Entrepreneurial Thought Leaders (and a request for help)

There are only two opportunities left this year to see a Lean Startup presentation in the US - for free. In order to make those events the best they can be, I'd like to ask for your help.

This Wednesday, I've been invited to give a lecture as part of Stanford University's Entrepreneurial Thought Leaders Seminar. I'm really honored to be included in this program, as it's one I've admired and enjoyed for many years. They produce fantastic video podcasts, which you can explore here. And in mid-November, I'll be speaking at the Web 2.0 Expo in NYC. Once again, this will be a web2open hybrid session; I'll post details for how to register as soon as I get them.

I'd like to incorporate feedback into these presentations, and so here's my request for help. If you've seen me present in any format (online or in-person), would you take a few minutes to fill out the following short survey?

Click Here to take survey

If you haven't seen any of my presentations before, feel free to take a moment and peruse the video, audio, or slides available on this blog. As always, if you can come to one of these events, please come say hello and let me know that you're a reader. Hope to see you there!

Support the Startup Founders Visa with a tweet

It's been an exhilarating first day here in Washington DC for the Geeks on a Plane tour. We met a number of policy makers from the White House and State Department, and had a solid Startup2Startup all about government policy and entrepreneurship. After a full day of talking, debating, thinking, and strategizing, we feel about read to take some good old-fashioned action. Will you join us?

In a previous post, I asked readers for suggested topics that the US government needs to know about startups and entrepreneurs, and got some really interesting responses. I've done my best to represent those perspectives in the meetings I've had here over the past two weeks. In my presentation this morning, I emphasized three key areas: reducing the personal cost of failure for entrepreneurs, innovation-friendly legal reforms, and access to the digital means of production (slides from my White House presentation are available at the end of this post).

However, there's one additional issue that has come up throughout the day today. We have a serious structural barrier to entrepreneurship: a glitch in US immigration policy. We can remedy it by creating a special visa for startup founders. The idea is to enable up to 10,000 people per year to enter the United States if they are here to found a company that will employ US citizens. I think the benefits are a no-brainer. Let me quote from Paul Graham's original essay:

The biggest constraint on the number of new startups that get created in the US is not tax policy or employment law or even Sarbanes-Oxley. It's that we won't let the people who want to start them into the country.

Letting just 10,000 startup founders into the country each year could have a visible effect on the economy. If we assume 4 people per startup, which is probably an overestimate, that's 2500 new companies. Each year. They wouldn't all grow as big as Google, but out of 2500 some would come close.

By definition these 10,000 founders wouldn't be taking jobs from Americans: it could be part of the terms of the visa that they couldn't work for existing companies, only new ones they'd founded. In fact they'd cause there to be more jobs for Americans, because the companies they started would hire more employees as they grew.

Brad Feld is working on promoting this idea inside the halls of Congress. Today at Startup2Startup, some additional pieces fell into place. First of all, Dave McClure introduced the idea of modifying an existing immigration program. The EB-5 visa is designed for foreign investors to get a green card if they are willing to bring capital to the US and create at least ten full-time jobs. Unfortunately, this program applies to the investor who holds the capital, and not the entrepreneur who discovers how to put that capital to use. A small change in the law could have a big impact on entrepreneurship in this country, and that's what he proposed. When Dave presented this to the White House and State Department audience, he got a favorable reaction. That's when the second piece clicked, a few hours later. At Startup2Startup, we decided to generate some grassroots momentum to help out. It's actually part of a lean startup story.

David Binetti is an entrepreneur with some credibility in this area, having worked to create the original USA.gov. Recently, he's been engaged in a customer validation exercise around a new concept for a political action-oriented social network. When that concept didn't pan out, he decided to pivot. His latest effort, called 2gov.org, makes it easy to contact your local, state and federal governments with just a tweet. For more on his lean startup journey, you can take a look at this slide presentation. 2gov.org automatically routes your tweet (aggregating it with everyone else who's expressed a similar point of view) to the right legislator or agency. Because it checks your registration against voting rolls, members of congress know that the contacts being received are from actual voters, not just astro-turf. In other words, the service transforms tweets into professional reports that are sent by snail mail, fax, and email - the channels that actually have attention paid to them.

