The Community Manager

There is a position in a startup which is often overlooked and undervalued. After you’ve hired your engineers, product manager and designers, I think one of the next hires should be a community manager.

The job of the community manager should be to evangelise your product and business. They should be blogging, tweeting, and making outward noise, and responding to inward enquiries with charisma, a sense of urgency and humour. They should have their eyes open for events, networking opportunities, PR opportunities, pitching sessions and so forth. They should be as passionate about the business as its founder and should understand the customer, market and niche and make noise where your customers read, watch and play.

The Community Manager is a marketing position, and there are endless responsibilities associated with this kind of role. A creative and smart community manager will never have nothing to do.

The Community Manager is an important role. If nobody knows about you, nobody is going to buy your product. It’s their job to get people to know you exist and to respond enthusiastically and passionately.

Vinod Khosla on Entrepreneurship at MIT

How to Win at the Sport of Business

I just downloaded Mark Cuban’s new book, “How to Win at the Sport of Business” and read it on my Kindle in about 2 hours. It is a quick and worthwhile read of his best blog posts from Blog Maverick. The book is $2.51 on Amazon. He writes with an air of common sense, and you get the impression that he could be the guy next door who just followed his dreams, got a bit lucky and killed it. Which is more or less what happened.

I recommend everyone reads this book.

My favourite chapter is this one – It reminds me of me :)

Maybe replace the Basketball with Cycling.

And yes, Mark Cuban might be lucky, but don’t hate the player.
Hate the game.

Disrupting Capitalism

At the core of capitalism is the concept of fractional ownership. At its core, public share markets facilitate fractional ownership of companies.

Markets enable people to own a fraction of an entity and receive returns that are apportioned accordingly to their ownership percentage.

There are various reasons why companies raise money, whether it be private or public, however in the startup world it has usually got to do with funding a founding team and building a business from nothing. This requires manpower which costs money and funding is required in order to pay the employees of the business.

Usually businesses need to give up a fraction of their shares, whether it is a large fraction or a small fraction in order to receive capital to start and/or grow the company. This has forever been the way that capitalism and investment has worked and it will continue to work this way, however recently a startup called Kickstarter has successful invented a different approach to raising capital eliminating the need to give away any equity.

Kickstarter is a very simple concept. It is a marketplace with “inventors” on one side and “backers” on the other. Inventors advertise their inventions and backers look for things they would be interested in buying. The inventor can specify an amount of funding needed to manufacture their widget, and if that level of funding is raised from backers, they get paid the money and begin making the product/art/documentary/anything. Inventors who use Kickstarter to raise funds do not take any equity  in the inventors product or business. They simply commit to manufacturing the pre-ordered widget. If enough people pre-order enough widgets to reach their required funding goal, then the inventor manufactures the widgets and sends them to everyone who pre-ordered.

There are a few things I like about Kickstarter:

  • Inventors can turn their dreams into reality without having to give up any equity for “dumb money”
  • It eliminates startup risk as you don’t have to go ahead with your idea if there is not enough interest
  • You can use the response of the Kickstarter marketplace to gauge general market interest
  • It levels the playing field enabling anyone with an idea, an internet connection and a video camera to raise money without being bullied by investors for a fractional ownership of their business
  • Kickstarter gives you customers upfront, many of whom are early adopters and are likely to spread your idea via word of mouth
  • It facilitates investment in the arts and humanities space which can often be difficult to find funding for

Why building things for the Internet is cheaper & faster than ever before

When I first announced Lind Ventures I said it was cheaper and faster to build things for the web.

“The Labs model is possible because the cost of building internet products and web services is at an all time low thanks to the abundant and affordable platform as a service (PaaS) and cloud computing offerings that exist today. It means that engineers can focus on building great applications without worrying about infrastructure issues and costs.”

I thought I’d provide some practical insight into how we use the services of third party providers for non core components of our web applications at Lind Ventures Labs.

Building a web application is not as simple as developing the core functionality of the application. That is a major challenge in itself, however in order to deliver a service that people will pay for, the offering needs to be delivered reliably with excellent customer support, a great user experience, fast performance with the ability to scale as the business grows. Most startups begin with 2 or 3 people and being able to develop all of these requirements in-house in a reasonable time frame with limited resources is very difficult, if not impossible.

