Category Archives: Startups

Talking It Up: Launch Capital and Betaworks Voicecamp 2017

“Alexa, turn on kitchen.”
“Alexa, timer set 16 minutes.”
It may seem like I’m talking to air, but I’m not; these are words I utter literally every day to my Amazon Echo in my kitchen. I’ve had my Echo since it first came out and I hopped onto its waitlist for purchase. When it first arrived, it was fun although I really didn’t use its music function all that much. However, things really started to shine when new functionality appeared and when I hooked up my Insteon connected light switches to it.
Now it’s my constant companion in the kitchen and helps me optimize my cooking time. As I race through food prep, I tell it to turn on the kitchen lights. As I dump vegetables into my steamer, I tell it to set a timer for when they will be done. I also set other timers fluidly as I prep other parts of my meal and in the course of moving throughout the kitchen, Alexa is helping me keep track of when food has finished cooking. The handsfree nature of voice allows me to not waste time taking a few steps to the light switch or fiddle with a digital timer on setting the time and setting it running.
It’s this real life experience of what a voice interface can bring that gets me really pumped about voice.
We’ve all seen other voice applications come and go or just not really gain traction. However, with the advent of true voice devices that listen for your command like the Amazon Echo or Google Home (versus Apple’s Siri which requires a button push to activate), the possibilities begin to multiply. I remember my first exposure to voice on Star Trek with its talking computer. But that was in the 1970s and it took until now to bring some of that vision to reality. Better systems and computers to recognize and process voice make real time voice interpretation possible now. However, now comes the really interesting part – how do you deal with the user interface challenges and then build a business on top of that?
As a UX guy, I find that there is inherent elegance in having less physical controls. Like me moving around in the kitchen, Amazon Alexa is a great helper without the need for my hands to *do* anything. And therein lies the challenge of voice interfaces – how can you interpret what I want it to do without me speaking endless complex sentences or memorizing specialized vocabulary? I’ve been impressed so far with Amazon Echo’s capabilities so far, but also wishing for more. In contrast, text-based interfaces via typing have been out there for a while now; however, the interpretation of written language there is less interesting to me than the interpretation of spoken language simply because you need hands to write words. A handsfree interface is much harder to implement properly – the service that does will have a clear advantage over others.
Once you solve the UX challenge, then comes the challenge of building a real business on top of it. Amazon and Google can sell hardware and charge for being on their platforms, but everyone else needs to charge somebody who wants their service bad enough that they will pay for it. Hence, while voice interfaces are inherently context sensitive (ie. you can’t be dictating every email in an open office setting), I believe building a real business is even more context sensitive. Startups will need to find those compelling use cases where voice beats other types of interfaces AND a real business exists, and some of those are known and some are still waiting to be imagined. It’s why we are excited to be part of, one of the few voice startups we have seen with some great early traction in the hotel space.
And we are looking for more, which is why we are delighted to be part of Betaworks Voicecamp, joining as co-investors into each startup of the batch. Betaworks has a great reputation for ferreting out the unique and untapped in startups; we very much look forward to seeing what develops with Voicecamp 2017. If you’re a startup working on voice based conversational interfaces, be sure to apply – the deadline for applications is coming up fast on February 28, 2017!

Help with Board Meetings

Recently an entrepeneur asked me about holding board meetings, and what kinds of things are discussed at them. I sent him these most excellent posts:
Running More Effective Board Meetings at Startups by Mark Suster
Here are some favorites from Brad Feld’s blog:
Ideal Board Meetings
Board of Directors: The Agenda
Great Board Meetings
Board Meetings – Do The Formal Stuff First
Sample Board Meeting Minutes
I also had this outline of a typical board meeting. Here are some of the usual topics discussed:

  1. Administrative and Legal (Chairman & Atty)
    1. Status of Prior Minutes.
    2. Status of Prior Consents.
  2. Financials – Review & Update (CFO/CEO)
  3. Operations Update (CEO)
  4. Sales Update (CEO)
  5. Marketing Update (CEO)
  6. Staffing Update (CEO)
  7. [Status of any Company Disputes] (CEO, VP, Atty)
  8. Compensation Considerations (CEO, CFO)
  9. Strategic/Business Alliance and General Business Update (CEO)
  10. Calendar
    1. Board and Committee Calendar Review.
    2. Annual Shareholders Meeting.
  11. Other Business (All)
  12. Adjourn

Can Recruiters Work With Startups?