He was at today's event, and the Geeks on a Plane had a brainstorm. Let's use 2gov.org to raise awareness of the Startup Founders Visa movement in congress. To that end, we're tweeting about it, and would like to ask you to join us. If you are a US citizen, tweet your thoughts on the Startup Founders Visa, using the #StartupVisa hashtag and including @2gov. 2gov.org will take care of the rest. In order to have your tweet included in the printed packet that your representative will receive, you'll need to register at 2gov.org (it really only takes a minute).

The Geeks are doing their part. Will you lend us a hand (or at least a tweet)?

2009 09 18 The Lean Startup Geeks On A Plane Edition

View more presentations from Eric Ries.

Testing the new Disqus comment system

The recent and overwhelming influx of comments on The cardinal sin of community management. Has prompted me to investigate upgrading the comments system on this blog. I reached out to the twitter to gather suggestions, and the clear first choice seems to be Disqus. So I've attempted to install Disqus such that this post should be the very first one it's enabled for. Want to come give it a try? Just drop a comment on this post.

Your help testing is much appreciated! I especially would like your feedback. Should I keep Disqus? Go to another comment system? Or go back to the way it was?

Thanks!

Gov 2.0 Summit wrap-up

I had an incredible time at the Gov 2.0 Summit in Washington DC last week. I've never seen such a mixed crowd of entrepreneurs, vendors, and policy makers all in one place. There was quite an exchange of ideas. I was thrilled to be included.

I promised to post the slides for my highly abbreviated version of the lean startup presentation, so here they are. As usual, I'll include some of the real-time comments and some of my thoughts below.

2009 09 08 The Lean Startup Gov 2.0 Summit Edition

View more presentations from Eric Ries.

Given the time constraints, I organized my presentation around two simple ideas:

STARTUP = EXPERIMENT

FASTER STARTUPS = MORE EXPERIMENTS PER DOLLAR

I tried to make clear my usual definition of a startup, one that has nothing to do with size of company or sector of the economy. But judging from the twitter comments, it's not clear if I was able to make that case. It may be that it will prove a lot harder to make this point in DC than elsewhere:

aptuscollab: Too bad all you #g2s folks got up and left when Eric Ries took the stage. Dude is smart, his lessons apply to internal projects as well.

That's the nice thing about Twitter. You get the straight scoop, no sugar-coating. Any public speaker that doesn't take advantage of it is really missing out.

On to what seems to have stuck:

kwooleyy: #g2s Showed startup OODA loop developed by USAF pilot John Boyd

I included two Boyd-inspired books in the recommended reading list on the right-hand side of this blog: Certain to Win and Boyd: The Fighter Pilot Who Changed the Art of War. With a number of military men and women in the audience, I couldn't resist a plug. Boyd's ideas have inspired a lot of the principles underlying my work.

whorunsgov: Eric Ries: Startups fail not because the technology works, but because no one wants the tech. once it launches. #g2s

The very abbreviated version of Customer Development (channeling Steve Blank).

nickvitalari: Lean startups mean more experiments for dollars and human capital invested #ngenera #g2s

I'm trying to keep hitting on the theme of the human capital waste when we invest our smartest and most creative people into a venture that builds something that nobody wants. Every bit as true for government as for enterprise - and even the two guys in a garage.

dhinchcliffe: Lean startups go faster. Do course correction called a "pivot". - @ericries "Most exciting time in history be an entrepreneur." #g2s

For more on the pivot, see Pivot, don't jump to a new vision. I don't see how it could more a more exiting time to be an entrepreneur, and certainly can't imagine another time when entrepreneurship was more important to our country's future economic prosperity.

marciamarcia: The L word (learning) onstage at #g2s from @ericries. Finally. Startup=Experiment. http://startuplessonslearned.com

Amen! It's natural at a gathering like this to focus on new technology and applications. A lot of conversation was about what "the federal government" should do. But it's all too easy to lose sight of the fact that any government, even one as large as the US, is made up entirely of people. And so the right questions to ask, when we're talking about fostering innovation in any human institution, are: how can we foster a culture of learning and discovery? And it's my hope that the lean startup can provide some guidance in that direction.

