4 Lessons for Corporate Entrepreneurs

Corporate entrepreneurship is an art. You have to learn to win for the team and for the company, to break just the right number of rules, and to swing almost for the fences.

Train like you fight: when deployed to Kuwait, my platoon of violated the safety guidelines during training exercises to master breach operations. Instead of traveling in our Bradley Fighting Vehicles up to a breach at 10 miles an hour, we would travel at maximum speed in wedge formation until the last minute, when we would form a line, with the trail vehicles slowing only enough to let the lead vehicles advance. Once in line, we would again travel at maximum speed through the breach using infrared cameras to see through the smoke and keep appropriate distance from the vehicle in front. My view was that it was actually more dangerous to train at 10 miles an hour because people would not be able to operate at combat speed during an actual engagement.

Think about your billionth user, build for your first customer: In 1999, I started working on a horribly named, but forward-looking social networking site: azazoo. I left my job as a patent attorney and taught myself Drumbeat + Access, then ASP + SQL. I wrote over a hundred pages of patent applications and created over a hundred pages of code. I was focused on the problems that people would have when everything was tied into a single identity, authorization, and identification system, from banking to building access to little league baseball management. For my efforts, I received a patent that was later sold via the Ocean Tomo auction. What I did not receive was a customer base. I was so focused on problems that people were going to face once my system achieved universal adoption that I failed to make my offering interesting to anybody. Facebook came along a few years later and in the matter of a year had achieved the scale that I had dreamt of by creating a valuable application for its first set of customers: students at Harvard. Mark Zuckerburg probably did have some ideas about how the world would be when everybody was on Facebook, but he focused on making his first customer happy and worried about the future later.

People want simplicity: when I was working as a developer for the Marine Corps Institute in 2001, there was an initiative to transition to electronic testing. A project had been started several years (and over $10 million) earlier, and the product of this investment was a couple of exams that could be taken at a handful of locations and less than ten percent adoption. I pitched the idea of enabling people to submit standard bubble-sheet exams using a simple web-form: build it once, and it works for all of the Marine Corps Institute's 100+ exams. Once we received the green light, we built the initial prototype over the course of a month. Despite, and perhaps because of, its simplicity, the application was very popular, particularly for the Marines deployed overseas who often had their exams delayed or lost in transit back to the United States. Within a year, most of our exams were being submitted electronically. A couple of months ago, I learned that the Marine Corps Institute has discontinued paper exams entirely.

Create the bridge between a successful experiment and product team adoption: Speed Launch was an experiment I conducted to see how my employer evaluated experiments. Over the course of a few months, we built a prototype of a very basic application launcher. The application received positive press and was downloaded over 90,000 times (more than most of the formal prototypes), but the product teams did not know what to do with the idea. To grow the project from 90,000 to 900,000 downloads would have been a challenging but manageable task, but even with those numbers it is not clear whether any product team would have found it interesting. It would be great to create a mechanism for select experiments that are not adopted by a product team to be placed in an affiliate "proving grounds" company. If a company does not invest in small yet promising ideas in hopes of growing them into meaningful business opportunities, they should stop incubating entirely.

Matt's Recipe for Startups

I do not claim that this is a new recipe, but one of my belief's is that people (mostly me) place too much emphasis on "new" while thinking about startups and not enough focus on solving people's problems. The goal is not to do something that nobody has ever thought of, but to find a meaningful problem that you can help people overcome. Somebody has thought of pretty much everything, and pushing further into the unknown is generally unadviseable unless you have some deep pockets with a massive timeline financing you.

With no claim of novelty, here is my recipe:

1) find meaningful problem (meaning = big problem for few people OR little problem for many people)
2) do as little work as humanly possible to build a solution for the problem
3) validate that your solution addresses the problem with actual customers
4) repeat (but finding and solving a more meaningful problem with each iteration)

I will go on the record as saying this: if nobody has thought of your idea, it probably sucks. I am not wed to my recipe, but I do believe that it is important to overcome this harmful belief that you have to be in unchartered territory to build something meaningful.

Some interesting articles...

Innovating on New Business Models 1/6/2010 07:44 PM

"In the quest to come up with the next great product, many businesses ignore a possibly even greater source of differentiation--the next great business model." http://www.forbes.com/2009/12/18/innovation-business-model-leadership-managing-products.html?partner=msn​

Does your company innovate with business models? What percentage of your company's revenue comes from ventures started in the last 20% of your company's life?