Over the last 5 years the application layer of the internet has exploded and an entire ecosystem of services offering specific functionality within their own niche. Examples include:

  • Cloud hosting
  • On-demand customer support software
  • Recurring billing systems
  • Payment processing gateways
  • Content management platforms
  • Open source software
  • Transactional email
  • SMS

One such example of a platform that focussed on a specific niche is Assistly. Assitly is a software as a service platform that offers a turnkey customer service offering that can be white labelled using a custom URL and themed to match your brand. It is designed to handle inbound and outbound customer service requirements like support ticketing and basic CRM functionality. It also provides a fully hosted knowledge base management function and a CMS to manage your knowledge base content. Using a platform like Assistly for support enables our team to focus on the building our core application without having to develop these services ourselves. While excellent customer support is crucial, a attempting to build Assistly in-house would be spreading ourselves too thin and would result in a huge loss of focus and for $49 per month, why would we bother trying to build our own solution when the effort doesn’t add absolute value to our core offering!

There are two factors which are common amongst successful web platforms that make building things for the internet, cheap & fast:

 

  1. API’s – By building a platform on a stack of API’s and exposing them to the public it makes it possible for developers to hook into third party platforms and utilise their services, in many cases without the end user knowing your application is actually using a third party for a particular function. A good example is our billing system. BuyReply will use Chargify as its billing system. We don’t want to build a billing system. It is a loss of focus, however Chargify have built a brilliant billing system and by building it on a stack of API’s we can easily integrate it into our platform. For example when a new merchant signs up, we send some data to Chargify with the details of our new customer and the plan they have selected. We also send their payment details to Chargifty. Chargify then takes care of the monthly billing, plan upgrades and downgrades, monthly invoices via and email and much more. Our merchant will never know that we are using Chargify as our billing system however using Chargify means that we can focus our efforts on building our platforms core functionality rather than building a billing system.
  2. Tiered pricing –  Most of the services on the web these says enable you to pay only for the usage you need. If you are a small business, you pay a little, and if you are a large business you pay more. This is achieved by offering tiered pricing for different levels of service. SalesForce.com started this when they started charging for software by the seat. A company with two users might pay $25 per user, per month, however a company with 1,000 users would pay 1000 x $25 per month.

 

Startups are in a fortunate position being able to tap into resources of existing platforms and “outsource” non-core functionality. Leveraging third party platforms is cheap and removes a lot of wasted time from your product roadmap.

The application we are developing at the moment calls on a broad range of disciplines, systems and functions required to deliver the end product. I’ve made a list of the 3rd party services we are using.

 

If our team had to develop all of these services in house we’d need a huge budget and a broad range of skills under one roof, not to mention a lot of time. Another advantage of these tools is that many of them do not require hard technical skills to use or configure. For example a non-technical person can write your knowledge base articles in Assistly and set up your payment plans in Chargify or contribute to your blog via WordPress. All this is work that has to happen, outside of the actual coding giving non technical people a lot to do while the technical people build your product.

The beauty of the web is that there are a lot of smart people around the world who have chosen to focus on a specific niche and develop robust products that fulfil these requirements incredibly well.

Sean Parker on VC’s and Investors

“Being called an investor or a VC is a derogatory term – I’m actually an entrepreneur that happens to have a fund”

- Sean Parker via @leweb

Sean Parker And Shervin Pishevar talk Entrepreneurship

via @leweb

My Amazon.com Wishlist

I try to read as much as I can. I like reading. I read non-fiction biographies and business, marketing and design books but hardly ever read fiction books.  I usually use the Amazon wish list as a bookmarking tool. When I stumble upon a book recommendation online I’ll generally search for the book on Amazon, add it to my wish list and eventually get around to downloading it and reading it on my Kindle or iPad.

You can view my current Amazon wish list here:

http://amzn.com/w/VGMZZME5FO96

 

The diminishing value of technical founders in startups

One of the biggest challenges to building a technology startup is having the right technical skill set to turn your idea into reality.

