I’ll claim the necessary propensity to rapidly adjust your new business strategy is inversely proportional to the time you invest in writing a traditional business plan.

The more you invest in a business plan the less likely you’ll be willing to adjust.  Don’t let a plan weigh you down. It is more important that, as you enter the market and learn, you be willing to adjust… no matter what “the plan” said.

The most important thing you can do is learn from your customers.  As the leader of your startup your job is to then filter that information and adjust strategy as needed.  If you’re “married” to a plan you’ll hesitate when you should quickly move in a new direction.

Writing a business plan can be a good exercise.  It helps you think through your approach to the market and how to describe your offering. Whatever you put in that plan will be wrong so don’t treat it like the gospel.  It’s an exercise, not a panacea.

Good investors understand this too.  If they don’t, the weight of that plan doubles.

Image courtesy of Jen Waller

You should constantly move from idea to idea when you’re working on a new startup… until you get to something that is scalable.  Then stop the ideation and focus on execution.

Rarely will the first idea be the one that should be scaled.  My friend Scott Clark (BuzzMaven) talks a lot about adjacent possibilities as a way of exploring new ideas which I think applies here.  You need to find a good solid idea to start the process and then riff on it.  This takes time so you should make sure you have the runway to go through this process.

I’ve been “riffing” on my new startup Punndit for about a year and a half now.  The original idea has matured and we now have a much more solid understanding of where we can create real value and build a business.  That was unclear 18 months ago.  We went from what would have been solving a local maximum to what we now think could be a global maximum.  Not sure you can get there without going through that process.

Your original idea is rarely the best answer so being comfortable with an iterative design process is critical to solving the right problem.

I used to say that “people are lazy” when thinking about the challenges of getting customers to try out my company’s latest software.  I would push to make demos as simple as possible, ensuring there was a positive result for the user as quickly as possible.  I knew people wouldn’t spend much time on something that didn’t register with them immediately giving them a glimpse of the benefits they would receive if they adopted.  A decade ago I used to refer to the “golden five minutes” that someone would give to test a new product.  Today it’s probably more like a “golden five seconds”.  

I mentioned my “people are lazy” theory to my friend (and author) Joel DiGirolamo a couple of years ago and he aptly offered that “people conserve energy” was more appropriate.  That makes a lot more sense and maps into my optimistic lenses better than the lazy theory.

People aren’t lazy, they rightly conserve energy.  It’s biological.  It helps explain why people act the way they act.  In tech, it supports Clayton Christianson’s Technology Adoption Life Cycle and the biological basis for Rolf Skyberg’s Eternal Truths and Dangerous Curves presentation.

If you think of tech adoption in biological terms the “Innovators” are most likely to get eaten by the lions.  It’s the “Laggards” that are playing it safe, conserving energy, and probably stand the best chance of survival.  Why waste energy until something has proven to be of substantial benefit?

For me, this also ties into why emulating familiar things generates quicker uptake in the tech world.  If you throw a new paradigm out there you have to convince people that it’s worth a look.  Start with something they are familiar with and you’re already half way there.  I wrote recently about Google’s mimicking of Facebook’s “Wall” in their new Google+ “Stream”.  I claimed it was a smart move because everyone was already familiar with that paradigm and they immediately felt comfortable in the interface, ready to explore new features.

For entrepreneurs, this theory of energy conservation should be understood else it could prove to kill your company if you don’t build it into your customer adoption models.  You’re an Innovator and you think everyone should jump at the chance to improve their life with your new whiz-bang.  It will make them more efficient after all.  I’ll claim if it’s not an order of magnitude improvement adoption will be slow.  Don’t get frustrated because everybody doesn’t jump at your innovation, it’s biological and most will wait to make sure the king’s taster survives before they adopt.

I’m a visual thinker so I’m constantly writing down ideas and drawing diagrams.  I make a lot of diagrams.  At some point in this process “it” becomes clear to me.  I’ve often thought about the way I go about this process as some form of pattern recognition.

Recently, I’ve started thinking about my view of the world as a series of lenses.  I’ve formed theories and biases that become themes that I map the world into.  Those are my lenses.  We all have them.  

