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I was at an board meeting yesterday morning for a new seed deal that we’ve done that will be announced next week. I love the product vision – it’s in an area that I’ve been working in for a while across a variety of companies and will take a new approach to a very old and persistent problem.
The entrepreneurs have been living the specific problem for a long time and believe they have a unique and very informed way to solve it. Given that the company has had no funding to date, the founders have been scrappy and have cobbled together a really impressive prototype that they’ve been using to get early customer feedback. It’s an ambitious product vision that will take a while to fully roll out.
In lean startup language, they’ve got a minimal viable product. However, they are faced with two choices. The first is to polish and release the current prototype. The second is to use the prototype to continue to explore and understand the specific customer fit while building a production version from scratch that incorporates much of what they learned during the prototype development.
In their case, the customer is a business customer rather than a mass market consumer web product. Consequently, having 100,000 free users is not important in the near term – I’d much rather see them have 100 paying customers which might translate in several thousand users across all of these customers, as our premise is that organizations will have between 1 and 100 early users of the product.
We spent a lot of time in the meeting talking about this choice as well as overall product cadence. We left it up to the founders to figure out what they wanted to do and what they wanted the cadence to be, but we encouraged a one year top down view, rather than a quarterly bottoms up view. We encouraged them look at where they want to be in a year (remember – this is a seed deal, so we have plenty of ability and desire to continue to fund as they make progress, with or without new investors) and work backwards to a product cadence that works for them.
I don’t know if they’ll have a once a week, twice a month, once a month, or once a quarter release cycle. But I’m fine with any of them as long as they pick the cadence and stick with it. Given my deep belief in an agile development approach, I don’t really care what’s in the actual incremental releases at this point as I fully expect the furthest out they’ll be able to see is one quarter.
It reminded me of something I often tell TechStars teams – “slow down to speed up.” I see so many startups rushing to just get stuff out, without thinking hard about “what that stuff is and why anyone would care.” Part of this is lack of understanding of what you are trying to accomplish, but some of this is a lack of product cadence. When you have a clearly defined cadence (e.g., a monthly release) you can focus on “what’s next” while in parallel explore “what’s after next.” But in the absence of a cadence, you are always working on “what’s next” and never looking out any further.
For some reason I’ve been doing a lot of interviews lately. In many of them I get asked similar questions, including the inevitable “what makes a great entrepreneur?” When I’m on a VC panel, I’m always amused by the answers from my co-panelists as they are usually the same set of “VC cliches” which makes it even more fun when I blurt out my answer.
“A complete and total obsession with the product”
The great companies that I’ve been an investor in share a common trait – the founder/CEO is obsessed with the product. Not interested, not aware of, not familiar with, but obsessed. Every discussion trends back toward the product. All of the conversations about customer are really about how the customer uses the product and the value the product brings the customer. The majority of the early teams are focused entirely on the product, including the non-engineering people. Product, product, product.
And these CEO’s love to show their product to anyone that will listen. They don’t explain the company to people with powerpoint slides. They don’t send out long executive summaries with mocked up screen shots. They don’t try to engage you in a phone conversation about the great market they are going after. They start with the product. And stay with the product.
When I step back and think about what motivates me early in a relationship with an entrepreneur, it’s the product. I only invest in domains that I know well, so I don’t need fancy market studies (which are always wrong), financial models (which are always wrong), or customer needs analyses (which are always wrong). I want to play with the product, touch the product, understand the product – and understand where the founder thinks the product is going.
I don’t create products anymore (I invest in companies that create them), but I’m a great alpha tester. I’ve always been good at this for some reason – bugs just find me. While my UX design skills are merely adequate, I’ve got a great feel for how to simplify things and make them cleaner. Plus I’m happy to just grind and grind and grind on the product, offering both detailed and high level feedback indefinitely.
How a founder/CEO reacts to this speaks volumes to me. I probably first noticed this when interacting with Dick Costolo at FeedBurner when I first met him. I am FeedBurner publisher #699 and used it for my blog back when it was “pre-Alpha”. I had an issue – sent email@example.com a note – and instantly got a reply from Dick. I had no idea who Dick was, but he helped me and I quickly realized he was the CEO. Over the next six months we interacted regularly about the product and when he was ready to start fundraising, I quickly made him an offer and we became the lead investor in the round. My obsession with the product didn’t stop there (as Eric Lunt and many of the other FeedBurner gang can tell you – I still occasionally email SteveO bugs that I find.)
I can give a bunch of other examples like FeedBurner, but I wrap up by saying that I’m just as obsessed with product as the founders. And – as I realize what results in success in my world, I get even more obsessed. Plus, I really like to play with software.