Thanks to everyone who made the summit such a great event!

International tour about to begin

For my international readers: are you in Washington DC, Paris, Barcelona, London, Amsterdam, Malmo, or even Oulu, Finland? Then you'll have a chance to come discuss the lean startup live and in-person. (What's that you say? DC is actually not a separate country? Fascinating...)

The trip will happen in two separate trips. The first (DC, London for Seedcamp, Amsterdam for PICNIC) is first, with the Geeks on a Plane tour, September 18-25. Each event will feature a cool mix of Bay Area and local speakers (and me, too). Come join us if you can.

I then head back to the USA for a free and open-to-the-public lecture at Stanford University for their Entrepreneurial Thought Leaders Seminar on September 30.

Next up is a second swing through Europe. Exact dates for all events aren't yet pinned down, but here's what I'm working on so far: October 28 for a TBA event in Paris, November 2-7 for a series of events in Malmo, Sweden including Øredev, and ending with a workshop at the Martti Ahtisaari Institute of Global Business and Economics at the University of Oulu.

I'll keep you all posted as more details get added. As always, if you're a reader and can make it to one of these events, please come say hello. Continually love hearing your feedback!

The cardinal sin of community management

Once you have a product launched, you will the face the joys – and the despair – of a community that grows up around it. I won’t sugar-coat this: it is one of the most difficult and frustrating aspects of building a company online.

There are many articles by many experts (myself included) extolling the virtues of listening to customers. In fact, there are so many of these propaganda pieces that this question might naturally cross your mind: if listening to customers is so great, why do we need so much propaganda? I’ll tell you the honest truth: listening to customers is gruesome, uncomfortable, and painful work. Sure it has its moments, but then so does getting stranded on a desert island.

Yet few products these days can succeed without their online community, and the insight you can gain from interacting with that community is unparalleled, despite the pain. But to take advantage of that learning, you have to avoid the absolutely one and only cardinal sin of community management: not listening.

This probably sounds illogical. Communities care about lots of things, like how good your product is, how much information you give them, how you defend them from trolls, right? And when you’re being pilloried by community members over the latest mistake your company made, it can doubly confusing. After all, people rarely say they are mad because they are not being heard. But just because they don’t say it doesn’t mean that it’s not true.

Let me give an especially painful example. At a certain point in IMVU’s development, we faced a difficult choice. Some of our most passionate early adopters were using IMVU’s user-generated content capabilities to create illicit content. As you can imagine, this was a lucrative customer segment. But it became clear that if IMVU was ever going to become a mainstream business, we had to effectively fire these early customers. The reasons were many and complex, so I won’t rehash them all here. Suffice to say that our partners, vendors, and most importantly regular mainstream customers all found the idea disturbing. So we had to start enforcing new content policies that restricted what kinds of virtual goods could be bought and sold on IMVU.

We did not take this step lightly. We did a lot of analysis to make sure that we were minimizing the number of customers affected. For example, we spent some time researching the usage of virtual goods that would be disallowed under the new policy and were relieved to discover that they accounted for less than 0.1% of all usage. So we felt confident that removing them wouldn’t have too big an impact. We couldn’t have been more wrong.

This single decision wound up costing the company significant revenue and over the course of several months sent its customer growth into decline. We were totally unprepared for the magnitude of what happened. In the end, we managed to repair the damage, but only after losing a lot of time and at significant opportunity cost. This was one of those catastrophes that shouldn’t have happened. We carefully rolled out the change in stages. We did our best to actively communicate why we were making the change, and we tried to put in place policies that treated affected customers fairly.

Yet none of that mattered, because we violated the cardinal rule. We didn’t listen. More accurately, we made our customers feel like we weren’t listening. And until we could make that right, we kept on hemorrhaging business.

