Trusted Systems give you back relevant information when you need it.

I’ve learned something useful here from the idea of Trusted Systems, which is from GTD (Getting Things Done) – a time management approach. A Trusted System allows us to input useful things as they come up and trust that the system will bring them back to us when they become relevant. This allows us to stay focused with a clear mind.

For example, you never remember you’re out of milk at the store, but you spot it when you’re at the fridge. A Trusted System allows you to record this at the fridge, and then get on with your day because you know the system will remind you at the store.

The same is true for pivots.  While we’re out collecting information and building our startup, we come across a lot of useful stuff that we don’t record for some reason, but which is useful in the future while deciding whether and how to pivot.  It gives you a place to keep all of the advice you get from mentors and observations from customers that don’t quite fit with your current iteration or goal – so you can stay focused without losing that value.

In terms of iteration speed and failing fast, the confidence that all our information is in one place makes it easier to go into decision-making mode, rather than delay a little longer based on that niggling feeling that a bit more data or time is required to make the decision.

A portfolio of hypotheses

This can be as simple as an Evernote notebook, but I like using the business model canvas for this.

Alex Osterwalder taught me that setting a 3-minute timer to document a business model hypothesis keeps to the tool light-weight and good value-for-time.  Every time there’s an idea, a piece of an idea, or an opportunity from a customer or mentor, I take 3 minutes maximum to record it as a business model hypothesis. (I use Strategyzer now but I used to use a paper canvas and a camera phone.)

This is not a few post-it notes on the current canvas, but a set of separate business models canvases, defining the possibilities.  It doesn’t have to be a whole business model, just the relevant dynamic is useful. When it’s time to analyse our last tests and decide where to go next, all of those ideas are a ready reference. I find the visual aspect of the canvases useful in a few ways:

1. It’s easy to see how the idea fits with a whole business model.
2. It’s easier to see how to test that idea as part of the overall business, and the relevant measurement in relation to the whole business.
3. It allows me to scrutinise my ideas quickly. Rather than keeping “all these great ideas” in my head, when they’re on the canvas in the context of a pivot decision, it’s easy to spot gaps and eliminate them, freeing my headspace for something more useful.

How do you track all the stuff that becomes important when making big decisions like pivots?

So why is Rob Fitzpatrick telling us to learn to code?

Look at Derek Sivers, the founder of CD Baby, and the man to who we owe the digital music industry. (No, it’s not Steve.) When Derek started CD Baby, he didn’t know how to code and couldn’t afford a programmer. But he could afford a book on PHP, so he made himself to an HTML site with a buy button.  (All the buy button did was send him an email with the buyer’s info, and that was good enough to get him to thousands of customers, profitability, and a whole year of growth.)  Fast forward 10 years. CD Baby has over 100 employees and makes millions per month. But Derek still wrote all the code!

Is this possible for you?

Necessity is a strict teacher, forcing you to focus on clear outcomes.  After interviews and paper prototypes, you have a clear idea of what needs to be built, and why. This gives you a clear learning goal – you’re not learning to program, you’re learning to make this very specific thing.  The gap between your programming ability and what needs to be done helps you really focus.

This way, learning to code is easier than you think, and getting a head-start will allow you to get your business further on your own steam. If all you need is a landing page, you just need to learn Unbounce. The same dynamic is true when you have strong signals pointing to a tech product – you’ll be able to build something functional and usable, because you’ll only need to learn to build that small thing. You focus on closing a small gap, not learning a big thing

Having a clear definition of what truly needs to be built, and why, means you need to learn a lot less than you think to close the gap. Having real customers and viable business as your carrot means you’ll be far more motivated to learn and build.

Don’t let your inability to code prevent you from starting your business.  

If you start your business, and start a bit of coding now, you’ll be able to close the gap when it matters.

Lately, I’ve been doing one-day workshops, based on the Foundation Skills day at Founder-Centric, with different accelerators around Europe. The goal of this day is to teach the principles behind Lean, Lean Startup and Business Model Generation, with a particular focus on practical application and “gotchas” for startups.

Max, founder of DOU, participated at Startup Wiseguys in Estonia, and shared his notes from the day. Thanks Max!

From Max’s blog:

Part 1.

1. do less. more contstraints is better. then you grow with efficiency
2. you don’t see movement; failed tests allowed us to learn; thats how we succeeded
3. entrepreneur is NOT an inventor
4. stealth mode and “coming soon” is wrong
5. capital efficiency – front-loading the costs
6. there are no VPs and CxOs in a startup (Blank)
7. “I wish I knew this sooner!”
8. you DONT know what will work or not
9. there different path to get to the goal
10. customers are full of shit; they lying to you because you ask them to
11. when you ask “would you buy” you invite them to lie
12. ask questions in the right way. it really matters.
13. do 5-10 interviews to know what DOESNT resonate
14. track actual phrases used by customers, you can use it for copy/ads
15. ask them about the problem and how they solve it in their context
16. earlyvangelists.
• have the problem
• know they have a problem
• have budget to solve the problem
• tried to solve it themselves
17. choose biz models that are faster to validate, even if it is not the “best”
18. clay christensen 9/10 fail. “jobs” approach. “You hire Monday to …”
19. market pull. if there is hesitation – keep looking. that’s the stage you can test. when you start scaling you’re committed
20. “fail fast” = learn. everything you do must help you to get closer to ultimiate business
21. what is the fastest way to invalidate my hypothesis?

Part 2.

1. Choose your customer. You are NOT Evernote yet. Find your very specific niche you can saturate and show traction.
2. Commitment. It’s a good thing until it’s a bad thing. Have commitment about your vision but allow million variations in terms how you get there.
3. Vague customer definition.
4. Multiple customer definitions.
5. Clear definitions speed progress.
6. Find early adopters & find specific value prop. Help to communicate and get in front of those people.
7. “One word” customer segments. Enables you to invalidate your ideas fast.

