I was lucky enough to attend Marc Stickdorn’s three day workshop on Service Design Thinking. For the uninitiated, service design is a holistic approach to… you guessed it, designing services! In Australia, this is more commonly referred to as user centric design, customer experience design, user experience design and the like, which is typically the domain of products. So it was refreshing to dedicate three solid days to learning a few new techniques to discover what customers really think, do and feel, using a combination of traditional ethnographic techniques (good news for anthropology students!) and lean/agile methodologies with a sprinkling of theatre!

A mix of students, educators and industry people from a wide range of disciplines attended the workshop. Confronted with the challenge of such a diverse audience, Marc started by disrupting the environment (ie. moving the chairs/tables away) and setting us an impossible 10 minute challenge – service design thinking on a napkin. For this task, we were asked to map out a service – internet banking for toddlers – in 10 minutes using nothing but a piece of paper (ie. the napkin). Teams of three were constructed and away we went. The scrappy first draft was produced and we all breathed a sigh of relief – our first task was complete and it was too larger brief to worry about succeeding or failing. First rule: fail fast. Sounds familiar?

From there we broke up into groups, created a service to enhance and spent the next three days exploring value network maps, assumption personas, customer journeys, the theatrical method, business model canvas and even a few service ads, but I’ll save those for another post!

As with most workshops, unconferences etc that I attend, I couldn’t help but mindmap the journey, so here you’ll find the days events over two mindmaps:

(For those of you who asked, this was done on my iPhone using an app called simple mind)

I was delighted to see that service design thinking is much like the Pollenizer way – a hybrid of user centric design, lean startup and agile methodology – the main difference being that service design incorporates ‘a touch of theatre’, which I’ll be sure to explore over the coming weeks at Pollenzier!

That aside, there were a number of uniquely distinct things about this workshop worth highlighting here:

• The workshop itself (like good service experiences) had a story arc, much like a James Bond film – or as Marc put it: Boom! wow…wow…wow…Boom! Ahhhh…. The peaks and flows meant that we were never bored and always living in anticipation of the next scene.
• Marc helped us understand the meta, the process behind the process, running the workshop as a ‘train the trainer’ session so we could understand the why, not just the how.
• The theatrical method is a unique way to gain useful insights into the motivations of human behaviour. There are a number of rules such as ‘do – don’t talk’, abstraction (eg. use a rubber chicken in place of prop X) and many more. But to really understand it, you need to see it, so here’s an example from @adamstjohn.

Finally, a big thanks to Selena Griffith at UNSW for opening the doors to us industry folk and of course to Marc for a thought provoking three days – thank you for sweeping us off our feet!

If you have any questions, hints or tips be sure to leave a comment below.

3 legs of Startups: Customers, Product, Capital

For a startup, there are three things you need to develop: a product, a customer, an investor.

Recently at Pollenizer we had an epiphany. Well, it was more of an observation of what was happening, but it was just as powerful.

Like all startups, we have a limited time to get the job done and get to the next level. Though I guess this is more for us since every single business we work on has a limited starting investment, and hence a limited timeframe.

For example, if we start the Minimal Viable Product phase, we have 12 weeks to build it, launch it, get traction and get investment to keep going. There is no 13th week if we miss it. This does a lot of things to our team.

It forces the product team to be brutally focused. Just the key features, leaving enough room for lots of testing and iteration.

It forces the marketing team to get out in front of customers. You can’t wait to the last minute to build traction.

Plus (here is the epiphany) it forces the founders to get in front of investors straight away. You can’t wait to the last minute to build a relationship and go through due diligence.

That’s the third startup stream: Capital Development.

Quick story….

When we started Wooboard, it was an internal business. i.e. the idea came from the team. So it was 100% Pollenizer funded. From day one, we knew that this couldn’t go on past the first 12 weeks. So we needed to make sure there was funding to take it further. Like all grit your teeth and get it done founders, I didn’t want to leave it to chance. In the first week I sat down with Bronwen (customer development) and Albert (product development) and we set some goals around what evidence we’d have to show for the business by when.

Working backwards from week 12, if it was going to take a week to get paperwork and money in the bank, we needed a YES by week 11. A few weeks to pitch it and close it. So we needed evidence of a business by week 9 at the latest.

What evidence? We imagined pitching Wooboard then and what we’d have to say to convince them that there is a business here. How many customer? How many paying? How much of a product? Support? Love? We wrote it down and that was our goals.