My lenses drive the way I think about developing software products and business models.  They allow me to quickly evaluate scenarios and provide guidance for making the thousands of decisions I make when starting a new business.  I think the lenses are part of the pattern recognition.  It’s a mapping process.

You can cultivate your lenses.   It’s what you read, who you talk to, the places you visit.  Invest in your lenses.

I was talking with my friend Jim D’Amico (@jamesldamico), founder of oncampus.com, the other day about the oft-mentioned tech bubble.  Jim and I were both questioning whether or not there is a bubble.  A lot of angel investors and VCs are claiming one as investment terms swing in favor of entrepreneurs.

With any surge in the availability of investment capital there will inevitably be winners and losers. Entrepreneurs should be careful not to inflate their valuations too early in their growth cycle.  It will likely come back to bite them even if they find early investors willing to pay at a high valuation.  It is unlikely they’ll be able to grow (revenue) as quickly as their valuations suggest and could make it difficult to raise subsequent rounds of capital.

It seems to me there is a big difference between the high flying companies from the last tech bubble and today.  The high fliers today like LinkedIn and Demand Media have hundreds of millions of dollars of revenue each year; facebook and Groupon generate billions!  Jim suggested that there is a lot of revenue that has yet to be unleashed as consumers begin relinquishing small monthly payments for web services they value.  I agree with Jim.  We’re already seeing this in the B2B SaaS market as dozens of startups are replacing incumbent services for a fraction of the cost.

It also seems counter intuitive to me to have a runaway bubble in a down economy.  Imagine the frenzy to some of these new startups if the economy were doing better!  There are probably some runaway valuation but there aren’t hundreds of millions of dollars investing in sock puppets.   We may very well be in a bubble but I don’t think it is anywhere near the levels we saw a decade ago.

What do you think?  Bubble or not?

Most people don’t realize how much energy goes into starting a new company.  Only by participating in one will you get a sense of the investment of time, money, and energy needed to give a great idea a shot at becoming a sustainable business.  And it won’t happen over night.  One of the big challenges for first-time entrepreneurs is being ready for the multi-year slog that it normally takes to reach viability.  Most don’t have the stomach for it.  It is truly a labor of love.  For some its love of the idea or product, for others it’s love of the process.  Now on my third startup, I think I fall into the latter.

I meet a lot of people with lots of ideas.  I come up with new ideas constantly myself most of which are mediocre at best.  But ideas are inert.  They are fun to talk about and from that standpoint provide good entertainment, but without the massive amount of energy needed to turn any idea into a business it will sit idle.

It doesn’t have to be a “great” idea to build a viable business.  With enough energy average ideas can work.  It’s the great ideas that don’t have the commitment of the founders to slog it out that is disheartening.  It’s not easy, but great things don’t come from easy.

I started using Gmail (for business) a couple of years ago.  I wish I had started making a screen grab of the interface every day so I could run back through the hundreds (maybe thousands) of often subtle changes that have occurred to the interface over that time.  I’ve joked that Google could move a button from the left side of the Gmail interface to the right one pixel at a time, day after day, and you wouldn’t realize they had moved it.  Google is practicing Agile Development as they iterate and test dozens of ideas and changes to the user experience each day.

What seems most interesting to me is their ability to introduce new features and make small tweaks to the interface without causing much, if any, notice by users.  A new button here, a color change there; never enough change to confuse you or disrupt your normal use of the product.  Pixel by pixel, they iterate and improve the product.  Gmail users learn new features over time instead of being interrupted by an abrupt release where their world is turned upside down.  Given that there are tens of millions of users,  Gmail is a great example of rapid iteration sans massive disruption.

There are important lessons in this approach for application developers, both desktop and web-based.  As users are bombarded with more and more information and offered alternatives it is more imperative to improve your product(s) rapidly without disrupting utility to your customers.  You may lose them if you confuse them.

At last week’s IN2LEX meeting we were discussing how communities like Austin and Boulder gained the regard they have as vibrant, creative, innovation-hospitable communities.  I’ll claim it was not a grand plan but rather heavy doses of successful start-ups and it is futile to try to emulate these communities without the runaway successful companies that makes a community fertile for growth.