Part 3. Business model canvas

1. What do I test? You can’t test everything. Local maxima problem.
2. Starting point matters.
3. Being able to see all the different possibilities to choose a starting point (business model).
4. Really great product is not enough. If you have to build a business model to support the product.
5. Architect prototype so that they a re not committed to a single idea. There is a infinite number of b.model canvases.
6. Mckinsey proved funnels is wrong. What matters is timing when asking your customer to pay.
7. Snapshots and navigating a space.
8. Four actions framework: remove, reduce, increase, broad.
9. Take away something you think you need.
10. 5 rev. streams means 0 rev streams.
11. Learning is progress. Data is a tool.
12. We look for data that validates what we believe. “Torture the data long enough and it tell you everything”.
13. If this problem really crucial, I’ll find 5 people spending money to solve it now.
14. Customer interview hack: stopwatch. 3 poor interviews is much better than 1 very good one. [because you can learn and adapt your interview approach faster by actually DOING the interviews sooner. - Sal]

Part 4.

1. What the thing the really worries me? Now what I need to build to test it?
2. MVP: incremental or piece by piece. Start with a riskiest part.
3. Growth engines
   • sticky. subscription, marketplace. Are my customers coming back?
   • paid acqusition. transactional biz.
   • viral
4. MVP. Action is not intent. [test actual customer behaviour, rather than asking customers to state their intentions. - Sal]
5. Landing page, Paper prototype, customer interviews.
6. Kickstarter, Dropbox video.
7. Holistic approach – look at the ultimate number that makes sense for the business as a whole.

It’s interesting to be around different types who adopt Lean Startup. The Learning Loop, aka Build-Measure-Learn, “build” gets interpreted differently. I’ve noticed that quite a few people use this to indulge, rather than spot, their biases. People tend to map the build part of their loop to their favourite activities –  they choose what they want to learn based on what they want to build.   In doing so, they lose some of the best learning opportunities available to them.

Can you spot yourself in any of these scenarios?

The Coding Crutch

The classic story is Joel Gascoigne, a programmer who, while running the first tests to validate the idea for his startup Buffer, kept jumping back into programming mode at every little sign of market demand. Every time he stopped learning to write code, he was slowing down further validation and learning. What did he do to break the habit? He deleted all of his code so he’d stay focused on validating market demand! It worked.

Narrow Scopes For Learning

This isn’t limited to coders. For example, some UX designers have a penchant for interfaces or information architecture, so they tend towards wireframes or paper prototypes in their build-measure-learn loop. With learning accomplished, the next learning goal gets framed as another user experience goal, which can leave more critical aspects of the business model unaddressed.

The Git Of Gab

And people who like talking to people will stick to Customer Development, even when the most crucial validation requires product or channel development. Customer Development is a great tool for understanding commercial opportunities from the customers’ perspectives, but rarely does it give you explicit instructions. Some people continually go back to customer interviews when there are more tangible MVPs to build and test.

Over-Sell

There are also salespeople with the mantra, “promise the world, deliver what you can.” When presented with the concept of a Letter Of Intent as validation, they say that’s what they’ve been doing the whole time! By focusing  on “the close” and what it takes to make a deal with each, individual customer, they lose focus on the learning goal – discovering the minimum feature set to meet consistent, repeatable needs of the customer segment.

Analysis Paralysis

Sometimes, it’s hard to pick an idea or pick a starting point, and planning to learn never leads to actually doing the learning. In other cases, more and more learning goals pile up for the same “MVP” and continually delays getting the thing out there.

Metrics-heavy

People who have analytics backgrounds tend to build out heavy measurement platforms, capturing and reporting on all kinds of behaviours. Building out these systems, rather than focusing on a key few metrics, actually slows down learning as these systems take more time to build, configure, install and they also take more time to pull out actionable information. All of this slows down actionable learning. Are you measuring everything because you’re not sure what to measure?

Data Torturers

When I was Digital Media Director at a jwt agency, there was a phrase in the analytics department: “Torture your data long enough, and it’ll tell you anything.” It was a warning to the account directors and clients who only wanted data to back their conclusion. When you start an experiment, are you trying to prove yourself right, or wrong?

Using Learning To Avoid Decisions

Some people continually learn and validate broadly, failing to zero in on more tangible opportunities. As you learn, your idea of customer segments, product, partners, channel and relationship become clearer – so you’re in a better position of collecting evidence to back them.  As you do, your customer list will start to build.  But, some of us don’t get there, not because of the lack of validation, but the lack of mettle to simply take things to the next level.

The Lean Startup methodology does not advocate using optimization techniques to make startup decisions. That’s right. You don’t have to listen to customers, you don’t have to split-test, and you are free to ignore any data you want. This isn’t kindergarten. You don’t get a gold star for listening to what customers say. You only get a gold star for achieving results. - Eric Ries

For example, there are a lot of first-time founders who use learning as an excuse to avoid sticking their neck out, like using surveys as an excuse to avoid talking to customers. And there are founders who continually ignore the results of their tests, yet continue to waste time running them.

What can you do about it?

If you’re having trouble learning what you need to learn, you might want to look at yourself and see if you’re biases are pushing you towards the wrong learning tools.

The key to the build-measure-learn loop is start with what you want to learn, and why.  With that clear, the measurement becomes more obvious, and then what to build follows. Start with your learning goal – what worries you the most? what poses the greatest risk? – and work backwards from there.

Leancamp, like most startups and non-profits, can’t afford to lose money, so our financial risk needs to carefully managed. Effectuation and Lean Startup principles help here – but they look different than the typical startup business.

