How to Build a Startup Community! Thanks for letting me be a part of this

“The Center for Entrepreneurship // CIE-KIT at Karlsruhe Institute of Technology is an independently managed plattform to connect students, graduates, professors, mentors and investors with the goal of boosting the formation of startups. We follow a free-spirited and non-bureaucratic approach to support founders.”

Here is their new video: http://youtu.be/NmhemC6olIs (produced by Brainchild Media).

Having worked for the CIE-KIT as a startup manager from Nov 2011 – March 2013, it feels great to be a part of this. I want to thank everybody that has been or is still involved in the project and/or the community for making it so special.

The CIE has really achieved a lot over the course of its existence. Above all, it is the initiator of a vibrant, dynamic, and growing startup community in and around Karlsruhe, the tech hub in southwest Germany. Check it out for yourself!

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Startup Tools should be used as Gates to pass

In this post I want to take the chance to shortly outline my learnings about all kinds of startup tools that I have come across in the past. The trigger that started me thinking and reflecting about this was pulled last night at the weekly meet-up of PionierGarage.

I introduced Alexander Osterwalder‘s Value Proposition Canvas, to a group of about 30 interested pioneers, entrepreneurs and entrepreneurs-in-the-making. In my talk I explained how to work with the Canvas and gave some additional advice on what I think is important to keep in mind in the process. Check out my deck “Value Proposition Canvas (explained)” on slideshare to get a hint of what I presented (feel free to share or use for your own work!). Afterwards we had a fun workshop that had all attendees use the Canvas tool to work out their own ideas in groups with subsequent short pitches presenting the results. We definitely had a productive session with interesting, promising, and in some instances really crazy ideas that were pitched at the end.

Before we finished our session I asked for feedback from the group. How did they like the Canvas?  Was it helpful in the process of structuring their ideas? Did it somehow limit the work of their “creative and crazy” minds? …and so on and so forth. The comments were definitely mixed with more positive than negative feedback. I could sense a consensus in the group: the structure helped them not to forget important parts of the problem-solution aspects of their ideas. However, some did feel that the Canvas was somehow difficult to work with in this the first attempt, a feeling which will arguably improve with some training. Questions along the lines of “Where do I start first” or “Why do I have to do this with an idea that I’ve thought about for a while?” were posed here and there.

Having worked with quite a few startup tools such as the Value Proposition Canvas or the Business Model Canvas in the past, I come to the conclusion that they should be used as tests at frequent points in time – test that your business ideas and models have to pass. Image them like a gate that you have to go through with your work every now and then to see whether you are aware of all aspects of your business. The process reminded me a lot of the well-known phase-gate model which finds application in project management environments. So my advice is this: do whatever is necessary in the certain phases and lifecycle stages you’re in at the moment, but take the time and have the descipline to pass the “startup tool gates” every once in a while. Frequency and intensity of these gate milestones should be left to the individual startup, I believe, as these kinds of tools should always be helpful (and fun), never a hassle or limiting structure. We are definitely going to try this approach at my new startup lengoo and I will let you know more about my experiences soon.

What’s your take on this? I would love to hear from you.

Does Lean Startup Have Limitations?

Let me, first of all, make clear that I am a big Lean Startup believer. I have internalized the principles, led long discussions with like-minded, and taught the principles to many entrepreneurs as part of my startup coaching/consulting work. For everyone, who hasn’t heard about it yet: the Lean Startup methodology is a scientific approach to experiment your way from a first product idea to a product that a certain number of customers want while minimizing waste (i.e. time) in the process. Its central element is the Build-Measure-Learn (BML) cycle, a basic visualization and iteration of the scientific method, which roughly consists of these steps: (1) do basic research, (2) derive hypothesis, (3) build experiments, and (4) collect & analyze data to validate/refute the hypotheses.

Lean Startup = Truth! But does it have limitations?

