Managing Startups: Best Posts of 2012


Here's my compilation of 2012's best posts about managing startups. I assembled similar lists at the end of 2011, 2010 and 2009. Many thanks to all of the authors. The generosity of the startup community is amazing, and these insights are invaluable to those of us who teach and coach aspiring entrepreneurs.

Apologies to authors whose work I've omitted. Please use comments below to suggest additional posts. Happy New Year!

Lean Startup
Business Models
Customer Discovery and Validation
Marketing: Demand Generation and Optimization

Sales and Sales Management
Viral Marketing
PR Strategy
Branding/Naming a Startup
Product Management/Product Design

Business Development
  • John O'Farrell of a16z describes how quality trumps quantity and clarity regarding mutual objectives is crucial in doing business development deals, using Opsware's transformative distribution agreement with Cisco as a case study.
Scaling

Funding Strategy
Founding Process
  • My colleague Noam Wasserman published his book, The Founder's Dilemmas, that describes tradeoffs that founders confront when deciding when/with whom to found, how to split equity, how to divide roles, etc.
  • Blake Masters' summary of Peter Thiel's Stanford CS183 lecture on the importance on early founding decisions.
  • Charlie O'Donnell of Brooklyn Bridge Ventures on questions that co-founders must address ASAP and the concept of the "minimum viable team," i.e., the smallest set of skills needed to get traction in an early-stage startup.
Company Culture, Organizational Structure, Recruiting and Other HR Issues
Board Management
Startup Failure
Exiting By Selling Your Company
The Startup Mindset and Coping with Startup Pressures
Management Advice, Not Elsewhere Classified
Career Advice (Especially for MBAs)
Startup Hubs
  • Brad Feld of Foundry Group and TechStars has published the book Startup Communities, a guide to building an entrepreneurial ecosystem.
Tools for Entrepreneurs
  • Beyond Steve Blank's Startup Owner's Manual, a book he co-authored with Bob Dorf, here is a list of the fantastic resources Steve has made available to the startup community -- mostly for free.

Product Management 101


This fall at Harvard Business School, we launched Product Management 101, a course for academic credit that uses a "learning-by-doing" approach to build basic PM skills, rather than the classic HBS case method approach. I describe our course design below with the hope that colleagues at other universities will adapt and improve it.

First, a nod to the two MBA candidates who proposed, designed and oversaw PM 101: Prem Ramaswami and Rana Kashyap. The course has many moving parts, and Rana and Prem kept them in smooth motion.

Motivation. As I've written in a course note co-authored with Jeff Bussgang and Rob Go, product manager is a fantastic entry-level general management position for MBAs. Every year, dozens of HBS graduates seek PM jobs. They face a Catch-22, though, because these jobs typically require prior PM experience. Many students have such experience, acquired either before or -- via summer internships or working on their own startups -- during business school. The Catch-22 is most acute for career switchers who decide to pursue a PM position midway through their MBA -- too late to gain experience through a summer job. PM 101 was designed for these students.

Fall Semester. Our goal was to give students hands-on practice specifying and managing the development of a real application. We identified concepts for websites and smartphone apps that might benefit the HBS community, but were unlikely to ever be developed by student entrepreneurs (not enough profit potential) or by the school's own IT unit (too far down their priority list). Examples included a better online campus map; a mobile app for sharing taxis; and a site for scheduling professors' office hours.

Each of fourteen students was assigned an app and a faculty adviser who provided periodic coaching. After a spending a couple of weeks assessing customer requirements, students delivered a Market Requirements Document and, based on their assessment of demand, a recommendation on whether to proceed. After discussing the MRDs, we killed a few apps; students who were working on them were teamed with a classmate on a surviving application.

Students spent the next several weeks specifying their application's functionality and preparing a Product Requirements Document. At the end of the semester, students presented their PRDs to each other and to a panel of faculty advisers, HBS IT managers, and Student Association officers. We voted on which apps should proceed into development. Six of the original fourteen applications were still live after this process. Students whose products were not advanced could join another team.

Winter Semester. For each app moving forward, HBS has allocated $5-8K to be spent on development. Next semester, student teams will select and supervise an outsourced engineering team. Following launch, we expect students to: 1) stress test the application and fix bugs; and 2) collect and interpret data needed to enhance features. Software launched as a result of PM 101 will be owned by HBS, but the school may transfer the IP to our Student Association and/or release it as open source software.

Workshops. In addition to the MRD and PRD checkpoint sessions mentioned above, every two weeks we met as a group with outside experts -- seasoned product leaders and designers -- who gave presentations on key product management skills and tools. At these workshops, students got feedback on their work-in-process from each other and from the experts. Pre-class readings and session assignments are listed on our course site. Session topics included:

  • What does a PM do and who do they work with at different stages of the product life cycle? What are the attributes of successful and unsuccessful PMs?
  • What is a Market Requirements Document and why might a PM be asked to complete one? What techniques do PMs use to understand customer needs and validate demand for a product?
  • What is a Product Requirements Document? Why do some tech companies use them while others do not?
  • What approaches (e.g., project planning software, face-to-face meetings, etc.) do PMs use to track progress and coordinate their team's efforts?
  • How should a PM approach wireframing? What do they need to know about UX design? 
  • What does a PM need to know about cloud technology? Database architectures?