Affordable Loss & Runway

Every event we’ve run in a new place has started with the Affordable Loss Principle. This is similar to the idea of Runway in Lean Startup, in that the idea is that if you fail, you live to fight another battle.

In Lean Startup, we look at Runway in terms of number of learning opportunities before we run out of cash. Since it’s a non-profit, we can’t afford to lose money on an event. With events like Leancamp, we first want to learn that there’s enough demand for the event to break even.

Our Earlyvangelists & the Minimum Viable Product

At first, we get the word out to our Earlyvangelists. These are people who want to learn about better ways to get market traction from a variety of sources, and we usually find that these people belong to existing communities and networks.  These are the communities and networks we’ll connect at Leancamp.

If you’ve been to one of the larger Leancamp events, at about 150-200 people, you know there’s epic excitement and lots of useful discussion at that scale.   But the format works just as well with 60-80 people.  Our satisfaction scores on our exit surveys prove this. A 60-person Leancamp is small, but equally awesome.

So, our first goal, our MVP, is usually a Leancamp with around 60 people. Selling these first tickets is our first real test for validation.  Based on the revenues from that, we know what the budget is for the smaller version of the event, so we make sure we can break even by reducing costs. Mininum Viable Leancamp! At this stage, there’s usually only a budget for some regional flights, but there’s still an exciting feel and great cross-over between communities.

If our Earlyvangelist tickets don’t sell well, we’ll try a different approach.  If we have less than a 4-6 weeks though, we have to discuss if we cancel or postpone the event, and refund everyone.

Iterating as incremental improvements

However, once we’ve passed that goal post, we have enough cash to buy some local plane tickets, so we invite and announce recognised leaders, both local and regional. At this point, we don’t need to worry about financial viability anymore, and we can turn our full attention to the responsibility we have to create the best possible experience for our participants.

We also put the word out to internationally-recognised leaders to see if they’re interested. As we release batches of tickets, we reduce the discount.  This is to encourage people to buy sooner and also allows us to add bigger costs based on the event’s momentum. If we sell more full-price tickets later, this covers the cost of the international flight(s) and we announce them as well.

Financial risks, under control.

After the first break-even point, we don’t incur costs that we can’t pay for with money already collected. This not only makes the event break-even, but also cashflow-positive, which makes our lives a lot easier.

In this way, we make sure we’re always working within an Affordable Loss, and the concept of Runway is based on how much time or money we have to make an incremental improvement to that particular event.

Not your typical Lean Startup, Effectuation and Iteration – but these are how we apply these principles with Leancamp events.

via How we get a @leancamp started. Lean Startup & Effectuation applied to event businesses. #affordableloss #iteration #runway | @Leancamp.

Last year, Paul Graham posited that in order for a startup community to be an effective antidote to startup death, it needs to provide a supportive cultural environment and a high and dense enough startup population where chance encounters happen regularly.  I think we’ve subscribed to this as a theory, but now we have a chance to validate it and build more applicable approaches on top of it.

In terms of an encouraging and supportive environment, I have total confidence that Eze Vidra‘s the right leader to set the right cultural norm.  In the past, the UK scene has been criticised for its insular startup culture and lack of a pay-it-forward attitude, but there are few, sprouting groups here, like Leancamp, that are open, inclusive and giving. Eze has supported and connected us, and lead by example. It will be useful to learn if and how Campus becomes platform to further those ideals.

Since last year, the conversation about startup density has continued and there have been a few observations of startup density at a city-by-city level.  Trying to get past the rivalry and towards lessons that help everyone make a better environment for themselves, I’ve wondered if the difference in startup saturation in different cities (the number of startups over the total population of the city) was a relevant factor. (Compare Boulder to New York to Berlin, for example.)

With the Google Campus opening in London, we now have a chance to observe this phenomenon, while separating density and saturation.  London, and even East London or the sprawlingly vague definition of Tech City, is too big to ever be dominated by startup culture, but that doesn’t mean Campus, a relatively small island within it, can’t have both the size and density required to create enough regular chance encounters. With Seedcamp, Springboard, TechHub and Central Working moving in, seems the quality ingredients will be there in quantity.  The Campus launch party was a shining demonstration of that – so many people glowing about all the great people they met, especially the founders, who were walking tall, with a sense of control, empowerment and optimism.

So in an attempt to be scientific, honest with myself about this, and to learn concretely, my next question is: how do we measure success of such a startup hub?  What will we look for as a signal that Campus is working for founders?

As stewards of this community, how could we enable it to continue?

We ran experiments against a few models: freemium, membership, and various types of media partnerships. After a few pivots, a glaring assumption became clear. Hang on – what if we participants actually paid for this instead of sponsors? Could it really be that simple?

Looking at the business model of Leancamp, this simple change has a number of huge benefits:

• We can be self-empowered. The Leancamp community can be here to stay on its own terms.
• We can uphold the Barcamp ideal of free as in speech. (But you pay for your beer.)
• We can run Leancamp more frequently.
• We can run Leancamp with far less lead-time.
• We can run Leancamp in far more places, even if they don’t have a culture of sponsoring startup events.
• We can spend 100% of our time on making a better event for the participants, rather than finding sponsors and managing their expectations.
• We have positive cashflow, which makes things easier to manage and nobody has to carry the debt to make the event happen.

That’s what we tested in this last set of Leancamps. And it worked in most cases! Leancamp London, Barcelona and New York all ran without sponsorship.

