How to be a great founder

The day of the last lecture came. We ended the class with a lecture on a topic "How to be a great founder".

What is the perception of a great founder? It is the image of a super man, like Steve Jobs or Bill Gates. However, in reality a great founder is just a normal person who deals with many problems and headaches. The thing about a good founder is that they pour their heart into solving problems and they are able to focus solely on the startup.

The perception people have about a great founder". Source

You have to be a risk taker to be a great founder. However, you need to take intelligent risks. You need to be able to assess the risks and the outcomes so you minimize the negative outcomes and maximize the positive ones.

What are the requirements for being a great founder. Being genius isn't requirement for being a good founder. However, as founder it is vital for you to control your own psyche. You need to remain calm on the surface even when everything is going wrong and you are an emotional wreck. You are the captain of the ship and need to be able to remain calm even under a lot of pressure. You also have to have humility. You need to recognize that usually behind the success of the startup is the whole team and not just the founder. As a founder you also have to be ready to make sacrifices for your team. A great founder is someone who isn't concerned about himself that much. A great founder wants to change the world with his startup.

I will end my last blog post with a quote from Guy Kawasaki:

"Great companies start because the founders want to change the world... not make a fast buck."
-Guy Kawasaki

Company culture

This week we had the pleasure of having Gunnar Holmsteinn as our quest lecturer. Gunnar has much experience with starting companies and currently he is working as a CEO on the startup QuizUp. The topic for the lecture was company culture but we also had a Q&A session with Gunnar about general aspects of being a startup CEO.

Company culture can be all these things and more. Source

When Gunnar started working at QuizUp as the CEO he wanted to know the opinions the employees had about the company. He wanted to get to know the company and the possible strengths and weaknesses it had. He came to realize that the company was seen by the employees as a fun and exciting place to work with many talented employees. However, it was also clear that there were some issues with the culture. Some things which were causing frustration were lack of clear orders and poor information flow. Employees responsibilities weren't clear either. A lot of important things were not discussed. For example retention of customers, long term planning, and the core values and beliefs of the company were not articulated. This all deals with the culture of the company which is something that has a major effect on the performance of a company. At this time the culture of QuizUp was not clear. There was no clear vision and so something needed to be done.

As a response the company took two days off the establish clear image, values and vision for the company. The stated their values as follows:

• Help others learn: help others grow so the talent in the company increases
• Fun with every action: not too serious when experimenting with new things
• Drive the vision: every action should in alignment with the vision (connecting people through shared interests)        
• Wait for nothing: get things done!

QuizUp culture is nowadays also based on the model “the 5 dysfunctions of a team". A representation of this model can be seen in the figure below.  Starting from the bottom of the figure, to deal with lack of trust Gunnar established FridayFeelings where they discuss what's going on in both their work and personl life. Fear of conflict on the other hand is now handled at QuizUp by meetings were they discuss what went well and what did not go so well and what are the things that need to be fixed. Building commitment is handled when you have the right amount of conflict and trust. QuizUp uses small teams so that no one can hide and everybody has their voice heard. To deal with accountability they keep all meeting notes public. To the results they pay attention by having town hall meetings once a month and also by having one on one conversations about the results of each individual.

The 5 dysfunctions of a team. Source

That's all for now. There was also a great quote said in the class about startups in general. I'll end this blog post with it (and with style). See you in the next post!

What is the best time to plant a tree? 20 years ago. What is the second best time to plant a tree? Today.

Don’t regret not doing things sooner – but get them done

Products that users love?

Hi there, welcome back! This time the blog post will be all about the story behind a startup called Bungalo. We will also discuss how to create great products in general. So on last week's lecture we had the founder and CEO of bungalo.com, Haukur Gudjonsson, as our guest lecturer. He shared his story as an entrepreneur and provided us with great tips concering startups.

The man behind Bungalo, Haukur Gudjonsson. Source.

Haukur has founded 5 companies himself, latest one being the successful Bungalo, a cabin rental service. In total he has over 12 years of experience with working with startups. He has a preference of starting companies without much money and growing them organically as the below quote illustrates.

