cyberlaxamana

by George Levitte Startups often face difficult decisions surrounding when and how to grow, particularly regarding whether or not it’s necessary to fully validate a business model prior to scaling up. Under most circumstances it’s best to test and iterate over and over again until the model has been validated and the entrepreneur is confident that the startup can scale and eventually achieve profitability. More specifically, in markets that do not have “winner-takes-all” dynamics (e.g. strong network effects or significant scale economics) it’s important to have validated the model prior to ramping up. Note that this does not require being profitable, but rather just proving that profitability could be turned on if necessary. Startups often refer to “flipping a switch” on profitability, which might mean adding more ads, charging fees for premium offerings, or any of several other avenues for generating revenue. It’s important to test and iterate sufficiently to prove that you have this...

by Wei Lien Dang All eyes were on Facebook last week as it filed for a long-awaited IPO. In his letter to shareholders, Mark Zuckerberg commented on the company’s approach to building products: “The Hacker Way is an approach to building that involves continuous improvement and iteration...Hackers try to build the best services over the long term by quickly releasing and learning from smaller iterations rather than trying to get everything right all at once. To support this, we have built a testing framework that at any given time can try out thousands of versions of Facebook.” Perhaps surprisingly, that description sounds a lot like the underlying principles of lean startup methodology. I say it’s surprising because Zuckerberg is a visionary who hasn’t shied away from relying on instinct to ship new products even in the face of large protests among Facebook’s users. Features like News Feed and Timeline all generated significant backlash upon their introduction yet this didn’t deter Zuc...

by Om L. Lala In a recent HBS class, a firm called “KNP,” specializing in “speaker training and executive communication,” shared their advice on presentation skills. After seeing thousands of VC pitches and interviewing hundreds of VC principals, KNP noted that despite the quantitative nature of the evaluation process, the characteristic that often ends up making the difference between getting funded and not is “passion.” Similarly, entrepreneurs often describe how their “passion” for an idea is what motivates them. But in the journey of most startups, passion can be both an asset and a liability. Hypothesis-driven entrepreneurship is the best approach a startup can employ to make sure their business model is viable. But this process is an inherently unbiased analysis that should not be influenced by an entrepreneur’s personal attachment to his idea. As such, there can be an inherent conflict between the dispassion required for hypothesis-testing and the entrepreneur’s passion for his ...

by Jeff Buening I’ve spent the better part of 2 years now at HBS developing a sense for what it takes to succeed as an entrepreneur. Whether through attending speaker series, joining tech/start-up clubs, pursuing start-up ideas of my own, or extensive coursework I’ve taken (The Entrepreneurial Manager, Social Entrepreneurship in the Biz Sector, Entrepreneurship and Global Capitalism, Entrepreneurial Finance, Launching Tech Ventures, Digital Marketing Strategy, etc.), I’ve covered countless data points and case studies on startups that have both succeeded and failed. And I’ve been fortunate enough to listen firsthand in class to many of these entrepreneurs discuss and diagnose the reasons for their successes and failures. One topic that consistently pops up unprompted is how and why the entrepreneur decided to start her particular business and, in some cases, leave that startup to pursue the next one – effectively, it’s the decision criteria an entrepreneur applies to start (and stay in...

by Anonymous I have constantly found myself thinking through the new lean startup concepts throughout this class and wondering how they could be successfully applied to large organizations. The definition of a startup and a large corporation are completely different in every critical way: access to capital, human resources, brand awareness etc. And yet, large corporations are constantly trying to find ways to “incubate”, develop, promote and support lean startup methodologies. Over the past few years, I have seen how two large companies have tried to create a “lean” environment within their companies. The common trade-offs are: Uncertainty vs. Scaling: Startups ideally try to reduce the amount of uncertainty through minimum viable products (MVPs), while corporations require accountable business plans and projections that force premature scaling and disincentives pivoting. Effectively there are rarely corporate structures or environments that even permit anything beyond setting a visio...

by Michael Belkin Thousands of ideas are envisioned each day, but only a select few come to fruition. Despite a CEO’s wide-eyed optimism for finding the perfect idea, early stage entrepreneurship is largely about execution. Consider Facebook vs. MySpace, Google vs. AltaVista or Dropbox vs. every previous online backup solution. One doesn’t have to look far for companies who have established themselves not by inventing new business models, but by excelling on superior execution. While some businesses can outsource IT or cordon it off to a skilled CTO, the more a company relies on its technology the more important it is that the founders have technical backgrounds. I propose a simple test, if your business can’t serve a single user or customer without software, the founders should know at least the basics of coding. As access to capital and business advisors increase, the relevance of non-technical CEOs continues to diminish. With the seed of a good idea and a couple all nighters, an eng...

by Sarah Elliot The primary objective for most entrepreneurs is to create a product that customers want and are willing to pay for. The process by which this objective is reached often requires frequent product iterations and customer interactions. It is through this process that the entrepreneur identifies which aspects of the product vision are incommensurate with the wants and needs of the customer. Closing the communication gap with the customer is critical to the success of a venture. However, there are real and substantial consequences to exposing a customer to a product that isn’t “right”. Therefore, there seems to be an inherent tension between getting the product “right” and getting the product out the door and into the hands of customer. So the question remains, When does it make sense to launch early with a buggy product, and when is it important to perfect the product? The answer to this question varies and is contingent upon several contextual factors such as the nature...