We learned a number of lessons from this:

• Seeking partnership is a completely different thing than seeking sponsorship. Now, we’re able to work with others who have similar or complimentary goals. Asking for money is salesy and starts negotiation rather than action. Instead, we look at what we want to achieve together and the conversation quickly moves to what everyone can put towards that goal. Our hosts at each event, UCL, La Salle and General Assembly, were the first in each city to respond saying, “Sounds great! We’re in. Here’s what we want to do to help.” In this way, we end up working with very proactive partners, which makes us even better at execution.
• To make a great Leancamp, we need a lot less that we thought we needed. Our satisfaction scores are soaring as our teams are shrinking.
• As we iterate the format, things get easier which opens up new opportunities we couldn’t have considered at the outset. So we don’t need to think too far ahead.
• This model might not work every time so we’re flexible. Leancamp Netherlands had to be postponed because the eco-system around venues had very strong expectations about sponsorship, so finding reasonable prices was too difficult for our aggressive timeline.
• Partnerships and communities are more critical to our existence than any other part of our model. Those relationships enable the financial support to come from the benefactors, the Leancamp participants.

It feels like we have validation for our model now. The next step for Leancamp is to empower all of the people who have volunteered all over the world, literally on every continent! So, if you’d like to create a Leancamp where you are, step up as one of our proactive partners!

via Leancamp

In my early teens, I volunteered to teach, then run, a computer school that was part of the local mosque. It was a good excuse to skip the religious services – a pragmatic escape for an atheist kid.

At first the work was fulfilling, we were helping Afghani refugee families find jobs and get settled in Canada, among other social causes.  The problem was that the volunteer teachers were used to getting social cred in the religious community in exchange for their time teaching, but I was in no position to offer that. Support dwindled and I had to teach  more and more classes myself. It got tiring, and seemed fruitless pretty fast.

But one of my students changed that. He was the Director of IT for a major corporation who wanted to learn HTML. (This was the mid-90s!)  After meeting me, he brought a project plan from work so I could understand “management.”   It opened my eyes to how I could translate my technical knowledge into value for an organisation.

An almost trivial exchange of knowledge for him that kicked off my career. I was 16.

I’ve come to see this as a consistent dynamic in communities, the payoff is usually in knowledge, or in connecting to people with similar goals willing to combine their momentum with yours.

I think a lot of people think of networking as “connections” and deals.  That hasn’t been my experience – selling is something totally separate from investing in the community around you. Sure, the knowledge and friends I gain from volunteering are something that can help me get deals or make money, but when I sell, I do that explicitly.

I volunteer a lot.  Most of my activities don’t generate revenue for me personally, but they help me create an environment that I and others can thrive within. To make this work, I think about what I’m contributing towards in terms of concentric circles.

This allows me to consider how to investing my time, and what I can look out for as payback. I don’t put people in these categories, just my activities, and even then, things get fuzzy between them.  But it still helps me work out how to get value back from my time.

My concentric circles of community

1. Brain Trust –  I make my advice and resources freely and regularly available to a small group of entrepreneurs, and get the same in return. It’s a small, organic group that changes over time. Together, we can progress with a bigger support base and fresh eyes to keep ourselves on the right track.
2. My friends in general - I’ve tended to make money by making other people rich, usually my friends.  Jobs I’ve had, startups I’ve founded – they’ve mostly started by just helping friends where I could. As they succeed, they’re in a better position to help me out too. I help out as needed and if the work gets too demanding, it’s time to cut me in.
3. Organised communities – This is where the computer school and Leancamp fit in. A common goal at Leancamp is that we’re seeking market traction. By design, sharing knowledge within these communities allows for immediate and useful knowledge coming back. Being open helps make new friends with goals I’d love to get behind, or people with similar challenges who can share their experience. The openness is a value-multiplier – everyone who shows up can derive the same benefits, and some pay it forward.
4. The big wide world - I put activities like blogging in this category. You invest some time to share what you hope will be useful to people, just to get some anonymous web stats in return. If I’m lucky! But once in a while, I’ll get an email from someone new with helpful ideas, willing get involved, or with a great opportunity.

It must be said that this just a way I’ve come to see things, in a kind of fuzzy, underlying way. It’s really non-explicit, and writing this post was the first time I’ve tried to articulate it as a whole. I also don’t think these specific circles apply to everyone. I’m sure the circles around you will be different, if you see them as circles at all, but I wonder if you’ve considered them in a similar way to me.

I sometimes wonder if I’m being too naive, but then, people I look up to are always encouraging me, telling me the future is in making this kind of community sustainable. I’d like our experiments with Leancamp will benefit other communities.  I’m certainly hoping what we learn about the Leancamp model can be shared with others, and make knowledge transfer more accessible and more common.

For now, for me, I’d say this is working. In each of those 4 circles, my work seems to be paying off for me and others. I’m really happy with what I do, with the type of environment I’m helping create, and with the people around me. Oh, and I happen to have learned a useful thing or two about Lean, Agile and Design over the last 2 years!

When accountants look at businesses, they spot problems and patterns in a similar way that architects, programmers and user experience designers do. As entrepreneurs, being able to spot the same patterns makes our businesses financially-sustainable and healthy, and I’ve seen it lead to serious innovation too.

If you truly understand something, you can draw it, so with that in mind, I sat down with Mark Twum-Ampofo from Kingston Smith, an accountancy with a specialty in tech startups. We were looking for a visual way to help startups and business owners get their heads around finance – a simple visual language for describing business scenarios.

Sometimes people use ad-hoc visual languages to describe things.  A common language would allow non-finance and finance people to work together more effectively, and allow pattern libraries to help businesses through common problems. If this starts to work for people, this could yield similar benefits to the Business Model Canvas as a standard, accessible language. (The BMC has sparked a lot of techniques and bridges in the business model world.)

What we have created is just a start, and doesn’t yet address more complex dynamics in accounting, but we hope it will already be helpful, and grow to become more useful. So far, we’ve tested it on a few people to help people understand and describe solutions to cashflow problems and investment scenarios like convertible notes.

