Category Archives: Learning

How to A/B test your startup’s positioning statement

I had a chance to talk to 2 of our startups at the accelerator yesterday and we discussed positioning. One of the first things that we focus on is to ensure you position your company and product well. That may seem like “fluff” and “soft” to many folks, but we find that to be critical to ensure that people who you interact with – customers, partners, potential recruits, investors, etc., get it quickly and accurately.

What I have found is that depending on the background of the entrepreneur, the positioning statements tend to be very long, mostly filled with buzzwords – (no, really 99% of the people in this world dont know ARM, resin-conductors or DevOps, and most likely 90% of your target audience does not either) or overly complicated.

The positioning statement should at its simplest help explain who you are at your core.

Most folks will try to explain their positioning by using the framework below.

For (specific customer description):

Who (has the following problem):

Our product (describe the solution):

That provides (the following difference):

Unlike (your competition):

Now, for most parts this was 15 years ago. This is still a valid exercise for you to come up with your positioning, but most of this may be not as effective in our Twitter driven world.

There are 3 more manifestations I have seen for this statement:

1. Position your company / product in less than 8 worlds so that someone coming to your website can get it in less than 5 seconds

2. Positioning by successful similarity – We are XYX (an awesome product, e.g. Uber) for ABC (a very large market, e.g. school kids needing rides)

3. Retweet ready positioning – A positioning statement that is retweet worthy, so it should be less than 100 characters – so you can still provide a link to your website

The important thing to note is that your website should reflect positioning for your biggest audience – target users or customers, not potential investors or employees.

I am also not a fan of using multiple positioning statements by audience – so you should avoid telling investors you are a disruptive solution for ABC market, and tell potential employees you are X for Y.

It never adds up and wont scale.

Instead, I’d recommend you start with first making a list of segments of your customers. Preferably you are able to segment a small niche customer segment to start.

Then write down the list of problems your customers have. For example. a) the existing products are too hard to use b) the existing solution is too expensive c) the existing solution is to do something manual d) potential customers are unable to be successful since no solution exists to help them with this pain, etc.

Then you have to document the features of your product that correspond to solving the problems you listed above in the problem statement. For example: a) Our export to excel feature allows customers to get the data via API’s b) our API based mechanism lowers cost of delivery. etc. This is also sometimes the “how you do it”.

Then you have to record the differentiation associated with the features. How do you do something different to enable that feature(s). For example: our algorithm for ranking generates a proprietary score for each customer segment.

The next step (which you may not need for the positioning, but will later on) is to document the benefits of the feature / differentiation. Benefits are fairly easy to document based on cost savings, revenue generation, etc. and are based on the feature list. For example, if you have X feature and Y differentiation, that results in a reduced cost compared to existing competitive solutions for customers,.

This should suffice for you to start A/B testing. Now, use these in your web copy, presentations and when you are describing your company to others at events, meetups, etc.

Keep a log of the first 100 people (or some good enough sample size) of people you to talk to, and get a sense for which statements resonate.

Test different positioning statements until you get to the minimal set that gets people exited enough to ask you to tell them more.

Until that point, keep testing.

Before you know it, your startup is now a “big” bureaucracy with “approvals” for everything

Often when I meet wannabe entrepreneurs at events, I ask the question, why they are willing to give up their relatively easy job, with good pay to take up the roller coaster world of starting their own company. About 20% or so of the folks I meet at these events work at another startup (typically < 3 years old, about 20-50 people). I think of most of these companies as startups as well, so I am curious as to why, after seeing all that happens in an early stage startup, they want to start their own company.

Sometimes it is because they want to be their own boss, or they see the success of the founders, who they claim have little intelligence, but still managed to start their own company and be moderately successful. At other times, I hear the burning itch to start and solve a problem or other times it is because they always wanted to start one, but were not able to because of other constraints.

Every so often I will get a person who was the 1st or among the first 10 employees of a startup. They will reminisce about the “early” days of the startup they are working at and talk about how everything was simple and easy during those days and how bureaucratic their 50-100+ person startup had become.

When I press further about the “bureaucracy” and what makes things slow and inefficient, the word that always comes up is “approvals”.

“Approvals” are the tool misguided managers use to make themselves feel important.

If you are a person that needs to feel important so you can “approve” things, you dont have enough work to do.

Approvals are used by big companies to kill any ounce of individual responsibility and trust. They also kill the very initial set of values and culture that you might set out to build your company’s foundations on.

Approvals send one of many messages:

1. I did not hire the right person so I have to ensure they “stick” to the rules of the company that HR has arbitrarily come up with.