Last week I had lunch with a prominent recruiter who was interested in working with startups. We had a great conversation about ideas and the issues, and at the end I told him I would poll my startups to see if there was any way to structure a relationship that would be palatable for the startup and make sense business-wise for the recruiter.
In polling my startups, I was hoping to find a solution to help combat the problem that people are always having problems hiring and that finding great people was near impossible. Certainly hiring a good recruiter to expand one’s networks would be a good thing, if it could be made workable.
The email I sent out was:

hey all,
today i had lunch with a recruiter who helps VCs find personnel for their startups. we talked about recruiting for early stage and how hard it was, but also that it was nearly impossible for them to justify engaging traditional recruiters due to cost mostly, but many also don’t deliver very well either. this guy has worked with some top VC firms in the valley so i somewhat believe him that his network of personnel to reach is pretty good, probably better than most recruiting firms.
but this recruiter wanted to help out early stagers and wanted to find a way to do it that made sense. to that end, i told him i would throw out a quick survey to my cos and contacts to see if something might work out.
one issue is paying them for their services. he was willing to back off that for early stagers, because he had normal contracts with bigger companies who could pay the bills but he had time to help out startups and also wanted to do that personally.
if anyone has worked with recruiters before, that can be anywhere from 10% to 33% the hired person’s salary which is too much for early stagers.
we talked about accepting equity potentially but the risk of taking early stage startup stock or options is pretty high and most will fail, leaving him with nothing for his efforts if that is the only payment for his services.
so my question to you would be, what would you be willing to pay for their services? maybe something like 5% salary + 5000 options perhaps? or flat fee $5000 + 5000 options? would love to hear your honest thoughts, noting that you won’t get their services for free but you must pay something either in equity and/or cash…
thanks in advance!

I have an email list of all my contacts at the startups. There are 62 people on the list, representing 25+ startups and companies.
Of those 62 people, 9 people responded. Here were the results:
1 would not pay cash at all
3 would never pay options for recruiting.
1 suggest deferring payment either until financial position better or next funding round.
2 would pay up to $5K, preferably less.
1 would pay 5% of salary but not more.
1 would pay options if there were future services/longer relationship
1 would pay options with no expectation of future services/longer relationship
1 would be happy to pay the normal recruiting rate 10-33% of salary
All are concerned that recruiters would deliver good candidates at all. Their experience with many recruiting firms was that they were not able to deliver great candidates. Also, there could be conflict of interest in that if recruiter is compensated on % of salary, a recruiter may negotiate for higher salaries. Or they just find you any candidate whether they are good or not, just to get paid.
2 suggested – was there a way to reward recruiters more for a good hire (ie. lasts longer than a year, and performing well) and rewarded little for a poor hire (ie. let go within a year).
One person suggested, could recruiter fees be paid by VC firms as part of their services or use of funds?
In looking at the responses, the consistent message was that startups were very cash strapped and did not want to, or could not, pay any cash at all. Or they did not want to pay until later. Everyone had a different opinion on whether or not they were willing to pay options and what paying options meant.
Looking at it from the recruiter side, there are definitely issues with working with startups:
1. For startups, many times it’s low salary and high equity for the new hire. If a recruiter is getting 10-33% of hiring salary, then how does recruiter make money if the new hire salary is much lower than what they would get at a traditional company?
2. Startup equity is notoriously risky. If a recruiter only takes equity for payment, much of that payment will be forfeit since most early stage startups fail.
3. Recruiting is a cash based business like other consulting services. You need upfront cash to survive but startups are reluctant to give you any cash at all.
Given what I found out here, I am not sure that the current recruiter model can work. Some other comments and options I have found interesting that are out there:
1. Incubators and VCs already have recruiters on staff. Some of them are contractors paid through venture funds but some of them are actually on staff so they are not compensated like external, independent contractors.
2. StartupDigest is an email digest focused on startups, but there is a recruiting model hidden inside. It’s an application driven, VIP only members list of both startups and key individuals who get matched to each other.
3. Codeeval allows those seeking to hire engineers to post coding challenges and a place to upload solutions. You set potential coding hires to your section of the site and they solve problems that you create. They write code and upload the code to the server where it runs the code and publishes the output and the code for the hiring manager to evaluate.
4. Ovia HR is video based recruiting, but in an asynchronous manner. You upload videos of the hiring manager/recruiter asking interview questions and interviewees come and answer via video. Actual interview situations are mimicked because there is a time limit to answering a question so you don’t get time to prepare answers; you have to answer on the fly, just like in a real interview.
Still, in today’s world, hiring is a big problem for startups and likely to remain that way for a long time. The explosion of startups means that there are too many choices for prospective new hires to join. Using new technology to help find candidates is nice, but there is no substitute for the power of getting out there and networking yourself. Ultimately, people join your startup not only for the cool idea and opportunity, but for the opportunity to work with smart people whom they respect and can learn from.