Unshackling Employees 1/13/2010 09:11 AM

http://blogs.wsj.com/management/2009/08/07/unshackling-employees/?mod=rss_WSJBlog

"…humanity’s most adaptable social system—democracies and markets—are those that extend the greatest freedom to their constituents. In a democracy, you don’t need anyone’s permission to form a new political party, publish a politically charged article, or organize a “tea party.” And in open markets, individuals are free to buy and invest as they see fit. When compared to the typical corporate leviathan, these systems are remarkably under-managed."

Reading List 1/13/2010 09:15 AM

Three books that have affected me deeply are Art of the Start by Guy Kawasaki, Discover your Strengths by Marcus Buckingham, and Orbiting the Giant Hairball by Gordon MacKenzie.

Failure and Innovation 1/17/2010 03:38 PM

http://www.fastcompany.com/blog/valeria-maltoni/customer-conversation/innovation-and-failure
​
You Cannot Analyze Your Way to Innovation 1/17/2010 03:42 PM

"This is a fascinating time, and there's an interesting battle coming. One of these smallish design firms might combine the best of the analytical from the business world and the best intuitive thinking from the design world and become gigantic. There would be massive traction for it. It wouldn't be the first time that a little company in a garage saw things differently."

http://www.fastcompany.com/blog/linda-tischler/design-times/whats-thwarting-american-innovation-too-much-science-says-roger-mar?nav=inform-rl​

Writing Business Plans 1/19/2010 12:05 PM

Video from GSB:

http://www.youtube.com/user/stanfordbusiness#p/search/0/yG6_6UbprFw

For some great podcasts, check out their ecorner:

http://ecorner.stanford.edu/podcasts.html​

Why experiment? 1/21/2010 05:18 PM

http://www.businessweek.com/print/innovate/content/dec2009/id2009122_190843.htm​

I wish I could write like this:

"It is no longer about displaying a screen shot to gauge input on a new UI layout. Rather, it's about demonstrating a willingness to experiment in the first place and then providing a vehicle to experiment with the value proposition itself and the business model that enables it."

What is a business model 1/28/2010 03:06 PM

http://blogs.hbr.org/cs/2010/01/is_your_business_model_a_myste_1.html


Why would someone want to buy something from you?
How will you make money selling it?
What, exactly, are the important things you need to do to pull off the plan?
​
Straight from the horse's mouth 2/11/2010 11:49 AM

Jason Fried, the guy behind 37 signals, the company behind ruby on rails, dishes out some wisdom in a fun video.

Have a great idea, break it in half.
Putting a price on something forces you to make it good.

http://bigthink.com/jasonfried
​
What really matters 2/11/2010 05:06 PM

http://www.scribd.com/doc/23639635/What-Really-Matters-When-Starting-a-Consumer-Internet-Company

According to a little overnight success called Scribd. ​

Bob Parson's Rules 2/15/2010 07:06 PM

So, the guy who brought you the godaddy commercials is an interesting character. Former Marine, part geek part purveyor of business porn, he has figured out how to win in a commodity marketplace. Check out his rules at:

http://www.godaddymobile.com/Entertainment/Bobs16Rules.aspx?ci=17135&isc=gda224x&cookiecheck=1&isc=gda224x ​

MORE intelligence from Bob Parson's 2/18/2010 10:23 AM

I am not sure if I am merely delluded by the...marketing strategy of this man, but he makes more sense to me than most. Check out this video (not sure if it is safe for work...but GO FOR IT).

http://www.bobparsons.me/index.php?ci=14968&id=-1&targetGuid=b18d3b48-19c1-47bf-accf-f0fbe8123be0 ​

Rise of the Innovation Ninja 2/23/2010 04:50 PM

http://www.ideachampions.com/weblogs/archives/2010/02/_every_once_in.shtml​

Be Lucky 3/1/2010 02:39 PM

I have no idea where this article came from (Ross?), but it is great.

http://www.telegraph.co.uk/technology/3304496/Be-lucky-its-an-easy-skill-to-learn.html

Enjoy, and be lucky.