Then I started pitching and talking to investors. Not asking for money. Just telling them what we were doing. Getting them excited. Telling them the vision.

And I kept talking to investors. Constant updates. New versions. News.

I focused on a few investors who were showing interest, and in particular, Trevor Folsom from Elevation Capital. He had built a successful business up to 1,000 staff based on culture so I thought he’d be a good target. I pitched it every chance I could, including Innovation Bay, and by the time I was due to pitch it there, Trevor had said he was prepared to invest. That was week 8, 3 weeks ahead of schedule.

There is no way that could have happened if we had waited till week 10 or even week 6 to start working with investors. It was crucial to start early. Scott Farquhar from Atlassian started a lot of us thinking about this when he gave a talk to the founders and team of Pollenizer. They had recently closed a huge round from Rich Wong at Accel and he said he’d started the conversations and relationships more than 5 years earlier.

Now I recognise that not all startups need funding, but I think more need it than don’t. If you don’t, great. If you do, start early. Also, this may not be big news to some, but the idea to think about it as something you have to develop rather than just expect is useful to me.

So we now have 3 bit mottos at Pollenizer when we start a new business;

• Product Development: Launch it now!
• Customer Development: Sell it now!
• Capital Development: Pitch it now!

What the role is;

• Leading a team of 4 customer development/marketing people as they work their butts off to start new web businesses.
• Build processes and systems to more efficiently and effectively get customers for new startups.
• Keep up to date on new systems, ideas, methods and implement them in our startups.
• Work very closely with product, engineering and design people to create great startups.
• Tracking and measuring everything that moves.

What we’d like to see:

• Must have worked on startups (day 1, creating products, no budget, finding customers, selling)
• 5-10 years online
• Marketing, customer acquisition roles.
• Strong hands on acquisition and Conversion skills
• Strong metrics/data driven person
• Heavy detail person, not big picture/strategic.
• Great people person, leader, manager.
• Great written and spoken communication skills.
• Sydney based (or willing to relocate)
• Able to juggle 5-10 businesses as once.
• Eager to work in high risk, uncertain environment where it’s up to you to work it out.

Key reasons the team at Pollenizer love what they do:

• The challenge – it’s hard to get startups off the ground, Pollenizer constantly challenges you.
• The impact – work a hard day and you’ll see a full days worth of value. Everyone makes an impact.
• The team – you’ll be surrounded by a strong team of passionate people always keen to help.
• The variety – you’ll never get bored. Everyone works on 2 businesses at once and you’ll get to have input into 4+ more.
• The pride – startups are high risk and they don’t always work, but you’ll be proud of the effort and thinking you put into the business to give it the best shot.

If you’re interested, please email your Linkedin profile to info pollenizer com or get a referral via Linkedin.

We had a great offer, clear call to action, a good value price – let the cash roll in!

Ummm… we forgot to sell the product….

Yes, in our excitement or more accurately our myopia, we had assumed the world was excited about Wooboard and knew just how it was going to make their teams more wonderful and happy so we didn’t to tell them. Remember, to make assumptions is to make an ass out of u and mptions.

We were deep in the product and whilst we were thinking about customers, working with customers and actually being customers – we forgot the customers. Or more specifically we forgot to empathise with the customers. Looking at your business with fresh eyes is hard, or maybe impossible but it’s worth trying and it’s worth finding ways to do it.

The good news is that we didn’t send it to all our database, we included a feedback loop so we learned the reason why it failed fast and we get 5 people to try it.

That’s the idea, try, fail, learn – just do it fast and cheap.

The end result was a quick video on what Wooboard does. It’s not brilliant, but hopefully it does the trick;

What do you think? Does it work? Do we have some customer empathy now?

I copped some flack on Friday for tweeting out a link to a site called Noble Village. This was one of those tests. If you see the site all it has is a title, basic offer, and an email submission box. Like this:

So what are we doing here? We’re testing a couple of key things pre-product as customer discovery and customer development.

1. Customer acquisition

We see if we can intercept people who could be interested in a product doing what they would normally do. We run Google ads, Facebook ads, linkedin ads that are really targeted and have a simple offer. We also put it out on Twitter – hence me spamming my friends occasionally. If I said it was one of our businesses then it would influence the effectiveness of the test. Given the reaction from my followers (or at least the ones that know me well enough to tell me) Twitter is clearly not a good way to test.