Investment Pacing and The Timing of Fund Raising for Startups

Yesterday I had a conversation with my managing director about my investing pace. It had seemed to both of us separately that I had a lot going on, and that I was potentially going to invest in what seemed to be a large amount of startups in a short amount of time. After all, this is my 11th week at Launch Capital – barely 3 months in!
While my pace was blistering by some measures, after some reflection it wasn’t so bad after all. Some thoughts on this pace:
1. We looked at the other directors at LC and noted that for some reason, deals seem to come in waves and bursts. Sometimes the bursts can be planned for, like after a Ycombinator or Techstars Demo Day. Other waves come with no warning whatsoever. Or some deals drag on and then run into other more faster moving, hot deals in the future.
And there are long periods of calm where there seems to be no attractive deals for a while. It’s in these times I take a breather, but also wonder if I’m doing something wrong that deals have dried up.
2. We talked about adjusting the pace. This could be raising our bar, although I was already only looking for startups with very high potential (see The $100,000,000 Question) and not those whose trajectory was more obviously a smaller exit. We could shift our bar, like being really focused only on startups I had personal interest in. However, we noted that we didn’t want to potentially overlook an opportunity simply because it wasn’t in some area of determined focus.
3. I also noted that although we had set a goal of investing in 7-10 seed startups this year, the calendar year was problematic to review pace. This is because the second half of the year has 3 dead months in it for fund raising: August – when the investment community all go on vacation for the summer; November/December – when we all dive into the three holiday whammy starting with Thanksgiving, and then it’s Hanukkah and Christmas.
Thus, in any given calendar year, there are only really 9 months where rounds have the best chance to be closed. Even though in reality not all investors go on vacation, the problem is that many venture funds operate via partnerships. Often the entire partnership needs to agree on an investment before it takes place; all it can take is enough of the partnership to be on vacation and that can mean that a round can’t close with that fund. So investment pace can be raised during those 9 active months as those startups who happen to be fund raising then have a much higher probability of closing their rounds.
4. As mentioned previously, some funding rounds can drag on for months before they close. Nobody ever plans on that, but sometimes it takes time to round up investors to believe in a startup enough to commit. Given my experience, it can be deceptive that I am working on many startups at once because their actual funding rounds may not close until months later, as the entrepreneur tries to find a lead somewhere.
While I talk about my own investment pacing and the environmental factors that affect it, I think this has important implications for startups and the timing of their fund raising.
In the last few years of angel investing, I’ve observed that startups who start fund raising in the summer are at higher risk to not closing their rounds before the end of the year, due to the 3 down months in the latter part of each year. Starting fund raising in September is even worse because you really have to finalize everything in 2 months; if you start drifting into November, then people begin go on vacation and it’s harder to find your investors (and their money). Inevitably, many of these startups drift into January and finally are able to close their rounds.
This is not so true for startups who close rounds with all angels. Individual investors are not beholden to a partnership and can make decisions in more flexible timeframes.
The 3 down months in the latter part of the year also affect those who are looking for their next rounds. Remember that fund raising in the second half of the year really only means you have 3 months to work in – It can be particularly problematic if your burn rate and plan show you running out of money in November or December!
Remember that if you need to raise money, you need to do so before your money runs out. Sometimes people say that the rule of thumb is to start looking for your next round 4-6 months before your current funds run out. However, nobody can predict how long your fund raise will take. Depending on investor interest and your progress, you may raise in a few weeks; or you may need a few more months in if interest is low or your progress isn’t substantial. In tough economic times you may find that it takes an extraordinarily long time to raise a next round; you may even need to go asking for a bridge to carry you through what inevitably is the new year when fund raising probability goes up again.
My advice to startups is – no matter what, try to plan for your funds to run to the middle of the calendar year, which has you raising your next round in January. If you need to raise money in the second half of the year, you’re putting your venture at much higher risk than otherwise.

Which Subscription/Billing Systems Are the Best?

The other week, a startup asked me for recommendations on billing/subscription platforms as their startup involved selling a subscription service. I looked on Quora but didn’t find any good recommendations there (see: What are some recommended turn-key billing systems for online subscription services? and What tools for billing and subscriptions are good for integrating with your web application?).
I threw a query out to my contacts at 500startups and also on Twitter.
Seems like the winners are, Chargify, and Braintree Payments.
Many thanks to @webwright for his link to Accepting Payments on the Real Time Web.
The actual results of my query are below.
From the 500startups crew, the expectation would be that Recurly would be the platform of choice, given that 500startups has invested in them. Here were the results, out of 8 responses: – positive votes: 5
positive quotes:
“Recurly is cool yeah”
“Recurly is awesome.”
“They’re super supportive and easy to use.”
Chargify – positive votes: 2
“customer service being super quick”
“From a development POV they were super easy to implement and it’s been quite easy to add things as they’ve released new features and different ways of doing things.”
Paypal – negative votes: 1
“I’ve never worked with any of the others except for Paypal and would never go back to using them for recurring.”
CheddarGetter – positive votes: 1
Braintree – positive votes: 3
“They do 1-time and subscription billing, and support a lot of the standard options like free trials, add ons — and the have a potentially portable CC vault, etc.”
“We used Braintree for cc transactions, which recurly can work on top of, and the advice we got from other friends was to avoid building your own subscription system for as long as possible.”
“Recurly using braintree on the back end is fantastic. Also allows you to grow because you can eventually use braintree for subscriptions alone by writing a bit more code.”
Looking at other discussions, I found some more comments about payment services, especially Zuora which seems to be expensive and also very hard to setup.
From my Twitter followers, I got 14 responses, 1 RT, and 2 replies from marketing folks who follow Twitter for these requests. It’s nice to see marketing folks watching the real time web for potential leads, but honestly I just don’t know how I can trust a recommendation from such biased sources. I think the other sources are at least more dependable in that regard.
Foxy Cart – votes: 1
Zuora – votes: 1
eVapt – votes: 1
Vindicia – two people who worked for Vindicia replied.
Cybersource – votes: 1
Sagepay – votes: 1 – votes: 5
CheddarGetter – votes: 1
Braintree – votes: 1
Chargify – votes: 2
The tweets follow in this image:

