If a competitor can outexecute a startup once the idea is known, the startup is doomed anyway.
The reason to build a new team to pursue an idea is that you believe you can accelerate through the Build-Measure-Learn feedback loop faster than anyone else can. If that’s true, it makes no difference what the competition knows. If it’s not true, a startup has much bigger problems, and secrecy won’t fix them. Sooner or later, a successful startup will face competition from fast followers. A head start is rarely large enough to matter, and time spent in stealth mode—away from customers—is unlikely to provide a head start. The only way to win is to learn faster than anyone else. The Lean Startup: How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses by Eric Ries Modern production processes rely on high quality as a way to boost efficiency. They operate using W. Edwards Deming’s famous dictum that the customer is the most important part of the production process. This means that we must focus our energies exclusively on producing outcomes that the customer perceives as valuable.
Allowing sloppy work into our process inevitably leads to excessive variation. Variation in process yields products of varying quality in the eyes of the customer that at best require rework and at worst lead to a lost customer. Most modern business and engineering philosophies focus on producing high-quality experiences for customers as a primary principle; it is the foundation of Six Sigma, lean manufacturing, design thinking, extreme programming, and the software craftsmanship movement. Thus, for startups, I believe in the following quality principle: If we do not know who the customer is, we do not know what quality is. The Lean Startup: How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses by Eric Ries First off, reality check.
Very few apps make real—if any—money. There are two key reasons for this: 1. Competition: Tens of thousands of apps have been created and more are released daily. Working through the muddle of options and being noticed is difficult. 2. Price: The majority of apps are available for free, and many are them are quite useful. This has made it increasingly difficult to get customers to pay for an app. And even if you sell an app, your marketplace will receive a commission on each sale. That means you need to sell a ton of product to earn real money. You should absolutely think twice before spending substantial cash creating an app, because recouping your investment is far from a sure thing. But if you are ready and committed: First, you must be clear about what app you’d like to create. Ideally, the app should compliment your business or reflect your unique abilities and/or interests. It is crucially important to understand your audience, what they can most benefit from, and deliver desired content via preferred learning modes. Three proven ways to start include: • Determining your client’s needs. • Researching existing apps serving this market. • Drafting your plan. Internet Prophets: The World's Leading Experts Reveal How to Profit Online by Steve Olsher The first point is self-explanatory. The second may seem basic, but it’s surprising how many skim past this step with a mere cursory glance, only to find out after significant time and resources have been expended that a more sophisticated tool exists. Do not be afraid to identify competitive products that may thwart your plans. Successful entrepreneurs embrace similar products and focus on what they can do better and more effectively. The third point is essential. You want to strategize and formulate your vision before the clock begins ticking. Thinking on someone else’s dime is not only expensive, but also unnecessary. Instead, brainstorm with partners, friends, and other trusted sources and create and refine an outline of how the product will look and how it will work. Unless you have money to burn, start the fire with the kindling of your efforts and let the professionals toss in the heavy logs. Finding A Programmer With your idea formalized, the next step is identifying a suitable programmer to bring the concept to fruition. There are multiple options. FREE Numerous free development options exist. However, it’s important to note that in app-land, you really do get what you pay for. That said, if giving things a test run before fully committing is your preference, consider the following: • Sencha: Sencha.com/Touch • AppMakr: AppMakr.com • Free iPhone App Maker: FreeIphoneAppMaker.com • Free Android App Maker: FreeAndroidAppMaker.com Each enables you to create a functional app which can be a great tool for creating a working prototype and begin securing feedback. The downside to free is that, once your name and brand is associated with the app you’ve put forth, an impression has been made and there’s no turning back. If the app’s functionality, appearance, or value is minimal, the consumer will tie this directly to you. Make 100% sure the app is fully representative of the impression you want to make before hitting the “release” button. Minimize costs to produce your app A fully functional, cost-effective app can be built for less than $5,000. Many capable developers have the ability to create a professional looking product that represents your brand and image well. Three sites are solid resources to consider when searching for a developer: • ELance: Elance.com • ODesk: oDesk.com • Freelancer: Freelancer.com Each enables you to provide various criteria such as developer location, experience, and total budget. Talent, of course, varies so be sure to check references and ratings. The caliber of developers available can be outstanding as many have salaried positions and moonlight to make extra cash. Ask for examples of their work and, contrary to popular belief, do not be afraid to select