The problem was that although very few customers were affected by the changes in policy, many more were anxious about those changes. We tried to be low-key about the roll-out of these changes, so as not to call attention to it, but our silence on the subject simply served to make room for conspiracy theories about what was really going on. And, because the people complaining were yelling and screaming, we thought the right response was to ignore them and wait for them to leave. After all, someone who is writing ten-page posts about how they are going to abandon your product is presumably going to go away, right? That’s why one of the most important maxims in online communities is “don’t feed the trolls.” People who thrive on creating controversy through volume, repetition and hyperbole don’t really want to be heard. They just want attention, and giving it to them just encourages more reckless behavior.

But silence was the worst possible strategy. For months, we made constant product and policy changes, trying to end the controversy without simply undoing our original decision and abandoning the mainstream market. Nothing worked, until we finally had one of our community managers start talking to real customers on the phone. Then the reality of our problem hit us.

Most normal customers – even among early adopters - do not pay attention to the trolls. They don’t participate heavily in the forums, and they don’t send email when they are dissatisfied. They are largely invisible in the normal channels where customer service and community management pays attention. But that doesn’t mean they are not aware of what’s going on, or that they don’t care deeply about it. It turned out that our customers had gotten a clear message, one that we had never intended to send: that IMVU was becoming a teen-only site. We were totally shocked. Adults, even those that aren’t at all interested in racy content, were our best customers. We had built numerous features specifically for them, and often had to contend with charges from teenagers that we were too adult-friendly (these two segments don’t really like hanging out with each other as a rule).

When we actually started listening, things changed fast. First of all, we discovered what was really upsetting our customers. They had come to rely on the fact that IMVU was one of the very few online communications platforms where verified adults could meet one another. This was an unintended side-effect of our earlier content policies, that required age verification before you could buy unrated content from our catalog. It turns out many of our best customers were becoming age verified and then not buying any “adult” content. They enjoyed being treated like adults and having a way to chat online with other adults. Again, this was not about prurient content. Avatars make it possible to meet other people as they would like to be perceived. Mostly, that’s a good thing – many people believe their avatar is a more authentic representation of their true self than their physical appearance. But it also has some drawbacks. In the middle of a serious conversation on the joys of motherhood or the stress of a career you might realize that the person you’re talking to is only 15. That can be a jarring juxtaposition of physical reality that breaks the suspension of disbelief.

It took me a long time to understand that benefit of our product. Most customers couldn’t articulate it; they just knew they were angry that we had ruined it. Except that, from a literal point of view, we hadn’t ruined it. All of the features that enabled that experience were still there. What we had done to ruin it was make our customers feel like they were not welcome anymore. We kept denying that we had done anything wrong, that the features still worked as advertised, and justifying our decisions instead of apologizing. When we finally understood the problem, fixing it was relatively easy. We made a series of very public declarations that IMVU would always support adults, that we appreciated their unique contribution, and that we would always protect the key features that meant the most to them. The fact that pornography was not one of these key features was besides the point. We had summarily turned off one of their features without consulting them and without remorse. Who knew what feature might be next?

So real listening can head off a crisis in progress. But it also has other powers. For example, consider a common case of a minimum viable product. Since this product is necessarily missing a lot of features, those of us who ship them often want to duck the feedback. After all, it’s likely to be something we already know. In fact, I used to have the urge to argue with customers who gave feedback like “hey, idiot, you’re missing feature X.” I used to respond with something like, “I know, but it’s on our road map and we’re already working on it and we don’t really want feedback about that right now and so please get off my back.” You can imagine the field day the trolls had with that.

Eventually, we learned a better way. Feedback that tells you something you already know is still quite valuable. It gives you a hint that you are on the right track, but it also tells you quite a lot about the person giving you the feedback – that they believe in the path that you are on. For an early adopter, having this insight acknowledged and validated is a powerful experience. So we learned to take the time to say “thank you for your suggestion. Thanks to you, we’re going to prioritize feature X.” Then, when feature X finally did come out, every early adopter who suggested it feels an earned sense of ownership over it. Here’s the best part. They will also defend you against future attackers and trolls.