When I first read the Lean Startup book (something many Tech Founders probably haven’t done) I was immediately impressed by its logic, simplicity, and applicability. Over time I dove deeper into the topic (as part of my PhD research) and found more and more scientific work that had in parts covered different aspects of what is summarized in the Lean Startup methodology. I was surprised that none of these things had found their way into the heads of a broader base of practitioners. Eric Ries was really the first to digest the different aspects (agile dev, lean manufacturing, customer dev etc.) and appropriately apply them to the trending startup field. He also managed to present them in a way that is broadly accessible and easily marketable. While the Lean Startup methodology as a whole was a rather novel concept, its individual aspects weren’t all new. But how could they have been? The Lean Startup principles are the truth and truth doesn’t change over time! Although Lean Startup is the way to go in most cases, I am attempting to follow up on a popular blogpost by the well-known investor Marc Andreessen, who proposed that not every startup can be a Lean Startup. The next paragraphs present a humble discussion of three potential limitations of Lean Startup. Please feel free to comment and educate me, if I am mistaken.

1. Does it work for Big Ideas?

I argue that big ideas, the ones that are truly visionary and innovative, don’t always fit well with the Lean Startup approach, at least not entirely. Lean discovery and validation of customers (early part of Steve Blank’s customer development process) are tough tasks for highly innovative product/service ideas. Building an MVP simply isn’t easy in these situations. Customers may need an almost finalized product to get the intended experience, so balancing sufficient learning and the minimization of waste in the process becomes increasingly difficult. Along these lines Andreessen mentions that the methodology just doesn’t work well for startups “with the really audacious goals”. To illustrate the challenges of coming up with a lean MVP, he refers to Elon Musk‘s SpaceX, a project where you just have “to get the rocket into space”.

So, put frankly, may Lean Startup be too lean to support high-tech development? I believe this statement to be too harsh. Lean Startup does work wonders when validating smaller parts of a bigger startup vision (via divide & conquer) and, of course, for most ideas that aren’t extremely innovative (think “Airbnb for Boats”). It is tough to really draw the line here, because I think it’s blurry. Max Marmer of Startup Genome Project, for example, labels the big ideas as “transformational entrepreneurship” and defines them as having both high economic impact and high long-term societal impact. I would say they are mostly the ones that are tough to grab with the Lean Startup approach. Let me propose my own rule: If a technical solution for a problem exists or can be created fairly easily, Lean Startup is the way to go. In other cases, I’m not sure…

2. Risk of premature pivoting

Lean Startup teaches us to focus on experimenting and learning directly from customers. When our data refutes the hypotheses we have about our product, we are told to pivot. Of course, testing and tweaking a product can be done quickly, as long as you’re talking about a website or software. It’s not so easy when the solution isn’t limited to lines of code (and I’m not judging!). With a lot of software products nowadays pivoting is taken to the max. Andreessen even worries about the possibility of developing a “fetish for failure”. A ridiculous example that I have recently stumbled upon was the shut-down of a new social network within 45min after its launch (update: a sarcastic The Onion article making fun of the the pivot craziness).

I believe, it is a major challenge to design good experiments (with appropriate MVPs), measure the right things, and make quality decisions based on the data. Applied falsely, or in the wrong situations, Lean Startup may encourage us to give up too quickly. This is especially troublesome in cases where the goal is to bring a highly innovative product to market. Here, perseverance and a strong belief in the vision may be absolutely necessary for success.

3. Pivoting away from passion?

Another risk I want to address is the possibility to slowly but surely pivot away from your passion with every iteration through the BML cycle. Passion is the secret sauce that lets you go the extra step. If you don’t love what you’re doing, it’s highly unlikely that you’ll be very successful at it. An entrepreneur doesn’t usually wake up in the morning and think: ‘Today, I’m going to pivot my way to success, whatever it takes’. Much rather, most entrepreneurs that I’ve met start out with a vision to change the world for the better (and make a lot money in the process). In the HBR article “Too Many Pivots, Too Little Passion”, Daniel McGinn adresses this problem and proposes that “finding the right balance between passion, patience, and a practical respect for market feedback is probably a more realistic formula for start-up success.” In between frequent pivots I advise entrepreneurs to occasionally step back and contemplate whether the direction of their startup is still aligned with what they want to dedicate their limited life-time to.

What to do when Lean Startup isn’t enough?