2. We have hired way too many people who dont have enough work to do, so they have to be around to “approve” things.

3. We need policies and procedures for everything since we dont trust the folks we hired to use their judgement.

Notice that the common word in these (and most other) examples is “hiring”.

Approvals are the child of poor hiring and recruitment.

You can cop out and say it is a HR problem. It is not actually.

As a founder, it is your responsibility to ensure that the vision and culture of the company are consistent with the ethos you started it out with.

The first 10 employees are indicative of the zeal you brought to the table, which convinced them to join a high risk startup at such an early stage.

If these first 10 and many other employees feel that the company is “approval” heavy and requires big company (productivity killing and sans accountability) procedures, then you have something wrong with your hiring, not with your HR policies.

Remember this, if a manager in your company feels so important to want to “approve” everything anyone does in his organization, he has practically no work and likely a heightened sense of importance.

Reducing complexity and making choices – things I learned from Apple’s product designs

The other day a friend who was closely watching the Watch and Macbook announcements mentioned to me that Apple had introduced its new notebook with only one port - the USB C.

He gave many examples of why he need more ports, simultaneously, including charging the Macbook and a phone at the same time, for example or being at your desk and transferring files from a USB flash drive.

I thought they were all good examples actually, and situations I had faced before. Then I decided to challenge all the assumptions he had made with the fact that those situations are the exception not the norm.

With a battery life of 12 hours, there were very few situations where you will need to charge and give your iPhone some juice as well. You could plug the notebook from the power unit and it would go for hours even if it had to charge your phone. Similarly with its long battery life, the chances were slim that it would really run out of charge for “normal” usage.

Then it struck me that most of us do the same thing with all of our daily possessions. Take a look at your backpack for example. There are surely 100’s of things that I have in my own backpack that I have rarely used, but need for a “rainy day”.Truth is, during those “rainy days”, I had options.

I dont need 3 pens because there are 3 pen slots in my bag, neither do I need my check book, etc. I dont need a backup credit card – well I have not for the last 3 years, but I do carry them all and more things.

I believe we make these choices because of our fear of “what if” and apply it to the worst case situation. Which to a large extent prevents us from the “what if” and enjoy the best case scenario.

Optimize for the “likely case” and plan for your options might be a better situation – at least in my case. I think that’s a key learning from the USB-C port discussion.

Trying to save for a rainy day is great, but too much saving results in most days being gray, without enjoying the sunshine that’s all around us.

Trends among the Ultra High Net Worth Individuals that will shape Global attitudes

There are 170K+ individuals in the world who have more than $30 Million in net worth according to the Knight Frank report on UHNWI. They own a total of over $20 Trillion in wealth. That’s a staggering 25% of all wealth in the world. Owned by less than 0.00001% of the population. By 2025, the number of UHNWI is expected to be at 230K.

Over 82% of these people had their wealth increase over the last year (2014) and over 80% expect it to increase the next year as well.

The biggest concern about their ability to generate more wealth (as if that’s needed) was family succession issues.

What does their asset allocation look like? 45% in equities (stocks), 10% in home (property) and rest in other assets (cash, gold, art, etc.)

Where are these UHNWI located? 45K in the US, 60K in Europe, Latin America has about 10K and Asia the rest at about 40K+.

Surprisingly only 40% were inherited wealth. The rest made money via entrepreneurial means – real estate and “other business” were the top professions. Technology UHNWI were less than 5% of the total.

The other surprising part of the equation is that there are 1844 billionaires, 38K $100+ Millionaires and over $172K UHNWI. Over 17 Million people are merely millionaires. Turns out the millionaires are the new lower middle class.

As the “poor” become “richer” the “rich” get “wealthy”. There is a direct correlation between the increasing middle-class, their aspirations and the wealth of the UHNWI.

The most important cities where you should look for UHNWI – London, New York, Hong Kong and Singapore top the list, San Francisco is in the top 20, and Mumbai is the only Indian city in the top 50.

The air traffic information from private jets is another interesting story within the story. The top 10 routes for private jets are mostly from and to the US, but the fastest growing are mostly to the US from other places. Meaning even if wealth is created elsewhere, most end up in the Americas – to invest, to hang out, etc.

Where are they going to and where are they coming from? They are going from China, India to the UK and Singapore.

So where’ the money – Chinese investing in Miami, commercial properties in New York and London.

The Indians are investing in Europe more – London, Zurich (not a surprise here).