Collectively, an online community has an unlimited amount of time to spend. Even if you and your community managers are a hundred times smarter and more productive than the members of your community, there is absolutely no way that you can keep up with its sheer volume of energy. So you can’t fight an online community and hope to win the argument. The only way to have your point of view prevail is to have members of the community invest their unlimited time and energy in evangelizing it. And that’s what really, truly, actively listening does. It sends a signal to passionate customers that you care, that you want them on your side, and that they are part owners of your vision. In fact, I am convinced that if you could find some of IMVU’s earliest adopters, they would say something like this: “sure, those guys at IMVU HQ were helpful in writing code and stuff, but in the end they were just the hired help. It was really the community who built that product.” Imagine what happens when a troll shows up and starts bad-mouthing you. Those earlyvangelists (to borrow Steve Blank’s phrase) will defend you.

I have seen this dynamic time and again. As a creator of products (and now an author, too), it’s one of the things that keeps me going. When your customers become your allies, there’s almost nothing you can’t accomplish together.

There’s only one catch. You can’t stop listening. If you do, as IMVU found out to our peril, you break the implicit bargain that made you allies in the first place. And when your defenders join forces with your trolls, there’s no way to have your message heard.

That’s why not listening is the cardinal sin of community management. Any other mistake can be overcome: shipping bad product, removing key features, erroneously banning community members, even kicking out a whole segment of customers. And when those allies feel unheard, you simply can’t do anything right. Every little thing becomes a crisis. Choose wisely.

Happy blogiversary (my present: a brand new URL)

It's official: Startup Lessons Learned has passed the one-year mark. 130 posts (and dozens more that mercifully never saw the light of day), tons of comments, and, of course - you, the awesomest subscribers on the internet. Thank you.

When I first started writing this blog, I made a promise to myself that I would spend more time on the content of the essays than on layout and fancy widgets. I've managed to go a whole year in keeping that promise, even though I get the the occasional teasing about my lame default Blogger theme. Still, it's probably time to start growing up. Today I'm taking the first step, and finally setting the blog up on its own real domain: StartupLessonsLearned.com. I know, it's not a new layout full of Web 2.0 goodness, but it's a start, right?

Back to the content, passing an anniversary is a great time to look back. Luckily, blogs come with an archive, which means you can take your own trip down memory lane. Want to see my very first post? It's a pretty weak homage to Paul Graham. Or how about the first of about a zillion times I used the term lean startup? Read the very first comment (thanks tfitz!) or relive my very first subscriber survey - when there were a grand total of five. Or, for something more substantive, how about the top five-most-read posts:

1. Why PHP won
2. Don't launch
3. Five Whys
4. Work in small batches
5. The engineering manager's lament

But wait, there's more! First OODA reference: Ideas. Code. Data. Implement. Measure. Learn. You can also witness the start of my speaking marathon in Built to learn, or leave a comment on my (still-draft) A new version of the Joel Test (draft).

If all that archive-browsing leaves you hungry for more, you will soon be able to get Startup Lessons Learned in book form. I've been experimenting with a simple compilation format. I've given copies to attendees at some recent workshops. The response has been positive, and I'm getting ready for a more general release. If you'd like more info, or want to order one of the beta-test copies, I'd love your feedback. Feel free to drop me a line or leave a comment.

Most of all, thank you so much for your continuing support. It's been a real blast getting to know so many of you - in person, comments, and at events. Please keep the feedback coming. And, if you're feeling really generous, tell a friend to subscribe. Thank you, thank you, thank you.

Oh, and one last thought. It's true, not every comment has been so supportive or constructive. That's the internet for you. So, for the trolls: I've heard you loud and clear. Let me summarize. Actually, I'll let MC Frontalot take it...



Thanks for stopping by!

What would you want to tell Washington DC about startups?

I'm writing this post from an airplane headed to Washington DC, where I'll be presenting at the Government 2.0 Summit. It's an honor to be invited, and I'm looking forward to meeting a lot of people with a background very different from my usual crowd. I'm especially curious to gauge the reaction of the civilian and military representatives of our government. Beyond just those who will be hearing about the lean startup for the first time, I'm expecting to shake a lot of hands and have a lot of interesting side conversations.

