Jim Harrer

STARTUPS, TURNAROUNDS, APPDEV, AGILE & LIFE...

5 Best Practices of a Startup Leader

I’ve been around the block a few times as a technology leader. I’ve been fortunate to start a company, bootstrap it to profitability, skipping the VC rounds, taking it public on the NASDAQ exchange and then having a successful exit – this was over a 14 year span. I learned to manage, I learned the importance of leading by example. Since then, I’ve done another startup and performed three corporate turnarounds, all feeding my intense desire to learn how to build financially sound and insanely happy and productive companies. I thought I had heard and seen it all. Boy was I wrong.

13831827 sThis past year I have been working with 10 startup companies. Some through our accelerator here in Bend, Oregon, others through a recent Startup Weekend we held in Bend and the rest through my consulting practice. Not all startups are created equal. Some start with one person, others with more. Some start with a techie developing a killer mobile application, the other a mom with an idea on how to reduce her child’s asthma attacks and that’s it.

Working with these companies I’ve had the chance to see what has worked and where they’ve stumbled. I’ve been able to start understanding the Best Practices of a Startup Leader. The first thing you should note in my title is, I chose the word “Leader” over manager or founder. I strongly believe you lead people, and you manage things. Startups are about people, not the things. The things are artifacts of the production from the team. Production drops when people fail to lead.

If you’re thinking of founding a startup, or if you’re a founder of a startup, here are some of the Best Practices I’ve observed from the founders I’ve worked with:

1. They’re passionate.

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Why everyone should experience a startup weekend.

Why everyone should experience a startup weekend.

I had the opportunity to attend a startup weekend here in my hometown of Bend, Oregon. In 54 hours, I watched 30 ideas, turn into 7 concepts that developed 7 companies including 7 websites, facebook pages and twitter feeds.  Each team conducted interviews with potential customers and defined their first release backlog for their Minimal Viable Product (MVP), embracing the Lean Startup principles discussed by author Eric Ries. Each team also created business models to help them understand their potential revenue opportunities, cost of goods sold, SG&A and profit potentials.  On Sunday night at 6pm, just 48 hours later, these new companies presented their five minute pitch deck to a group of judges.  One company had secured it's first paying customer, and another company was invited into a local World Market to test their homemade Venezuelan chocolates in the store. These teams gained an amazing amount of traction over the weekend. In this blog post, I plan to share some of the lessons learned from the weekend and how they can be applied to your startup.

I had heard of Startup Weekends being held in other cities, but I didn't give it a lot of thought.  Honestly, the idea of spending my entire weekend coaching teams didn't sound like a lot of fun.  Boy was I wrong.  Not only was it a ton of fun, it was insightful, rewarding and energizing. Let me explain...

Startup Weekend Bend OregonWhat is Startup Weekend you ask?

Startup Weekend is a global network of passionate leaders and entrepreneurs on a mission to inspire, educate, and empower individuals, teams and communities to turn a pitch into a startup. These are 54-hour events where developers, designers, marketers, product managers, business strategist and past Founders (acting as coaches), come together to share ideas, form teams, build products and launch startups.

Some people assume Startup Weekend is a tech driven event solely for software programmers, like a hack-a-thon, they're not. Startup Weekend draws a wider audience with broader skills: sales, marketing, business development managers, finance, UX/UI, web, CSS, data architects, past founders and current CEOs, CFOs, VCs and a handful of experienced Angel investors.  Add these skills early on, when the MVP is being defined, changes the  typical focus on "product development" to "customer development", asking some tough questions, early. Like, "Who is our customer, what is their persona, and how much would they pay to have this product or service?"  Add in the 54 hour time box around the event, you also bake in a real sense of urgency to move quickly into customer discovery.

What happened at Startup Weekend – Bend, Oregon.

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Inventor lighting up Kickstarter with a new approach to illuminate bike wheels for safer night time riding.