We'll continue these workshops next term, for example, devoting sessions to how PMs work with engineers and to post-launch analytics.

Lessons Learned. At the end of the semester, we asked the students to blog on lessons they learned about the PM role. One wrote about how difficult it was to find definitive metrics to evaluate a product idea at its very early stages, and how killing her idea led her to reconsider her personal standards for success and adding value in an organization. Another wrote about learning that being a PM entails not being a "nice guy" -- rejecting colleagues' feature suggestions because the PM has to make some tough calls. A third wrote about the challenges of becoming a PM as an MBA without strong coding skills.

Improvement Ideas. As with any first iteration, we see lots of ways to improve PM 101. With our workshops, for example, we spent too much time having experts present and not enough time having them react to students' work-in-process. We also should have spent more time having students critique each others' work, as design school students do.

A shortcoming of the course, in the words of one of the few students who had prior PM experience, is that "Unfortunately, it's difficult for PM101 to give students a clear understanding of the often-hurried timeframe, constant pivots, and complexities of people management." Working just a few hours per week, and not as part of a bigger team, doesn't capture the essence of the role.

Another big question is what to do about agile. We recognize that MRDs and PRDs are seen as "old school" by product professionals who favor agile processes. Our readings and many of our speakers discussed agile development, so students gained some understanding of its methods and precepts. But our course design, with its reliance on upfront specification followed by outsourced development, would make it difficult to actually employ agile processes -- as would the fact that our student PMs, who take four other courses, are expected to spend only 5-10 hours per week on PM 101. Ultimately, we concluded that students would gain a deeper appreciation of agile's advantages if they understood how and why to create a PRD.

A final question is how to scale the course. So far, our fourteen students have learned a lot, but next year, we'd like to at least double enrollment, given strong demand for the course and the big fixed cost of organizing it. An obvious problem with scaling is the subsidy required to fund outsourced software development. Prem has floated the idea of shifting the course focus away from apps that benefit our school's community to software developed for not-for-profits. In that scenario, we might find a foundation willing to underwrite development expenses.

I hope that readers who see solutions to the scaling question and other ways to improve the course will share their ideas here.

RESPOND QUICK... OR PERISH!

RESPOND QUICK... OR PERISH!
It is said that John F. Kennedy was America’s first television President. Barack Obama has shown that he is the nation’s first ‘Social Media’ President!

The super fast advancements in technology and the growth of the internet have changed the marketing landscape totally. Its impact was seen the most in the Presidential campaigns of Obama and Romney. This time, Obama’s campaign strategies were totally different from the ones he used in 2008. Yes, he once again used social media, but he used it more scientifically. This time, he had a huge team of ‘boffins’ (data analysts) headed by a new ‘Chief Scientist’ Rayid Ghani, whose job was to scientifically analyze all the data and use it to plan Obama’s various marketing strategies. For example, the team found out that in 2008, it had used the “Sign up now” button to gather followers on Facebook; but changing it to “Learn more” was far more effective in getting people to register in 2012. Each plan was tested, retested, analyzed and then implemented. A huge team of data analysts holed up in what was nicknamed ‘The Cave’ sat day in and day out crunching numbers and planning each move. That was the secret to Obama’s success.

The social media landscape is, after all, more cluttered and much different now than it was four years ago; so this time, it needed to be handled differently too. Obama showed us the most effective way of handling it.

RESPOND TO THE CONSUMER

The consumer talks to you in many different ways, and the most successful marketer is one who listens most intently. Today, most marketers do listen to their consumers, but the ones who can respond the fastest will win in the future. This is the new rule of the game. This is also called ‘adaptive marketing’, and both Obama and Romney showed the corporate world how to adapt real fast.

Every aspect of your marketing campaign has to learn to ‘adapt’. Nothing can be static, not even ad campaigns. If Romney got a reaction from the audience for a particular point during his speech, that point was turned into a small online video ad spot soon enough. If an online ad got a positive response from the viewers, it was soon made into a newspaper ad. Gone are the days when past experience, intuition and creativity decided your advertising strategies and media buying plans. With so much clutter in the market place, you need to have the ability to gather all possible data about your consumer, analyze it and use it to plan your move; and most importantly, change your move according to the changes in the preferences of your consumer. Obama’s team sitting in ‘The Cave’ used to process the data and run it through 66,000 computer simulations every night to figure out Obama’s chances of winning in the swing states. The next morning, the results were used to help him plan his next move, in fact his every move. Like for example, a study of old data collected for Obama’s campaign revealed that in the West Coast, George Clooney was the man who attracted the women in the age group of 40-49 the most. That was also the group that was rich and most able to donate. So a promotional event ‘Chance to dine in Hollywood with Clooney’ was created. In the East Coast, it was Sarah Jessica Parker who would work, so the next Dinner with Barack contest was born: a chance to eat at Parker’s West Village brownstone!