2. Is there strong general interest?

If we put up a generic offer and ask for an email address, it’s our way of gauging that at least some of the taget customers find the proposition appealing. Giving up your email address isn’t as powerful as paying 1c but it is something.

3. Is there a ‘deal’ combination that appeals?

As well as trying generic offerings, we try specific ones to see if we can find a combination that works. i.e. we might try to focus the page on one of three key points of value to see which one appeals the most. Or we might try three different price types ($100 for the year, $20 a month, free trial, etc).

There is a lot of reasons why a test of this may not show a true result, but it’s one of the fastest ways for us to start learning – and speed of learning is everything.

All 3 of these points are trying to find out if anyone other than you cares. Do even a few possible customers want this, before you go off and start building a product.

As the shirt says…….

P.S. If anyone would like to design some shirts like this for the Australian startup scene I would totally help out and fund it.

Mick: “There is definitely a vision worth pursuing there, but the fact that we don’t know the first step says to me that we need to do more focused exploring. We can’t build it and hope.”

Founder: “Yes, we really have never known what our starting point is. What our X-Factor is?”

Mick: “Mmm, I’m not sure it’s an X-factor. That says that it’s one thing that when we add it in makes the difference. I think it’s more the right mix. There are 1,000′s of variables with any idea. There is no one right combination, but lots of wrong ones.”

It really made me think about the sequence of a startup. Here are some options.

1. Think about something, work on it and never launch it because it’s never perfect.
2. Build something, get an average response, try to grow it, have an average business.
3. Build something, get an average response, change the mix, get an average response (or worse), change the mix, get an average response (keep going until…), change the mix, get a great response, try and grow it, have a great business.

Clearly I’m cheering for option number 3, but the key point is ‘change the mix’, not ‘add in a new feature’. More features just add more complexity making it harder for customers to like you and makes you slower to move.

WDYT?

DIRTY HACKS FOR STARTUP FOUNDERS

The aim of the dirty hacks series is to help you launch your startup faster, cheaper & dirtier. Everything is rough, crude, and fast. Just what you need for your startup.

Part 1: How to use Facebook to size a market

Ok. So you’re assessing a new startup idea for potential, or you’re putting together your first pitch for an investor. You need to know the market size, right? Not only should it be at least 1 gazillion people so the VCs think you’re hot, but you need to quantify it in terms of TAM, SAM, and SOM. So how do you do it? Some people trawl through market reports or pay for specific market segment data. But this doesn’t actually give you what you need. You don’t get anything that means much in the real world. Instead, here’s a hack to get a rough feel for the market that you want to enter. It’s free, and it is easy. All you need to do is dig into the Facebook Ads platform. You’ll be done before you can type N-i-e-l-s-e-n on your iPhone.

Background

Facebook ads can be great for highly targeted advertising, but they also give us a quick way to quantify specific market segments by using a combination of the location, demography, and likes information of Facebook users. We can use this information to build useful market segment profiles and calculate the size of a potential market. What you get is an actual number of real people who have specifically stated that they like your kewords. You won’t get these data from a market report.

How to do it

• Login to Facebook
• Click on the “Advertising” link in the footer of your profile
• Click the “Create an Ad” button
• Complete the Design your Ad form (use any website, it doesn’t matter)
• Start changing the settings on the “Targeting” screen, and you’ll see your Estimated Reach update dynamically
• Choose Locations
• Choose Demographics
• Choose Likes & Interests (previously known as Keywords)
• Choose Connections
• Choose Advanced Demographics.
• Now you have your final Estimated Reach.
• NB: Don’t delete your settings once you’ve got your Reach. Save it as an ad campaign so you can run it when you start testing your MVP. (Use that $50 free ad credit voucher that Facebook sent you).
• Now get out of the building and go do some customer development

Caveats

Using Facebook for sizing markets is rude and crude. There are all kinds of inherent data biases, so be mindful when drawing conclusions from the data. For example:

* Facebook users are not a random, representative sample of the general population. This is a key point if you want to make some kind of inference about the greater population. While Facebook does have a very large sample size (500+million users) it does not accurately represent the world’s population, nor does it necessarily represent your market at all. You must ask yourself if the Facebook user base accurately reflects your market. That said, sub-sampling for results within the Facebook demographic is valid, where you believe that your market has strong crossover with the Facebook population. For tech startups, it is probably correct to say that some segments within the Facebook market are an excellent representation of your market. In terms of sizing your overall market, let’s be clear that you can’t extrapolate from Facebook to another market. It is entirely flawed to say that 65 536 out of 500 million Facebook users like a product, therefore 65 536 *12 = 786 432 out of 6 billion humans will like that product.