By enlarge, people who have great ideas are often not technical people. In the early stages of a startup you need techical people on your team as programming is where the rubber meets the road. Without coders you dont have a product or a website. However as time goes on the focus shifts from solving technical problems to solving business problems.

While the technical layers of your business needs to be maintained, the business becomes about driving sales and maintaining customer service and as this occurs, the value of technical people diminishes as the bulk of the technical heavy lifting is complete and the technical responsibilities shift into a “maintenance” role instead of a “building” role.

A useful analogy is building a house. You can’t build a house without an architect and you can’t build a house without bricklayers or builders however once the house is built you dont need your architect anymore, and you dont need your builders full time. You can hire a carpenter to do odd jobs around the place for $60 per hour as needed and you can make small renovations by calling on your original builders when you need them.

Would you give your builder 50% of your house for him to build it, or would you pay him a fixed sum upfront to build the house? We all do the later however in start-up world, most people to the former!

If you can handle the risk and finance the heavy lifting yourself, then you should get someone to build your idea for a fixed sum. If you know what you want and believe in your idea, then this won’t be scary at all.

The issue in most startups is that founders often don’t have a clear enough idea of what they want, so they think hiring people and spending money will help. Money can’t buy that clarity of vision. Only the best founders have it, and its what makes great founders great.

This value of technical people in startups diminishes quicker than you think and entrepreneurs need to be careful not to give away equity to developers who are super valuable in the short term, but end up twiddling their thumbs in the long term. Giving away equity to someone who does not add value over the long term, or quits the company prematurely is known as “dead equity”.

You need to ask yourself whether you believe the particular candidate, be it a “technical co-founder” or an incubation firm taking 50% of your company, is capable of adding perpetual value over 3 years or more. If your product was completed today, will they still be able to add value to the business thereafter? I can tell you without an ounce of doubt, that if you are giving equity to a “technical co-founder” who has great tech skills but average business skills, average marketing skills, and average communication skills, that their contribution will be of lesser value over time as the product is built.

As your business grows the skill set of your team grows with it and the importance of technical people gets diluted as the focus shifts from “how are we going to make this, to how are we going to sell this?“.

When you find the right fit for a co-founder, you will know it. It will be 1000% clear in your gut.
If you won’t settle for the perfect life partner, then you shouldn’t settle for less than the perfect business partner. You’ll probably see them more if you are running a startup anyway!

So do you need to be able to code to be a founder?

In short, I believe that you do not need to be able to code, however being technical certainly helps.

I also believe that the importance of a technical co-founder depends on the nature of your idea. I don’t believe you need a technical co-founder or need to give away equity to a technical person if you are running an e-commerce business. E-commerce is 90% retail and 10% technology. If you are building a web application as we are doing now which is 50% technology 50% business, then having someone technical on board is a big benefit however they can just as easily be on the books (as apposed to being an equity holder) if you don’t believe they are fit to add value outside of coding after the initial build.

What is more important than being able to code is having a strong vision. All successful founders have a strong and focussed vision and know exactly what they want to achieve. They commit to these goals with unwavering focus and purpose, whether they code or not. What matters is knowing what you want.

People who know what they want, end up getting what they want.

Knowing what you want means knowing exactly what you want, down to the last pixel on every screen, who your first customer should be and what the third question on your FAQ page should say. While I don’t believe you have to be able to code, I do believe you have to be able to communicate  to developers in the early days. Drawing your screens in a wire framing app, and documenting functionality is good enough provided you have a good developer working for you. Being able to think for your developers will result in a faster build and a product that closely resembles your vision while reducing risk.

Don’t live a limited life. Make & change things.

“When you grow up you tend to get told the world is the way it is and you’re life is just to live your life inside the world. Try not to bash into the walls too much. Try to have a nice family, have fun, save a little money. That’s a very limited life. Life can be much broader once you discover one simple fact: Everything around you that you call life was made up by people that were no smarter than you and you can change it, you can influence it, you can build your own things that other people can use. Once you learn that, you’ll never be the same again.”

- Steve Jobs