the lowest bid. HIGH-END Developing a full-blown, highly robust app can be prohibitively expensive. It is not unusual for companies to spend upwards of $1 million to create an app with virtually every bell and whistle. Such apps typically involve detailed, interactive components and move far beyond the options offered by template-oriented products. For most, developing a high-end app is not an option. When it is, there are multiple companies who are more than capable of delivering per your specifications. Internet Prophets: The World's Leading Experts Reveal How to Profit Online by Steve Olsher How to monetize your app Not every app is created to generate income. Many companies seek to spread goodwill and garner exposure by giving their apps away for free. This is not unusual as thousands of firms implement this approach. If generating awareness is the core objective, the app typically serves the singular purpose of being a digital brochure. If the plan is to monetize your efforts, there are three proven tactics to consider. 1. Sell It! Fees typically range from .99 to $2.99 with more robust apps costing significantly more, such as VIPorbit’s Business version which sells for $9.99 on the iPhone and $19.99 for the iPad. While seemingly expensive, the robust functionality ofVIPorbit is equivalent to desktop software that can cost significantly more. Additionally, it is available at your fingertips 24/7, which no desktop software can claim. For example, Sage ACT! was recently available for $466.99.…on sale! 2. Sell Ads Within Your App In similar fashion to AdSense, Google’s AdMob.com has made it extraordinarily simple to place ads on your app via their proprietary platform. AdMob “allows earnings to be generated by placing targeted ads based on the site’s content and users.” Additional options include Greystripe.com and Smaato.com. Revenue is directly tied to traffic. Therefore, as more ads are shown, income will increase accordingly. And, while a significant number of views and clicks are required before more than just pocket change will be generated, each provides a reasonable opportunity to offset a portion of development costs. 3. Offer A “Light” Version And Encourage Upgrading This strategy can be very effective. VIPorbit offers a free “light” version, as do thousands of other apps. The free version typically provides customers with a solid user experience, but refrains from allowing access to many key components. In consumer product marketing, this is often referred to as sampling, whereby a taste is offered to whet the consumer’s appetite and, hopefully, leads to the product being purchased. Remember: • Modern technology has largely killed the intimacy associated with developing tangible rapport with vendors, clients and even, employees. • Few apps make real money due to competition and price. • Ideally, your app should compliment your business or reflect your unique abilities and/or interests. • It is crucially important to understand your audience, what they can most benefit from, and deliver desired content via preferred learning modes. • Over 300,000 apps were developed between 2008 and 2010, translating to an astonishing 10.9B downloads. • By the end of 2011, more than 25 percent of mobile web users reported owning no other device to access the Internet. • Apps can be lucrative but must be viewed as a component of the overall marketing/branding mix. Internet Prophets: The World's Leading Experts Reveal How to Profit Online by Steve Olsher Routine and physical strength are as necessary as artistic sensitivity to create great work.5/9/2013
When he is writing a novel, Murakami wakes at 4:00 A.M. and works for five to six hours straight. In the afternoons he runs or swims (or does both), runs errands, reads, and listens to music; bedtime is 9:00. “I keep to this routine every day without variation,” he told The Paris Review in 2004. “The repetition itself becomes the important thing; it’s a form of mesmerism. I mesmerize myself to reach a deeper state of mind.”
Daily Rituals: How Artists Work by Mason Currey Murakami has said that maintaining this repetition for the time required to complete a novel takes more than mental discipline: “Physical strength is as necessary as artistic sensitivity.” When he first hung out his shingle as a professional writer, in 1981, after several years running a small jazz club in Tokyo, he discovered that the sedentary lifestyle caused him to gain weight rapidly; he was also smoking as many as sixty cigarettes a day. He soon resolved to change his habits completely, moving with his wife to a rural area, quitting smoking, drinking less, and eating a diet of mostly vegetables and fish. He also started running daily, a habit he has kept up for more than a quarter century. The one drawback to this self-made schedule, Murakami admitted in a 2008 essay, is that it doesn’t allow for much of a social life. “People are offended when you repeatedly turn down their invitations,” he wrote. But he decided that the indispensable relationship in his life was with his readers. “My readers would welcome whatever life style I chose, as long as I made sure each new work was an improvement over the last. And shouldn’t that be my duty—and my top priority—as a novelist?” Daily Rituals: How Artists Work by Mason Currey Why you need early adopters and why you only need the most basic product to start a business5/8/2013
We had a working engine of growth. The gross numbers were small because we were selling the product to visionary early customers called early adopters. Before new products can be sold successfully to the mass market, they have to be sold to early adopters. These people are a special breed of customer. They accept—in fact prefer—an 80 percent solution; you don’t need a perfect solution to capture their interest.