* Facebook “likes” are also not random or representative. “Likes” data are based on what people say they like, yet many users don’t use the likes field, or they use inconsistent keywords, or their likes are biased selections. (Conversely, data such as location, gender, and age typically have a much better signal to noise ratio).

* We can only pull broad data sets using the current implementation of the Facebook Ads platform. This is because the Likes & Interests field uses the Boolean OR operator, instead of AND. For example, entering “iphone, mp3” will return the Estimated Reach for “iphone or mp3″, not “iphone and mp3″. Just get smart with your likes terms and you can get great data. NB: When Facebook roll out the AND operator, this hack will improve 10x.

* I’m not even going to start talking about null hypotheses, Type I and Type II errors, and all the other statistical funkiness. This is a dirty hack. Your stats professor will not give you an A+.

* Lastly, once you’ve pulled your data from Facebook, you should also read this: http://cdixon.org/2010/04/03/size-markets-using-narratives-not-numbers/

Conclusion

A final note: market numbers don’t actually mean anything. Instead you need to go and talk to real customers. Use the data from Facebook as a proxy for your market, and then go and test your assumptions with real customers. If you haven’t got them already, go and buy the insanely good Customer Development book by Brant Cooper and Patrick Vlaskovits, the brain tweaking Four Steps to the Epiphany book by Steve Blank, and the piping hot Lean Startup Book by Eric Ries. And if you aren’t following @hnshah and @kissmetrics you should be.

What are your experiences with using Facebook as a dirty hack to size a market?

Our goal: Invest our team and money in 10 web startups by June 30, 2011.

Pollenizer’s focus is on:

• Startup, idea-stage web businesses,
• In Australia,
• Targeting consumers,
• Commercially focused,
• With a committed founder, with industry experience,
• That need an experienced co-founder to invest time and money.

To clarify, Pollenizer only ever invests in businesses that we are already a shareholder in.

What do you get?

• A majority shareholding.
• A co-founder committed for two years.
• A team of 15 in Australia and 55 in India across technology, marketing and business at your disposal.
• Experience building over 80 web businesses, in ten countries, 100m users and $100m in revenue (portfolio).
• A network of experts on call.
• Access to our exclusive founders and friends discussion group.
• Connection to Angel investors in Australia, Europe and USA (we’ve helped raised $5m in seed and angel investments in the past 12 months including Spreets).
• Founder minimal viable income (in certain cases)

What does Pollenizer get?

• 20-45% shareholding

Why Pollenizer?

• We have a strong, committed team.
• We have a reputation for integrity, action and results.
• We are uniquely positioned between technology, entrepreneurialism and investment.
• Our companies have already employed over 100 people.
• We have made more than 14 investments, many outlined in our startup portfolio.

What is the process?

1. Starting Up

• You come to a Startup Bootcamp. Held every few months.
• You propose a partnership.
• Pollenizer conducts basic due diligence on you and the business.
• We sign an agreement and are co-founders for two years. (It’s all ‘we’ from here.)

2. Customer Development

• We continue customer discovery and validation until confident.
• We build out a minimal viable product and keep iterating until traction.
• We get the company and ourselves investor ready, including pitch training.
• We pitch the company until we raise capital from the right investors.

3. Growth

• We put the team in place to grow the business towards profit.
• Pollenizer transitions into advisory roles if required.
• Exit or return on investment options are pursued.

Next Steps

If you’d like to talk to Pollenizer about being a co-founder in your next web business  contact us here.

If you’d like to invest in some of our web businesses, please contact us here.

A lot of startups we see and work with are getting better at doing customer development, but they sometimes aren’t quite sure what to do with the results. Very rarely do you finish one lap of the testing with an absolute clear answer and a simple view to what needs to be done next. Normally it’s murky, confusing and conflicting.

Important to do before hand is to set some metrics of your expectations. Afterwards you’ll be tempted to justify results in the direction that suits you, which is normally what you have as your best case plan.

Here is how we set them and what we do next;

1. x = fantastic results. Do the test again and see if you get the same result.
2. y = good, but not great results. Make a minor variation to existing elements to the same market to see if you can improve the result.
3. z = bad results. Make a major variation to the elements, priority of elements, target market etc to see if you can get ‘good’ results.