Matt
​
P&L for Newbies 3/16/2010 02:54 PM

http://www.businessinsider.com/the-profit-and-loss-statement-2010-3

Fred Wilson is a VC and is a big name in the startup world. He provided this dumbed down explanation for P&L that can help people outside of the business world understand what people inside the business world care about. ​

Lion v. Buffalo

A lot of times, opportunity is defined by perspective. First, consider you are a buffalo roaming the plains of somewhere grassy, like in this video. You see the tigers, and realize: things are going poorly for somebody today. What should you do? Well, I have never been to buffalo survival school, but it seems like the best idea is to stay in the middle of the pack and hope one of your buddies blows out a knee. You may be thinking "Ah, you have forgotten the possibility that the tiger get's nobody! That is what I would hope for." But, you are wrong. If the tigers fails to eat my buddy, you just have some really hungry tigers. Based on the fact that there are still tigers, something tells me they will eat before too long. If you live in a buffalo herd, you want to surround yourself by weaker buffaloes, because if you are the slowest, you are lunch.

Let's review: the best potential outcome is that one of your buddies dies, and the worst outcome is that none of your buddies dies and you took one for the team. How do you win? Why do you play? It seems like you are just waiting for your time to go...so switch sides.

Consider this game from the perspective of the tiger. Instead of hoping to not die, you are chasing the herd, waiting for an opportunity to present itself. Hopefully, it is you that makes the strike, because there is something wonderful about leading the chase. But, if your buddy makes the strike and you just come and join him for some chow, that is not bad either. The only thing that sucks is if your whole crew fails to deliver. If you live in a tiger...I cannot remember the name...gaggle, you want to surround yourself with the most powerful buddies you can. You hope for their success while working aggressively to achieve success yourself. This seems like a fun game.

If you find yourself in a job where you are trying to position yourself against your co-workers so that you are not the one that gets fired, switch teams (or create a new team). Hunt for opportunities. Go for the kill but support your buddy and hope he succeeds as well.

Matt

Create your own innovation pipeline.

Many ideas. Fewer experiments. One big bet.

I know a lot of people who have a lot of great ideas...actually, a lot of ideas is probably more accurate. I am one of them. The problem is, that most people who have tons of ideas have no process for clearing their mind (and their mouth) of the less interesting ideas and putting more energy into the more interesting ideas. A solution to this problem is creating an innovation pipeline.

The first requirement for an effective innovation pipeline is tons and tons of input: new, random ideas. Random is important, because if you just have 100 different ideas about how to make a better mousetrap, you are not innovating, you are just engineering a better mousetrap.

The second requirement is to create some sort of fitness function that helps you evaluate the ideas and select the best (most fit) for experimentation. For example, you can score each idea for customer value, business value, ease of prototyping, and degree difference from the next best solution. The score is not as important as the process of critically evaluating your landslide of ideas and quickly sorting the potential winners from everything else.

The third component is to create experiments for the best ideas. An experiment is a prototype plus a business model--you want to learn as quickly as possible whether you can build it and whether you can make money off what you built. As far as prototypes are concerned, a good prototype is one that approximates what the customer would use (e.g., not just screen shots/drawings). As far as business models, do not wait until your product is in the box to figure out how to try to sell it. Do it early so you can adapt your product to the demand when it is still small and flexible.

Now that you have your experiments up and running, you need another fitness function. What happens if you cannot adapt your product to make a customer say "that is awesome" as he is reaching for his wallet? Throw the experiment and the idea away before you have invested too much time--you are just dating your experiments, and the quicker you give up on lower quality ideas the better. Even if you could make a marginal idea float, it is better to put that same amount of energy into a better idea and make it fly. Knowing that failure is a very real possibility, you want to invest as little as possible in your experiments so that you do not end up in a personal "too big to fail" scenario: if you have mortgaged your house or invested the last five years of your life for your new venture, you may not be able to reasonably assess whether you should just push a little harder or walk away.

So do not wait before looking your little experiment in the eye and making the call. And have many other experiments, so you can get a sense of what a good experiment feels like. And have many other ideas so that you can kill an experiment with confidence knowing that there are other good candidates waiting in the pipeline.

Once you have an experiment that feels right, you are ready to do great things. It is time to stop with the hedging of many and put yourself behind your one big bet. The big bet will evolve over time, but you are probably stuck with it for five years if it actually succeeds. The odds are still that you will fail, but you now have a better chance of success. And, by the way, do not feel guilty about what you have done--you never kill an idea or an experiment. You will probably end up looking to some of these as you execute on your big bet if you determine that they might satisfy a customer need. So get started today: write down all of your ideas on a board and build the foundation of your innovation pipeline.

Happy innovating.

Matt