"I am a big advocate of bootstrapping your business or essentially starting your business for little or no money and building and growing it naturally. A lot of entrepreneurs feel like they need to get investors to be able to create a successful business but the truth is that they only should approach investors when they need money to grow and know exactly what that money should be used for. "

 - Haukur Gudjonsson

Haukur also gave us tips on what to focus early on in a startup. 

While designing your startup company, you should be aware of every aspect of your idea. You need to inspect your idea from multiple perspectives and play devil's advocate a lot.  If you do not do this, you will notice that you will waste company's resources later on researching matters which you could have done yourself. This will leave the company with extra unnecessary costs.

Once you have finished your design, it's vital to get the product out to the market as soon as possible. Entering the market will enable you to get feedback from customers and you will gain a great insight on your product.

Lastly Haukur mentioned one of his mistakes with Bungalo. The mistake was spending too much time on the logo of the company. He summarized his tip as do not waste money on things that aren't vital for your company to flourish. A company can do well without spending much money on a logo.

After Haukur's lecture Bala held a lecture about how to create products which users love. Bala summarized two key points in this topic.

1. Empathize with the user: You have to understand exactly what is the user's problem you are solving, and what the problem is about. 

2. Design matters: Bala stressed that even the simple details such as phrases, fonts and paragraph spacing matter when creating a great product. The devil is indeed in the details  

This quote really fits here perfectly! Source

Bala continued to describe what is a good design. In his mind it is something that is simple and timeless, while also being daring and something innovative. However, the most important part of a good design is that it provides the solution to the right problem!

 

This is all for now. Until next time! 

Startup and PR?

Hi again! On this week's lecture we discussed public relations (PR) and what it has to do with startups. To get things going and to set the mood here's a quote from the Bill Gates:

There's plenty of great quotes of PR quotes but this one was definitely my favourite. Source

So this week we had a guest lecturer Paula Gould talking about PR this week. She has had much experience working with both startups and PR so she was a great fit to the lecture series. Here are few of topics I would like to highlight about the issues discussed.

A great emphasis was put on the meaning of a story behind a startup. A good story is the greatest asset when doing a pitch for an investment. This was something that made me think back about the pitches I've seen in Shark Tank / Dragon's den episodes. I found myself always rooting for the entrepreneurs with the best stories. I think the power of stories should never be underestimated. Great stories have great power regardless of the medium. For example an ad which tells a great story is often very memorable. The same of course goes for movies and books as well. Stories are weird in a way since they have a tendency to get under our skin and influence us without us even realizing how great of an impact they have on us. I can truly see the value of a great story for a startup founder. If you got yourself a great story go out and share it.

So do you have a story to tell? Use it to your advantage! Source

 

I also really liked the very practical tips our guest lecturer gave us regarding research for PR. For example you should get to know how your competitors use social media and what are the common hashtags in posts related to your market. What do your competitors tweet about? You need to know your market fit, your competitors and how you are different from them.

We also discussed the affordability of PR. It was stated that PR is something you should build in your budget very early on. If you can't afford PR there are many ways around it. You just have to be resourceful. Use whatever means you have at your disposal to get some PR. Stunts were mentioned as one example. However, we were also warned about stunts. They have much potential and can be very effective if done right, but do it wrong and you'll just end up looking silly and causing more harm than good. It was also mentioned that PR can be simply done by scheduling some time to simply be active in social media such as Twitter or Facebook. And of course never forget to take advantage of your network of friends, family and fools to promote your idea. They are your best means of getting started with spreading the idea and getting traction.

Traction is everything

The theme for this week's lecture was about growth and getting traction. This week we also had a quest speaker Xiaochen. She is a Co-founder & the Chief Marketing Officer at Guide to Iceland. Xiaochen told the story of their company and at the end of her presentation we had a Q&A related to growth and HR issues. Afterwards we discussed the topic growth in more detail.

