Startups vs Corporations, and what happens in between

Why founders of startups get replaced by the board when the startup starts to grow fast? Why many startups fail to integrate into the parent company after the acquisition? And why big corporations struggle to launch a successful startup from within?

Concept of RPV

RPV stands for Resources, Processes and Valuves.

Resources

At the initial stage of a company, all you need are good and reliable people that can get the job done i.e resources. At this stage resources are crucial, if you have a web technology startup and happen to find a great coder and UX developer then you are in luck. On the other hand, if you happen to hire the wrong developer, you will have a tough time launching that MVP (minimum-viable-product) of yours. Similarly, if your lead developer leaves at this stage to a competitor startup, it can greatly affect your product and even your startup as a whole. But this is also the stage where it’s easiest to solve your company’s problems, because most of the problems will be related to resources and usually they can be settled by hiring a new guy or firing an existing employee.

Processes

When your startup is at the stage where it has a product or service that is selling like hot cakes, and you start hiring a lot more people to grow both your company and its revenue, that’s where the processes come in. That’s because you want your operations, customer service, support, billing etc to be run efficiently. That’s when you start to setup company wide processes, different processes for different teams and departments, KPIs (key-performance-indicators), SLAs (service-level-agreements), SOPs (standard-operating-procedures) etc. This is the stage when efficiency is most important to the company, because efficiency is directly related to company’s revenues.

rpv startup

Values

The final stage is when a particular startup has become an established corporation. At this stage “company values” are normally setup to guide the employees in their daily work, dealings and most importantly in decision making. Values are guiding principles that dictate how the company is run in all walks of its life. At this stage, while still important, resources won’t be as important as they were at the “resources stage”. Hiring and firing happens quite often. Individual opinions within the company doesn’t really have any weight unless the person is a c-level. Continue reading

Competition is for Losers

Peter Thiel is no stranger to Startup World. He is the co-founder of PayPal and investor in Facebook, Quora, Artsy, PandoDaily, AdRoll, Reddit and many more.

He has an interesting viewpoint when it comes to Startups and how they should be managed, in order to be successful. For the past decade, methodologies like Customer Development and Lean Startup have been popular. The central idea in these methodologies are around customers, and that your idea (hypothesis) must be tested against potential customers in order to be successful, and based on customers’ feedback you should tweak your initial idea (pivot) to achieve a sustainable and repeatable business model that generates revenue.

Peter Thiel is sceptical about these methodologies. He says that customers might not always be right and listening to them to guide your business’ destiny might not be the right approach. He encourages entrepreneurs to start startups that do in order of magnitude better than the existing competitors, rather than doing incremental improvements as the Lean Startup methodology suggests. He also advises entrepreneurs to go for monopoly when starting a startup, doing something that dominates the market i.e avoiding competition and aiming for monopoly. He says “Competition is for losers”.

He also questions the education system in leading Universities that teach Entrepreneurship, he says that currently our education system instills and inculcates in future entrepreneurs to compete and to be a better competitor rather than doing something unique that makes competition irrelevant or difficult for others to compete with your startup.

Personally, what he puts forward is definitely something interesting and somewhat refreshing. It kind of reminds me of Steve Jobs’ beliefs. He was the type of person where he would say “customers do not know what they want.. etc”. But I think Customer Development and Lean Startup Methodologies are not mutually exclusive to what Peter Thiel is suggesting, in fact they can still be used to help reach product-market-fit.

Below is a video of him giving a lecture in Stanford in “Business Strategy and Monopoly Theory” where he expounds on the above mentioned ideas of his:

Note: If you are based in Malaysia, you can order his book from Bookurve with free shipping. I ordered mine already together with Eric Schmidt’s “How Google Works“, should be arriving next week.

OhLife Alternative

It’s a shame that OhLife is shutting down. If you didn’t know what it was, it was a service where it periodically (eg; daily, weekly, monthly, depending on what you choose) sent you an email asking “How was your day today?”. You would just reply back to the same email describing your day, week, month, and it would save it in your account in OhLife.com.

And one of my favorite bits of the service was, it would include a random post from your life, saying; “Oh snap, remember this? 175 days ago you wrote…” (see above screenshot).

What I liked about the service was, it was not a burden, it was very easy to use, it didn’t force you to write. If you didn’t want, you would just ignore the reminder email and just enjoy the random post from your life.