Getting Started: The basic shapes of finance

Let’s start with 3 basic concepts, from which we can explore a whole range of scenarios:

Equity
Who owns the company?

Balance sheet
What’s the company worth? This is a point in time snapshot comparing your assets and liabilities.

Profit and loss
Are we making money? This compares money you earn and money you have to spend, over a period of time.

So, a simple scenario is one where we make some money, moving from a starting point of no assets or liabilities, to making some money (with about half of it going out in expenses), to where we have cash in the bank.

A line showing no assets or liabilities.	A period of time where revenue was twice as high as expenses.	Now we have some cash in the bank.

Scenario: Getting investment

Now, let’s look at an investment scenario, where you’re offered a small cash investment for 33% of your company.

Scenario: Getting investment with a convertible note

Let’s jump in. This is what a convertible note looks like.

The note is a contract that is structured like a loan, but that loan can convert into an equity investment based on different “triggers.”

Let’s look at this step-by-step.

Like before, we’ll start with a company that has some assets and some liabilities, and you own the whole company.

Then, you get the investment as a convertible notes. Technically, this is the same as loan at this stage – you have the increase in cash which is an asset, but you also have the debt along with it. So you still balance. You’re not really worth more – while the cash is a new asset, it comes with an equal new liability, the debt.

Now, let’s say one of the triggers comes along. This is most likely to be an investment round where you have a higher valuation, but it could be a number of things as written in your contract. In this case, it’s your decision to take an investment round at a higher valuation that triggers the conversion. You can see that the equity circle gets bigger to show the higher valuation. But then the note is converted, meaning that the debt (which is a liability) goes away and is replaced by a chunk of equity in the company.

(This quickly gets more complicated because other investors are involved to create the higher valuation, and there’s usually the implication of valuation caps and other conditions. I can describe visually in another post if you’d like if you ask.)

What we’ve done here is described the technicalities of a typical startup investment scenario without numbers. I’ve shown this to people who have never heard of convertible notes, and people have had convertible notes, and both have had a better understanding having seen the scenario.

Problem Solving: Cashflow

Now, let’s look at a typical problem with bootstrapped startups, cashflow. I’ll show you a company that looks healthy, Enterprise Telephones, which sells telephones to big companies.

It has more assets than liabilities, which is good – accountants call this solvent. In the Profit and Loss over last 3 months, it’s also sold a lot of telephones, at a value more than what they’ve spent in costs. So they’re profitable.

But there’s a problem – in spite of this, there’s just £1,000 in the bank but there are £4,000 in bills that are due! When they say that cashflow kills startups, this is what they mean.

The problem with Enterprise Telephones is that they’ve sold the phones, but haven’t been paid. The sales count on the Profit and Loss, showing as revenue. They also count on the balance sheet because the credit, the money the customer owes Enterprise Telephones, is an asset. But the company hasn’t seen the cash yet! This is the different between profit and cashflow.

Here’s where the finance patterns come in handy. If you find yourself in this situation, there are two immediate ways out:

1. Look at your assets. Are there assets that can be converted to cash?
   
2. Look at your expenses. Are there short-term expenses that can be put off or renegotiated?
   
   And in some cases, you can:
3. Look at your revenues & liabilities. Can you presell anything now to get some cash in the door? (The cash helps now but comes with a liability – you owe the customer the product now!)
   

This visual language could be a start.

This is how accountants “see” the situation, how they use patterns to spot problems and solve them.

Think there are ways to improve on this?  All feedback is welcome so please email me or comment! I’d like to see how you use this, and understand what scenarios you try. I’d also like to know if this helps you understand something better, or if you get stuck or confused somewhere.

Thanks Mark at Kingston-Smith for investing his time to help startups. This also builds on momentum from a number of thought leaders.  Robert Kiyosaki used visuals for financial definitions in his Rich Dad Poor Dad books, which I found very helpful as a young entrepreneur. Alex Osterwalder, Alan Smith and Patrick Van Der Pijl have been a big influence with their work on the business model canvas, a visual language for business models that has opened a range of new tools for business model innovation. And Dave Gray is constantly progressing Visual Thinking as a pragmatic business skill.

Interested in Visual Thinking at Leancamp?

Since you’re interested in visual thinking, we have a special access code for you – grab a ticket to Leancamp London 2 at the Early Adopter price, using the code: vizfinance.

Always choose the option that minimizes the total time through the feedback loop. – Eric Ries

As the pro-learning attitude of Lean Startup takes hold, startups face a challenge not only in learning, but in figuring out how to learn quickly, actionably and repeatably.

I’ve found that Kanban is very useful here. Kanban is a simple Lean tool for pulling more value out of a process.

Why Kanban helps

Kanban comes from Toyota’s Lean manufacturing system. It recognises and addresses that work-in-progress has already incurred a cost, but not yet delivered value to the customer. This means that all of the capital and time invested into in-progress work hasn’t seen a return on investment yet. Kanban streamlines flow, limiting work-in-progress so that value is delivered speedily and regularly, thus making the whole system more capital-efficient.

When you try to improve speed through the learning loop, it’s these Lean principles that come into play.

Learning delivers value by giving you advance insight in the form of actionable course-corrections. When your learning is complete and well-structured, you know your next step. Half-done learning is not properly actionable, since it can’t allow to make a concrete adjustment to your business. Learning by validating or invaliding specific hypotheses allows your conclusions to influence what you build next and what you learn next. Because learning one thing leads to the next, learning fewer things at once allows you to progress faster.

Kanban can help give you this structure so you pull actionable learning from your learning activity. Take a look at the Kanban board for Leancamp Learning.