Early adopters use their imagination to fill in what a product is missing. They prefer that state of affairs, because what they care about above all is being the first to use or adopt a new product or technology. In consumer products, it’s often the thrill of being the first one on the block to show off a new basketball shoe, music player, or cool phone. In enterprise products, it’s often about gaining a competitive advantage by taking a risk with something new that competitors don’t have yet. Early adopters are suspicious of something that is too polished: if it’s ready for everyone to adopt, how much advantage can one get by being early? As a result, additional features or polish beyond what early adopters demand is form of wasted resources and time. This is a hard truth for many entrepreneurs to accept. After all, the vision entrepreneurs keep in their heads is of a high-quality mainstream product that will change the world, not one used by a small niche of people who are willing to give it a shot before it’s ready. That world-changing product is polished, slick, and ready for prime time. It wins awards at trade shows and, most of all, is something you can proudly show Mom and Dad. An early, buggy, incomplete product feels like an unacceptable compromise. Minimum viable products range in complexity from extremely simple smoke tests (little more than an advertisement) to actual early prototypes complete with problems and missing features. Deciding exactly how complex an MVP needs to be cannot be done formulaically. It requires judgment. The lesson of the MVP is that any additional work beyond what was required to start learning is waste, no matter how important it might have seemed at the time. The Lean Startup: How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses by Eric Ries The goal of such early contact with customers is not to gain definitive answers. Instead, it is to clarify at a basic, coarse level that we understand our potential customer and what problems they have. With that understanding, we can craft a customer archetype, a brief document that seeks to humanize the proposed target customer. This archetype is an essential guide for product development and ensures that the daily prioritization decisions that every product team must make are aligned with the customer to whom the company aims to appeal.
No amount of design can anticipate the many complexities of bringing a product to life in the real world. The problem with most entrepreneurs’ plans is generally not that they don’t follow sound strategic principles but that the facts upon which they are based are wrong. Unfortunately, most of these errors cannot be detected at the whiteboard because they depend on the subtle interactions between products and customers. The Lean Startup: How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses by Eric Ries Trollope managed to produce forty-seven novels and sixteen other books by dint of an unvarying early-morning writing session. In his Autobiography, Trollope described his composition methods at Waltham Cross, England, where he lived for twelve years. For most of that time he was also employed as a civil servant at the General Post Office, a career he began in 1834 and did not resign until thirty-three years later, when he had already published more than two dozen books.
Daily Rituals: How Artists Work by Mason Currey Trollope's daily ritual was; It was my practice to be at my table every morning at 5.30 A.M.; and it was also my practice to allow myself no mercy. An old groom, whose business it was to call me, and to whom I paid £5 a year extra for the duty, allowed himself no mercy. During all those years at Waltham Cross he never was once late with the coffee which it was his duty to bring me. I do not know that I ought not to feel that I owe more to him than to any one else for the success I have had. By beginning at that hour I could complete my literary work before I dressed for breakfast. All those I think who have lived as literary men,—working daily as literary labourers,—will agree with me that three hours a day will produce as much as a man ought to write. But then, he should so have trained himself that he shall be able to work continuously during those three hours,—so have tutored his mind that it shall not be necessary for him to sit nibbling his pen, and gazing at the wall before him, till he shall have found the words with which he wants to express his ideas. It had at this time become my custom,—and is still my custom, though of late I have become a little lenient of myself,—to write with my watch before me, and to require of myself 250 words every quarter of an hour. I have found that the 250 words have been forthcoming as regularly as my watch went. But my three hours were not devoted entirely to writing. I always began my task by reading the work of the day before, an operation which would take me half an hour, and which consisted chiefly in weighing with my ear the sound of the words and phrases.… This division of time allowed me to produce over ten pages of an ordinary novel volume a day, and if kept up through ten months, would have given as its results three novels of three volumes each in the year;—the precise amount which so greatly acerbated the publisher in Paternoster Row, and which must at any rate be felt to be quite as much as the novel-readers of the world can want from the hands of one man. If he completed a novel before his three hours were up, Trollope would take out a fresh sheet of paper and immediately begin the next one. Daily Rituals: How Artists Work by Mason Currey What differentiates the success stories from the failures is that the successful entrepreneurs had the foresight, the ability, and the tools to discover which parts of their plans were working brilliantly and which were misguided, and adapt their strategies accordingly.