If you are an entrepreneur looking to raise funding from UHNWI, you should expect to meet with their adviser than with them directly apparently. Most of the UHNWI prefer to work on their own business and spend less time mentoring or guiding anyone but their own kids.

Overall it is a very interesting report. Worth a long plane ride read.

Apple Watch is going to hurt Twitter the most. Law of unintended consequences

I have been reading the multiple blog posts on the Monday “Spring event” for the Apple watch.

Having worn the Microsoft band for a few months now, I think I now know what I need from a wearable. Note I did not say “watch”. I gave up wearing watches many years ago and switched to a phone for time. I really don’t have a need for a watch and so don’t many others, but they will still buy the Apple “watch”.

I used the fitbit for activity tracking, so I was not actively looking for a fitness tracker before I got the Microsoft band. Being an active user, I think that I want most is “Smart Notifications” from a wearable. That it will track some fitness is an added bonus.

With the very small form factor, it is absolutely important that the right amount of “relevant information” comes to the wearable.

If you just take an email and strip out a few things and send it to the wearable, that wont help.

What you really need is a summary of the relevant portion of the email and the ability to dismiss, delete or provide contextual reply – the relevant actions may differ on the notification itself, but the action should result in not having to pick up the phone for quick responses, which your watch can handle.

Lets look at email notifications first and email call to actions.

I am really surprised the the Microsoft band has no delete or archive actions on the emails received. Which is pretty awful actually. I am pretty sure 60% of all emails that I receive are to be deleted after reading immediately or archived. Of the remainder, I could guess that 50% of them would be able to get a simple answer – Thanks, OK, Sounds good, Approved, etc. I am surprised that does not exist on the Microsoft Band.

The notifications on the Band are not “smart”, which I suspect Apple will get right, because of 3rd party developers.

If you get a bunch of smart app developers to focus on the 8 things most folks do every day, on the phone – check news, weather, sports, finance, email, social networks,  text messages or understand who is calling, then you can pretty much drop the need to pick up your phone by 50 – 60% of the time.

So here are the 3 unintended consequences of a successful Apple Watch launch according to me.

1. The battery life on your iPhone will “increase” since you wont “pick it up and use it as often”. Since 30% (at the low-end) and 60% (at the high end) of the stuff you use the phone for now, you can get on the watch. The battery life wont increase really, but you will charge the iPhone a lot less than every day or twice a day for heavy users.

2. Breaking news alerts, weather, sports news alerts will be more contextual and smart. So you know “just in time” instead of having to scan all of Twitter or social networks to find out what’s hot.

3. Over the longer term (5-7 years) obesity will drop among the “rich who can afford Apple watches” even further. Having a fitness tracker on your wrist that also does other things motivates you to take action.

Which brings me to Twitter.

I think of Twitter a global platform for “what’s happening as it happens” even before the media organizations get to know about it. Twitter knows first. And Twitter’s job is then to let everyone else know.

Well if you can summarize what’s happening and send it via a notification in a smart way, to all those who have the watch, then you dont have as many people posting on Twitter, or retweeting, instead you will increase the # of “consumers of the Twitter feed” even more, reducing the “producers”.

The folks that are “marginal users” of Twitter will use it even less. Why? Largely because they are in it to get information, not share as much. As much as 80% of Twitter’s users consume it but post < 10 times a month.

So, I think Twitter will become less and less relevant to them and more a “protocol” which can easily replaced by other systems.

Another loser from the Apple watch will be those that depend on Advertising on the mobile (Facebook, Twitter, Google, etc).

When you have a watch and use your mobile phone a lot less, the need to view ads on your watch do not exist.

I would short Twitter big time (I should put my money where my mouth is) because I think the Apple watch will drive its value down. I might add that Twitter may go down on its own because of other issues, but the Watch adoption will drive its irrelevance even faster.

When you don’t know what made you successful, you make new mistakes

Most startup founders tell me they learn more from failure than they do from success. The reason primarily seems to be because you can point to one (or many) things that directly affected your failure, but success tends to have multiple factors contributing to it.

Then there’s the age old “I got lucky”. Which is interesting in itself, because the most successful people I know attribute their success to luck more than to anything else.

Success does have its challenges though in terms of being a good teacher. Most often we are told that what got you to a certain point wont get you to the next “level” and that you need to change your processes, systems, people and technology stack.

I had the chance to talk to 3 founders in consumer internet companies, over the last few weeks about their pilots and how their initial MVP’s are going – most of them had “successful” beta products with engaged users and many referrals. The one thing though they all felt was that they did not learn what made their products stick.