A recent snapshot of the Leancamp Learning Kanban board – click to enlarge

On a Kanban board, work progresses step-by-step from left to right.  When we come up with a hypothesis or something to test, we put it in the To Do column.  When we’re ready to to create a new test, we “pull” it from the To Do column into the Creating column, and start creating the test.  (The test might be a split test, cohort test or mock advert.  Or, if it’s qualitative learning we’re after, it’ll be creating a Topic Map and documenting Problem/Solution Hypotheses for interviews.)

Once the test is created, we start collecting data, and once enough data is collected, we mark it as ready-to-pull with a checkmark. Then, when the team can get together, we analyse the data, draw our conclusions and decide what to act on and what we want to learn next.  The things we want to learn next go into the To Do column on the left.

Things we want to act on go into whatever project management system is already in place.  So, Kanban for learning can be used in concert with other management approaches – including agile, PRINCE2 or waterfall development.  (This is a great way to get people personally acquainted with the benefits of Lean and Kanban without disrupting or challenging them, by the way.)

Some of the details on this Kanban Board for learning

Kanban boards all look different. As you get the hang of Kanban, you’ll adjust yours to make it right for you.

Work-In-Progress Limits

The numbers at the top of each column are the work in progress limits, which allow us to pull more value (learning) out of our system faster. In this system, there’s a WIP limit of 1 for creating tests. So if we’re in the middle of creating at test, we don’t start creating another one until it’s done and collecting data.  If we’re collecting data for 3 tests, then we don’t start collecting data on a fourth until we’ve started analysing the results of one of them.

What the board teaches us about our flow, and how we adjust the board to our needs

If we hit a block, we treat that as a learning opportunity for our process – we get the team together to do a root cause analysis of the block and address it. That can include adding or removing columns, or changing WIP limits. For example, if we’ve created a test but already have 3 collecting data, that’s a block. It tells us that we probably need to get together as a team more often to analyse our learning.  But it might be that we’re moving towards tests that take longer to collect data. That’s something we’re going to want to notice sooner than later, since it indicates we’re slowing down our learning.

Colour-coding

I also like to run qualitative and quantative tests through the same learning board, since I think it’s important to have balance of tests and interviews on the go. Colour-coding helps here.

Place-holders

Sometimes, a hypothesis is too big to fit into a test or a set of interviews. So, it stays at the top of the To Do list as a reminder and another card gets started in the Creating column. It only disappears when the test we create from it will finally prove or disprove that hypothesis. (If you have a suggestion here, please let me know! This feels like a bit of a hack, but is working well for now.)

Don’t get too caught up in choosing a Kanban tool

A last point on tools, I use an online tool because Leancamp and my other projects have team members all over the world. I like Kanbanery because it’s simple and a pleasure to use, but you might find Blossom.io, AgileZen or Trello suit you better.  There’s something really empowering about a real board with real cards hanging on a wall for all to see too. It’s always there as a reminder of how the team is working together, and creates a sense of camaraderie and progress when you see someone get up to pull a card forward.

Make it your own

Again, remember that Kanban, like all Lean approaches, are based on principles over implimentations.  You can use this as a starting point, but make it your own.

Better yet, if you’re already doing some kind of learning activity, start by mapping and tracking what you already do, so the Kanban board can expose where you’re building up work-in-progress now. This’ll allow you to improve quickly without massive disruption.

Originally posted on Leancamp

What can we learn from Open Source models?

Lately, I’ve spent a bit of time wrapping my head around open-source business models, and reflecting about Leancamp and the assets is creates. A common thread of open-source, inbound and social media models, is that free information spreads through channels that are either unavailable or much higher-friction when used with proprietary IP. While the open information is usually in the form of software, it might also be knowledge. In Leancamp’s case, it’s know-how that can improve market traction quickly.

Looking at how people made use of Leancamp’s key assets

If you were at the first Leancamp, or involved in the early days of the London Lean Startup scene, you witnessed the some of the first connections between Lean Startup and Design, and between Customer Development and Business Models.

The Leancamp community ran with these connections, and the resulting tools and techniques have proved to be valuable assets to people around the world. This evidences the prescience of the Leancamp community and the ability of Leancamp to create valuable tools and methods. And since these are open assets, they produce an advantage over proprietary assets -

Open source assets spread, rather than scale.

A bias towards scaling over spreading?

In startups, we’re often geared towards looking at delivering value through channels that can scale.  But with communities and with open-source projects, the growth doesn’t come from scaling, it comes from value spreading.  With scaling goggles on, we’ve been focused on scaling up the experience of Leancamp, which creates new connections and progresses the methods of entrepreneurship. What we haven’t yet done is focus on spreading the fruits of our work – the great tools, techniques and knowledge that come out of it.

Events aren’t easily scalable. But knowledge is easily spreadable.

My current hypothesis is that better-enabling the spread of IP that emerges from Leancamp can directly benefit the community.  We can build a growth engine that is focused on spreading, rather than scaling.

After all, spreading the best that comes out of Leancamp is good for us – it makes a bigger difference by putting our effort to good use, let’s our methods progress by getting more feedback earlier, and gives our sponsors a bigger return on investment because they benefit from the audience of the event and the spread of the resulting knowledge.

So, with this set of Leancamps, we’re going to focus on capturing and distributing our sessions, so that others around the world can benefit from being included right away.

Any comments or guidance on this approach is much appreciated!

Originall posted on Leancamp

Lean Startup needs to avoid becoming dogmatic or a religion. It is terribly ironic when some well-meaning enthusiasts take Lean Startup as the Holy Grail of startup methodologies and expect miracles based on faith & unquestioningly “following the rules” alone.

Lean Startup-ers need to keep each other honest about this.

Thomas Schranz from blossom.io had a heart-felt response on Twitter:

Let’s not get into where agile ended up with SCRUM. As much as I love the whole movement, I start to feel more dogmatism and it is very important to become aware of it before it is too late.