As a result, sitting here on this plane, I've been pondering what message I want to deliver on behalf of startups and entrepreneurs. Thanks to on-board wifi, you can join me in that thought process, if you'd like. So here's my simple question:

What do folks in Washington need to know about the global community of entrepreneurs?

I've been in a few government-themed meetings recently, so I know some of the standard answers. One school of thought is something like: leave startups alone! They are so fragile, the heavy hand of government policy could easily snuff them out while trying to help them. And there's some truth to that, although I think the metaphor is a little misleading. Much of what makes the USA, and Silicon Valley in particular, such a great place to start a company is the result of good government policy. I think a more nuanced view is that we should be encouraging the government to think about the impact on entrepreneurs, and try to foster policies that reduce burdens on companies in their earliest stages. Some of those policies actually require more, not less, government action, because startups risk being crushed by entrenched corporate interests as well.

A second standard theme focuses on each of our financial interest. If the government raises taxes or adds regulation to my sector of the economy, watch out: innovation is doomed. I understand that there is a reason to employ lobbyists to protect established interests, but I'm not really interested in that job. I'd like to see if we can come up with policy suggestions, concerns, or questions that might promote entrepreneurship generally - and globally. It's my fervent belief that will lead to overall economic growth.

So what are good entrepreneur-friendly policies? What is good in the current system that should be preserved? And what hurdles could be eliminated? My short list, off the top of my head (hey, I am in an airplane, after all):

• Patent reform (so startups don't have to waste time amassing a deterrent warchest of dubious patents)
  
• Health insurance reform (so more people can take the risk of becoming an entrepreneur)
• Stage-appropriate regulation (many regulations kick in only after companies achieve a certain size, which promotes more risk-taking)
• Open data and platforms (the major theme of the Gov 2.0 movement - give startups open access to the raw materials so they can create economic growth)
• Open spectrum and wireless competition (with obvious benefits, I hope)

What would you add? And beyond just policy suggestions, what facts on the ground do policy-makers need to know about startups? Please leave a comment and let's discuss!

(It's impossible to resist the urge to plug Virgin America as much as possible. Here I am, tens of thousands of feet above the ground, and I have power and broadband. Of course, the real thanks should go to a startup - Gogo Inflight Internet - that I was lucky enough to meet at a recent workshop. Thanks guys!)

Don't be the Ice Cream Glove

I have a new post up today on O'Reilly Radar, called "Is your product an Ice Cream Glove or a Snuggie?" It is based on two videos I normally use in workshops - each of which contains an important entrepreneurship lesson for all of us. Here's an excerpt:

For those that haven’t watched it, I’ll give a brief recap. Ali G meets with business leaders and investors on Wall Street to learn how to create a new company around a new product idea. After some general lessons, he then proposes his first product idea, complete with flip charts, business plan, and marketing plan. His idea? The Ice Cream Glove, a special glove you can carry around with you so that, if you happen to eat ice cream, you can prevent your hands from getting sticky. After failing to persuade most of the investors to back him in that venture, he then tries to sell a second idea: a Hoverboard, “like from Back to the Future.” After all, they must have made at least one of them for the movie, right?

Both of these ideas for companies are terrible, and the show is funny because he manages to keep on selling them with a straight face. But there are also important lessons baked into the humor. Take the example of the Hoverboard. If you look at the typical startup, you will see the vast majority of their energy and time invested in building new technology. We act as if the biggest risk to startup success is that the technology won’t work. But in reality, most products fail because they are the Ice Cream Glove, that is, because there are no customers who will buy them.

Read the rest (and be sure to watch the videos)...

These videos make an important point: that almost all product ideas sound bad. At the whiteboard, you can make any idea seem brilliant or ridiculous. It's only by actually moving through the fundamental startup feedback loop, which involves facts, that we can find out which have a kernel of truth baked within them.

Let me also say a brief thank you to those who replied to my previous ask for feedback about cross-posting. So far, all the feedback has been in favor of doing it whenever I have a guest post elsewhere. If you have further thoughts, please leave them as a comment. Thanks!