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How to Hire a VP of Product for your Startup

21 Feb

I was recently asked by a startup CEO how he should think about hiring a Head of Product / VP of Product at his startup. Here’s what I shared with him.

Are you ready to hire a VP of Product?

There are two points in a startup’s trajectory when it makes the most sense to hire a VP of Product:

  1. When the Founder/CEO can no longer dedicate the time: Few things in a tech startup are more important than the product, but there are some things that only the CEO can do – these include advocating the company’s vision, fundraising and making financial decisions that keep enough money in the bank, hiring and managing talent, and making things happen, like closing critical sales or landing partnerships. When the CEO no longer has the time to focus on product, it’s time to bring in expert help.
  2. When a team of junior PMs needs leadership: Some particularly product-savvy CEOs don’t hire a Head of Product when #1 happens, but rather bring in one or more junior PMs to help handle the day-to-day product work while owning product strategy themselves. Once this team has grown beyond a couple PMs, a startup may need to bring in an experienced VP of Product to help mentor and coordinate this junior team, guide strategy, and ensure the delivery of awesome products.

Other good reading about hiring your VP of PM:

 

Defining the role

vp_of_awesome_mugIt’s important to start by making sure you know the role you’re trying to fill. I typically think of a VP of Product as having 3 core responsibilities:

  1. Building the Product Team: Hiring, mentoring, celebrating, and nurturing the people who make the product successful. Product leaders create a culture where people feel ownership of the products they’re building, and are constantly finding ways to improve and extend them. In my experience, VP of PM does this not only for the PM team, but broader Product (design, engineering, data, QA) team.
  2. Guiding Product Strategy: Leading the exploration of ideas, fostering decision making, seeking data and customer insights to inform hypotheses, and communicating strategic direction and its rationale formally and informally, throughout the organization.
  3. Delivering Great Products: Establishing process, sweating the details, insisting on quality, breaking down roadblocks, coordinating teams, setting schedules, and ultimately being accountable for the creation of great customer experiences.

Marty Cagan (former SVP of Product at eBay) at SVPG share his thoughts in a great summary: The VP Product Role. Ellen Chisa (VP Product, Lola Travel) helps differentiate between the responsibilities of a more junior PM and the Head of Product in The VP of Product vs. the Product Manager.

 

Decide how to evaluate your candidates

Next, you need to figure out how you’re going to evaluate your candidates. At TurboTax I helped a team revamp our PM hiring process around a few principles:

  • Use expert assessors: use product experts in the craft to help with evaluation. In a startup’s case, that might be your board, your CTO, or even the head of product at a peer company
  • Show, don’t tell: use case studies, homework assignments, and working sessions to work through realistic work scenarios, rather than talking about them. Ask candidates to tackle a strategic product problem you’re actually facing – while you’re mostly looking to understand their approach, you might just get some great new ideas
  • Know what you’re looking for: At Intuit, we looked for PMs with analytical ability, customer empathy, cross-functional communication, strategic thinking, and detail orientation. I like it when startups can articulate even more concrete targets, for instance experience analyzing data with SQL, a background in computer science or UX design, etc. Given the broad role a PM plays, expect that most candidates will be stronger in some areas and weaker in others

Here are a couple good articles on the subject:

 

Source candidates

There’s no single place where great PMs hang out, but there are a few places I would recommend starting your search:

  • AngelList, VentureLoop, and Hired.com
  • Your board and extended network (including the “Talent” lead at more prolific VC firms)
  • Recruiters (some entrepreneurs loathe them, but they help you see a high volume of quality candidates quickly). A few that seem to do a lot of this kind of search: Daversa Partners, Riviera, Russell Reynolds, and Quest Groups are a few.
  • Your team’s network. “Who were the top 5 contributors at your last company?”
  • Your own jobs page

 

Have you recently led or been part of a VP of Product search? Other tips you would share?

Dot Voting – How PMs Can Avoid Wasting Time on Ideas Everyone Hates

24 Jan

You’re leading a brainstorming and prioritization session, and there are a dozen or more ideas on the white board. You could ask someone to pitch each idea, you could encourage debate of each idea’s merits, or you could quickly eliminate most of the ideas with a single step, and focus the discussion: ask people to vote on their top 3 favorite ideas.

