For those of you not familiar with the Lean StartUp concept, I can recommend the recent HBR article “Why the Lean Start-Up Changes Everything.”
The article points out the the value of “experimentation over elaborate planning, customer feedback over intuition, iterative design” and introduces concepts such as “minimum viable product” and “pivoting“.
Some of the ideas in this article, really resonated with me and here is why.
Lets start with “the fallacy of the business plan“.
At my previous startup (Kronos Software), I recall spending a lot of time in the year 1999 on crafting a beautiful business plan, with 5 year revenue projections and pitching to investors. Looking back on that plan and our subsequent trade sale a few years later, I would say the product and business we built bore very little resemblance to the static fiction that was in the business plan. Well it seems this is true for the majority of start-ups, so no surprises there.
This point is well articulated by the LeanStartup movement, so startups should forget about the business plan, but focus on the search for a business model, which involves sketching out a hypothesis, listening to customers and quick responsive development.
I want to now contrast what we did at Kronos Software in 1999, with what we are now doing at Clarus Financial Technology in 2013.
Back in 1999, we also had a belief in rapid development and I used to think about our product development process as follows. First the Powerpoint concept, then the demonstrable Prototype, followed by a Prototype good enough for a customer workshop, then a sale and then the path to production software for the the first customer followed by more work to create general production software for subsequent customers.
And that step from prototype to sale, meant getting the software on my laptop and going out to show prospective customers, which in our target market (FinTech for Capital Markets) was time-consuming (finding a prospect), expensive (global travel, conferences) and in-efficient (difficult to get into deals without a relationship sales force).
Now in 2013, we are looking to do something very different. Not necessarily because we are all wiser (there must be good articles on whether that is a fallacy, a useful belief or a real feeling) but because our market is changing and there are enabling technologies and business models out there to help us.
So what are we doing differently?
Firstly we are releasing our prototypes as publicly available and freely useable from our website. See the link SDR View for the first one of these. All we require for access to the full functionality is for people to login with their LinkedIn account (more on this later).
While there is the fear of giving ideas to competitors, we think the advantages of making publicaly available outweigh the downsides. Either because in a disruptive changing market, having competitors with a new and similar message to ours is better for all of us against the incumbent vendors or because it is one thing to put ideas out there, but quite another for someone else to understand the essence of these, agree with them and then be sufficiently motivated to act on them. Which brings to mind that “imitation is the greatest form of flattery”, and would only serve to increase our confidence that the idea is good.
Secondly these prototypes use real-world data, as unlike the consumer apps that we all download on our Apple or Android Devices, the applications for Enterprise-tech or Fin-tech are useless without data and it is too time-consuming for the user to enter this data and too expensive to integrate with existing data sources.
Contrast this with 1999, when the first time we had real-world data, was either in a customer workshop or in the implementation project at the first customer. You can imagine the problems found and time taken to address at that stage.
While this does limit the type of prototypes we can make publicly available, we believe it is consistent with the trend in our industry of shared services and shared data, as one example see Legal Entity Identifier.
Thirdly we are marketing online, using the online news sites in our market segment and most importantly harnessing the power of the LinkedIn network; our personal LinkedIn networks, our membership of LinkedIn Groups and attracting Followers to our LinkedIn Company profile.
Now I am not encouraging any of you to start bombarding your Groups with product pitches. Rather you need to create appropriate engaging posts that are relevant to the purpose of the Group. These should be designed to encourage interested people to voluntarily follow your Company; where you can engage with them more closely and have the product material available at that point.
And the reason we make people login using their LinkedIn account (aside from the convenience of not having to create yet another user name) is that we also require them to Follow us on LinkedIn and so join an online community we can engage with.
The goal here is for people with the relevant skills and interest to find us rather than we find them. For these folks to then be motivated to play with our prototype and give us motivation we need to continue (all those likes and comments are really welcome, after all there is nothing better for a developer to know that someone likes what he/she has built) and the feedback that we need to continue to improve the product to get to that “minimum viable product“.
Contrast this with what we used to do in 1999, which is I would do a demonstration, pick-up the feedback, bring back to the developers and once programmed into the next version, hope I could still go-back to that same prospect and show them again. Not very efficient, I hear you say. But this sadly is still the norm in our industry.
Which brings me on to the search for a business model. Currently I don’t know what that will be for SDR View. It may be that we do not discover one, but at least we will have kept lean in the process, failed fast and tried again, failed fast and ….. successfully “pivoted” to a product idea that we can monetize to a level to achieve our growth ambitions.
Right now it is early days for Clarus Financial Technology and I plan to keep you posted on our progress and experiences.
Till then, all I can say is, learn about Lean StartUp and Use LinkedIn.