What You Need to Know About Starting a Startup

2. Let me tell you a story. Some of you know our Samurai products relatively well. There is a product called Email Samurai that has never seen the light of day. But let me tell you what happened. We had an email list somewhere in the order of 300,000 to 400,000 at the time. We were really frustrated with the email service providers that we were using. They were expensive and they were like the thought police. They wanted to stop us in eight different ways and we really were doing pretty standard kinds of things. One of the things in a startup business is it’s good to be your own customer. It’s good to be the person who is going to use your products because you’ve got an empathy for it. So we said we’re going to fix this problem. We’re going to solve this. So we went about building an email marketing platform that we were confident was going to take over the world. This is getting a bit technical , but one of the key things when you’re building email marketing platforms, one of the key things is most of them are third party systems. They sit outside your website. So you’re consistently having to integrate off to these systems. There are really good systems out there called hubsoft and Infusion soft and even MailChimp and these bits and pieces. You’ve got to integrate to them.

3. We said, what if we could build a system inside of WordPress? The reason you would do this is half of the websites built in the world today will be built in WordPress. You would literally have half the market and you could build things integrated inside WordPress that would automatically know about a lot of the things that are happening. It would be smart enough to know and the integration would be so much easier. So we went ahead and built that. So we worked away and we worked away. At the end of that process we were really proud of ourselves. We thought we had built something really cool and we thought, let’s start showing people. We went and started taking it to customers. In fact there are people in this room we might have taken it to. Then we had a sad experience. People gave you the look that you give your relatives sometimes when they’ve got something and you don’t want to tell them their baby is ugly but it’s not good. We started to have the experience of ‘Oh, yeah, that’s good. That’d be good’. When we started to push into it, what we discovered was the big problems we had weren’t problems for other people. Most people don’t have lists of 300,000 to 400,000 people on their email database. They’re lucky to have 300 to 400.

4. For most people, the integration problem is not even on their radar. Their version of solve the integration problem is, ring Ben. In fact the only thing that came out of it that they liked was we built within it a component that helped people write the emails. A lot of people struggle to write emails and it gave you some coaching and other bits and pieces around that. So we discovered what I call the ultimate waste. The ultimate waste is building something that people don’t want. It cost us a lot of money and time to do that. We did not need to have spent the time building the software to run the interviews that gave us the information. We could have simply run the interviews with pretty pieces of paper. We would have got exactly the same information. Instead, we spent something north of $150,000 of wage costs. It was not a trivial product to build; six to eight months of our professional lives went down the toilet. It was a lot of pain. If you’re in the room and you’ve had failure in the tech space, we can very much relate to it. It changed our thinking in a whole range of ways. I want to share some of those thinking changes and then give you some techniques to take a different approach. The first thing it did is we discovered that we are going to be

5. wrong. In every project that we start, we are going to be wrong. It’s a matter of to what degree we are going to be wrong and where we are going to be wrong. It’s going to be wrong in some way or another. We discovered the value of fast learning loops. Let me talk about learning loops. Learning is a phrase in business that we use, or I have used at times, to commiserate. Something went badly, oh, but we learned some good lessons. We tell ourselves when it all goes horribly, oh, we’ve learned something. It’s the phrase we use to console ourselves. But deep down we think, I don’t want to learn lessons, I want to succeed. I want this thing to dominate, I want to make money, I want it to be a great product, I want it to be awesome. I’ve discovered that what we actually do need is learning loops. We want to, as quickly as possible, get things into the market, validate it and do the minimum amount of work to get the maximum amount of learning that we possibly can. Another piece is the notion of problems before solutions. A lot of people get enamored with their solution. They think their solution, and it is the inventor syndrome, I’ve invented something and it is brilliant. This is my

6. invention. Actually, if you’re in a startup business, the key is you’ve got to find the pain. People ultimately pay to get rid of pain. Your solution is just one of a dozen different ways they can pay to get rid of that pain. What you’ve got to do is, you’ve got to start by getting really clear that the pain is there, the pain is real and you’re going to solve the pain. We also learned the value of minimum viable products and I’ll talk about those in a moment. So changes in actions, we did lots of interviews. Some of you in the room, I’ve suggested you should go and talk to five customers. We spoke to, I think, sixty to seventy. We did lots and lots of interviews and I’ll show you some examples from that in a moment. We gave out ugly, handwritten wire frames. I wasn’t looking to impress anybody, I wasn’t worried about what people’s opinions were, we wanted to get wire frames into people’s hands. We shipped embarrassingly low featured software. We turned Email Samurai into another product called Content Samurai and the first version of it, I was embarrassed about. There was a whole bunch of things that I was sure we needed. It’s a video production platform. I was sure we needed a YouTube export function. That was critical. In my mind it was mind boggling that we wouldn’t have that. We are now two years in, almost 2,000

7. paying subscribers, $US50 a month, we still do not have an export function. What we discovered was there was a whole bunch of other things that people cared about. As I said, Content Samurai is where that has come from. So we discovered that people liked the help writing the materials and what they really wanted was help around that and ultimately to turn that into videos. So we’ve created a video platform after a series of something like sixty to seventy interviews at various stages of production. That is now a business that is absolutely the flagship of the Samurai business from the revenue perspective. You do the maths, it’s about $50 a month for about 2000 subscribers in the US. So it’s doing well for a startup business and interestingly, I still feel like it’s only a small fraction of where we want to take it. There are a couple of things before we get into specific techniques. The process that we used, we stumbled upon this book. I’ve actually given this book to a number of people in the room. We stumbled upon this book and it essentially gave us a really good step by step process to assess and validate a market. Just in terms of a hands-on process, it’s really good and it focuses people a lot more on getting clear on the problem before they get people to try to fall in love with the solution.

8. IN THIS VIDEO: Ben Stickland, the founder of Alliance Software, talks about a former product called the “Email Samurai” and the things they learned from it.

9. Ready to get the help you need to get your business off the ground? Visit our website todayfor more information.