Specifically, the first and most vital lesson is that asking anyone (including your Mom) what they think of your idea is a guaranteed way to an untruthful and useless response.
Why is this a great book?
The Mom Test goes right to the top of the list for several reasons. It passes the freakonomics test (it is actually much better than Freakonomics by the way). The reasoning may seem counter intuitive but once it is laid out it marries exactly with long experience. The author is able to put into clear and simple words one of those nagging truths that I have learned the hard way but did not understand well enough to be able to articulate.
Those clear and simple words are another great plus. The book is quite short and the language is plain but beautifully expressed. I only found myself reading back over a paragraph a couple of times in the whole 133 pages. In some jargon laden books, I do this three times on every page....and then put the book down before I finish chapter one. The appalling, tendentious best seller Seven Habits of Highly Effective People is the classic of this genre.
How to be really useful
It is highly unusual because every page is useful. Repetition is kept to a minimum and there is no attempt at padding. Contrast this with another best seller Who Moved my Cheese? in which a trite concept that could make a mildly amusing 2 minute coffee break story is spun out into 94 pages of laboured prose.
Even more different, The Mom Test makes no claim to have invented a model which solves the entire business world. Over extending the significance of an interesting couple of case studies is a much more common approach. Dig into In Search of Excellence or Playing to Win to see what I mean.
As a consequence, Rob Fitzpatrick makes no attempt to claim that there is a fixed formula which must be followed in every detail. Nor does he try to say that every reader should adopt the lessons of the book. On the contrary, he says if you don't want to do it, don't bother.
This stuff really matters
Why does this matter? Identifying customer pain and designing a solution is the fundamental premise of any Startup. Many business plans fall into two traps. Sometimes they quote large scale market statistics to demonstrate the sheer size of the potential customer base. You know the sort of thing - Gartner says this market is worth $2 billion per annum and growing at 14%. Neither the Startup nor Gartner have actually defined an addressable market need so this message is essentially worthless. The alternative approach is customer research based on a questionnaire which essentially says to potential buyers “Would you like X really cool product?” Nice but this does not get at the truth of the market either.
The Mom Test looks behind these myths and suggests a way of approaching customers to find out the real truth. The answers may be painful but if you don’t ask these questions your chances of success are much lower. Anyone who needs to identify the real market for a product (which is every Startup and plenty of other businesses too) should read this book and keep it on their shelf.
One small favour. Receiving compliments is a very bad sign according to The Mom Test so please don't tell Rob Fitzpatrick about this blog, he will hate it!
Too old for an all nighter....
Like many people, I spent Thursday night/ Friday morning in front of the TV transfixed by the unfolding drama of the referendum results. I shared most of the night with my 19 year old son who voted the opposite way to me but was equally fascinated by the outcome (I voted No by the way just in the interests of full disclosure). Long before the outcome became clear, one truth was universal. This campaign engaged more people in Scotland than any other political event in our lifetime anywhere. I was lucky enough to be living in South Africa in 1994 when the first free elections took place there and even then the level of actual voting was less than we experienced on Thursday.
In a world where democratic participation is in retreat across the world and people of all ages and views are consistently disgusted and despairing about their political systems, Scotland dramatically bucked the trend. Everyone would like to see this continue but it won’t happen unless we do something about it.
We all know one reason the referendum was different - because independence was a clear cut, once in a generation issue. Incidentally, the decision to have a simple Yes/No made a big difference. A three option question would have undermined much of the campaign. This situation will not hold for long. We can already see in the squabbling about potential new powers and different options for devolution that politics as usual is starting to take hold.
On both sides it also harnessed a larger trend. Voters no longer engage with political parties and politicians. Overarching ideas which provide a frame of reference for everything are considered cranky at best and dangerous by many. People engage with specific issues. Passionately. Often these are issues which concern everyday life but just as frequently care for others is the dominant motivation. Think about the bring back our girls campaign a couple of months ago for instance.
People also want to see things actively being done about these issues. Passing a new law or making a distant donation does not cut it. This is the new war. We don’t want to go abroad to fight but on the right issue we are all missionaries now.
Party programmes with compromise and balance and carefully calibrated appeal to the widest possible audience engage almost no-one and win no votes. Look at the pattern in the referendum where many traditional Labour areas voted Yes and constituencies which have regularly elected the SNP voted No. I don’t believe that any political party will be able to capture the active participation triggered by the campaign.
How can technology help?
In Scotland, I expect we will capture the excitement and passion of the campaign by seeing a series of groups emerge which aim to tackle issues which engage them on a very personal level. These groups will all look different but they will have a couple of things in common. They will not be aligned to any party. They will publicise and build their campaign by unconventional methods. They will take direct action to fix the problem not just to protest and not just as pressure groups.
Obviously mobile and social media will be key enablers for these groups. I would like to suggest something more.
For many of the areas which most concern people - health, education, poverty, democracy and so on - technology can be a fundamental part of the solution. Broadly this will take two forms. Helping deliver public services more efficiently and with better access is the easy and obvious although making such reforms happen is considerably more difficult. Many will bypass this route and aim to empower communities to take ownership of the issues which are most important to them and shape solutions specifically for their community.
