The birth of a word, a TED talk by Deb Roy: MIT researcher Deb Roy wanted to understand how his infant son learned language — so he wired up his house with video cameras to catch every moment (with exceptions) of his son’s life, then parsed 90,000 hours of home video to watch “gaaaa” slowly turn into “water.” Astonishing, data-rich research with deep implications for how we learn. Quantitative ethnography at its best.

4. Fun: Confidential Google research on YouTube

 click here to see the videos

 

 

 

More on Steve Portigal (interview) - San Francisco, CA, USA
steve@portigal.com, www.portigal.com, www.cultureventure.net
Steve Portigal is the founder of Portigal Consulting, a boutique firm that brings together user research, design and business strategy to help innovative companies discover and act on new insights about their customers. He also leads CultureVenture, a group that provides immersive and inspirational experiences in foreign cultures to help executives, project managers, designers and others discover and make sense of the notable differences in other markets.

The foundation of Lean StartUps - Customer Development

Customer Development is a four-step framework developed by serial entrepreneur and  business school Professor Steve Blank for:

1) discovering and validating the right market for your idea,

2) building the right product features that solve customers’ needs,

3) testing the correct model and tactics for acquiring and converting customers, and

4) deploying the right organization and resources to scale the business.

One of the interesting things on the bottom of this diagram is something called a “pivot” - an iterative process that I advocate is ideally supported by design thinking.

The pivot is what will save your job/start-up: once you find this repeatable and scalable business model, then you go into the execution phase of customer development.

Search Phase

 

 

Customer Discovery: This is where you (1) construct your hypothesis and (2) you get out of the building and start testing your assumptions about whether people actually have the problem or need you think they have.

Customer Validation: This is where you see if your proposed solution actually matches what you think the customer problem was. This test between problem and solution, and your features and customers, is sometimes called product market fit. Here you validate the alignment of what you offer (your value proposition) with customer needs. That is what you are out testing, and this is what we call the search for the business model.

Execution  Phase

Customer Creation: This is where you create and grow end user demand.
Company Building: This is where you scale / grow the organization by transitioning from customer development into a functional organization that is oriented for constant and rapid execution.

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Please bear in mind a word of caution from Ash Maurya: do not attempt to literally apply Steve Blank’s Customer Development techniques without consideration for specific business and channel types.

“The Four Steps to the Epiphany” was written for a specific type of business – Enterprise Software, and a specific type of channel – Direct Sales.

While Customer Development is still the fastest way to learn, you have to adapt the tactical techniques for your business and channel to avoid hitting a wall after Problem/Solution Fit.

Read Lesson #4 by Ash Maurya - Customer Development Adapted for Web Apps.

Customer Development as an innovation methodology, powered by Design Thinking

In order to realize Eric Ries’s full vision of the Lean Startup, Customer Development HAS to scale.

• It can’t just be applied at the head and tail ends of the product development cycle but needs to be ingrained throughout the product development cycle using Design Thinking methodologies.
• It can’t just be applied to finding a problem worth solving and building a MVP but needs to be part of an ongoing process for how features are built and validated.
• It can’t just be limited to interviews, but needs to incorporate other forms of qualitative learning (usability tests) and techniques for reaching customers (lifecycle messaging).

L#3: Bulletproo​f Your Business Model Against the Top 10 Pitfalls that Kill Products (by Ash Maurya)

Congratulations on creating your first canvas.
Now that you have drawn a line in the sand, we are now going to spend some time putting your business model through the wringer.

The reasoning behind this is best summed up by Seth Godin:

"All projects go through some level of thrashing.
Successful projects do all their thrashing at the beginning."

Yes, you have to get outside the building to empirically test your plan.

But, you can get your initial plan to a much stronger starting point and save yourself a lot of "learning" time simply by avoiding some common pitfalls that have tripped up others.

 

Watch this video to learn how-to bullet-proof your business model against these top 10 pitfalls.

 

Another great technique for bullet-proofing your business model is talking about it with potential advisors. These ideally are other seasoned entrepreneurs but could also be other peer entrepreneurs.

L#2 - Capture Your Business Model in 20 Minutes (by Ash Maurya)

 If you spend more than 20 minutes creating your first Business Model canvas you are doing it wrong.

Here's why…

It's very easy to fall into the analysis/paralysis trap and spend a ton of time trying to create that perfect plan.

But here's the thing: A perfect plan is a myth.

Most Plan As don't work.

A study conducted on hundreds of startups showed that more than two-thirds of those that succeeded reported having drastically changed their original plans along the way.

Just look at companies like Paypal, Groupon, Flickr…

Where they ended up was very different from where they thought they would.

That tells us that what separates successful products from those that don't make it isn't necessarily starting with a perfect plan, but finding a plan that works before running out of resources.

That last part is key.

The way you do that isn't through rhetorical reasoning on a white-board but through empirical testing with customers and conversations with people other than yourself. People like your team members, advisors, investors, and even competitors.

In other words: "You need to get out of the building" (Steve Blank).

Coming back to the initial canvas…

The goal  is to create a snapshot of your business model as it exists in your head.

* It's okay to guess.
* It's okay if you don't have all the answers.
* It's okay to leave sections blank.

Guessing and leaving sections blank are gifts because they honestly reveal what you don't yet know.

Some things you don't need to know yet. Others you do.

We'll get to that distinction later in another lesson.

For now simply prepare yourself for creating that initial "non-perfect" snapshot of your business model.

How to Get Started:

1. Find a quiet 20 minute block of uninterrupted time.
2. Watch this video on how to get started.
3. Additional reading by Ash Maurya, an excerpt of his book (Running Lean) that covers

how to create your first canvas with a case-study from one of his products (click here). 

L#1 - Why products fail, by Ash Maurya (author of Running Lean)

We live in an age of unparalleled opportunity for innovation. 

 

With the advent of the Internet, cloud computing, and  open source software, the cost of building products is at an 

all-time low. Yet, the odds of building successful startups haven't improved much.

Most startups still fail.

When entrepreneurs get hit by an idea they either rush towards building out their solution or rush towards finding 

investors. Both of these approaches take a lot of time and energy, and can be overwhelming. Most importantly, that is the wrong way to start.

 

The number one reason startups fail is not because they fail to build what they set out to build, but because they 

spend too much time, money, and effort building the wrong product.

 

I attribute the entrepreneur's, often unbridled and singular, passion for the solution as the top contributor to this failure. 

 

People place too much emphasis on the original idea but studies conducted on product success and failure tell a different story. 

 

It has been statistically shown that most initial ideas don't work as anticipated. Rather, what separates successful 

entrepreneurs isn't starting with that perfect idea (or Plan A) but finding a plan that works before running out of resources.

 

These lessons will show you how. They are designed for entrepreneurs, intrapreneurs, and visionaries looking to launch a startup idea or bring 

a new product to market. 

It will show you how to get starting by first capturing your initial vision (or Plan A) and then how to bullet-proof this 

vision and begin the process of stress-testing your business model.

What you'll learn:

 

* How to capture your vision on a single page

* Refining your vision into a bullet proof business model

* Finding a compelling problem that is worth solving

* The critical components of different business models

* How to de-risk your plan through conversations

* What matters most to investors.
 

Then kickstart your idea by watching the first video in the Lean Canvas series.

 

 

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