Many people draw parallels to the Agile movement and the dogmatism that seems to have arisen in some circles within it. It’s even been called the 2nd chasm.

I like the “challenge your assumptions” attitude in Lean Startup, which when taken to heart, helps prevent people from becoming dogmatic, but I’m not sure this is enough.

Bob Marshall points out the benefits of learning as an organisation and the necessity of a “playing by the rules” stage to become better.  This answers what individuals and organisations can do to avoid the traps within their own dogmatic attitudes. Jared Spool has a great outlook on this in the Design community.

I’m really interested to learn from Agilists, Designers and others who’ve been there, so we can learn from you.  As “a movement” is this really a critical problem? What is “too late” and what have the tangible consequences been?  Is there a signal/noise problem that prevents individuals seeking to learn more or dig deeper from doing so? If so, has that been because of people spreading mis-information, and how has mis-information been differentiated from progressive new ideas in the past? What questions should we be asking?

Please chime in here or on Roundtable.

Originally posted on Leancamp.

Leancamp was at the beginning of two strands of thought-leadership in Entrepreneurship, the Lean UX movement, and the connection between Customer Development and Business Model Innovation. Did Leancamp happen to be in the right place, or did the Leancamp participants make the future happen?

If the future is unevenly distributed, it’s the entrepreneurs role to redistribute.

Try to visualise the William Gibson quote, “The future is already here — it’s just not very evenly distributed.” What do you see?

Many people think of futuristic technology starting somewhere, like MIT or the military, and rippling out to the rest of us over time. But the reality is that there are many of these centres, like raindrops in a pond, and the flowing out is more a function of human interaction than time.

Technologies that fail to be distributed can’t become the future. The ones that do usually end up being repurposed and combined with other technology and human endeavours. Interesting things happen when the different ripples meet.

So where does entrepreneurship fit in?

Entrepreneurship usually makes the connections–between technologies and audiences or between disparate communities – which become the future.

Last year, connecting Lean, Agile and Design at Leancamp led to some useful tools for entrepreneurs around the world. This January, we’re connecting to other ripples again – toFashion, Architecture, Science and an entrepreneurship method called Effectuation. When you consider the commonalities around working in market uncertainty and figuring out what to make before it exists, you can start to see the potential.

I’ll only make one prediction though – going Leancamp will put you in the right place at the right time. For what? That part’s up to you.

Join us at the next Leancamp here.

Originally posted on Leancamp.

The problem with this way of thinking is that it implies that these major trends are outside of your control.

But if you look at what’s inside of your control, and follow the potential rather than try to predict it, you start to find yourself in the right place at the right time.

This is known as the Bird-In-Hand Principle of Effectuation, which I’ve found to be a powerful compliment to the Lean Startup approach.

The Bird-In-Hand Principle:

Start with your means. Don’t wait for the perfect opportunity. Start taking action, based on what you have readily available: who you are, what you know, and who you know.

The unbearable lightness of starting

We did this last May at the first Leancamp. We didn’t try to predict all the topics that will be interesting or relevant to you, like at conferences. We didn’t “start with the end in mind.” Instead, we focused on bringing people together around areas of potential. We created an environment for the good, and as-yet unknown, ideas to “spark.”

Instead of curating topics in detail, my co-founder Nicky & I looked at bringing the people together from both communities to have these discussions themselves.

We started with our means. We just started bringing people together.

We couldn’t predict that Ian Collingwood, an accomplished UX Specialist would be there and later develop and share his Lean Usability methods, or that Rob Fitzpatrick would be inspired to create The Startup Toolkit, the first online tool connecting Customer Development and Business Model Generation. But we did expect to make new friends and connections – like Rob and Ian.

And it turns out that after we started, it was possible to connect 160 people and a number of thought leaders too. It wasn’t in our power to “start a movement” or anything so grand. It’s not a billion-dollar business. But it was and is in our power to bring the right people together to learn and help each other. So we started.

If you want to learn more about Lean Startup or Effectuation, we’re connecting those communities at our upcoming events! You can join us at Leancamp here.

Originally posted on Leancamp.

via skitch.com

Thinking about doing some kind of Earlyvangelist t-shirt for swag or fund-raising for Leancamp. What do you think? Worth paying for? Would you wear something like this? (Tell me like it is – I can take the criticism if you think it’s a silly idea!)

Posted via email from I’m Sal

Early-Evangelists:

• Have the problem you think they have
• Knows they have the problem
• Tried to solve the problem themselves
• Looked for a solution themselves
• Put budget behind solving the problem

Issues can happen when an entrepreneur finds someone who fits 3 or 4 of these traits but not all of them. The example Sal gives is when someone has everything except for the budget, you don’t want to invest the time and cost in building a solution if you will end up empty handed.

via ow.ly

When you think a customer group will have a specific problem that’s painful enough that they’re already looking for a solution, you can validate that through Customer Development interviews. When you need prospects to see it to get it, lightweight paper prototypes can help you learn and evolve quickly. But what about the middle ground when the customer problem/pain isn’t super strong, and showing paper prototypes won’t tell you if they’ll really use the thing?

Christian Blunden’s (@christianralph) team at Lean Startup Machine London had an idea for a social network for reconnecting dog owners who meet while walking their dogs. The crucial thing to test was if dog owners would bite. So they put up poster for a website that didn’t exist, to see if people would tear off the contact information to check later.

A great example of working out your MVP – your Minimum Viable Product! This quickly tested the riskiest part of their idea, whether people care enough to even check it out. And it test real customer behaviour – what they do, not what they say they’ll do. Nice one!

Posted via email from I’m Sal

SaintSal in Barcelona - Homage to Desigual!