Talk About the Problem, Not Just the Solution

When I meet with entrepreneurs, the conversation often goes like this:
We start by talking about the startup idea or problem they are trying to solve.  We spend about a minute on that and then we dive into a product demo.  He starts showing me the product, all the cool widgets, flash effects and interactivity and then I raise my hand and call a (hopefully polite) halt.  I pull him back to the problem definition and often have to drag him back to talking about it because he often wants to go back to showing me how cool the website or product he built is.
Here is the problem with this.  I have not bought into the problem statement yet, but the entrepreneur assumes I have.  And it very much seems like he wants to sell me on the beauty of the execution alone, which I may agree looks really elegant and well done.  However, creating a startup is not just about building the product, it’s about why we’re doing it in the first place. If I don’t agree with that yet, then it doesn’t matter how we execute or what we’re building.
To me, building the product is the most straightforward (out of a potentially chaotic customer discovery process) part of a startup; building the right problem statement is much more important and difficult.  After all, how do you know that you’re building the product to solve the right problem?
By right problem, I mean all those things that are so important to contributing to the success of the startup: big enough market, do users have a big enough want or need, can you monetize, are there competitiors or none, etc. etc.  If, in that first few minutes of problem definition, I don’t believe your problem statement is worth building for, then it’s pointless to keep showing me how great your product is executed.
After I call a halt to the product demo and I explain why, often the entrepreneur looks at me incredulously and tells me you’re the first investor to want to stop looking at the product.  This is frightening to me; are there a crew of investors out there who care more about how cool the product is than why they are building the product in the first place?
My favorite pitches tend to follow a form which I learned in high school about writing compositions.  

With the introductory paragraph, you start broad and then work down to your problem statement which generally is the last sentence in the introduction.  Then the next 3 or 4 paragraphs offer proof of your problem statement.  The last paragraph is the concluding paragraph, which summarizes the key points in defense of your problem statement and usually tries to end with a broader concept.
In a pitch, this starts with a lot of time talking about the problem statement, why we’re doing this and why it’s a great idea to be working on this venture. Once we establish this, we can talk about what they’ve accomplished from a product standpoint.  After we go through that, we go back to the company and widen the discussion to what they’re going to do in the future, and talking about where this company can go from here (and hopefully see the opportunity to grow huge).
These entrepreneurs’ pitches look more like this:

We start broad for about a minute and then we narrow quickly into a deep dive into the product itself.  At the end of the discussion, assuming I haven’t stopped them first, they just ask me how much money I want to contribute and that’s that.
No discussion about the future, no talk about company vision, no assurance that there is a real big opportunity here; just a cool product and someone who wants money to develop it further.
Here’s are the issues:
1. Talking about vision and potential future of the company is important.  It gives you a defining vehicle in which to drive the company forward.  It provides direction internally, and external understanding about what your company is all about.  If you don’t have this, you could be really stuck at some point if your current product isn’t getting traction and you won’t have some sort of map to follow; you’ll be forced to define one on the fly and you might not be able to.
2. If you never talk about the vision, I will never know if you will ever get one.  I have found some people don’t ever get the vision. They can’t ever get their heads out of what they’re doing at that moment. They somehow are missing the strategic gene, and only have the tactical – so they are great sergeants but not generals. But it’s the generals that will build the Googles, not sergeants who can’t advance beyond their rank. That doesn’t mean that sergeants aren’t important; it’s just a problem if they are trying to build a startup which requires someone to think like a general to know if they are working on the right problem.
3. If we never talk about the vision, then I won’t know if you’re aiming for the right opportunity. If all I see is an incremental improvement on what’s out there, or something small like a feature (how ever nifty it is), it’s just not going to get me excited because I need to bet on the next big thing not just another little thing.
4. Here’s another way to look at it. The world contains a whole bunch of problems that you could work on, and a whole bunch of solutions:

So you lightly define a problem, and then you start building and coding because that’s what you’re good at and you want to get cranking. So you crank.
Now, starting with this solution, you’re aiming for some problem:

But your problem definition isn’t complete. It’s nebulous. The problem with this is, if you had a great problem definition, you might actually be spending time on the wrong solution. If you started with a great problem definition, you might actually end up with a better solution than the one you worked on now:

This is because the set of possible solutions can be enormous and unless you define the problem well, you might be wasting time building something which may not be the optimal solution from the right problem! So why not show me that you understand and have defined the problem fully, and then show me that you’re working towards an optimal solution to this problem, versus me feeling unsure that you’re working for the optimal solution to some problem which I’m not sure yet whether you should be working on!
So are we headed for a small business, or the next Google? Talking about your product in detail is nice and important, but I want to hear about why you’re building it in the first place as much as how much you want to demo what you’ve built.