Well, obviously I don’t have a quick and easy fix. Nevertheless, I propose that age-tested heuristics (versus the scientific method) may be the way to go when Lean Startup reaches its limits. Heuristics are proven rules-of-thumb that can be derived from decision-making patterns of practitioners. They usually develop over long periods of time and compact huge amounts of experience. An example showing the power of heuristics in finance is a pricing formula used by option traders. The formula was later expressed scientifically and came to be known as the Nobel prize awarded “Black–Scholes–Merton” formula. Our job is to be alert and identify the hidden heuristics applied by experienced entrepreneurs. They present powerful tools to navigate in uncertain environments, particularly if they have stood the test of time.

What are limitations that you have witnessed with regards to Lean Startup? What are your suggestions of how we can then operate? I would love for you to share your thoughts. Maybe we can find more answers?!

cc: Jan König, Lean Startup Meetup Karlsruhe #10

(Talk:) Business Modeling to Reduce Risk

Business Modeling to Reduce Risk (at 10th Lean Startup Meetup Karlsruhe)

Business Modeling to Reduce Risk (at 10th Lean Startup Meetup Karlsruhe)

Today, I had the wonderful chance to speak at the 10th Lean Startup Meetup Karlsruhe. My talk “Business Modelling to Reduce Risk” (you can check out my presentation on Slideshare) covered Osterwalder’s well-established (1) Business Model Canvas, his somewhat newer (2) Value Proposition Canvas, Ash Maurya’s (3) Lean Canvas Adaptation, and finally the core of (4) risk prioritization (with the help of these tools). The last slides cover my own practical advice on how to get these things done and implement them in your startup. Here, I developed two different process views, the first a 3-dimensional one and the second and linear process. I would love some feedback, if you have experience in uncovering, prioritizing, and tackling risks in your startup project.

PS: The Lean Startup Karlsruhe is a regular event hosted by Jan König at KIT that I do recommend for everybody in the area, who is interested. I want to thank everybody for their atively listening and participation as well as the feedback I received.

Copyright: Umberto Salvagnin, Wikimedia Commons

#sxswlucky – The New Serendipity?

Serendipity…luck…fortune…#sxswlucky…I recently found myself in a landslide of remarkable tweets all around the topic of serendipity. What had happened?? It’s called SXSW 2013, the annual South by Southwest conference and festival, that went down in Austin, TX, at the time. It lasted from March 8 to 17 and left quite a footprint on Twitter. What really stuck out to me though was this serendipity buzz that had originated from the panel discussion “The New Serendipity?”.

It’s In Everything We Do

I wasn’t at SXSW 2013 nor was I at this specific panel, but the reactions of people captured my curiosity. Serendipity is topic that I’ve had profound interest in over the past few years. Anybody working in entrepreneurial environments probably has this predisposition. My first concious encounter was watching Steven Johnson’s TED talk “Where good ideas come from”. Ever since, I’ve been alert to serendipitous events in almost everything I do. Whether in running the Center for Innovation & Entrepreneurship, consulting startups, organizing networking events, blogging or whatever have you. Especially my decision to open a founders’ coffee shop involved serendipity on many levels. Everything I do in part comes about as a result of it, profits from it, or in the latter case had the implicit purpose to produce it. My own experienced moved me to write an #sxswlucky summary. These are ideas and thoughts that shouldn’t be lost. Please feel invited to comment and add to the discussion!

Can We Be More Lucky?

Of course, we are all asking ourselves “how can we be more lucky”? The obvious answer, I anticipate, won’t ever be definite…that’s why it’s called luck after all. So I doubt that there is a surefire recipe. However, in the early 1990s Richard Wiseman embarked on a ten-year study to lift the secrets of good fortune, the results of which where later published as the luck factor. The study examined a pool of 400 people and surprisingly showed that people really are responsible for their being lucky, at least to an extent. Wiseman discovered four principles: “[People] are skilled at creating and noticing chance opportunities, make lucky decisions by listening to their intuition, create self-fulfilling prohesies via positive expectations, and adopt a resilient attitude that transforms bad luck into good” (Wiseman R., 2003, p 3). So, apparently we do have some influence. But let’s see what the powerful “The New Serendipity?” panel can add.

“The New Serendipity?” Panel

The panel discussion had an explosive line-up and, from what I could absorb, didn’t fail to deliver on its promise. Colin Raney (designer and location director at IDEO), John Perry Barlow (lyricist, essayist, co-founder of Electronic Frontier Foundation and former Dead songwriter), Joichi Ito (director of MIT Media Lab), and Kevin Rose (Partner at Google Ventures, founder at Digg, Revision3, and Milk) participated in the panel. They provided rich insights that I broke down into five basic luck principles.