Let's do something!
Here is my proposal. We should set up a Scottish Startup Community Foundation which will provide skills and ideas which can help communities take advantage of this opportunity.
The model would be the foundations in US communities such as Boulder (Entrepreneurs Foundation of Colorado or EFCO) where Startups chip in pro bono skills and a small percentage of equity. As time passes the latter builds up into a solid base of assets. Other income is raised conventionally from donations.
I have not had the chance to discuss this with anyone. My plan now is to go off and turn this into a proper proposal but I would love to hear what people think.
Use the comment box or the take the two option poll - I would rather hear from two people who think I’m crazy than nothing!
Well intentioned illusions
The Startup world is home to many well intentioned illusions. One of these is the concept of "investor ready." This apparently attractive phrase is dangerous because it misleads about investor priorities, it misunderstands the relationship between investors and companies and it misrepresents the role of advisors.
Let me explain. If you search the Internet you will find literally thousands of blogs and articles by angels, VCs and investors of all types setting out their investment priorities. Investor ready is never on the list. There is a very simple reason. Investors want to invest in a great business. The common factors - team, product/ market fit, growth potential etc - are all about being a great business.
Investors and Startups need each other
Investor ready also implies, even assumes in some cases, that Startups are supplicants aiming for the grace and favour of investors. This is wrong. Investing in a Startup is a partnership. The investor has scarce resources of money and expertise but the Startup also offers something rare, great people and an innovative business. Investors need Startups as much as Startups need investors.
A few things you need to know
A mini industry has grown up around matching these needs. If you are a Startup looking for money, you will encounter this sector of the economy sooner or later. Here are a few things you need to know:
Hold onto your dream
The most essential thing is not to lose yourself and your business in the “investor ready” process. I have seen many pitches and business plans (which is just another pitch remember) refined and improved by expert advisors which are designed to answer every question in the book. Unfortunately this never works. Once investors see the pitch sooner or later they will ask the question about the business fundamentals that is not in the book and the founder will be exposed. Your job in the investor ready process is just another pitch. It is not to change the market, the product or the revenue model to meet someone else’s expectation.
Securing investment is an exciting moment for any business. Remember you are an equal partner in that investment and what you bring is the idea and the passion. Lose these and the investment will be and for you and the investor. Keep them and we will all have fun.
People are the most vital asset of any Startup. The founding team, the early hires, marketing guys, software gals, interns and freelancers are all essential to success. What is the best way of managing performance? How can feedback be shared between peers? Is there a good model for allocating rewards? These are tough questions and there is no HR department, no set of processes and no track record to help answer them.
Talking and listening
Fortunately there are some simple principles to follow. Managing, reviewing and evaluating people is all about talking and listening. Processes, reporting lines, formal measurement all have a place especially in larger organisations. The value lies in time spent with people, preferably one to one, asking open questions, listening heedfully and sharing honestly and directly.
See the whole board
Past and future performance are the product of many factors. Try to make sure you cover a wide range of areas when talking to your people. Technical skills, teamwork, communication, leadership skills, energy and commitment are all part of the picture. Many Startups have plenty of hard metrics to use and these can be valuable but the wider picture is also important.
One useful tip is to look at the performance of teams to shine a light on individuals. Even in the early stages, different groups of people will have contributed to each project or task so every individual will have a unique combination of teams to which they have contributed. Reflecting on how these teams have performed can be very insightful.
Make sure any appraisal or evaluation is not a one way process. Upward feedback and peer to peer review are a great way of enhancing your credibility as a leader. More importantly, it is also a great way to learn and improve.
Openness and honesty
Lack of “transparency” is a common complaint about appraisal processes in large corporates. The reality is that some judgement is always involved - people are expressing opinions about people. An exactly measurable and predictable outcome is not possible. Openness and honesty are the watchwords. Be as direct and clear as you can and ask the same of all your people. This is especially important when dealing with reward. Pay, share awards and bonuses in small Startup teams are often the hardest choices facing a CEO. You can’t always get agreement but you can at least be clear about the reasons.
Keeping the books
Process is less important in the early stage environment but there are a couple of points to keep in mind. Try to have feedback and review often enough to be fresh and relevant. A fixed time schedule may not work but review of key projects such as a major product release could make sense. Keep some form of written record of the outcome which both parties to the review would recognise. You may never need this but employment law is a minefield and proper record keeping could save enormous amounts of time and money.
Performance matters but potential counts
Think about past performance but also about future potential. As a Startup it is the ability of your team to grow with the business that is most important. It is also what matters most to each individual. Of course reward for effort is welcome but guidance and options for developing, learning and leading are the best motivation in my experience.
Whether you are giving a hard message or rewarding a brilliant performer, be open and honest, talk about the person not just the numbers and reflect true potential. Even those who leave your company as a result will thank you.
Kenny Fraser is the Director of Sunstone Communication and a personal investor in startups.