Warm Gun: Alternative Impressions

I just got back from a whole day of hanging out at the Warm Gun: Designing Happiness Conference put on by Dave McClure and his crew at 500startups. Once again, it was a stellar event, gathering designers and developers and the occasional investor (like me, although I guess I’m also a designer and developer with my CS degree). I thought I would post about the event, but post differently than posting just the notes or what was good and not so good. Instead, I thought I’d post some alternative impressions that I got while at the event which I thought were interesting.
I was shopping for a lot of books!
Two presenters gave some suggestions for reading, Geoffrey Miller and Jennifer Aaker. Through them I instantly bought on Amazon:
We Feel Fine: An Almanac of Human Emotion by Sep Kamvar and Jonathan Harris
resonate: Present Visual Stories that Transform Audiences by Nancy Duarte
The Mating Mind: How Sexual Choice Shaped the Evolution of Human Nature by Geoffrey Miller
Spent: Sex, Evolution, and Consumer Behavior by Geoffrey Miller
I am glad that some of the presenters did give favorite texts because it is hard to take notes in a conference setting; they talk fairly rapidly and move through slides so quick that it is hard to take the important points down. Some of them thankfully will either post their presentations on Slideshare or email them to me personally which is pretty cool.
Ex-Yahoo! designers, the next generation
I met a few designers who had been doing design at Yahoo! and left relatively recently. Most of them got there after I had left, with one I saw who was there when I was there and was still had not left!
But seeing them present and hearing about the work they did for some reason gave me a lump in my throat. I spent 9 years at Yahoo! as VP of User Experience and Design and we did so much while I was there. Now there was the new generation who designed for Yahoo in not only a new regime but new internet environment of high bandwidth, HTML4 going on 5, advanced browser technologies, faster computers, iPhone and iPads – it was a much different environment than the one I had designed Yahoo! sites for way back when. For some reason I felt nostalgic for the old days, but was impressed by their skills and knowledge and also felt disconnected with the new generation.
It was good to say hi and talk about the Yahoo!s that we respectively knew and where we were going from there.
“Twitter intros” were everywhere
What an amazing thing Twitter does – I walk into Warm Gun and immediately I am meeting and talking to people as if they know me because they tell me they have been following me on Twitter for a while now – I do the same to them if I recognize their names by their Twitter handles.
It certainly breaks the ice and for many, we seem to already know each other before meeting in person!
On the other hand, it is vaguely stalker like – should I be afraid…?
“Those who do not remember history are destined to repeat it.”
Sitting through the last presentation of the developer track, I was listening to Tom Chi, former Yahoo! search designer and now at Google. He was giving a quick talk on the intricacies of designing a search user experience.
A lot of the things he talked about were things we did when I was still at Yahoo (although afterwards, we got into a great discussion on all the cool things they were doing that weren’t mentioned in the presentation due to time constraints). Still, I could not recall where anyone had recorded information about search UX much. One of my designers, Christina Wodtke (now at MySpace) wrote about search UX design in her book, Information Architecture: Blueprints for the Web (2nd Edition). On Boxes and Arrows, there are a few stories about search UX:
Advancing Advanced Search
Search Behavior Patterns
Long Tails and Short Queries (which references an excellent research article by Amanda Spink, From E-Sex to E-Commerce)
But if you didn’t know where to look, it would be potentially really hard to find this information. And the new generation of designers might not even try to find it before trying to design a search experience on their sites. What a shame that would be: they would most likely make the same mistakes that others have made before them. IF ONLY they had the knowledge of others before them!
Yet I find that much of the deep knowledge tends to be proprietary or trapped in the minds of individuals who worked on the problems and then went elsewhere, or left to rot on departing employees’ hard drives.
At Yahoo! we had a website where we made all the user researchers upload their usability reports into one place so that we could always go back and see what others had done before them. Now that I’ve been gone for 6 years, who knows if that repository still exists. Certainly the individuals have been scattered to the four winds.
Perhaps this is something that someone on the internet would do, which is to create a repository of design knowledge. Perhaps we could somehow get donations of historical proprietary data. Perhaps we could save presentations from all the talks both formal and informal (like on Slideshare). Maybe it could be a Design Wikipedia, or something like Television Tropes & Idioms where every formula for a TV show has been recorded and basically reused and recombined for new shows.
Otherwise, we’re going to be relegated to finding these individuals and making give the same presentation over and over again for each new generation of designers…maybe that’s yet another great reason to hold Warm Gun next year!