Introducing the Nori Lights - Bicycle Illumination System

San Diego Kickstarter and Inventor, Chris Flynn, came up with a smart way to Illuminate your bike wheels, letting drivers recognize you instantly at night. Well all know that tiny front and rear lights are not enough. Check out this video:

I know Chris Flynn, he's family, as Nori is my Uncle Nori.  I'll be the first to tell you that Uncle Nori would be very proud of Chris.  You can trust Chris to deliver on his promises and deliver on your pledge.  I would appreciate if you would support this project, by:

  • Telling your friends about it.  Add the link to your Facebook, Twitter, Google+ and LinkedIn profiles.
  • Buy a Nori Light System if you own a bike, purchase a tee shirt if you don't.
  • Forward this link to one bike shop in your area. Look them up on the web and send them an email via their contact us page.

Let's start another small business in America.  Please support this project today.

Thank you!

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The Lean Start-up MVP – One size does not fit all.

Eric Ries’s bestseller, The Lean Startup, is a thoughtful book that has created a conversation about startups.  It focuses on how to go from the back of the napkin to a Minimum Viable Product (MVP), to get in front of prospects in order to see if the idea is viable.

As with any new methodology, framework or process for the matter, I do not think audiences can truly measure its viability until they practice it themselves and spend time teaching it to others.
Lean-Startup-MVPI’ve had the chance to do both, use it with a couple of startups I’m involved in and teach it in the VentureBox business accelerator in Bend, Oregon.

The key principle of The Lean Startup is BUILD-MEASURE-LEARN.  The goal is to come up with a minimal feature set, bring it to market, measure actionable metrics and finally learn from the experience and then start again.  It barrows heavily from agile software development and favors learning from early adopters versus relying deeply on requirements management by someone in marketing.

I’m all for Build-Measure-Learn, what I have a problem with is Minimum Viable Product (MVP).   What is the definition of “Minimum”? I’ve witnessed entrepreneurs get so caught up in this MVP concept, that they test a product too soon and pivot based on incomplete data.  In my opinion, more time, not less, needs to be spent defining the MVP, including who the audience is that will see it, at each iteration.  Don't make the mistake of thinking the MVP is outside of the product lifecycle. 
MVPs should be matched to audiences. For example, your first MVP may be designed to only been seen by the development team, then management, then marketing and then prospects under NDA.  My point here is, be thoughtful about the process and audience.  Showing it to management or marketing, can quickly throw the team off the rails.  An MVP has its own product lifecycle development process, some stages should only be viewed by the core team.

Keep in mind if you’re building hardware, versus software, you have more challenges because of soft tooling requirements.  Also, don’t under-estimate the power of look and feel.  Ignoring UX/UI in some applications can take you down a rat hole you didn't intend. Each product is different. Craigslist appealed to its audience with it's simplistic UI.  Instagram's UX/UI from the get-go is what helped it go viral. 

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Details on the CrowdFunding aspects of the 2012 JOBS Bill.

crowdfunding-1Yesterday, President Barack Obama signed into law the Jumpstart Our Business Startups Act (JOBS), a measure that includes U.S. Sen. Michael Bennet's "crowdfunding" amendment, easing securities regulations in a variety of ways with the goal of aiding small businesses. Many of us have been pushing for easing the requirements needed for startups to raise initial seed money from the public.

In the past several years, the term “CrowdFunding” has been kicked around. The website Kickstarter is jumped out as the clearer in the space creating a marketplace for startups and users to barter startup capital for products or other incentives, other than equity.

It’s always amazed me that anyone could go to Las Vegas and invest $1,000 on the craps table, yet if that same person wanted to invest $1,000 in a startup, they needed to be an accredited investor, meaning you must make $200,000k a year (for the past 3 years) or have a liquid net worth of $1 million or more. The JOBS Act removes this barrier.

Now for the first time in the United States the average Joe Investor (non-accredited) can make investments based on their income or net worth. Companies will be able to raise up to $1 million in a 365 day period.  There are some requirements we know about already, they include:

  • Companies must provide CPA reviewed tax returns or audited financials based on the amount they raise, here is the breakdown:
    1. Less than $100K: You are required to provide your income tax returns and have your financial statements certified by your CEO.
    2. $100K to $499K: Your financial statements will need to be reviewed by a public accountant.
    3. $500K to $1 Million: You will need to provide the investors with audited financials.
  • Companies must have a defined communication plan to communicate with its investors. Since investors can’t look up a stock symbol to get their news, another plan must be developed.
  • No single investor invests more than a specified amount in the offering, namely:
  1. The greater of $2,000 or 5% of the annual income or net worth of the investor, as applicable, if the investor has annual income or net worth of less than $100,000; or
  2. 10% of the annual income or net worth of the investor, as applicable, if either the annual income or net worth of the investor is equal to more than $100,000, capped at a max of $100,000 invested.
  • The websites offering CrowdFunding services must register with the SEC as a Registered Broker or “Funding Portal”.