Dot Voting helps me focus everyone’s time on the ideas that have the most promise, by simply forcing people to narrow in on the ideas they’re most passionate about. Also sometimes called Dotmocracy or Multi-voting, dot voting is a technique I learned from Intuit’s founder Scott Cook while I was a PM leader at TurboTax. It’s been around since at least the 2000s, and is fairly well documented as a meeting facilitation technique.

Dot Voting at Couchsurfing.jpg

As a Product Manager these are the reasons I’ve come to love dot voting:

Helps get buy-in on priority. When you give an idea in a brainstorm and you never hear about it again afterwards, it can be kind of frustrating. Was your idea ignored? It can be especially maddening if, later, your great idea turns out to be extra great because the situation has changed. If, however, you collect Dot Votes at the end of a meeting, and you see that one of your ideas didn’t get a single vote (especially if you didn’t use a precious vote on it), you can understand why it doesn’t get picked.

Saves time. In prioritization sessions, it sometimes feels like you need to really speak up for your favorite ideas and defend them in front of the group. As the meeting facilitator, you can save a lot of time by pre-empting these monologues with a vote.

Focuses energy on a small set of ideas. Allows you to focus any further discussion with the group around the ideas that have the consensus of the group, and allows you to focus your follow-up research on a smaller set of ideas.

Dot voting isn’t, of course, the perfect tool for every situation. If the ideas you’re considering are new or are difficult to understand on the surface, or if the participants lack context on the problem or customer, it might be the right time to use it.

As a facilitator, there are a few things to watch out for: you can speak up during the meeting to make sure newer ideas are understood, you can use your own votes to help make sure some ideas are considered, and you can make sure the team knows which ideas have customer insights or data to back them. It’s also important to remember that businesses aren’t democracies – sometimes leaders will need to pursue a different direction than the team would favor. Even in these cases, however, it’s helpful to know if you’re fighting an uphill battle or if the team already has your back.

Taking Dot Voting Further: I’ve experimented with using a live Google Spreadsheet to take the Dot Voting concept further, and with each person giving a rank vote for their favorite few ideas (e.g. 1 is best, 5 is worst) in a single session. The collaborative nature of Google Sheets, and easy tabulation and rank-ordering of ideas at the end are appealing. Within a few minutes of starting, you have the beginnings of a priority-ranked set of initiatives.

A few things I like less about it however: everyone’s focused on their laptops instead of their colleagues or the board, it’s very tempting to make live edits to your votes to try and influence the final scores (“oh, idea X isn’t doing well, I’ll bump up my vote on that one because idea Y looks to be solidly in the lead”), and the rank order can give an overly scientific feeling to the outcome.

Do you have experience with Dot Voting? Any tips to share? What other techniques have you tried?

Another “Concierge MVP” Example, from TurboTax

17 Jan

I recently wrote about how Concierge MVPs work, and shared an example from my startup, GoodApril.

TL;DR: Concierge MVPs help prove out a new software product by offering customers a service, and providing it, without building out all the software to deliver it in an automated way.

The GoodApril Tax Checkup was actually a form of “Wizard of Oz” MVP, where the user didn’t know that my Co-Founder and I, not our software, were doing some of the work.

For this second example, I share an example of how a Concierge MVP can work even at a mature software product like TurboTax. This example is of a true Concierge MVP, where the user knows they aren’t interacting with software.

Example of Concierge MVP: The TurboTax Health AnswerXchange

After GoodApril was acquired, my Co-Founder and I joined the Intuit TurboTax team, responsible for the company’s response to the Affordable Care Act (ACA). Investment analysts had downgraded Intuit’s stock because of the risk that consumers would flee Do-it-Yourself (DIY) tax software in the face of this complex tax law change, and rather prefer the “expertise” of tax stores and accountants. As leaders of this team, however, we weren’t sure what about the law was most vexing to consumers, and how we could best alleviate their concerns and keep them as TurboTax customers. To find out, we built a way to gather data quickly: a question and answer forum on what would become TurboTax Health.

Starting with a Concierge MVP is a great way to uncover customer needs without building tons of product up front. You offer to help customers with their problem in a manual (and likely unscalable) way, and in doing so, gain much deeper understanding of their specific needs and what kinds of solutions might work best at scale.