What Startups Need Most Of Today

What startups don’t need more of:
1. Funding – if you have a great idea and team, you should be able to find money.
2. Smart people – Universities like MIT, Stanford, UC Berkeley and the like, are churning out 1000s of smart people each year. You may be smart, but you’re a dime a dozen.
3. Great ideas – Generally, if you have a great idea, you can get funding. You can even get funding for a mediocre idea if someone likes you. Given the explosion of startups, there doesn’t seem to be a lack for ideas.
4. Effort and Sweat – There is no lack of motivation to build either a company or a product. Given defined problems, there are known paths to building great usable, useful, and desirable products as long as you put in the time.
What startups need most of today are:
1. Experience – most entrepreneurs are young and haven’t worked much in industry. They need business savviness and experience either on their team or mentors who are willing to put in the time to handhold inexperienced entrepreneurs. Of course, entrepreneurs need to be open, willing to hear feedback, and to learn from it.
2. Contacts – Following on 1., if you haven’t been in industry long, then you haven’t had time to network properly. Getting the proper introductions can make or break a new business.
3. Monetization – Every startup needs money, but how to get it? Some of this related to experienced persons being involved and creating a business model; some of it relates to working with a platform to accelerate monetization.
4. Distribution/Customers – Whether you’re a consumer or B2B startup, you need customers. For consumer startups, how do you build a customer base when users are bombarded by invites to “great and new” services and everyone’s attention is drawn in a 100 different ways? For B2B startups, how do you find the right people to talk to in a business and get them to accelerate their process to buy your serivce?
5. Hiring – There are too many startups and not enough people to work in them. This is because every entrepreneurial person wants to be their own founder and are not OK with a small percentage of another company. The fact that not every smart person that is out there is fit for a startup means the available pool of hires drops dramatically.
The persons, platform, and/or organization which solves these problems for entrepreneurs is going to make a killing…!