Well, now that the service is shutting down, how can you record your life in a similar fashion?

OhLife Alternative via IFTTT

If you are not familiar with IFTTT (if this then that) service, then please check this post first. I have created a recipe in IFTTT that will do the following: Everytime you send an email with the subject #OhLife to trigger@recipe.ifttt.com it will save that email in your GoogleDocs. New entries will be added as a new row in the spreadsheet. Date and email content will be saved in the document.  Continue reading

How to Find Pro UI Designers for Your Startup

Say, you have an idea for a startup which you would like to build MVP (minimum viable product i.e most basic version) of it but don’t know any decent UI designer who can visualize your idea and turn it into this amazing User Interface; the likes of Instagram and other similar cool apps.

If you have done web or mobile app projects of your own before, I’m sure you know what I’m talking about – it’s a challenge to find pro User Interface designers.

Most of the time, prior to deciding if you should hire full-time developers and designers for your startup, optimal and cost-effective thing to do would be to outsource MVP version to freelancers. Hiring of full time staff can come later, once the app achieves product/market-fit.

For this reason, you would normally want someone who is pro and available for freelance work. Many sites like oDeskFreelancer, Elance, DesignCrowd etc have these kind of resources. But it’s really a pain to find the right person.

Melting pot for Great, Pro Designers

But there is a great platform where all the professional designers hang around, and that is on Dribbble. It’s a place where designers showcase their work and peers feedback and “like” each others’ work. It’s also a great place to find the right designer for your startup idea.

Continue reading

Bookurve – Amazon books, cheaper with free shipping to Malaysia

If you are an avid book reader in Malaysia and often purchase books from Amazon, you must already know how much the shipping fees are pain in the neck. Bookurve, a local startup that was founded by my friends Hossein and Lian Shen is addressing this issue.

Value proposition of their startup is simple;

  • Give access to wide selection of books (almost any books sold at Amazon is available on Bookurve)
  • At a cheaper price (usually 20-40% cheaper than Amazon)
  • With free shipping if you order above RM25 (for West Malaysia)

They have taken few pivots to reach to their current business model. And I’m optimistic about it, as it’s working pretty good for them.

Last week I tried out their service (mainly to see the end-to-end customer journey and provide feedback) and ordered my first book, received it few days back and couldn’t be happier 🙂

Give it a try..

Website: www.bookurve.com

Ideas vs Execution vs the Founder

You know why some startups that are working on some of the great ideas/products fail? You would think that they have a great idea, have a great team, and have a backing of the leading VC firms in the industry, but often times they end up in the dead pool after a few years.

There are of course many reasons for their failure, but to drive the idea of this post, ceteris paribus – mostly it’s because of the person, the leader, the entrepreneur behind the idea. Yes, I think, one of the most important requirements for a startup to succeed is to have a founder who is absolutely obsessed with his/her idea (provided that product/market fit has been achieved), very passionate about it and driven by it on daily basis. And most importantly, he/she is involved in all the important decisions about the product; from marketing to design to product features to User Interfaces… etc, basically end-to-end involvement. This is necessary. It’s a pre-requisite. Especially in the early years of a startup.

It’s when founder decides to heavily delegate (or even outsource) the product development to someone else, that the problem arises. Unfortunately, this is what happens in some startups; the founder would be too focused on the business development part of the startup and have little involvement in the product development part. Or some entrepreneurs who have money would setup a company and hire someone else to run their startup for him/her. Or some entrepreneurs would decide to outsource the most important part of the startup (i.e product development part) to third party companies.

It’s also why big corporations have struggled to churn out great ideas into successful products and services. Because, in big companies, new ideas would come from top management as a directive and passed to relevant divisions and subsequently to Product Managers or “Product Owners” for execution. This kind of delegation, especially for the new and innovative ideas can be disastrous. On top of that, big corporations would have layers and layers of red tape and processes that hinder the efficient execution of an idea. Inter-department collaboration on launching new ideas can be a real pain too.

So, it’s no surprise why Amazon allowed hugely successful Zappos to run independently after its acquisition in 2009. Or why Walt Disney kept Pixar as a separate entity after its acquisition in 2006. It’s precisely for the reason to keep the company culture alive and untainted, to keep the acquired company lean and efficient. And most importantly, to let the passionate people behind these companies to run them.