There are a lot of additional conditions, including background checks on the issuer. For a complete list, check out CrowdSourcing.Org

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Selling what you believe, the power of Why before How and What.

The work with our startups intensifies this week as we continue to work on Customer Development and The Lean User Experience. As our Founders move closer to defining their Minimal Viable Products (MVP), they have gone out in the market and interviewed potential customers of their products. As a result, some of our startups have made pivots in their business plan.

I like to celebrate these pivots with our startups. We're six weeks into the process, we've saved monthes of development time by not building software no one will purchase. We're learning more and more about their market segment each and every day. One interesting observation is, with each pivot, the founders are becoming even more passionate about their business. I contribute this to the fact the nine founders are going through this together\, and they're gaining positive energy from the team. This is another benefit of an accelerator; you push through the challenges at a much faster pace.

why how whatThe importance of WHY, before HOW and WHAT.

Simon Sinek, an adjunct staff member of the RAND Corporation, one of the most highly regarded think tanks in the world. He wrote a best seller, "Start with Why: How Great Leaders Inspire Everyone to Take Action". Yes, his principles focus on leaders and the importance of communicating "why". I could write about this topic for pages, but I want to stay on point for this post, so...

Sinek believes you should communicate to your customers: WHY your product/solution matters, than HOW it does it and finish with WHAT it does. We believe most companies do this in reverse. Starting with what features the product has, how it does it so well and finishing with why you should but it.

"Sell to people who believe what you believe." Says Sinek. "People don't buy what you do, they purchase why you do it."

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Breaking down the Investor Pitch

Our VentureBox founders have finished week 5 of our 12-week Venture Launch program. The pitches continue to get better each week.  Feedback is critical to the learning process, so after each pitch we give the founder a breakdown of what we've heard, what worked and what didn't.

TechStars, a popular high-tech accelerator, has a great video series called "This Week in TechStars". This past week they did a breakdown of Flixmaster's pitch.

Enjoy!

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Does it create Cash or Traction?

I recently sat down with one of the VentureBox startups I'm coaching, and we were reviewing their short term goals, over the next 30 days. They had a lot on their plate; it was time to groom the list. So I asked them a simple question:

 

Does it create Cash or Traction?


cash or traction

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This Week In Startups - A weekly dose of startup insight.

This Week In Startups - A Damn Good Show!

If you have missed the first couple hundred shows, like I have, don't sweat it. They're all online. I actually subscribe to their iTunes podcast, and have been catching up on them while I hike with my dog Morgan. The last couple weeks have been remarkable, however, if you truly want to have fun, listen to some of the old tapes from 2009 and it will confirm just how fast our tech industry changes.

This Week in... is a web television network covering a wide variety of topics from tech to entertainment. Produced out of our Culver City studios, the shows feature guest experts, founders, movie stars, comedians, technologists and CEO’s — all keeping you up to speed on what’s happening this week with a fast and funny style. Informative and entertaining, ThisWeekIn is the place for whatever your interests may be.

The company was founded by Jason Calacanis (co-founder of Weblogs, SVP AOL, CEO of Mahalo), actor Kevin Pollak and Mark Jeffrey and is based in Culver City, CA.

I've been listening and occasionally watching some of the Podcast and have found them informative, educational, insightful and entertaining. Jason Calacanis is an excellent host with an amazing memory. If you're an entrepreneur or angel investor, especially if you don't hang out at all the startup events, you'll want to catch this show each week.

 

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A Twitter Guide for CEOs and Business Owners

Twitter for business owners, explained.

Admittedly, Twitter is an application that most business people never get. You need to live in Twitter and study how other people are using Twitter successfully to connect with existing customers while finding new sales prospects. My goal in this blog post is to highlight how I think businesses should be using Twitter. I also plan to give you some examples of how businesses in different sectors should be taking advantage of Twitter.