Dell is the second largest employer in Austin with over 17,000 employees (The State of Texas is the largest employer in the area - source).  IBM and Motorola spinout Freescale Semiconductor are the other non-government/healthcare companies making up the top ten employers.  Boulder’s largest private employer is IBM with Sun Microsystems, Level 3 Communications, and Seagate falling in the top ten.

The success of Dell set the stage for the growth of SXSW and Austin’s “Keep It Weird” theme.  Keeping Austin weird is only “cool” because they have had several ultra-successful tech companies in the region that created an environment hospitable to growth.  I’ll claim we probably wouldn’t be talking about Austin if Michael Dell hadn’t launched Dell Computers out of his dorm room 26 years ago.

I’ll challenge you to name a community you’d like to emulate that isn’t built on a modern, successful private employer or employers.  Better to concentrate on building successful companies (employers) than to look at the “cool” things that become emblematic of a community and yearn to emulate that aspect.  Chic follows runaway entrepreneurial successes. 

Which companies are going to breakout in your region and help create the environment needed to grow a community that everyone wants to emulate?  What are you doing to help them? 

I attended a public presentation last week for a local development project called CentrePointe.  The presentation was led by Jeanne Gang of Gang Studio Architects.  For those that live in Lexington you know the history and controversy.  For those that aren’t familiar with the project it is a proposed major private development in the heart of downtown Lexington.

What struck me about the meeting was the importance of story telling.  Gang did a masterful job of drawing the audience into her world of contemporary design.  She explained the genesis of Gang Studio’s design response for the project and its origins in central Kentucky’s equine constructs and natural landscape.  Those stories provided context for what I’m sure many people in the audience would question as an  ”appropriate” design for Lexington.  The overall mood of the room seemed upbeat and supportive of the design and project in general, a stark contrast to the venomous opposition that surrounded the project just a year ago.  Yes, the design is different but so was the way the project was explained to the public.  I’ll claim the story is as important as the design in winning the audience.

I practice my own story telling too.  A local tech group called IN2LEX that I’ve been involved with recently hosted an entrepreneurial conference in Lexington called the Startup Advantage Conference. I picked up a couple of our speakers from the airport and took them to the Gratz Park Inn, a local boutique hotel in the heart of downtown.  For those that haven’t had the pleasure of flying into Lexington it is a spectacular landscape.  There are beautiful thoroughbred horse farms for as far as the eye can see.  The picturesque rolling terrain, white fences, and star equine athletes are unique to Lexington and make for great conversation on the ride from the airport to downtown.

Over the years I’ve learned some of the reasons Lexington became the center of the world for thoroughbred horses.  During the Revolutionary War wealthy horse owners on the east coast moved their prized possessions inland to prevent their theft by the British.  The rolling natural terrain surrounding Lexington is perfect for exercising the leg muscles of thoroughbreds and the natural limestone underlying the bluegrass is good for bone strength making central Kentucky a perfect spot.  My little bit of knowledge about the history of “why” the thoroughbreds are in Lexington makes the 20 minute ride from the airport to downtown fly by and gives my passengers context to accompany the natural beauty they see when they arrive in Lexington.  I’m “selling” Lexington in a very authentic, unassuming way.

I think storytelling is one of the most important aspects of a startup.  Stories about what value your product offers and why anyone should care become the primary means of interfacing with potential customers and garnering much needed feedback as you measure the accuracy of your assumptions.  Refining a good story or stories as backdrop to your shiny new product or service will help take the edge off what might otherwise seem confusing when first encountered.

I’ve been telling stories every day over the past year about my new startup Punndit.  The stories have evolved and through practice are getting easier and more exciting to tell.  Context matters, and a good story, be it to sell a building, a community, or a new product, is key to moving your vision forward.

I’m helping out the next couple of months with Awesome Inc’s summer interns.  Three teams are spending the summer working on starting new businesses.  One of the things I’m trying to impart on the teams is the need to fight the urge to focus entirely on their products.  It’s an all-too-easy place to retreat.

In the tech world it’s easy to become enthralled with the promise of your new product and forget that your ultimate goal is to build a business.  Cool Product ≠ Successful Business.  A good product is one component of building a successful business and delivering value to customers.

One of the resources we’re using is the Business Model Canvas (BMC) designed by Alexander Osterwalder and the team that delivered a great resource called Business Model Generation.  Every entrepreneur should have that book on their desk.