Steve Jobs have said on this topic spot on in his 1995 interview called “The Lost Interview“;

You know, one of the things that really hurt Apple was after I left John Sculley got a very serious disease. It’s the disease of thinking that a really great idea is 90% of the work. And if you just tell all these other people “here’s this great idea,” then of course they can go off and make it happen.

And the problem with that is that there’s just a tremendous amount of craftsmanship in between a great idea and a great product. And as you evolve that great idea, it changes and grows. It never comes out like it starts because you learn a lot more as you get into the subtleties of it. And you also find there are tremendous trade-offs that you have to make. There are just certain things you can’t make electrons do. There are certain things you can’t make plastic do. Or glass do. Or factories do. Or robots do.

Designing a product is keeping five thousand things in your brain and fitting them all together in new and different ways to get what you want. And every day you discover something new that is a new problem or a new opportunity to fit these things together a little differently.

And it’s that process that is the magic.

And because of this, you can’t outsource your idea to someone else to make it successful for you!

Wikipedia’s Initial Idea and How it Evolved

Wikipedia as we know it today, with more than 3.7 million articles for english version alone, had a different idea and business model altogether in the beginning that many people may not know it now.

As the story goes.. In 1999, Jimmy Wales had an idea, he wanted to create a free encyclopedia to be written by experts and PhD holders, it was called Nupedia. He reasoned, only scholars, academics and experts in a particular field would be able to write such articles. It made sense, as scholarly articles needed a lot of referential data and research, not everyone would be able to write such articles. However, in its first year, his team of “experts” were able to write only a dozen articles. They were simply too slow. This was due to many reasons, most of the academics were too busy, it was difficult to convince them to write for Nupedia, research normally took few years..etc.

So, Jimmy Wales saw that it was not working, something had to be done. He came out with a new idea. He suggested to his team, why not make it in a way that anybody can create an article, others can edit it, etc… basically early years of crowdsourcing. But the editors of Nupedia and Advisory Board were not very supportive of the idea. For them it was the opposite of what they were doing at the moment. Non-academics, and uncontrolled editing and creation of articles, they thought, would jeopardize the credibility of the articles and company as a whole. They reasoned, there would be too much error in the articles, which would render the articles useless for any scholarly reference or research.

This new idea ended up separated into different project and was called “Wikipedia” (wiki – hawaiian for quick). Within a year, there were more than 20,000 articles in it. Clearly it was a success and it was working. As for the margin of error, it was 3.86% per article, compared to 2.92% for Encyclopedia Britannica according to 2005 research by journal Nature, which is acceptable. And usually these errors get corrected over time.

Eventually, Nupedia was shutdown in 2003, and it had only 23 articles at the time of closing. And as they say, the rest is a history…

Lesson to Startups and Entrepreneurs..

Sometimes the initial idea for your startup may not work out, and you might end up doing something totally different for your startup and its direction. And this phenomenon is actually very common in startups. As Jawed Karim of YouTube said in SVC2M event in Kuala Lumpur, their initial idea for youtube was “a dating site with videos“.

So, if your first version of your product (MVP) didn’t take off, don’t despair. Find out why it didn’t take off, get feedback from your potential customers/users on what they want, after that iterate and try again!

Note: If you want to read more about wikipedia story, check this Business Week article here

Please feel free to comment about your own experiences or of any companies that you know which changed their business model, direction, idea drastically from the original one.

Next Big Idea: Internet TV

If you are an entrepreneur or company that missed making big money from the dot com era, overall internet business after that, and missing the boat from mobile applications at the moment… then perhaps you should start getting prepared for the next big wave – Internet+TV.

Google is already into it as we all know it, they are trying to figure it out at the moment. But there are so many great products and services can be built for bringing internet to the TV. Just a food for thought!

google-tv.png

Jack Ma’s Philosophy on Shareholders

MBA books teaches you that – shareholders are the most important stakeholders of the company and that company’s main objective is to increase shareholder value.

However the founder of Alibaba.com, biggest online company in China, says that for him “the most important groups are customers and then employees. He says that customers are the ones who pay him and employees are the ones who stick with him but shareholders come and go. And for this reason, shareholders come last for him.”

That’s a very interesting point that he makes. Read his other two company philosophies on TechCrunch here. Watch the full interview here.