For ACA, our idea was pretty simple: Let’s just ask TurboTax users to post their questions about Obamacare, and we’ll offer to answer them. We could then analyze the most frequent questions, and build tools or content to help give them confidence that TurboTax had them covered for ACA.

Our plan required two things: users with actual questions, and someone to answer them.

Finding customers was easy enough: We created a branch off the TurboTax homepage asking users if they had questions about how Obamacare would affect them in the year ahead, and directed them to our new Question-and-Answer product for healthcare, which we called the AnswerXchange.

Giving customers accurate answers at scale was a somewhat tougher challenge, but luckily we had a major asset on our side: an existing question-and-answer forum called the TurboTax Live Community. The community was built to help answer in-product questions for users. While some Intuit employees answered questions in the community, most of the answerers were actually just regular people who enjoyed helping others with tax questions.

Since we anticipated we might get a large volume of questions, and some folks at Intuit had already built a basic calculator that helped customers determine if they would face a penalty under the law, or be eligible for a subsidy, we incorporated it into the AnswerXchange. First, they could step through that calculator, then they were prompted to browse the existing questions or ask their own:

answerxchange-health-fall-2013

Gathering a deeper understanding of customer needs by answering their questions

The volume of questions that started to roll in was pretty overwhelming, and it turned out our community experts couldn’t totally keep up, so our whole team – product people, engineers, designers and marketers alike – began researching the answers for customers’ questions and posting them in the community.

Within just a couple of weeks, we had amazing results. Here are a few of the ways the Concierge MVP benefited us:

  • We were able to develop a basic solution to our customer’s problems before any competitor did, helping us establish credibility and generate early press mentions on our expertise on the ACA.
  • We learned the most common kinds of questions people had about the ACA: how much subsidy they could get, whether their insurance qualified, and how they could enroll.
  • We also learned that even for basic questions like these, the answers could be surprisingly complex based on small nuances of a family’s situation. For instance, what if your kids were covered under free government insurance (CHIP), but you as parents weren’t?
  • Our entire team developed a much deeper understanding of the law, its many complexities, and the impact it was going to have on our customers

With what we learned, we were able to roll out a much more robust solution, called TurboTax Health, to serve customers throughout the 2013 tax year. It incorporated a step-by-step guide to understanding the subsidy, what kinds of insurance would avoid the penalties, and even connected you to an online health insurance marketplace partner to purchase insurance if you needed it.

turbotax-health-subsidy-info

TurboTax Health was built with the knowledge developed in our Concierge MVP

Lessons From Our First Hiring Mistake

19 Jun

Now HiringThree weeks after we made our first contract-to-hire job offer at GoodApril, we pulled the plug.

As a two-person startup, we recognize that making our next three hires will set the culture and trajectory of our company for years to come.  Nevertheless, it’s hard to turn down qualified candidates who fill most, but not all, of your expectations – last week we made the hard choice to go back to the drawing board and find the right candidate, even at the cost of short-term productivity.

“Hire Slow, Fire Fast” is harder than it sounds

That old adage sure sounds great when presented in the abstract, but in the midst of the early entrepreneurial sprint, it’s much harder than you would expect.

Here’s our entrepreneurial reality: we are two people in week 6 of the 12 week TechStars startup accelerator.  The pressure for us to execute is intense – we know that potential investors are evaluating us and the progress we make.  Two of our top goals during the program are to launch a beta version of our forthcoming real-time tax planning product (announced at FinovateSpring) and to assemble the core team that will enable us to prove out our business idea to provide online tax planning services to individuals.

So, six weeks ago we met an amazing CTO candidate – a recently departed senior engineer from a major tax filing company.  He had seven years experience building tax software, he had the right entrepreneurial mindset (offering to take no salary until we closed our seed round), and his references were glowing.  We could just imagine how much more progress we could make on our product, and how much more credible our team was going to look to investors at the big “Demo Day” at the end of the accelerator program.

Two weeks ago our candidate hit the ground on a two week contract-to-hire test.  On Friday, we decided to call it quits, despite all of those pluses.  The experience helped us discover what was important in our hiring process.