What is minor and major? That’s up to your brilliant instincts as a future billionaire founder. :-)

In the first half of the 4 hour workshop we worked on customer discovery (micro-segments, customer values, creating 10 X value). We iterated on this process to create a focused customer development plan. See below. We then pitched the concept to a group of colleagues who liked the idea. That evening we ran a fun market validation exercise around the original business concept – Dares for Dollars. Mick copped a few cream pies in the face.

Customer Development Model

On Monday Chris and the team arrived ready to refine the model above and get cracking on an implementation plan. Within the first hour, the workshop ended. Chris had the weekend to think about his business and changed his mind. He decided he didn’t want to pursue the Pledgespace idea any further.

He failed. This is a good thing. For the modest cost of a Pollenizer focus workshop, Chris has saved himself time and money  building out an idea ‘to spec’ as he originally envisaged and one that he wasn’t passionate about.

Chris has gone through a valuable experience and it highlights that starting a web business and learning to be an entrepreneur requires an enormous head shift, discarding old mental models to learn new principals. It can feel a bit like you are in kindergarten all over again.

What did Chris learn about this experience? You can read below.

From Chris Gray, June 2010:

Hi Guys

I have had some time to think about stuff and reflect on the process and what I have learnt from meeting you guys in Sydney.

To be honest I found the entire process overwhelming.  This would be quite personal as I think it has allot to do with my background, environment  and support network as opposed to the process itself.

I understand the process (as much as I can after 1 weekend) and immediately saw the mistakes I had made along the way. I can still see the value in the concept but can also see the risks and challenges that would need to be mounted along the way and am not prepared to take them.

It comes down to what I said on the day, I don’t know or feel confident enough that I have a strong enough platform on which to build. If I had a history of activism, daring and change facilitation then it would be a different story.

The positive things (things I did like)

1. The feeling that there is MORE to life and the ability to actually make stuff happen
2. The importance and value of having a network and utilising that network
3. The awesome people (Mick, Luke, Jo, Lesley-Ann, Rob Antulov, Wayne Bosley) who I got to meet and talk to
4. The excitement and energy that the process gives you (you guys will never get bored J)
5. The idea that a business is about being dynamic, learning, pivoting and iterating.

The negative things (things I didn’t like)

1. The willingness to “Burn people” in order to learn.  I do understand this but am not entirely comfortable with the “smoke and mirrors” approach.  I like to be 100% transparent as a rule
2. The idea that you put yourself out there to be judged knowing you are wrong just to learn.  Again I understand now why it is necessary and love the fact that this is dynamic and exciting. But at the same time I don’t like to do stuff that I know is wrong, even if I can get something out of it.  It comes back again to the fact that I am transparent, genuine and honest. (Or at least I try to be J)
3. The feeling of being on the outside looking in.

Next steps for me …

1. Find some other people, build a new network that contains more successful, dynamic people such as yourselves
2. Find a concept that I know (not just love) and make it happen
3. Follow through on my ideas… too many times I have gotten almost to the “tipping point” and then bailed out

I would like to thank all of you guys for your time, input, honesty and feedback.

As far as my venture into the web startup world, I can honestly say that I enjoyed it immensely and definitely feel I chose the right people to talk to in Pollenizer.  I can see what you do, understand your approach and how you will continue to be successful.

Given an opportunity I would love to work with any or all of you in the future.

I hope to encounter and meet all of you in some capacity again

Regards

Chris

Mick Liubinskas’ reply to Chris:

Thanks Chris. Fantastic email. Greatly appreciated.

A quick note on ‘burning people’. It sounds worse than it’s supposed to. I guess the key principle here is that we know we’re not going to be perfect day one, so we might have to disappoint or not satisfy some people. There is a tendency to hold it back until it’s right, but the dilemma is that we won’t work out if it’s right until we get it out there in front of real customers.

This relates heavily to points 2 and 3 below.

Looking forward to your next venture and I hope we can work together in the future.

Thanks,
Mick Liubinskas

This week Pollenizer launched Startup Bootcamp to help people like Chris learn the principals of web business startups.”Focus or Fail, it’s that simple”…

Failure if part of life and business. As a community of new and experienced entrepreneurs, why don’t we start sharing more of these stories with our own community and see what happens.

Big thanks to Chris for being willing to share his experience with our community. If you are involved in the startup scene in Perth, get in touch with Chris, he’d love to hear from new and experienced web entrepreneurs.

You can contact Chris Gray on chris@madicus.com.