While FAKEGRIMLOCK and all of the humans he has let survive are hanging out at the TechStars SXSW party, I’m at home with Amy, buried in a snowstorm, reading. I haven’t read much this year – I’ve been overwhelmed with work and writing and haven’t had much energy for reading. Which is dumb, since I love to read, and it’s an important way I discover new things and think about things I’m interested in.
A copy of Clay Christensen’s new book How Will You Measure Your Life? ended up finding its way to me. It’s signed by Clay and his co-authors James Allworth and Karen Dillon so I assume someone sent it to me. I read it tonight. It was timely and excellent.
One of the chapters in Startup Life: Surviving and Thriving in a Relationship with an Entrepreneur that was especially challenging for me and Amy to write was the one about children. We don’t have any, so we enlisted a bunch of friends to write sections of it. I’m proud of what they wrote and think it hits the mark, but it is an area I struggle to understand since we made a deliberate decision not to have kids. So I dug into the middle section of the book where Clay spends a lot of time talking about children in the context of measuring one’s life. I learned a lot from it that I think I can apply to my interaction with children that are not my own.
Clay very deftly uses business concepts to set the stage for a deep discussion of how to think about your life, your values, and how you operate. The one I liked the most was his discussion of the theory of good and bad capital. It’s very nicely linked to the Lean Startup methodology (without realizing it). The theory is that early in their life, companies should be patient for growth but impatient for profit. Specifically, they should search for their business model, and long term strategy, before stepping on the gas. This is good capital. Bad capital early on will be impatient for growth ahead of profit.
When companies accelerate (search for growth) too early, they often drive right over a cliff. However, once the business model and strategy is figured out, then companies should switch modes to be impatient for growth but patient for profit. Invest like crazy when you’ve got it figured out.
The section that follows is awesome. You need to read it to get it, but imagine the notion of how you invest in friendships, in your children, and in yourself. At any particular time are you focused on growth or profit? Do you have them sequenced and allocated correctly? Clay’s punch line is:
“There are two forces that will be constantly working against [your investments in relationships with family and close friends.] First, you’ll be routinely tempted to invest your resources elsewhere – in things that will provide you with a more immediate payoff. And second, your family and friends rarely shout the loudest to demand your attention… If you don’t nurture and develop these relationships, they won’t be there to support you if you find yourself traversing some of the more challenging stretches of life.”
I’ve just had one of those stretches – I spent the past three months struggling with depression after having a bike accident, wearing myself out travelling for two months, and then ending up in the hospital to have surgery to remove a kidney stone. I’d made the right investments in my relationships so it was easy to cash in on a bunch of them, and I appreciate greatly everyone who invested energy and support in me. I came out of the depression around February 14th and I appreciate more than ever the value of investing in these relationships. I now have a powerful business analogy – that of good and bad capital.
There’s a lot more in How Will You Measure Your Life? It’s a great companion to Startup Life: Surviving and Thriving in a Relationship with an Entrepreneur and very easy to recommend to anyone who is trying to live the best life they can.
This article (Business Plans Are An Historical Artifact) first appeared last week in the Wall Street Journal The Accelerators Column, which I’m contributing to on a regular basis.
In 1987 when I started my first company (Feld Technologies), I wrote a business plan for a course at MIT that I was in called 15.375: New Enterprises. The textbook for the course was Jeffry A. Timmons’ classic book “New Venture Creation” and the course ended with the submission of a written business plan.
I went on to create a company, with my partner Dave Jilk, that bore very little resemblance to that business plan. When I reread the plan several years ago for amusement, it motivated me to go dig up plans for other successful companies that I was a co-founder of or early investor in, including NetGenesis and Harmonix. In each case, the business plans were big, long, serious documents that had only a minor semblance to actual business that got created.
In the 1990s, business plan competitions were all the rage. I was a judge early on at the MIT $10k Competition (now the $100k Competition) and read lots and lots of business plans. By 1997, when I started investing as a venture capital investor, I was no longer reading business plans. And I don’t think I have since then.
Today, it’s clear to me that business plans for startup companies are a historical artifact that represented the best approach at the time to define a business for potential investors. In the past decade, we’ve shifted from a “tell me about it” approach (the business plan) to a “show me” approach (the Lean Startup). Rather than write long exhaustive documents, entrepreneurs can rapidly prototype their product and get immediate user and market feedback. They can use Steve Blank’s Lean LaunchPad approach to get out of the building and actually incorporate customer development early into the definition of their business. And they can learn the lesson we teach over and over again in TechStars – “show don’t tell.”
While “business plan competitions” are still around, some are rapidly evolving into “business creation competitions.” CU Boulder is at the forefront of this with their New Venture Challenge, which is experimenting with new things each year. And activities like Startup Weekend are teaching a new generation of entrepreneurs how to envision, create, and launch a startup in a weekend, and then incorporating Blank’s Lean LaunchPad into a month-long process called SWNext.
As an entrepreneur, I encourage you to reject the notion of a classical business plan from the 1970’s. You should still thinking deeply about the business you are creating and communicate clearly what you are doing to investors – just use contemporary approaches that are much more deeply incorporated into the actual creation of your product and business.