GoodApril’s Hiring Manifesto

We Will Hire Better Than Ourselves

It’s important that we stretch ourselves and our team’s capabilities by hiring people who are strong in areas where we are not.  The biggest thing that went wrong with our hiring process was that we discovered our CTO candidate couldn’t keep pace with my co-founder, Benny, from a pure technology development perspective. While Benny is a talented engineer, he’s also got an MBA and two years experience as a Product Manager – we need our CTO to be a better developer than he is. The same holds true for making a hire in any other functional area: marketing, business development, etc.

We Will Hire “Swiss Army Knives” (for now)

As a small team can’t afford to hire team-members with narrow functional capabilities – we should be hiring diversely talented generalists who can help provide coverage across multiple elements of our business.  Our candidate had strengths that were extremely relevant to product design, team management, and some specific elements of tax software, but didn’t have as much ability to make hands-on contributions in other areas.

We Will Reward Entrepreneurial Ambition

On the positive end, our candidate truly impressed us with his willingness to take risks in pursuit of our entrepreneurial vision.  In exchange for his willingness to take less salary, we agreed to over-compensate him with equity.  We recognize not everyone can afford to take as much risk as others, but those willing to take more risk should see greater upside.

Now Hiring

As we move forward, I’m sure we’ll continue to develop more of a point of view on how to hire – I’ll be sure to share those here as well.  In the meantime, if you’re a full-stack software engineer looking to take a lead development, or even CTO role, please check out the GoodApril careers page and get in touch.

Photo Credit: Zach Klein

How to Trend on AngelList: GoodApril’s Success

6 May


AngelList is now a critical part of the startup toolkit.  It helps emergent companies attract talent and investors, and apply to incubators.  Learn how GoodApril was able to “trend” on AngelList, and the benefits of doing so.

Trending on AngelList

Why “Trending” on AngelList Matters

Attracting a large following on AngelList is helpful for raising money, hiring employees, and gathering the “social proof” that other startup-insiders think your idea is compelling. There are thousands of startups listed on AngelList, but only a few are highly visible at any moment – these are either “featured” (curated by the AngelList team) or “trending” (adding lots of followers in a short period of time), and are listed on the website and in a weekly email to users.

Partially as a result of being featured as a trending startup, GoodApril was able to attract 175 followers on AngelList, the majority of whom had no prior connection to us, within one week of listing on the platform.  The talent service found a match of mutual interest between us and 21 job candidates, and gave us exposure to at least 100 more over the next month.  While GoodApril has not pursued external funding, when we do, we already have several investors who have pre-emptively expressed interest through the platform.

How to Get Your Startup Into the “Trending” Section

The basic key to trending is to add as many followers in as short a time period as possible.  It’s not formally stated, but we believe that AngelList also considers how “popular” the people are who are following you – so it’s most valuable to add followers who have a large number of followers themselves.

Ironically, the most effective way to gather new followers for your startup is to be listed in the “trending” section of the website in the first place.  What it takes to be successful at growing your follower base, therefore, is to rapidly harvest your own network, and then ride the wave of new “organic” followers as you begin to trend to stay there.

How to Get Prepared:

  1. Find all your allies already on AngelList – If you use other social networking tools like LinkedIn, it is very easy to find your network on AngelList.  Click your profile, then “Find Friends,” and connect your social network profiles.  You are presented with a list of people in your network already on AngelList – comb through this list a bit and begin following people you actually know or whose updates you might find interesting.
  2. Prioritize your allies for outreach – Now go to your own profile, click the number of people you are “Following”, then “All [XXX] following.”  This presents a full list of the people you just added or were already following.  Take this list and move it into a spreadsheet.  Put the number of followers each of these people has into a second column and sort.  This is your prioritized list for outreach.
  3. Ask your most prominent non-investor advocate to be your “referrer” – Using your new “allies on AngelList” spreadsheet, you now have a hit-list of potential “referrers”.  It’s not publicly stated how this person influences your listing, but they are prominently listed on your profile page.  I recommend contacting and getting a commitment from this person in advance.
  4. Get your non-AngelList Allies Listed – Ask any advisors, employees, investors, lawyers, or other advocates who aren’t already on the service to create a profile in advance of publishing.  Ask, in particular, that they include a photo – a profile page full of photo-less profiles is shady.