The BMC provides a framework for thinking through the critical components of a business.  For me, one of the best things about the book and the canvas is a reminder that there are multiple ways to deliver value.  The BMC helps guide you through the ramifications of making changes in your business model.  It’s a great tool for playing out “what if” scenarios and seeing their effect.

Building a successful business is more challenging than building a cool product.  Building a business encompasses many components that play a part in delivering value to a customer.  The Business Model Generation book is a great resource for guiding you through the process.

I watched Apple’s iCloud announcement a couple of weeks ago.  Here’s what I heard.  ”We’re going to trade complex for simple.”  

It sounds like they plan to copy (cache) all of your data on every Apple device you own.  The iCloud service will be used to synchronize the devices ensuring that you will find the same data no matter which device you are on (iMac, iPad, iPhone, etc).  They will store a copy of that data on their central servers as well.

So what Apple is going to “trade” is storage costs for simplicity.  They’re going to put the files you own and access on every device and keep them synchronized without having to think about it.  A copy of the same file will automagically find its way onto every one of your Apple devices.  From a design standpoint this would be heresy to most engineers!  What a waste of space and resources.  What Apple clearly understands is that 1) storage costs will continue to approach zero and 2) Apple customers are not engineers nor are they versed in the complexities of traditional data management.

From a product design standpoint I think this is a smart move on their part.  ”Normal” people don’t understand networks, file systems, data synchronization, or any of the other intricacies of data management.  Simple wins over optimized, as it should.

From a business standpoint Apple is leveraging their strengths with this strategy.  They know a large number of their users have more than one of their devices.  They will set a new bar for simplicity and expectations and fortify the desire to have all Apple devices because “it just works”.  People are willing to pay a premium for that.  They will also build obsolescence into their devices as your storage needs increase due to their inefficient ways.  Smart move on their part.

Most software companies are in some phase of incorporating the “cloud” into their product/service strategy.  Apples “Fat” storage strategy could be a blueprint for simplifying your offering. 

Hidden in my facebook profile is something I started saying a few years ago, “Creation versus Consumption should be a 90/10 split”.  I thought about this again week before last when I was talking to a group of high school juniors/seniors participating in a week-long entrepreneurial camp called the Entrepreneurial Leadership Institute.  The program has been around the better part of a decade in Lexington and is run by Pamela Troutner at Commerce Lexington.  The goal is to expose the students to entrepreneurship.

What I mean by that quote is that I believe people are happiest when they are creating, not consuming.  A comment made in the PBS series Triumph of the Nerds (http://www.pbs.org/nerds/) by an early Microsoft executive formed the basis for my thesis.  During the interview they asked the executive if Bill Gates had changed after he made his millions.  The exec quoted Gates as saying something to the effect of “You reach a point where you can’t stay in any better hotel, can’t eat any better food”.  It really struck me at the time that at some point there is a “diminishing consumption return”.  Also helped form my anti class warfare political beliefs.  Why does Gates continue to get up and go to work every morning?

Gates has spent his life creating, not consuming.  He is driven by the creation, not the consumption.  He could never consume as much as he has created.  I’ve followed this philosophy in my own scholastic and career choices.  The times that I worked the hardest; pulling all-nighters in arch school working on drawings or a cad model, working 90 hour weeks to get a client project out the door, were in hind-sight the most rewarding times of my life.  I think it’s because I was creating.  The toil was followed clearly by the reward of creating something I could be proud of.  I reminded the students last week that as they pursue their scholastic and career choices they should look for something they not only enjoy doing but can become passionate about.  If you can wake up every morning eager to get to “work” because you’re excited about what you’re working on and know you’re creating something of value for yourself or others the hours sail by.

By contrast I’ve seen too many people “consumed by consumption”.  They are distraught over things they wish they could have but can’t afford.  They spend most of their time wanting.  They spend their life consuming.

I like to consume too.  I enjoy great meals, nice cars, travelling.  The trick is balancing this consumption with your contributions.  I don’t think it’s a 50/50 split.  Rather, I’ll claim that your happiest days on earth will be when you are creating rather than consuming.  For me it’s more like a 90/10 split.  I’m happiest when I’m creating and have trained myself to care little about the consumption.

