good idea, bad startup (ucla econ 106e)
TRANSCRIPT
GOOD IDEA, BAD STARTUPBAD IDEA, GOOD STARTUP
How to validate startup ideas in the wild to build products
people want.
2
GOOD IDEA, BAD STARTUP
• Introduction• Anatomy of a Pivot• Common Failure Cases• How to Validate Your Idea• Product/Market Fit• Resources
@jmilinovich
3
INTRODUCTION
@jmilinovich
4
THESIS
Startup ideas that seem like good ideas are probably bad ideas.
Non-obvious ideas that cater to a small first market are often the biggest ideas.
@jmilinovich
5
DISCLAIMER
IMPOSSIBLY HARD
NO BALANCE
LIKELY TO FAIL
NOT GLORIOUS
LOSE FRIENDS
EAT RAMEN
BE YOUR OWN BOSS
VERTICAL LEARNING CURVE
HIGH RISK, HIGH REWARD
EN VOGUE
+-
@jmilinovich
6
MY BACKGROUND
@jmilinovich
7
WHAT PEOPLE DON’T TELL YOU
• Requires Grit, not just “Hard Work”• Starting a company is almost never a
good idea• There is no safety net• The world doesn’t need another
startup• Being naïve is not a competitive
advantage
@jmilinovich
8
ANATOMY OF A PIVOT
@jmilinovich
9
ADLAST, INC.
• Feb 2013: “Search Engine Marketing Optimization for AdWords and Bing”
Things we heard/felt:• “Really great $20m idea”• “Who are our customers again?”• “Why not focused on mobile?”• “You have no idea what you’re
doing.”@jmilinovich
10
ADLAST, INC.
• Apr 2013: “Create Links into Apps”
Things we heard/felt:• “The world is going mobile, 86% time
in apps”• “How the heck will we make money?”• “Why isn’t this the way it works
today?”• “Why would anyone ever want to do
this?”@jmilinovich
11
URX
• Today: “Get Paid to Link into Apps”
Things we learned:• No one has really figured out mobile
monetization• Find fast growing markets w/ a unique
POV• Platform, tech-first approach to
massive problem@jmilinovich
12
COMMON FAILURE CASES
@jmilinovich
13
CASE 1: NOBODY CARES
• REASON: You don’t know who your target market is, or don’t have an interesting value prop to them.
• CAUSE: Your product isn’t 10x better than the pre-existing solution
• WHAT IT FEELS LIKE: Even your friends won’t use your product@jmilinovich
14
CASE 2: FOUNDER/MARKET FIT
• REASON: Founders don’t have a unique insight into a market
• CAUSE: Insincere ideas – choose an idea because it sounds cool, not because you know the pain
• WHAT IT FEELS LIKE: What does my client look like, again? Who are competitors? What are market dynamics?
@jmilinovich
15
CASE 3: BOILING THE OCEAN
• REASON: You try to do too much, too fast
• CAUSE: A lack of focus/specificity/discipline. 20 features, not 1 that works perfectly.
• WHAT IT FEELS LIKE: So many things, so little time; very hard to explain what you do@jmilinovich
16
CASE 4: GIVING UP
• REASON: Emotional/Physical burnout
• CAUSE: Too much work, not enough traction
• WHAT IT FEELS LIKE: Consistently being below water
@jmilinovich
17
CASE 5: RUN OUT OF MONEY
• REASON: You didn’t have enough runway to prove your thesis
• CAUSE: Couldn’t convince enough customers to be able to convince investors
• WHAT IT FEELS LIKE: Micromanaging pennies@jmilinovich
18
HOW TO VALIDATE YOUR IDEA
@jmilinovich
19
Validating Your Idea
• Think Like a Founder– Think strategically about your market– Build a market hypothesis– Play devil’s advocate– Pretend you’re ready– Work your ass off– Learn to code– Make money– Find a peer group– Focus on the user
@jmilinovich
20
Validating Your Idea
• Market Feedback– Talk about your idea 100 times per day– Test variants in parallel with the same
base. Nearest neighbor ideas– Don’t get defensive– Pitch the dream– Interview customers consistently
@jmilinovich
21
Validating Your Idea
• Customer Interviews– In person always best– Ask past the yes and the no– Get people to sign LOIs and give CC#s–Messaging: Define, codify, repeat
@jmilinovich
22
PRODUCT/MARKET FIT
@jmilinovich
23
Product/Market Fit
• What does product market fit feel like– Growth– Not asking what if but how do– You don’t have to ask you just know– Organic growth– North star– New sets of problems
@jmilinovich
24
RESOURCES
@jmilinovich
25
Resources
• Resources to read immediately– “Founders at Work” – Jessica Livingston– “Hard thing about hard things” - Ben
Horowitz– “Zero to one” – Peter Thiel– Paul Graham’s Essays– Tech Beats: build an opinion about a
market
@jmilinovich
26
QUESTIONS?
@jmilinovich