Begin your Outreach:

  1. Begin building your profile in “draft” mode – You can add your advisors, lawyers, investors, and referrer while your company is still in “draft” mode.  This enables you to get all your loose ends together before publishing.
  2. Go “live” and individually email your allies – While it is tempting to send a blast email to ask folks to follow you, refrain.  Individual emails, with some thoughtful work put into crafting it to your relationship and most recent conversations, are critical to driving up the number of people who actually take the trouble to click “follow.”  So bust out your prioritized list of people in your network, and start emailing.  Pro tip: draft these emails before you go live so you can just click “send” on launch day.
  3. Publish to Social Media – This should be obvious, but it’s also a good idea to send out a call for help to your friends on Facebook, Twitter, and LinkedIn.  Tell your friends that you’ve debuted on AngelList and that their “follow” will help you get noticed by potential investors (this message seems to be easily understood by people even unfamiliar with tech startups).  We found that this was a helpful way to have a second “touch” with our network to remind them about the individual email we had sent earlier in the day.
  4. Do follow-ups 3 days later –  Even writing individual emails, it took us nearly 200 emails and a social media blast to reach ~75 followers.  We pulled in another 10 or so by going back through our list of new followers, cross-referencing that to our Allies list, and sending a follow-up to the folks we thought were likely to support us.

Timing your Listing (and Trending) on AngelList

The only real benchmark for success for a company is ultimately growing a large base of customers who value and pay (directly or indirectly) for your service.  Despite knowing this, it is very seductively ego-boosting to watch your company’s base of followers grow.  Try not to get too distracted by it.

As I mentioned at the start, we saw many quantifiable benefits of trending on AngelList.  Other incredible benefits included getting noticed by some folks in the accounting industry, who provided the first bit of press attention for us.  An investor spotted us and introduced us to the executive team at a major player in our industry, which led to valuable business development meetings.  Finally, we saw significant traffic to our site and dozens of prospect customer signups.

There is a cost to trending, however.  It takes valuable time and attention from the founders – you have to do the cost-benefit analysis yourself on that one.  It’s also hard to sustain, and you more or less have one good shot at it (until your product and/or investment news is powerful enough to bring on a second or third wave).  Others have written that you shouldn’t post until you are already mid-way into your fundraising cycle.  In our case, we listed before we were even seeking funding, and we’re happy we did.

That’s our story, but if you want to hear another entrepreneur’s experience, check out Justin Thiele’s article with his advice and experience with trending on AngelList.

Do you have an AngelList success story of your own to share?  Please leave a comment!

Are Product Managers Future Entrepreneurs?

1 Feb

I posted this answer today on Quora, in response to the question “Are Product Manager Future Entrepreneurs?

As a former Product Manager, recently turned Entrepreneur, I’ll say that several skills necessary to be successful in Product overlap, but certainly not all.

Skills in Common:

  • Cross-company collaboration – PMs must be able to work across business functional areas, including marketing, service, and engineering, in order to get great products built.  This flexibility and breadth of exposure is helpful as an entrepreneur
  • Focus on users – PMs tend to be highly customer-centric – thinking about the best user experience that a product or service can deliver.  This is even more important for an entrepreneur, who must even more actively seek out customer opinions to assess the merits of a specific product idea
  • Effort and priority assessment – PMs are required to constantly manage a backlog of priorities and keep tabs on the productivity of a finite number of resources.  These same skills are necessary to maniacally manage scope for startup projects where resources (namely your own time and that of your co-founders) is extremely limited
  • Market evaluation – PMs often find themselves in the role of assessing the viability of a particular market or product, and developing a business case.  This is obviously similar and even more exaggerated for an entrepreneur.

New Skills I’ve Found Necessary as an Entrepreneur

  • Sales – As a PM, I did not find myself having to sell, and certainly not to external audiences.  As an entrepreneur, I have had to learn how to sell others on my vision, on how our progress actually represents tremendous momentum, and how our barely-existent product is a solution for their needs.
  • Networking – As a PM, only rarely did I have to develop relationships outside of my business – much more important were my internal connections and clout.  As an entrepreneur, I am constantly looking to develop new relationships and connections with potential employees, advisors, and investors.
  • “Growth hacking” – As a PM, I certainly had to worry about user adoption, but mostly only the abstract – there was a marketing team that was responsible for delivering new users to “knock on the front door.”  As an entrepreneur, I have had to get very creative in finding ways to deliver users to my product with little or no budget to spend.