The 5 Luck Principles

The following is the recipe I recommend to increase your chances of getting lucky breaks in life and business. Please feel free to utter your thoughts, give feedback and discuss these principles (I claim neither absolute accuracy nor completeness).

Go ahead and do stuff: “It’s important to commit to something and go and build it. That will attract others.” (Kevin Rose) It’s kind of like the saying ‘You have to be prepared to get lucky’. What people really mean is that you have to be in a position to react upon fortunate incidents when they arise. Simply by being active you put yourself out there and increase your chances to encouter luck.

Network! Especially with weak-ties and the unknown: “They used to say fortune prefers the prepared mind, now it’s fortune prefers the networked mind.” (John Perry Barlow) Look for people who are different than you to get totally new impulses. The classic Sociology piece The Strength of Weak Ties (Mark S. Granovetter, 1973) fits perfectly here. It emphasizes the power of network ties, which are the sole connector between highly fertile and dense networks. These weak-ties at the edges are key as they bridge the disconnect between networks. (A great opportunity for this kind of networking is co-working, which definitely has serendipitous elements to it.)

Diversity is key, not focus: “You lose peripheral vision when you focus.” (Joichi Ito) It’s like in basketball, where you have to see the ball and your opponent at all times to prevent backdoor-cuts and easy baskets. If you focus too intensely on the ball you lose sight of every thing else. More than just avoiding focus, we have to push to increase diversity. In order to increase the chance of serendipitous events, it’s important to get as many influences as possible. When creativity and innovativeness are needed, bringing different individuals, industries, and science fields together productive collaboration is often most promising.

Be generous: “Selfishness kills serendipity. We create more luck through generosity.” (Colin Raney) There is a good reason the Silicon Valley community lives by the “Paying forward” mantra. Engage with other people and show that you’re not necessarily in it because of some underlying incentive, but because you truly want to help. Helping others will pay off big-time for you someday.

Don’t kill your inner child: “As we gain wisdom, how do we retain a beginner’s mind?” (Colin Raney) Think about when people are most creative and open throughout their life. It’s usually when they are little children, who just do stuff without fear of being wrong. Simply growing up (in your head) and receiving education in our strict and standardized schooling-system makes us increasingly lose our creative geniuses as Sir Ken Robinson puts it. Also, becoming an expert in something will oftentimes narrow your thinking in the long-run and kill serendipity. So have the courage to remain a child.

So, what will you make of it?

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For the more interested reader: Below, I have collected all additional quotes as they are tweeted.

Kevin Rose: @kevinrose “You get a lot of pitches that are the next Pinterest, for cats.”; “Think about the kind of constraints to apply to things, to see what happens.”; “Idea to actually building something is a difficult jump for some people.”

John Perry Barlow: @JPBarlow “Teach your kids to ALWAYS talk to strangers.”; “Acts of generosity will repay themselves abundantly in totally unexpected ways.”; “Steve Jobs had a ‘weird degree of focus’.”; “You also have to be able to reward failure.”

Joichi Ito: @Joi “It’s important to be weird.”; “While you cannot plan ahead, we are all connected. If you need it to happen, it will.”; “The cost of collaboration is so low.”; “As you get older, your memory goes down, but your pattern recognition goes up.”; “I’m trying to heavily increase diversity and serendipity at the Lab.”; “Going to confusing places and seeing the patterns and mapping them back into your space helps to create new ties.”; “You need to be able to pivot OUT of commitments. Make sure commitment doesn’t mean you get stuck in a rut.”; “Art/design, science/technology–you need to have all, and overlap.”

Colin Raney: @Colin Raney “Opportunities are created through strong relationships. Serendipity lives at the edges of the network.”; “How can we use technology to find what we are not looking for?”; “Serendipity hates selfishness”; “Uniqueness, impact, and magic! Keys to serendipitous ideas.”

More sources: Twitter (#sxswlucky), www.writeonnetwork.com/blog/, olegkurnosov.com/post/45061643696/sxsw-the-new-serendipity-social-relationships, storify.com/jvilhena/the-new-serendipity?

Photo Credits: Umberto Salvagnin, Wikimedia Commons