The superficial learning – about features in the product or the instant gratification a user got from their product was mentioned often, but that’s not enough.

To truly go from Minimum Viable Product (MVP) to Product Market Fit (PMF) the most important thing I have learned is that you need to know what made your product a “success” for your customers.

Let me give you one personal example and one professional one.

When I set out to lose weight and get fit (I lost 50 lbs in 25 weeks), I thought the key was to eat less and exercise more. In fact I thought they were equally important. I also believed a calorie lost was a calorie gained. Not true actually.

“A calorie lost is worth at least 2-3 calories gained”.

I learned this the hard way.

When I started, I put my data into MyFitnessPal (MFP) and it said I needed to eat 1650 calories each day or less. MFP, also tracks your exercise (automated via API from MapMyRun and FitBit). So the first few weeks I tracked what I ate and also automatically tracked when I exercised.

I would eat about 2000 calories and workout for about an hour to burn 550 calories and assume that it would turn my weight in the right direction. Turns out that was an incorrect assumption. My weight was flat.

When I truly started to eat less than 1650 calories, and still keep up the workout regiment was the only time I lost weight.

Then I experimented with my workouts and my eating. I tried eating 1500, then 1400 and finally 1300 calories or less each day for 3-4 weeks. My exercise regiment was constant. I lost a lot more weight than I anticipated.

I tweaked it further (because of travel) and reduced my workout to 45 min and still tweaked my eating for 3 weeks from 1500 to 1400, and finally to 1300 calories a day for 3 weeks. I lost the same amount of weight as I did when I worked out for 1 hour.

So the key to success was portion control and food, not exercise as much. That was something l learned. Now, that may work for my body type and may not for all, but it is important to experiment the key to ensure you understand the contours of your success.

Now for a more professional example.

I used to write more often that I do now, but over the last 8 years I have written about 800+ posts to average about 100 per year. Many are forgettable, so there.

I tried to experiment with writing short posts, then longer ones, then ones about current technology (newsworthy and topical) and finally about humor and self learning.

The ones about technology and news generate the most page views. Which, I know I am not supposed to care about, but I do.

The ones where I talk about what I learned from entrepreneurs generate the most comments, which I love again.

The blog posts which are short generate more likes on Facebook and the longer posts tend to get more shared overall.

I experimented more with length of my posts, the topic, the category, the sharing options, and the titles, but I don’t think I have found the formula for “success”.

The only thing I know is that if I write often, I tend to get more emails from entrepreneurs, talking about their own experiences, which I love the most.

So what happens when you don’t know what makes you successful – you tend to make more mistakes, but you tend to also learn a lot more.

If learning is your objective and constant learning at that, then I suggest you dont find out what makes you successful.

I learned that blog posts about my reflection tend to generate more interest than those written dispassionately about the world and its affairs.

I still have to find out what makes a successful blogger and have to define success first. Until I do that I have to be content with the assumption that I will learn more and make more mistakes, not knowing what made a post a “success”.

The one piece of advice I’d give myself from 15 years ago

“Skills are overrated, Connections are invaluable”.

Fresh out of school and eager to ‘conquer the world” I wish I focused a lot less on picking up “Analysis”, “Critical thinking”, “Strategy”, “Time Management”, “Project Management” skills and instead focused on “building and growing connections with people”.

I get 2-3 people emailing me to be their mentor every day. Most of these folks are young, fresh out of school and are at a large company – most times a tech company like Microsoft, Google, Facebook, etc.

Since I have very little time, I schedule 15 min when I can with them to help them learn what I did not learn, but wish I had 15 years ago.

Most young people focus on picking up “skills” or “intellectually stimulating global assignments” like a stint in China or India, etc. so they can be a well rounded individual. Then I try to push them towards entrepreneurship.

At this point, they usually (90% of them) tell me the dont think they have the skills to be an entrepreneur and point to their lack of sales, marketing, branding, positioning, coding, scaling, hiring, interviewing, motivating, etc. Any number of skills that they believe they dont have yet to be an entrepreneur.

Here’s the thing – skills are easy to develop for “most” people. If you are at a company like Microsoft or Google (or any other large company), you are reasonably skilled already. Else, they would have not hired you.

Focus your attention on building networks and connections with people instead at these places. There are folks who will be there building careers for the next 15-20 years there. They will get to important positions, just because they are there for so long. You will need their help at some point.

The other way I have found is to offer help on projects that executives have which they will never get to but are keen to execute. Offering your time and smarts towards that helps you build a relationship with top executives.

Build connections and networks not skills.