Giving UX and Design Advice

A buddy of mine was helping some friends setup an incubator and he asked me whether or not they should have some UX/design support that is resident in the incubator.
It’s an interesting proposition. According to Dave McClure:
Addictive User Experience (aka Design) & Scalable Distribution Methods (aka Marketing) are the most critical for success in consumer internet startups, not pure Engineering talent.
(from Startups & VCs: Learn How to Design, Market, & Eat Your Own Consumer Internet Dogfood)
I tend to agree. Most startups are started by business people or engineers. It is very rare to find startups started by designers; relative to the other disciplines, it’s like finding a needle in a haystack. So most entrepreneur teams really have no formal training in the area of user experience and any that do well are either lucky or naturally talented. But yet at early stage, the quality of the product experience matters so much more than at any other time and is so critical to the early traction a startup can get. Also, designers are among the hardest of disciplines to hire for; there simply aren’t enough to go around, especially compared to the number of engineers universities crank out each year. Thus it’s natural that an incubator, which provides a lot of critical resources to its incubated businesses, would want to provide design as one of those resources.
I should also say that we’ve been really bastardizing the use of the term “designer”. There are many sub-disciplines within the category of design: visual design, graphic design, interaction design, user researchers, usability testing professionals. Saying that someone should get a talented designer is not a cure-all for UX success. You must have some basic level of understanding and skill in a few of these areas in order to create a great user experience.
For the last 4 years, I’ve been advising startups partially in the area of UX and design. I think there are parallels in what I do and what an incubator might provide. Both an incubator and I have a portfolio of companies to provide design support for; but yet how to provide a level of support for so many customers at one time? Is it actual design detail work or is it just guidance? Certainly I have thought a lot about providing UX and design help to all the startups in my portfolio, and in what form that help looks like. However, the nature of providing help in this form comes with interesting dynamics.
All About Influencing
Everything is influenced based, which means that in no way can I force someone to come to my viewpoint. I have to convince them that my way is better through belief in my past experiences and/or through some sort of research, or through the persuasiveness of my reasoning. These individuals do not report to me; nor in reality do they even have to listen to me. I do not hold their destinies in my hands so I cannot have that level of control over whether they listen to me or act on my advice.
In the beginning, this was a source of mild frustration because I would tell my startups that something was wrong or could be better in that way, but yet they would seem to not do what I just told them to do. I realized that early on that my advice was just that; it was advice that someone would just add to their knowledge base and they would act on it or not.
Not Letting Grinfucks Get to You
I also have to let go of the fact that they may not listen to me at all, or totally disagree with me and discount whatever I advise. Sometimes they would even agree with what I said and then go back to doing whatever it was they were doing later (I believe this is what Mark Suster calls the “grinfuck”.). However, I can’t let this get to me or else immense frustration will set in.
However, as much as we see someone else is failing (by our own standards), I have to admit that there is always the probability that I am not right. If there is anything I’ve learned about product design is that there is huge variability of success amongst users. I think if we thought hard enough, even the most crappiest designed products have had huge success in the world (ie. Windows). Or we underestimate users’ tolerance for imperfect design; sometimes users put up with so much because the product satisfies some basic need very well. Then, when you consider what makes a startup successful, it throws even more variability into whether or not a perfect design is really required. For example, one metric for success is when a big company buys your startup for a lot of money; you may have a really imperfect product but yet we’re successful because we sold our startup for a lot of money and made a decent return.
To me, this is all a probability game. Too often we get caught up in black and white: “if you don’t implement my design ideas, you’re gonna fail.” To me, it’s about maximizing all chances of success, with UX and design being one of those all important details a startup works on. When you execute well across a number of fronts, that raises the probability of success. The more details you execute poorly or imperfectly, the less your probability of success. So I ask you, the intreprid entrepreneur, wouldn’t you want to listen to some UX design advice to maximize your probability of success overall?
Gotta Keep an Endless Flow of Ideas Comin’
When teams don’t like my initial ideas, I find I have to keep throwing ideas at them until something sticks. In some situations, I seem to have an endless supplies of things to try. In others, I hit a wall and run out of ideas very quickly. It’s definitely frustrating to me when I run out of ideas, as I consider myself a pretty creative guy. But there is ultimately an end to ideas when they come from a single person, and from someone who doesn’t live and breathe the startup day in and day out.
Advising Generally Means You’re Not Doing the Work
However, advising is generally not actually doing the work. You’re evaluating, giving your opinion, suggesting changes, giving ideas and direction on what can work better. Rarely am I actually launching Photoshop or doing actual HTML.
I like advising. I like teaching and guiding others and it’s a source of great satisfaction to me to help others succeed. I also like to see if my theories actually work or not, so now it’s a challenge to see if my ideas are right or not. Second, advising allows me to cover a far wider set of customers than by doing the actual work. In order to do great work, you really have to focus on a project; multitasking can get you only so far and I’m sure anyone who is in the contracting business will tell you the pitfalls of working on more than one project at a time. Quality of the work, thought leadership, and time management all become huge challenges when you’re working on just one more extra thing.
The downside to advising is that I’m not doing the actual work. Advice can only communicate your ideas so far; words just cannot replace the actual design work being just done by you. To some, doing the work is far more satisfying than giving advice. Hey I know – I’ve been there. I’ve lost count of how many sites I’ve launched at Yahoo, or the immense enjoyment I feel when I’m part of team designing, building, and launching a product at Apple or through our contracts at frogdesign. You also don’t learn as much unless you’re doing the actual work; living and breathing the design allows you to be immersed in the users and their problems with your product. Hearing it secondhand just isn’t the same.
I think for many designers, it’s tough to just give advice. It is hard to let go of the immense personal satisfaction and learning of doing the actual work. I think this is partially why there aren’t that many designers out there giving advice in some form or another. It’s actually pretty cool to be doing the work and taking a product all the way through to launch.
One other important point about doing the work: it also maximizes the chance that your ideas will get implemented. Any ideas you may plant in someone are just thoughts; taking those thoughts to action requires firm belief by the listener in what you said, being able to internalize it, and then act on it. But if you are on the team doing the implementing, then you have the best chance of implementing the ideas into the product because you already believe in it and have internalized it, and recognize and can walk a path to realization of the idea.
Not Doing the Work Means Wider Coverage of Projects
One advantage to stepping back from the actual work is that you can cover a wider variety of projects simultaneously. I do not know of any designer who can handle more than two projects at the same time; most only work on one at a time before moving on. Spreading your brain across multiple projects really puts quality at risk. It is very difficult to do your best work when you’re not focused on one thing.
However, if I’m giving just advice, I can do that across many more projects. Still, it is consistent with multitasking issues that if I don’t get depth on a given project, that it’s hard to give really detailed advice. So often I may spend more time on a single project and get to know it better and then I can give more depth in my advice. I do think my past Yahoo experience as been a great advantage here. At Yahoo we worked on a wide variety of projects and I am usually able to bring some depth to my advice without needing much time to get to know a project.
The Difference Between Design Advice and UX Advice
Just so I’m clear – I think there is a difference between “design” advice and “UX” advice. Definitely the two are related. Building a great user experience pretty much means you’re employing great visual and interaction design, coupled with user research to reinforce and inform. However, I think there are differences as well. Mostly, I think that design is a subset of creating the entire user experience, which encompasses branding and its effects on a user’s constant use of a product, tackling a certain market segment, and customer service, among other things.
When I give specific design advice, I tend to think of looking at the specific elements on an interface and commenting on the interaction or its aesthetics. I talk about placement of controls, and what is confusing and what is not. I talk about the flow across screens and whether or not that makes sense, or could be easier or not. Often this comes in the form of a design walkthrough with discussion after.
However, when I give UX advice, my comments go wider and I talk about the entire product experience. A conversation may start with “can I get help on my GUI?” but sometimes I see the problem is not with the GUI but it’s with a broader issue of why the heck we’re doing this in the first place. I start talking about who the customer is, and why they’re targeting the customer. I also talk about getting a better product definition and problem statement.
Personally, I think it’s not a good use of time if the problem statement is incorrect in the first place to dive into detail UI issues. Once you have refined the problem statement (aka iterate until you find the right product fit for a customer base and get a scalable business model – thanks, Steve Blank!), then we can start talking about whether the UI you have created is appropriate for that or not. Then we can take an orderly approach to crafting a superior UI for a problem that users desire a solution to and hopefully make money off of.
Finding the Right People
OK I just expounded on my experiences in giving design and UX advice. Why? It’s important to understand the motivations and experiences of a person who loves giving design and UX advice so that if your goal is to find similar support, you’re going to have to find a person with similar motivations and experiences.
I have not met many people who are happy giving design advice only. Most designers I have met want to do the work and derive great enjoyment from the work. At one time, I too loved doing the work; however, the complexities of life forced me to create a situation where I could still contribute and grow in my experiences but not mean that I am on critical path for any particular project. (Someday, I would be happy to talk about exactly what complexities I mean here, but just not in my blog but live over a beer 😉 ) Giving advice rather doing the work meant that I could still be part of the process as well as be a part of a greater number of projects, but not do the actual work because my life isn’t structured to deliver actual work well.
So if you want design and UX advice, you’re going to have to find someone who is OK with not doing the work and hopefully loves doing this.
I started this post by talking about helping a friend out regarding design support in incubators and then focused on the individual giving advice, in order to understand what kind of person might be good in such a role and what experience they might need. Watch for my next post on my thoughts on design as a central resource in incubators.