Growth is the engine of startup. If growth stops so will the startup. (Source)

Growth is the engine behind every startup and it should never be underestimated. This was made clear on the very first lecture with this course. On the first lecture I asked what is the most common mistake when starting a startup, and the answer was: the lack of traction. It is very common for founders the get too caught up in product development and focus too little on getting traction. If you fail to focus on getting traction while doing product development you will most likely end up with a product the customer won't even want. You have to always think about the customer and if you lose focus you will not succeed. This point brings us to a great tip from the Traction book:

"The biggest mistake startup make when trying to get traction is failing to pursue traction parallel with product development. Traction and product development are of equal importance and should each get about half of your attention. This is what we call the golden rule :

Spend 50% of your time on product 

and 50 % on traction"

-Traction book 

  

So how to get traction then? Well there are many ways. The Traction book  lists a total of 19 different solutions for this issue. These options range from viral marketing to PR stunt events. It is vital to get at lease one of these channels to work. Peter Thiel (co-founder of PayPal) has stated:

"If you can get even a single distribution channel to work, you have a great business.  

    

If you try several but don't nail one, you're finished. So it's worth thinking really hard about finding the best distribution channel"

It is also important to note that traction is not a function of money, although in some cases having money helps. But the point is that to get traction you don't need money and this is what many founders get wrong. Many think that getting money from investor for marketing purposes will magically solve everything. This is not the case. To be able to get funding you have to show traction and growth. Having statistics that your startup is growing is the best proof to show your concept works and this is what many investors are looking for in a startup. So never ever forget to focus on getting traction when starting a startup!

Here's all for now, until next time!

QuizUp visit & Competition - Yay or nay?

On our fifth lecture we discussed competition and we also payed a visit to a startup company located in Reykjavik called QuizUp. In this post I'll go over what I learned from the visit and I'll also discuss the competition. Is it a good thing or not? I'll start with the QuizUp visit.

On 2014 QuizUp had more than 20 million users. (Source)

 

QuizUp is a mobile trivia game from an Icelandic company Plain Vanilla Games which has gotten very popular. We had a few presentations at their office about the programming aspect of their app. It was a very interesting visit. The presentations themselves were very technical with a focus on programming techniques. To be honest I did not understand most of the technical stuff but I would still say the visit was very much worthwhile since I learned a lot just by talking with the founders and hearing their story. It also helped that they had beer and pizza as well.

What I found interesting was the fact that the company was still unsure about their business plan. That was actually pretty comforting since our own startup team is also currently unsure about how to monetize our idea. It's good to know that this is a problem which others face also. I just find it peculiar that QuizUp has a very popular app with millions of users but currently no means to make money from the it. Adding adds would be a simple solution but that is a route they would not like to take.

Before we went to visit QuizUp we also had a lecture about competition. If you ask yourself is competition a good thing I think most of people would answer yes. This makes sense since for us consumers competition is good. It forces companies to keep innovating and improving their product and also helps to keep the price down. 

However, if you are sitting on the other end of the table as startup founder competition is a very bad thing. Competition is something founders want to avoid since it will distract founders from their focus on the customer and the product. Competition also diminishes profits. Striving to be first in the market by offering unique product is something much more interesting for a founder. Being the first in the market with a unique product will offer a monopoly state with very little competition as was discussed in my previous post. 

Monopolies are only bad if we're dealing with a static world because in that case they can create artificial scarcity. This was very much the case with resource based businesses such as energy and oil for example. However, with a dynamic world monopolies are a good thing. Creative monopolies will actually improve the society and make life better for everyone. These are the companies that are so good at what they do that no other firms can offer a close substitute. Creative monopolies create so much more value compared to the substitutes that customers are willing to pay extra. These companies also increase the abundance of choices a customer has by adding entirely new categories from which to choose from. These kinds of companies are for example Google, Apple and Facebook, just to name a few. These companies have successfully created something that is completely new or ten times better than the competition. 

Here's all for now. Next post will focus on growth. Until next time!

 

How to build great products?

On our fourth lecture we discussed how to create great products and how to develop business plan.  We also compared product business to service business.