Media, too, was bought on the basis of data analysis. TV ads were planned according to the potential voters’ ‘browser history’. When you surf the internet, you leave a history and data miners are using this to know you better, figure out which TV programmes you are most likely to watch and put their ads there. So this time, Obama’s political ads were not only aired on news channels (as has been the case with political ads all these years); rather, you saw him on Discovery Channel on programmes like “The Walking Dead’, et al. Barack was there where his voters were (there were no Romney ads here incidentally!).

Campaigns of the future will be planned keeping in mind the likes of the consumers. Amazon does it. It knows the books that you have bought or browsed through and it sends you suggestions on what is new and of interest to you. KLM Airlines now offers a unique feature wherein travelers can decide who they want to sit next to by linking their Facebook profiles to your flight.

With technology advancing so much thanks to the mobiles, the tablets and the smart TVs, it’s become easy to know your customers. In fact, a recent study in UK revealed that 75% of consumers who had a relationship with the company were happy to share their personal information with it, for it made their lives easier. Everyday, he is daunted with zillions of options. If someone could pick out a few that suited him the best, the consumer would appreciate it.

Soon, we would be in an era of ‘IP-addressable TV sets’, and advertisers would be showing us ads of only those products that we are interested in (after analyzing our browser history!)! As our interests would change, so would the ads we see! Soon, campaign planners would know us better than us!!

So the brand, which can get the maximum data about its consumers and analyze it best, would be the most successful brand in the future. The brand, which responds the fastest to consumer opinions, is the one that is most likely to succeed.

Respond to consumers yet again

Apart from understanding your consumers’ likes and dislikes and responding to them by customizing your marketing strategies, brands have to also find more and more ways to engage with their customers and talk to them first hand. The growth of social networking sites has made this most imperative. When these sites started, they gave marketers an opportunity to connect to their consumers (through Twitter, Facebook et al). Today, many brands are connecting with their buyers through these sites, but very few are engaging them. Even fewer are listening to them and responding back. Walmart is one such company, which maintains a keen vigilance on the social networking websites. Once a consumer tweeted, “Sold Out@Target we want more @Boss_Starz Season1DVDs”. Walmart replied to the disgruntled customer, “Hi Nicole-@Boss_Starz fans can pick up Season One online here: bit.ly/MJ9F6c or at their local Walmart.” The consumer had a problem with the department store Target and Walmart saw this as an opportunity to win some brownie points and simultaneously get the competitor’s consumer to visit its store.

This year, Coca-Cola became the first retail brand to pass the 50 million mark in terms of Facebook fans. Coke has been working quietly towards increasing its presence on social networking sites; for it believes in the simple rule that its Senior Vice President, Integrated Marketing, stated, “Fans are twice as likely to consume and 10 times more likely to purchase than non-fans.” Coke considers these social networking sites as ‘social telephones’, and they seldom let them go unanswered, which is why their ‘customer service strategy’ has changed. Today, Coke has increased the number of employees in its ‘Twitter Response Team’ and reduced the team strength of its ‘tele-calling team’. Coke has recently launched a new white packaging for its product and it’s using this to engage its vast community on Facebook. It’s asking them to send in ideas on how to save the Arctic and polar bears. These companies have mastered the art of responding to consumers and interacting with potential consumers in a way so that their loyalty towards their brand increases.

A research done by Maritz Research Company revealed that a whole lot of companies are active on Twitter, giving information about their products, new launches and new services; but very few ‘respond’ to their customers. The research also brought out an interesting fact that 49% of those surveyed said that they expected the company to read their tweets and respond to them. The older the respondent was, the more they expected the company to respond to them. Out of those who did receive a response from the company, around 83% said they loved it. So if you are not responding, you might be losing out your customers to competitors.

Wars were fought in the battlefields decades ago, and then they were fought in retail outlets. However, in future, wars will be fought in the virtual world. The one who masters the art of interacting with his customers and of engaging his customers in a dialogue is the one who will win.

In a nutshell, marketing today is not just about the 4Ps – Price, Product, Place & Promotion – rather, it’s about the new 4Ps with the customer in focus.

Permission – to talk to you (customer)
Perception – understanding what you want.
Proximity – designing strategies and customizing them to suit you.
Participation – involving you in as many ways as possible.

You will now have to keep these 4Ps in mind while formulating your marketing strategies. The social media is changing us, our lives and our marketing theories too. Move with the times and the times demand that you connect well with your customer and most importantly, respond quickly… or else perish!
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