First, if you own a business and you’re new to Twitter or still, just don’t “get it” let me give you a quick overview. Twitter is a micro-blogging application designed to send updates or notices to a group of followers. The founders picked 140 characters because that was the limit on most SMS phones for text messaging. The application quickly found a home beyond cell phones where 140 characters could have easily been expanded. However, something interesting happened by accident, the 140 characters made people “get to the point” by using their 140 characters wisely.

If you own a small business owner and wonder how many people in your local area are potential customers, check out a site called LocalTweeps (http://bit.ly/6Sl16o) and do a search by zip code. LocalTweeps' audience is less than 1% of the people in your area using Twitter, but it’s a good place to find people in your area that have established followers. You should add your Twitter account to their free directory while you’re on the site.

Why businesses should use Twitter.

For the purpose of this blog post, I’m only going to focus on two reasons you should create an active Twitter social media program. Obviously, there are more, but let’s stay focused on these two: 

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The heart of a startup entrepreneur.

As I discussed in my previous post, we’re finishing up week 3 in our VentureBox Venture Launch class. The course is 12 weeks.  Each week the founders meet every Wednesday from 3-8pm for a formal class and workshop. Dinner is included halfway through. Here is the 20k foot view of what we’ve done with the 7 companies in the program:

  • Week 1: Curriculum review, format discussion, introductions and company pitches. This was the first time all the founders got to meet each other. We have 7 companies, with 2 companies with co-founders, so we have a total of 9 founders in the room. The majority of the night was spent having the founders do their 10 minute investor pitch, followed by 20-30 minutes of Q&A from the rest of the founders.
  • Week 2: Our partner, LUXr,  traveled to Bend from San Francisco and conducted a train-the-mentors on their Lean Startup Customer Development and User Experience curriculum using their Bento Box training materials. Then the Mentors (yep, me included) taught the materials the next day to our VentureBox class with Janice and Kate guiding us all the way. Each of the founders developed their first customer persona for their product. Their homework was to go out and do in-person interviews with people who match the persona's they created.
  • Week 3: Tackled market segments and helped each of the founders understand how to figure out their first, highly focused, target market for their minimal viable product using The Lean Startup framework. I was privileged to co-teach this class with Steven Curley, a local marketing genus and one of VentureBox's Subject Matter Experts.

Alright, with this foundation set. I’m going to change gears and discuss my observations and less on the materials and process, at least for the rest of this post.

The five traits of a startup entrepreneur.the_heart_of_the_startup

It’s hard to not fall in love with each of these founders and their ideas. Each of the 9 founders are amazing in their own right. They inspire me with their ideas, questions and drive to succeed. Since I have the privilege to work with each of the founders, I thought I would share with you some of the commonalities I have observed among the founders in the class.  

Not in any specific order, here we go:

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Copyright

© Copyright 2012 James A. Harrer, all rights reserved, worldwide.

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VentureBox–A business accelerator in Bend, Oregon.

startup-sign

VentureBox is a business accelerator in Bend, Oregon, where I live. Each accelerator is a little different, so let me give you some background.

Business accelerators are different than business incubators (which focus on product ideas) primarily because all of our founders already have a business concept and a basic “pitch” of what their business is and what problem it solves.   Last December (2011) we started with 37 businesses applying to VentureBox and through our vetting process we selected 7.  Most are all in the “Early Concept”, pre-revenue stage.  We have  high-tech web based SaaS products, a mobile app and one physical product in medical devices.  The VentureBox class meets every Wednesday from 3-8pm for a class and workshop.  Each week we teach, then have a workshop on what they just learned and apply it to their business concept.  Then they go home with homework and goals for the week.

The course runs for 12 weeks and concludes with an investor day where Angel Investors get to meet the companies and hear their pitch. The cost for each company to attend the course is $1,500  plus 2% founder equity. The business community in Bend, Oregon, was kind enough to step up and sponsor each of the 7 companies so none of the Founders had any out of pocket expenses to participant in the program.

VentureBox’s executive director is Jim Boeddeker (JimBo) who I met after the Bend Venture Conference last October. He is a servant leader, and coach, over a pool of past founders and local business leaders who make up the Mentor team. Not an easy job managing all of us type A personalities, but he makes it look easy.  The Mentor team is experienced and deep. It’s made up of Founders, Subject Matter Experts, creative and talented individuals who have a passion for startups.

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