When building a product it is vital to have the customer constantly in mind. Why would he or she use your product? What is the benefit of using your product? How does the product feel to use? What are the potential fears that a customer will face when switching to your product? Are there substitute products? How does your product differ from the substitutes? You should have an answer for all these before going any further with your idea.

Other important point that was raised on the lecture was a point about copying the ideas of others. Copying is something you want to avoid since it will get you nowhere. If everything you do is copy, you don't differ from the competition at all and you are always lagging behind in innovation. You have to bring something new to the table or make your product ten times better than the competitors. You also receive a great benefit from creating unique products since you will acquire a monopoly state for your company once you launch. You will be the only company in the market with such a product and you don't have to deal with competition. Of course if your idea turns out to be very successful other companies will also want a slice of the pie so the monopoly status of your company may not last long. An example of this would be the first iPhone. It was radically different from previous mobile phones and quickly gained a huge share of the market. Many competitors have since done similar products but iPhone still remains hugely successful.

The iPhone example illustrates also an other important point: It's vital to enter the market as soon as you have a functioning product. That way you will get to enjoy the benefits of being first in the market longer that you would if you would strive to create a perfect product before launch. The truth is that there is never going to be a perfect time for launch. The product you are developing will never be perfect so it's better to just launch as soon as you possibly can and reap the benefits from it.

We also discussed the differences between product and service based start-ups. The key difference is that the product approach will require large initial investments since you need a lot of equipment and such to create your product. However, if the product turns out to be successful you will make a lot more money than with a successful service business. The thing about service business is that  you don't require that much initial capital. Generally speaking it is very easy to start a service business compared to starting a product based business. You can pretty much just start offering services for money but the thing is that it is much harder to scale up a service business.  With product approach you can just manufacture more products to sell but with services it is very different. The figure 1 below illustrates the differences between a product start-up and a service start-up.

Figure 1. The differences between product and a service start-ups. (Source )

Here's all for now. Until next time!

Before the start

On the third lecture Bala held we learned about the things that you need to be aware of before starting a startup. We also discussed idea creation and we also watched the documentary Something Ventured – the art of venture investing. In this post I will discuss some of the key points which need to be considered before starting a startup based on the lecture and the documentary we watched.

Before starting a startup one must be aware of the counter intuitive nature of startups. With startups you cant' to rely on your intuition, that will lead you astray.  ONLY rely on intuition when it comes to people like finding a co-founder or hiring people. Paul Graham described the nature of startups on his lecture about idea creation with an example about skiing. Skiing is something which is very counter intuitive the first time you try it. Your instincts tell you to lean back if you want to slow down but this only increases your speed. That is why there are a lot of skiing instructors and very few running instructors. Startups are the same way as skiing, you can't rely on your instincts.

There are no requirements for starting a startup, you don't have to be an expert or a business major. You DO need to have product development intuition and empathy in order to make a startup work. There are also no easy shortcuts with startups. The slogan "Fake it till you make it" does not work with startups at all. It's worth noting that startups also consume vasts amounts of time. As a startup founder be prepared to have the startup to consume your life. Startups are always a gamble you will never know with certainty if a startup will be successful or not. The documentary we watched really drove this point home. It takes guts to do a startup or to fund one. In the documentary we saw many success stories. At the beginning of these stories there was never certainty about the idea being worthwhile.

Before the starting your adventure you should have a mentor who has also done a startup. Mentors which have not started their own startup aren't a great help. You really need someone who has walked the path. Starting a startup isn't something one can learn from reading a book. The best way to learn to do a startup is by starting one yourself.

Idea creation was the second topic we discussed.

How to come up with ideas? Here are few key points about idea creation:

• Do not start by thinking "how do I come up with fresh ideas"
• Good startup ideas sound really bad at the start
• Top-down vs Bottom-up is a good way to think about it

A good idea is to keep a notebook with you everywhere you go and every time you get an idea write it down immediately. In real world we run into many different situations which trigger new ideas. Later you can build on these ideas to see if there is actual potential behind the idea. 

Here's all for now. Next post after next lecture!