I judged Lean Startup Machine Boulder yesterday afternoon. I had a blast and thought the program was really impressive. I didn’t really know what I was getting myself into and usually protect my weekends pretty aggressively from stuff like this so I can spend time with Amy and recover / catch up from the week but for some reason Trevor Owens (Lean Startup Machine CEO) and Ray Wu convinced me to come out and play.
I’m a huge Eric Ries / Lean Startup fan and believe that the methodology can be quickly taught. What I saw yesterday is further evidence of this – 13 teams spent from Friday afternoon to Sunday afternoon using the Lean Startup Methodology, the concept of customer development, and the lean startup canvas to go from idea through a series of validated learnings to get to a better idea. It’s not a coding / hacking weekend – it’s an applied process of the Lean Startup Methodology.
The event took place in the Scrib co-working space in downtown Boulder. I hadn’t been there yet so it was a good chance to meet the founders of Scrib, see the space in use, and get a sense of the energy. It was excellent and I expect Scrib will be a great contribution to the Boulder Startup Community for a long time to come.
After we saw 5 minute presentations from each team, the judges sequestered for a while and came up with first and second place. The winner of Lean Startup Machine Boulder was I Want My Bike Back and second place went to Dig Rentals. We came up with fun awards for all of the other teams and there was no doubt in my mind that it was a useful event for everyone.
Lean Startup Machine has a goal of doing 50 events in 2012 and 200 events in 2013. The next ones are in San Francisco (5/25), Toronto (6/8), Rotterdam (Netherlands – 6/8), Los Angeles (6/15), Boston (6/15), and Seattle (6/29). If you are in any of these cities, I encourage you to check it out.
These three courses contain over 9 hours of content and 60 talks from people like Eric Ries, Dave McClure, Steve Blank, Hiten Shah and many more. That’s a lot of knowledge for 67% off.
In addition to the courses, you get a hardcover copy of Eric Ries’ awesome new book The Lean Startup. Eric – congrats on converting all of that digital content to ink on dead trees!
Many of the tech blogs / news blogs that I’m reading are suddenly about deals. financings, IPOs, valuations, and bubbles (or not bubbles). Several years ago, there was a lot more about “how to startup a company”, especially around product, vision, and team. Now a lot of that focus has shifted to deal making and exits.
It was with this backdrop that I read The Lean Startup by Eric Ries over the weekend. If you don’t know Eric, he’s the pioneer of the Lean Startup Movement, building on the great work of one of his mentors, Steve Blank who wrote the seminal book The Four Steps to the Epiphany. Both Eric and Steve have must read blogs and Eric’s new book will join Steve’s as a critical book for any entrepreneur working on a tech startup.
The Lean Startup is focused on the early stages of a company, but apply throughout the lifecycle of any business as all product initiatives, especially new ones, benefit greatly from the Lean Startup approach. We spend a lot of time on this at TechStars and you see a lot of the lean startup principles reflected in the stories in Do More Faster: TechStars Lessons to Accelerate Entrepreneurship. While Eric’s book isn’t out until September, I encourage you to preorder it now and gobble it down when it gets to you.
I’ve been a fan of Eric’s for a number of years ever since I first started reading his blog. We’ve worked closely together on the Startup Visa Movement and I put him on my short list of people who I’d support in any endeavor that was important to him based on his attitude, vision, deep thinking, and great style and approach to things.
As the world becomes fascinated with exits, I’m going to keep focusing on startups because without them, nothing else matters in the entrepreneurial chain. As part of this, I’d like to put together a great bookshelf of “startup books” – books aimed at the startup phase of entrepreneurships.
If you’ve got any favorites, please mention them here and – if I haven’t read them – I’ll go grab them.
Sometimes I feel like a conference promoter. It’s worth noting that while I put plenty of events up on this blog, I only post the ones that I’d consider going to. Specifically, I probably get 10 requests to post something for everyone one I do.
Over the past year, I’ve gotten to know Eric Ries through the work we’ve done together on the Startup Visa initiative. If you don’t know of Eric, he’s a software entrepreneur who over the past few years has been developing and evangelizing the idea of the Lean Startup. He’s an extraordinary writer – I gobble up every word that he writes on his blog Lessons Learned.
Eric wrote me the other day about a new conference he’s doing called Startup Lessons Learned in San Francisco on 4/23/10. The overview of the event follows:
Startup Lessons Learned is the first event designed to unite those interested in what it takes to succeed in building a lean startup. The goal for this event is to give practitioners and students of the lean startup methodology the opportunity to hear insights from leaders in embracing and deploying the core principles of the lean startup methodology. The day-long event will feature a mix of panels and talks focused on the key challenges and issues that technical and market-facing people at startups need to understand in order to succeed in building successful lean startups. We have a great lineup of speakers, including Kent Beck, Steve Blank, Sean Ellis, Andrew Chen, Randy Komisar, Hiten Shah, and many others.
While I can’t be there I highly recommend anything that Eric is involved in. He’s given me a discount code of ERIES25 which is good for 25% any ticket if you register for the event. If you are in the bay area on 4/23/10 I encourage you to check it out.