I’m answering this in the context of an online product manager transitioning to the role of the founder of an online-product-centric startup – other scenarios are obviously possible.

Looking forward to hearing the opinions of others.

An Unexpected Wrinkle in Preparing to Launch a Tax Business

25 Jan

Imagine preparing for the SAT, only to find out three days before the test that it had been struck down, and was no longer required for entrance to college.  That’s sorta what today felt like.

As Benny and I prepare to launch our tax preparation and advice startup, GoodApril, we have been prepping to take the Registered Tax Return Preparer exam with the IRS to help bolster our tax credentials.  While the test is really intended to ensure your local preparer knows their stuff, we thought passing it would help with fundraising and gaining customer confidence.

It turns out, however, that the United States District Court for the District of Columbia struck down the IRS’s registered tax return preparer program on Friday and is preventing it from enforcing the regulations.  As a result, the IRS today suspended the entire program, including its qualifying exam.

With the tax-filing season starting Jan. 30, hundreds of thousands of return preparers won’t have to register with the federal government, pass a competency test or meet continuing- education requirements.

So, it’s back to the drawing board on how to demonstrate that our product is being produced by financial technologists with legitimate tax “chops.”

I guess entrepreneurship is all about rolling with the punches.  In the meantime, you’ll just have to trust us: we know tax.

How to Improve the Y Combinator Interview

16 Jan

yc500Benny Joseph and I were thrilled to have our startup, GoodApril, selected for an interview with Y Combinator (YC) for the Winter class of 2013.  Getting into YC is competitive – acceptance rates were just 2% in Summer 2012 – so getting one of the final 250 interview slots to be one of the 50 companies accepted, was exciting unto itself. While we weren’t accepted, the process was a valuable experience, but could have been even more entrepreneur-friendly.

What We Got Out of our YC Interview

We’re glad we chose to apply to YC, and don’t regret the time we devoted to the original application and interview preparation.  We gained some real benefits from the experience:

  1. New friends – In order to prepare for the interview, we actively built many new relationships with YC companies and founders to better understand the program and selection process.  This new network of peers has already proven invaluable for introductions, best practice advice, and camaraderie in the ups and downs of being an early stage startup.
  2. Incentive to revisit the big picture – After working intensely on customer development (interviews, surveys, advertising tests, etc.) it was good to be forced to come back to the “30,000 foot view” of the business we were building, to put to the plan to paper, and practice saying it.
  3. Pitch practice – Paul Graham’s famed hatred of marketing speak forced us to figure out how to describe our business in real, simple language, and to practice delivering our messages in succinct ways.  We now feel quite comfortable in pitch settings, whether describing the business at a cocktail party, to a potential employee or vendor, or a potential investor.
  4. Enhanced credibility – Kudos to the YC team for their standing as the top-tier startup accelerator program.  Just being selected for an interview has earned us impressed “ohhhhs” from others in the Valley.

How the Experience Could Have Been Better

In total, the application and interview preparation process was a substantial investment of time – writing and re-writing a tight, compelling application, filming a video, prepping answers to dozens of potential interview questions, practicing those answers, discussing tactics with YC founders, going through practice interviews, and more.  YC was top of mind and at the top of the to-do list for weeks.

While we definitely benefited, the experience felt one sided: dozens of hours invested for a 10 minute meeting.  Here are a few ideas on how it could have been better for us, as startup founders:

  1. More exposure to the partners – I still have never met Paul Graham or Jessica Livingston, the most prominent YC founders, nor seen them present.  My entire exposure to 5 members of the extended YC partner group lasted the 10 minutes of our interview, and the “thanks, but no thanks” email we received later that night.  YC hosts an event called Startup School, but not all YC interviewees gets invites – I did not. To give entrepreneurs a little more “bang for the buck” of the experience, I would challenge the team to host a lecture and networking event for invited interviewees the day before interviews begin.  Give us a flavor for the YC dinners we would enjoy if accepted.

  2. More constructive feedback – We received a couple nuggets of useful feedback in our rejection email, but mostly it boiled down to “we don’t believe customers want this product” and “we tried to think of a better, similar idea, but couldn’t.” There’s an opportunity to “pay it forward” to the rejected entrepreneurs by giving them a taste of the sage wisdom YC could provide as startup mentors and advisors.