Motives and the team behind a startup

On our second lecture in the startup class we talked about the motives behind forming a startup. The best reason (and only proper reason) for starting a startup is the hunger to change the future. You need to have a vision of a different future and a burning desire to make that vision reality. This is what startups are for. Many of us had also other thoughts about motives for startup such as "wanting to be your own boss". According to Bala this is really not how startups work. Sure on the paper it sounds good but the reality is that instead of becoming your own boss you become a slave for everyone you work with. Dreams about making your own schedule by creating a startup are not grounded in reality since once a startup is founded it will devour all the time you have.

Other topic we covered in class was the team behind the startup. What makes a good team? What kind of people are needed? How to choose a co-founder or an investor? Here are some key points for the above questions:

The startup team should have one person for each of the following tasks:

• One person who is expert in the customers problem
• One person who knows the technical side of things
• One operator who takes care of everything else

 

Choosing your co-founders is like choosing the person you are going to marry. Startups can be very demanding, stressful and painful. They really put a strain on a relationship. And of course when there's money involved conflicts can get really messy (as can divorces). This is why you shouldn't choose a co-founder who you've just met. You really want to know that person before jumping into a startup with him or her.

The same goes for choosing an investor. Grabbing money whenever it is first offered is a very common mistake according to Bala. You can and you should be picky about your investor since they have much power over your startup. There is also a conflict of interests between startup founder and an investor. The founder usually thinks well into the future of the company, whereas an investor is often looking to get his or her money back as soon as possible. Therefore it is vital to discuss the plan through with the investor before accepting his money. When is the investor planning to get his money back from the investment?

We also went through some issues regarding the recruitment of employees to a startup. One of the most common mistakes that startup founders do is that they hire people too soon. This will kill the business very fast if scaling up doesn't happen as was planned. We also got a few tips on how to hire people. The best tip in my opinion being "always hire people smarter than you". As a person who is hiring you also need to sell the vision you have about the company to the future employees. That way you can get the best people on the planet to work with you. If they share your vision they will be evangelized and they will work vigorously.

This is all for now. Next post comes next week!

First post! Yay!

In this blog I'll be writing about lectures of class "How to start a startup". For more information about the ideas behind the course please see: http://startupiceland.com/2015/04/01/you-are-not-a-lottery-ticket/

So what did I learn from the first lecture?

I learned some of the dos and don'ts about starting a startup. My favorite point about the class was the idea about timing of a startup: "The best time to startup is now because yesterday has already passed and tomorrow it is too late". It's better to just get started and not to worry about details too much. I learned that some of the general reasons why startups fail. These reasons include premature scaling and the lack of engagement with customers. 

We also went over some basic definitions e.g. what is a startup & entrepreneurship. In the class we also had time to go through the 4 important things about starting a startup. These are:

• Idea (the difficult thing is turning idea into reality, also timing is an art in itself)
• Product (a great idea leads to a great product)
• Team
• Excecution

We also covered some key metrics for a startup. These are the amount total registrations, active users, activity levels, cohort retention, revenue and net promoter score (which tells our effective is the marketing).

In the first lecture we of course also talked about general stuff related to the course, timetables, assignments and such. In the course we will be starting our own startup with our own group of 5 people. We need to come up with an idea and try to sell this idea to strangers. We'll divide roles for each team member and we'll start by creating a web page for our startup. Before all of this we need to come up with a great idea for the startup of course.

We also had a skype chat with the author Sean Wise of our course book "Startup Opportunities: Know when to quit your day job". We got to ask questions from him. This was a really interesting chat and he had a lot of good points. He for example talked about entrepreneurship and family life. He also made good points about the future of startups and idea generation. We went over few different ways to create ideas. One was the purple cow game where a group is tasked to monetize on the world's only purple cow. This can for example be done by charging fees for people coming to see the cow or maybe by making a tv-show of the cow. The possibilities are endless. The point of the game is to strengthen the idea generation of the participants. In a way the game forces the participants to think outside of the box. 

All in all the lecture was a very positive experience and I look forward to the next ones.

That's all for today.