The Bastardization of the Terms “Designer” and “User Experience”

OK I’m annoyed.
All around the startup circles I hear about how startups need designers and how having a talented designer is going to solve their product UX problems.
This is a problem.
That’s because getting a talented “designer” isn’t necessarily going to fix your UX problems. There are many problems with this idea:
First, a product user experience is much broader than design alone. There are many elements that create a great experience for users with your product. The front line is held by the GUI where a designer usually plies his skills. But there is also product stability and quality, pricing, customer support, branding and marketing – you get the idea. Sometimes your product experience’s problem is not design by something else.
Second, there are many talented designers who are really bad at crafting a great user experience. In my experiences at hiring designers at Yahoo, I have found that some designers, while extremely talented in the areas they are skilled in, were really bad at creating a great user experience! This is because they do not have the open sensitivity to what others need in the product, cannot escape designing for themselves, or simply lacked training in creating a great UX. We have successfully trained some people to follow traditional UX design processes and thus made them into great UX people. However, not everyone is good at UX; they just lack some innate sensitivity to what makes a product useful, usable, and desirable all at the same time.
Having said the previous, there are many great user experience people who have no traditional design training whatsoever. Having one of these lead a product team may be all you need to take a mediocre or bad UX and create a great one. Typically we call these folks great product people and they can come from many different disciplines.
Third, people still use the word “designer” to mean a wide variety of skill sets and occupations. These are:
Visual Designer – someone who is great at aesthetics and “styling”, and creating art. They are masters at creating a visual style for your product.
Interaction Designer – someone who is great at creating great interactions with the product, making it easily usable. They are great at making interfaces understandable and quickly learnable.
User Researcher/Usability Engineer – someone who excels at researching users and their needs, watching and recording their reactions to products both the good and the bad. They gather data to inform the design and improve the product.
Each one of these skill areas is a full discipline in its own right. People go to school for 4 years, do graduate research in them, and then work solely in this area as a full career.
Thus saying you want a designer doesn’t help me find the right person for you. We have to figure out what kind of designer you really need based on the problems you are trying to solve, or the holes in the skills you have.
By the way, every startup has headcount issues. So they want that guy who can do it all. Realistically, there are people who have skills in all those areas. But they are the most sought after folks on the market, and there are so few of them to go around. To wait for that perfect person to show up will mean that you are going to wait a long, long time.
Typically, in the past, we have put together a team of 2-3 of the various functional areas to work together on creating the UX. Finding people who are really good at any one of the skill areas is the easiest; finding someone with 2 or more of those skill areas grows quickly exponentially impossible in any reasonable timeframe.
As mentioned before, potentially it is more important to find people who are great product people: those who are talented at creating great user experiences need not be designers per se, although it is necessary to have design skills in order to do the actual work in creating it. Without those skills, a product person would have to work with others to do the detail work. Therefore, a great product person leading a team of people who may not be so good at UX (ie. designers, engineers, etc) can generate an awesome result.
However, there are a lot of people in the design field who are trained in designing great user experiences. Thus, great UX people tend to be those with a design background. But still, not all of them have to be designers.
All startups would agree that at early stage, getting the product experience right as soon as possible is probably more critical at this stage than any stage in the life cycle of a company. But let’s get a little more educated and specific on what it means to create a great user experience, what design’s role is in that process, and which design roles we need to create it.