UPDATE: The Leancamp Barcelona waiting list has opened here: http://register.leanca.mp/leancamp-europe-2011/ Tickets will be available to the waiting list first.

My first few days in Barcelona have been great. I can already see how a very unique Leancamp could take shape here, an event where new approaches across entrepreneurship, design and architecture are born. If this excites you, please get in touch using the contact menu above – I’m in Barcelona until Friday morning and would love to meet you.

I’m looking forward to meeting the people mobile and game development communities, and I’ve had some great introductions in science, design and architecture. And while your mind might jump to all the outputs such collaborations could create, step back and think about the processes and approaches of each discipline too! I’ll go into each in detail below…

What does Leancamp do for the disciplines and communities it includes?

Leancamp is the birthplace of many startup methods and techniques that help you get market traction faster. The first time Eric Ries of Lean Startup and David Heinemeier Hansson of 37 Signals engaged in debate was at Leancamp in London last year. At the same event, several conversations were starting between designers and entrepreneurs, laying the foundations for the Lean UX movement we’re seeing grow today. Leancamp also created the first connections between Business Model Generation and Customer Development – which is why you see “business model canvasses” being used so often as a startup tool today.

So, let’s look at how Leancamp Barcelona could spark the same level of innovation, by bringing together leaders in architecture, tech entrepreneurship, fashion and science.

Startups

So far, my early connections are with mobile and game development startups. We’re starting to see the Lean Startup like approaches take hold in both of these areas, and building on the Leancamp heritage of combining Lean, Lean Startup, Agile and Design.  (To see how and what Leancamp has developed so far, check out the videos of past Leancamps at leanca.mp and to get an idea of the format of Leancamp, check out the Leancamp About page.)

Design

The design community in Spain is a world-wide force, particularly in architecture and fashion, drawing in-part from a healthy alternative scene and impacting the rest of the world with international architecture projects and iconic brands like Zara and Desigual. (Desigual are building a beach-front office for 1,000 of their designers!) The Lean Startup approach is explaining the way many tech startups build market traction so quickly. This approach has much in common with the successes of Spain, but there is also a lot we can learn from one another.

Connections to fashion design

Leancamp Barcelona can not only bridge these disciplines, it can draw on the Leancamp international base, teaching product designers with an entrepreneurial flair how to strike out on their own. For example, by inviting in the likes of Lookk.com from London to explain their progress with Internet business models in fashion, making better use of it as a marketing and customer information channel.

Leading fashion designers make decisions that trickle down through trends, standards, market cannibalisation, commercial feedback and Agile-like, iterative processes. The fashion industry has already matured around these dynamics – what can we learn from it?

1. Fashion is much better at including fast-moving commercial factors in an iterative process. You think tech moves fast? Try womenswear.
2. How do fashion designers push out quick designs with confidence that there will be demand? How can you get a product to market in two weeks, with limited customer feedback, and get it right?
3. How does the fashion business let the market positioning dictate the business model, while tech companies tend to focus on finding a market that suits a pre-determined business model?

And let’s not forget that Spain is the home of Zara, which has taken a dominant position in the global fashion business because of its Lean approach to retail and its supply chain.

Or, the interactive textiles and smart fabrics industries, which are begging for a common language between fashion designers and interaction designers. Lean is already becoming a common language, and with Lean Startup, the shared vocabulary around the customer experience is growing.

Connections to architecture

The connections to architecture are just as valuable. Many of the most useful techniques in computing science, interaction design and engineering come from architecture. Design patterns, for example, are thought of as coming from object-oriented programming, but these were adapted from architecture. The use of prototyping as a design technique to prime your mind to the possibilities and space you’re operating in, has been strongly emphasised by Frank Gehry. This technique is now used to great success in business model innovation and in Customer Development. Learning about this directly from architects will give entrepreneurs a better way to choose the right solutions when faced with limited resources. Architects themselves, many of whom are faced with a glut of their skills in applied architecture, can deliver value in other areas, in a similar way that the interaction design discipline emerged from a glut of young industrial designers a few decades ago.

Connections to Science

The Lean approach is rooted in research and experimentation, so a stronger connection to real scientists will only help improve the discipline. Barcelona has also been bolstered by recent European Union investment in Science. As early copies of Eric Ries’ book, The Lean Startup, proliferate, scientists are taking note. The Lean Startup approach to innovation is providing a stronger connection between scientific research, research & development, and commercial demand. This addresses two problems which seem to have been accepted as givens among scientists and R&D people I speak with:

1. That research projects and their corresponding intellectual property get shelved. Either they can’t be commercialised, or the political support dries up, leaving society unable to benefit from them.
2. That science budgets shrink and grow according to government support, or get controlled by by dominant commercial players.

These problems can be addressed with Lean Thinking, and scientists paying attention to this space are seeing new opportunities. They are seeing a future where science budgets are much healthier and more independant, and even true scientific breakthrough research is supported through more distributed markets in the commercial world.

International Leancamps in 2012

We’re hoping to create a cluster of Leancamps around Europe, so that we might travel between them, learning from each other’s strengths. I would hope to draw on the fashion and design connections to London, involving fashion startups like Lookk and our connections to institutions like UCL and Central St. Martins. In Spain, I’m hoping that interest from friends at Desigual, Zara, Elisava and other places spark the local community and come as ambassadors, students and teachers to the international Leancamp community, which already extends to England, Scotland, Netherlands and Bulgaria.

Please get in touch!

I’m in Barcelona until Friday morning.

The waiting list is now open

The Leancamp Barcelona waiting list has opened here: http://register.leanca.mp/leancamp-europe-2011/ Tickets will be available to the waiting list first, so please sign up if you’re interested.

If you’d like to meet, please get in touch! smile@saintsal.com or @SaintSal

Posted via email from I’m Sal