The term critique derives from the Greek term kritikē (κριτική), meaning “(the art of) discerning”.

Yesterday I wrote about the value of Iterative Design and Critique and how I’ve carried the valuable lessons I learned attending architecture school throughout my career.  Last year I started hosting Kritikē sessions for local entrepreneurs at Base163, Lexington’s new hub for entrepreneurs and creatives.

A key to entrepreneurial success is the ability to quickly evaluate ideas and set the proper course.  Good constructive critique by peers, mentors and early customers coupled with the ability to “pivot” from the analysis defines success.  However, exposing ideas in their nascent state is often intimidating in the minds of entrepreneurs for fear of someone “running” with the idea or of diagnosing Ugly Baby Syndrome.  Kritikē is an exercise in confronting those fears and working to set your new venture on the best possible vector to success.

Select Fridays at noon, base163 hosts Kritikē, an informal forum for peer/mentor critique at the critical early stages of new ventures.  We limit to one entrepreneur/team for one hour with a format of the entrepreneur presenting the idea for 5-10 minutes followed by free-form discussion for the remainder of the hour.  We try to assemble the best and brightest in the region to help vet the business opportunity.

We’re hosting a Kritikē session today for a local entrepreneur looking for feedback at a critical time in his company’s development.  If you think you could benefit from a Kritikē session for your business or would be interested in bringing your insights to the table to help our region’s entrepreneurs shoot me an email (rstevens [at] archvision.com).

August will mark 20 years since I graduated from the UK College of Architecture (now College of Design). I started at UK in 1985 as a freshman with a declared major in electrical engineering but changed direction and entered the architecture program my junior year.  Best decision of my life.  While I have not practiced architecture a day in my life I look back on the time in the arch program as a great investment.  I often tell people in hindsight it might have been the last great liberal arts education.

I’ve carried two important lessons with me all these years that were at the heart of the architecture program at UK and became second nature in my thinking.  These lessons have helped shape my approach to product development, business, and particularly tech startups; improving through Iterative Design and Critique.  While they became second nature to me I quickly realized not everyone understands or appreciates their value in every creative endeavor.

The process of Iterative Design is analogous to the Customer Development / Lean Startup processes that have caught so much attention in the tech startup world and evangelized by the likes of Steve Blank (http://steveblank.com/) and Eric Ries (http://www.startuplessonslearned.com/).  By engaging with others throughout the design process you learn very quickly that your project (and understanding) will improve with each external interaction.  The more iterations the better.  Great design results from a process, not an epiphany.  The same is true in tech startups.

An important part of the Iterative Design process is learning to manage Critique.  As you engage in the learning process of soliciting feedback from others you have to learn to digest the good and the bad.  The “bad” may be the most important feedback you get.  Not taking “negative” feedback personally and making it a natural part of the process is a skill that needs to be practiced.  I try to make a distinction between critique and criticism.  Critique should never be personal.  I’ll admit it is difficult to not take things personally.  Nobody likes to be told they have an ugly baby.  But the understanding that comes from good critique may be the difference between success and failure; both in design and your startup.

Nike made Just Do It part of our vernacular.  JDI, or as some put it JFDI (http://www.urbandictionary.com/define.php?term=JFDI), has become a rallying cry for startup entrepreneurs.  You can’t be content or frozen in fear and expect to move forward.  You have to keep moving to grow.  Discovery and learning are what keep the juices flowing.

I started this blog because 1) I need to practice writing, 2) I wanted to understand tumblr as a product and 3) I wanted to make sure I squelched any fear of putting things out there for critique.

I started writing and quickly had a handful of short posts so I queued them up to release one-per-day over the first week.  Then I started questioning whether or not I could sustain a post a day.  The following weekend I wrote another week’s worth and had notes for 7 additional posts.  Maybe it’s a pace I can sustain.  If not, the world won’t end :)

I’ve had a couple of people ask me how many people read the blog.  My answer is I assume none.  Nobody knows about it.  Doesn’t mean I shouldn’t do it.  The value for me comes from the practice and discipline.  JFDI!  The rest will take care of itself.  Complacency is the enemy of growth, both personally and professionally.