Numbers tell a compelling story, but I always remind entrepreneurs that metrics are people, too. No matter how many intermediaries lie between a company and its customers, at the end of the day, Customers are breathing, thinking, buying individuals. Their behavior is measurable and changeable. Even when one is selling to large institutions, as in a business-to-business model, it helps to remember that those businesses are made up of individuals. All successful sales models depend on breaking down the monolithic view of organizations into the disparate people that make them up. The goal of such early contact with customers is not to gain definitive answers. Instead, it is to clarify at a basic, coarse level that we understand our potential customer and what problems they have. With that understanding, we can craft a customer archetype, a brief document that seeks to humanize the proposed target customer. This archetype is an essential guide for product development and ensures that the daily prioritization decisions that every product team must make are aligned with the customer to whom the company aims to appeal. The Lean Startup: How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses by Eric Ries In the Lean Startup model, an experiment is more than just a theoretical inquiry; it is also a first product. If this or any other experiment is successful, it allows the manager to get started with his or her campaign: enlisting early adopters, adding employees to each further experiment or iteration, and eventually starting to build a product. By the time that product is ready to be distributed widely, it will already have established customers. It will have solved real problems and offer detailed specifications for what needs to be built. Unlike a traditional strategic planning or market research process, this specification will be rooted in feedback on what is working today rather than in anticipation of what might work tomorrow.
Questions to ask; 1. Do consumers recognize that they have the problem you are trying to solve? 2. If there was a solution, would they buy it? 3. Would they buy it from us? 4. Can we build a solution for that problem?” “Success is not delivering a feature; success is learning how to solve the customer’s problem.” The Lean Startup: How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses by Eric Ries A guy I met a while back used to be a drug dealer in another country, a long time ago, back when he was a young man, (He as since gone into IT which makes a twisted sense).
We were talking about pricing strategies, and he told me that he had back in the day, the best way to know when his pricing is right where it should be and he knew that he was cutting the best deal when selling. First off, we all agree that pricing is not an easy thing to do for most of us. People have all kinds of theories about how to set pricing, and how they know when they have the right price to still sell yet make the most profit. Every system feels like guess work, and no one ever says they had it perfect, but this system made sense. Some people just care to match what others are charging, basically match the market, but that is dangerous, because you don't have a system or a methodology, and what is the difference between you and the competitor? If he has better margins than you, your business is in trouble. You need to know what the customer is willing pay, and to do that, you have to know and think like your customer. Other businesses price just below others in the market, again, dangerous, as it just gets you those customers that care only about price, which means that you will lose them easily when someone else has a lower price. This is not a long term strategy. Works if your margins are better than everyone else's margins, but I wouldn't bank on it, as there is always someone out there who will compete. Any time your strategy is to be smarter than everyone else, you have a problem. There is always someone smarter than you out there. Trust me, someone is always willing to give them a lower price. You just end up in a price war that no one wins. There are theories of how to price, but the key to remember is that price is fluid, and that what you are selling on changes in value depending on who you sell to and their situation. How your customer views the product and how he uses it, and your customer's individual situation determines that customer's price. The cookie cutter one price fits all model doesn't work, and it just leaves money on the table. Which leads us back to the drug dealer. My friend told me that he always asked questions about his customers, and he knows their history, their likes and dislikes, which considering what he was doing was illegal back then, was a smart play. You only do business with other people you know well and trust, and he told me that when he discussed price, he asked them what was going on, what they were doing, and by that, got an idea where their mind was at, and then gave them a price, always slightly higher than what he felt was the market. He would sell the convenience factor, remind them of the trust between them, as the customer didn't want to keep looking, and the customer sure didn't want to have to find a new source, which is a time consuming process, and in this case, also might possibly be something that could get you put in jail. My friend said when he gave a price, if they took it right then, he knew he had priced too low. He was really happy when they hesitate and then say they have to think about it, and then they hang up. I ask him, you are happy you lost them? He said, I didn't lose that, I am happy because that is what you want, to know that the price you quote to them is close enough to make them want to buy right then, but just over what they wanted to pay, so that they say they have to think about it. Then they call up twenty minutes later and take the deal. When that happens, you know you got the most money you could out of that transaction. PS. Another point of the story, there are business lessons everywhere, listen to everyone. I do. Drop me a note, say hello. D |
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