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By Peter Vu Alec Baldwin, real estate agent, exhorting his real estate peers to sell! While most young entrepreneurs or tech-minded folks today may recognize Alec Baldwin as the character in “30 Rock,” they would also be well-served to check out his gripping performance in David Mamet’s ruthless 1992 play “ Glengarry Glen Ross .”   His emphatic speech on selling (“Always Be Closing!”) delivers a key line that has always held true for businesses since good and even bad products still have to be sold to generate revenue.   Yet in the past year or so, those looking to enter the startup game have constantly been inculcated with a need to code via popular firms such as Codeacademy or Treehouse with minimal focus on how to sell your product. This approach seems incredibly myopic. Below are three key takeaways on this situation and opportunities to rectify it. 1. Dearth of Selling. If you survey the catalogs of leading business schools, you will be hard-pressed to come across a maj...

By Matt Ziegler “It’s all about the people.” The idea that people are the driving force behind the success or failure of startups has been drilled into us repeatedly through cases, classroom discussions, and guest speakers…we get it.   The HBS curriculum also preaches that people are central to success in companies of all sizes, and that companies institutionalize people practices through culture .   Despite implicitly understanding this, founders are consumed by building products, finding customers, and raising capital.   With the emphasis on finding PMF, it’s not surprising that founders make early hiring decisions based on “who is the best person for this job?” instead of “ who is the right person to help me build my company?”   I’d argue that building a culture is just as important as finding PMF.   My views are strongly shaped by my internship experience last summer at DoubleDutch, a mobile enterprise startup in SF.   DoubleDutch cared deeply about i...

By Nicholas Patrick The lean startup methodology advises startups to validate their business model and find product-market fit before scaling. But recent history is littered with startups that have scaled without a fully-baked business model, including Facebook, Twitter, and Foursquare. In this post, we explore why startups might choose to do this. First, monetization can be distracting. Early stage startups only have limited amounts of financial and human capital to deploy. Focusing on monetization instead of growth in early stages may doom the startup never to achieve scale. This can be fatal when scale is necessary either for the product or for the monetization strategy to succeed. Would Mark Zuckerberg have been better off placing and tweaking banner ads on early versions of Facebook, or was he better off spending his time and energy continuing to develop the site and spread it to other schools, ensuring scale and ubiquity? History clearly suggests the latter. It can also be di...

By Stephanie Frias On Tuesday, February 19, we had a great VP of Sales panel in class. Yes, sales, the ignored discipline on MBA campuses across the country. Only 20 percent of accredited MBA programs offer a sales curriculum and only3 percent offer an MBA concentrating in sales. [1] Having worked in a sales organization for part of my pre-HBS career and now working on launching my own company, it was refreshing to hear the panelists’ insights. It led me to ponder why there is no sales curriculum at HBS. Below are my hypotheses and conclusions. 1.     Rarely do CEOs come from the sales trenches. False. Sure, a large number of Fortune 500 CEOs, about 30 percent, have a finance background. [2] However, approximately 20 percent of the same CEO pool made their way to the top from the sales side of the house. Some notables include: a.     John Chambers, CEO of Cisco Systems b.     Samuel Palmisano, former President and CEO of IBM c.  ...

By Dileepan Siva CEO of Plastiq, Eliot Buchanan, touched upon a key issue for some startups - doing business development deals with big corporations . Plastiq's solution enabled consumers to pay for large-ticket transactions where credit card payments were previously not available. In its early days, Plastiq struggled with how to go to market and signing merchants at scale. The startup could sell through merchant acquirers or go directly to merchants—scale could be achieved more rapidly through acquirers, particularly important for a business with low barriers to entry and well-entrenched players. This situation is not uncommon for many startups. Securing partnerships takes time, resources and is not easy by any means. But there are specific situations where challenges are more significant and where the lean startup in particular faces special difficulties. Early-stage searching for fit Some startups seek out business development deals prior to achieving product/market fit. Why wou...

By Adelyn Zhou Many industry leaders have said that there are only two roles in a startup, a builder or seller; the prevailing wisdom for startups seems to be “focus on sales first, and only later on business development.” In the Dropbox case taught in TEM last year, founder Drew Houston initially tried to pursue partnerships with large corporations.  However, after a series of trials and errors, he realized that it was very difficult to sell the Dropbox product directly to company IT managers.  Therefore, he did a “Trojan Horse” approach and targeted company employees instead.  Using great referral and viral techniques, he incentivized consumers to download Dropbox directly onto their computers.  Ultimately, the combination of IT department employees using the product and the internal demand from company employees tipped many companies over the adoption hurdle and into being Dropbox customers. Mark Roberge, SVP of Sales at Hubspot echoed similar sentiments on how a ...