    What made you question our evidence of customer demand for this product?  What approaches could we take to test market demand further?  Were there nuggets of the product concept, of the market, of the customer acquisition strategy, of the monetization model, that you thought had promise? I recognize this would come at some cost to YC: either more time invested per interviewing team and more days of interviews, fewer interviews, or longer delays in notifications of rejection. Nevertheless, if the interviewers invested 5 minutes post-interview brainstorming some tips for each team, these could easily be communicated by a single interviewer.

  3. Demonstrate your commitment to “The Team” – Little about the questions asked in our interview, nor the rejection email, reflected YC’s statement that their primary yardstick for inclusion is the quality of the team, not the idea.

    How do we choose who to fund? The people in your group are what matter most to us. We look for brains, motivation, and a sense of design… Your idea is important too, but mainly as evidence that you can have good ideas.

    The interview experience should reflect this. Ask us to bring screenshots or include links to our prior work if you want to see our sense of design. More importantly: address the shortcomings you saw in our team in your rejection – that way we can seek self-improvement and/or recruit to plug the hole.

Why Y Combinator Should Care

YC remains undisputedly the most successful startup accelerator program.  At the same time, competition is coming from many angles, including accelerators with similar models like AngelPad and TechStars, incubators with a more hands-on and resource-intensive approach like The HatteryRaj Kapoor‘s more intimate “operating advisor” model with CoFounder.co, and others.

For YC to continue to lead the pack, it must continue to have a disproportionate number of biggest startup successes coming out of its program.  The only way to do that is to keep seeing the best ideas and entrepreneurs.

The best way to ensure they see the best entrepreneurs?  Make sure YC has a sterling reputation both in the eyes of those who succeeded in getting accepted, and those who didn’t make it on their first try.  They should want to make sure they see not just GoodApril, but also my next startup, and those of the next generation of founders who ask me about my experience.

Closing

Let me re-iterate that we don’t regret our YC experience.  YC should keep innovating, however, to make the experience even better for the entrepreneurs.

Many thanks to BoDavid, and Jason (YC founders at FutureAdvisor, Bump, and Leaky), Brady (of Khosla Ventures) and the several other friends and acquaintances who helped us prepare for YC.

Appendix 1 – How our interview progressed:

Almost exactly 10 minutes total

  • Shake hands, get seated
  • Asked to close laptops with prototypes loaded (they never looked at it)
  • “How are you different from TurboTax?”
  • “Are you guys tax experts?”
  • “Who needs this?”
  • “What was the specific situation [Benny] had with the IRS [that inspired the idea]?”
  • “How much money can you save the average customer?”
  • “What are the top 3 tax saving algorithms?”
  • “You data do you need beyond what you can get from banks, and how do you get it?”
  • Thanks, shake hands, walk out

Performance-Based Acquisition Marketing

12 Jul

Zecco Logo

I recently completed a year-long period managing acquisition marketing for online brokerage firm Zecco.com.  One of the most important changes that I brought about during that tenure was to transition our markting focus from being purely CPA-based to consider not just cost of an account, but also its resulting quality.  Recognizing that different channels, and even specific partners within a channel, could yield dramatically different kinds of accounts was an important insight that led me to drive for this change.  Additionally, I recognized that a multi-year focus on getting as many, cheap accounts as possible had yielded an unbalanced, unscalable marketing machine.

In order to justify spending in more expensive channels like online banner display advertising, we had to be able to prove that the resulting accounts were “worth it” and generated sufficient revenue to justify the acquisition cost.  In order to do this, we had to overcome a lack of tracking and reporting tools to evaluate new account value based on acquisition source.  We had to solve this on two fronts: First, through the development of a reasonably comprehensive data warehouse which brought together account-level trading details to the website user-level at which we could track the original source of a new account. Second, through the adoption of tracking technologies that enabled us to more definitively attribute a specific new account to one of our multiple marketing channels.

Once we had established a way to track performance, we had to settle on standardized measures of account quality.  With input from our Finance team, we settled on using the average of an account’s first three months of account activity, extrapolating that average out to a year, and dividing that annualized revenue figure by our cost of acquisition.  If the average “payback period” on the accounts from a particular channel (ultimately, we got this down to the publisher and affiliate level), was less than one year, we considered that a success since the average customer lifetime of new accounts was a multiple of that.

While we only had a short period of time running this new approach at full-speed prior to Zecco’s acquisition by TradeKing (I apologize I can’t therefore share robust figures to demonstrate the impact), it proved to be an exceedingly valuable marketing management tool.  We could quickly evaluate a new display advertising partner’s promise, and re-allocate spend to the partners that were outperforming the others.  We were also able to identify specific affiliate partners were substantially under-delivering on account quality and remove them from our network.

I’d be happy to get into more detail to help other online marketers understand this methodology and approach.  Get in touch!

California Clean Tech Open Finalists

22 Jul

California Clean Tech Open

The California Clean Tech Open, a business plan contest with considerable, hefty backers, this morning announced its list of finalists.  I found the list of technologies and business ideas so interesting I decided to share it here to help bring attention to these impressive entrepreneurial ventures:

Air, Water & Waste Category Finalists

  • Clean Coal Inc.: Removes contaminants from coal
  • Over the Moon Diapers: High performance reusable diapers and service network
  • Porifera: Carbon nanotube membrane for reverse osmosis desalination
  • PURE-T: Salt free water softener using nanobeads
  • Purite: Zero-energy chemical-free whole house water filtration
  • SequesCO: Microbial CO2 capture and conversion to biofuel
  • Waste Water Works (WWW): Microbial wastewater treatment also generates electricity

Energy Efficiency Category Finalists

  • Atomic Precision Systems Inc.: New semiconductor process for ultra-cheap LED lighting
  • Enovative Group: Smart pump for hot water circulation
  • NexChem: Energy-saving process improvement for zinc galvanizing
  • Transoptic: Solar energy assistance for conventional water heaters
  • Viridis Earth: Domestic HVAC retrofit to improve efficiency
  • WicKool: Energy efficient water recovery for existing rooftop air conditioning

Green Building Category Finalists

  • BottleStone: Ceramic stone countertops include 80% recycled glass
  • en-vis-age: Green, modular and customizable buildings
  • Green Design Systems: Straw wall building panels
  • GreenHomeAnswers.com: Home improvement website for green products and services
  • GroundSource: Residential geothermal system with installation services
  • ISTN: Eco-friendly building insulation
  • Parco Homes: Manufactured green (zero net energy) home kits
  • Solar Red: Low cost rooftop PV installation system and components
  • Team Wawa: Water-conserving shower system

Renewables Category Finalists

  • Covalent Solar: Organic thin film solar concentrators
  • Focal Point Energy: Solar thermal water heater for industrial processes
  • IEM Applications: Landfill methane accelerated recovery
  • Renewable Fuel Technologies: Agricultural waste biomass converted to Green Coal
  • Solar Ice: Solar powered ice maker
  • Solindis: Optical solar concentrator for thin film PV

Smart Power Category Finalists

  • 1ARC Energy: Higher capacity lithium-ion batteries
  • Cooler: Carbon calculator to allow B2B targeted advertising in LOHAS
  • Energy Empowered: Home display and control to reduce standby power usage
  • Enverity Corporation: Greenhouse gas tracking and compliance
  • Power Assure: Data center energy management software service
  • Renewable Voltage: Treat organic waste to provide hydrogen and energy storage
  • Tangerine Network Devices: Home energy display and control

Transportation Category Finalists

  • AAA Fleets: Turnkey electric vehicles and solar charging systems for fleets
  • E-Chargers: Plug-in hybrid charging station
  • ElectraDrive: Gas to electric drivetrain auto conversion
  • Electric Drive Research: Plug-in/gas hybrid 2 person, 3 wheel sports car
  • ElectronVault, Inc.: More efficient traction battery for hybrids
  • Enhanced Vehicle Acoustics: Flexible engine sound generator for quiet cars
  • FuelMotion: Series hybrid conversions for the developing world
  • Goose Networks: Hosted dynamic scheduler for carpools/vanpools
  • Philo Fuel: GPS-based audiovisual cues to help drivers optimize fuel efficiency

Based upon these short snippets alone, I think I will have my eyes on BottleStone, 1ARC Energy, and ElectronVault.  These all play on existing market demands (countertops, batteries, hybrid vehicles) and don’t require the kind of massive market shifts needed to make ideas like Energy Empowered or IEM Applications viable businesses.