By Yue Zhao Companies spend a significant amount of their hard earned cash on acquisitions of startups in an attempt to complement innovation (or lack thereof) in their own ranks. In 2011, 970 deals worth $70 billion dollars were spent by corporations on acquisitions less than $1 billion in value. Of these, 21% by value or 80% by deal count were less than $100M and 53% by value or 17% by deal count were between $100M to $500M (E&Y Global Technology M&A reports). So, why not adopt lean startup tactics for intrapreneurship and save billions of dollars on acquiring entrepreneurs and their companies? First off, let me note that my Microsoft Word spell check does not recognize the words “intrapreneur” and “intrapreneurship”. On this extreme end of the argument, any format of entrepreneurship and innovation are incompatible with the DNA of large companies. Corporations have established scalable products that have proven product market fit and profit model. The sole purpose of their ...

By Jane Yu Pinterest is the new craze these days; the golden child of the social networking scene. The platform has raised $338MM to date and being recently valued at about $2.5B dollars although not having yet communicated a clear monetization strategy (to the outside world, at least). Pinterest’s high valuation, however, suggests that the tech community is hoping that the website will be the next greatest revenue generating engine. In a time of skepticism and disenchantment with the potential for new-age online business models to drive commerce, Pinterest is not without substance. Research has shown that across the web, the average sale from a Pinterest user is $180, versus $80 on Facebook and $70 on Twitter. Pinterest users are also more likely to buy: One Kings Lane discovered that users who are directed to their site from Pinterest are three times more likely than the average user to commit a purchase. The platform clearly has enormous potential, but so far, it has remained conspi...

By Aileen Wu One of my favorite activities related to product development is gathering consumer insights. I enjoy not only the process of observing people and interpreting their feelings and motivations, but also sitting at the front lines of where your creation meets the test of the outside world. Throughout Launching Tech Ventures and entrepreneurial endeavors, I have seen and used many techniques to gather insights from smoke tests to surveys to usability tests. In order to get reliable and valid customer data, it is important to think about not only what test to use, but also who to perform the tests on. Dharmesh Shah highlights the dangers of acting on survey data in a great article called “Early Evidence Is Often Too Early And Not Really Evidence.” He warns that even though 80% of your survey respondents might care tremendously about keeping an extra feature of your product, they may not be represent of your average user. Early on, you may have actually only gathered the response...

By Glen Thrope To someone thoroughly schooled in the lean startup methodology, the case of the mobile question-and-answer service Aardvark is somewhat disconcerting. The Aardvark team executed lean hypothesis testing about as by-the-book as anyone possibly could. In developing their concept, they avoided falling in love with any given idea and instead evaluated each using a predefined set of criteria. They used smoke tests to cheaply gauge interest in their different proposals. They employed mechanical turks to build cheap MVPs and avoided writing code for as long as possible. They coupled A/B tests, user studies, and short development cycles in an effort to constantly improve their product. And yet, Aardvark’s final product was underwhelming. The dynamic between the service’s question askers and answerers didn’t quite work. User growth was decelerating, and doubts remained surrounding the potential for future monetization. Though the product was ultimately acquired for a hefty sum, Aa...

  By Jennifer R. Smith Many smart, aspiring entrepreneurs are well-schooled in Eric Ries’ “lean startup methodology.”   They diligently follow his prescription of translating their visions into falsifiable hypotheses, developing minimum viable products (MVPs) to test those hypotheses, and then rapidly iterating and/or pivoting in response to market feedback – all while optimizing their preciously scarce resources. But what about corporate leaders?   I doubt many of the executives at the helm of Fortune 500 corporations talked about “lean startup” in their business school Strategy 101 classrooms or obsessively debate its applications in today’s boardrooms.   On the contrary: as a management consultant, I engaged with my clients on strategies to invest years and millions of dollars in building and perfecting new products before they ever reached the user.   Corporations obviously have resources that startups don’t: they have time, money, embedded processes, and an...

By Jeremy Schreiber In class, we study the lean-startup method, and with that we examine a very data-driven approach to building a product and a company.   While this is a very effective way to design for a consumer-facing online platforms, where scaling rapidly (or virally) is essential, I still question this approach as a one-size-fits-all solution to building a startup. As discussed in class, the visionary vs. data-driven development problem can be easily seen by comparing Apple and Google.   Google is one of the most data-driven companies around.   They design and quickly launch beta products, getting the code into the hands of their users as fast as possible, and learning from their observations.   And yet the solutions they create, while diverse and powerful in their own right, are fragmented, messy, sometimes unnecessarily complicated, and lack a cohesive feel.   Many of their products solve existing problems quite well, but perhaps with the exception of ...

By Kotaro Sasamoto How well would lean startup management practices apply to new business development in big corporations? Well, it is said that setting an independent division with different business processes, performance measure, incentive systems and culture should be one of the best ways for big corporations to handle new ventures (Yes, I took BSSE and read “Innovation’s Solution”!). However, I feel kind of cheated with this approach. It seems like “running a new business in the same way that all the other small startups do, but with the name of the parent big company on it.” In order to truly evaluate the applicability of startup management practices to big corporation, it is necessary to consider the unique characteristics of big corporations, which I think are modularization and specialization of business process, and to examine how well we could leverage these characteristics to the startup management practices. So, the question should be “can big companies effectively modular...