I've been solving the wrong problem

My background is industrial engineering. So I am constantly ask myself, "How can I do this better, faster, cheaper?" I have spent the last 2 years concentrating on how to build products faster and better.

At first, I focused on how to create basic functionality faster. I became very successful at quickly creating functionality that worked but looked terrible and probably didn't provide a very good user experience.

Then I realized building terrible looking products faster, wasn't working. Starting at the beginning of this year, I started focusing on design and usability. I'm not saying that I became a world-class designer, but learned the basic ideas behind design. It allowed me to move from a terrible designer to an average designer. Plus, I can now have a conversation with designers and be discriminating about what they tell me.

However, I then found myself creating better looking and more usable products faster that solved problems nobody seems to have. I still wasn't seeing results equal to the effort exerted.

I ran across Eric Ries talking about how 9 out of 10 new ideas fail and the tremendous waste of talent and effort in this undertaking. He takes his cue from personal experience and a book called: The Four Steps of the Epiphany, which I started reading.

The point he brings up is most ventures fail because they don't find a product that people want before they run out of money. Or worse yet, they prematurely scale up and early adopter sales won't support the company and they collapse.

My new approach is to start exploring how to efficiently discover what I should be building. I had the good fortune to have discovered a product that hit square on with what customers wanted: online dating. We were extremely efficient at building out and marketing, but never had to wander around discovering what people wanted.

So last week I experimented with testing a product pitch against Facebook traffic. It took only a day and $50 to find some customer data.

I am focusing on finding a set of tactics that allow fast, cheap evaluation of ideas. I am confident that if I find a product that customers want, I can build that product and scale it. Been there, done that. Now I need to learn how to find that product without going crazy.

Starting to work on how to iterate on products faster

After working on an idea with Cindy Alvarez at Startup 2.0, I realized that there is a dramatically easier way to test product ideas. So this week we brainstormed and came up with a new product idea for helping teachers track students progress in the classroom. Normally to test something like this I would have worked several weeks on creating a simple version of the idea and run customers through it to see their reaction.

Instead, I generated a splash page with our value proposition:



The button led to another page with a Wufoo survey:



Several aspects of the questions that Cindy used that weekend really resonated:

What do you think this product will do for you? It tests what the user thinks they are getting out of it.

The next question checks for who they think the competition is. Then a list of value propositions to find out what they think is most important to deliver in a product.

Then since we have an interested user, go ahead and try to recruit people for further beta testing of the product.

I made sure I had Google Analytics added to the site so I could see what happened when traffic got to the page.

I went on Facebook and ran a targeted ad that asked: Help your students. This got 63 teachers to the site. Of which 33% clicked the button to try the product. Then 11 actually took the time to fill out a survey for a product they now knew didn't exists.

From my experience with many products that haven't worked, this was a strong reaction to the value proposition as we communicated it.

We are not moving forward on this particular idea, due to a inability to visualize a monetization scheme that we believe is worth the development risk. But the exciting part was the speed and small amount of money spent on discovering consumer reaction to the idea. It was simple to target and attract potential customers, always a key consideration. Once the consumers saw the value proposition, we had a huge acceptance of the idea. All this for 2 days of brainstorming and $50 of advertising.

I am seeing a whole new way to start vetting ideas and testing them.

Starting to see progress from learning new technologies

I have started to see some results from my experiment to broaden out my technical skills. I started 6 weeks ago to tackle all the languages on the top 10 Open Source Project Activity List. It has been quite a slog, but in the last week the quality of my conversations with other entrepreneurs who are working on projects has changed.

Inevitably if you engage with someone who is already in the middle of starting up their idea, they will have picked a technology platform. Before this push on learning, if they hadn't chosen the technology stack that I knew (Ruby on Rails), then I had a very limited amount that I could offer in terms of concrete technical execution. At that point you are put in the same bucket as everyone else that is giving them advice, "Oh great, someone else giving me suggestions that add to my work load."

Last week, I starting talking with someone who is wanting to move their application to Google App Engine. This will require knowledge of either Python or Java. Now that I know the basics of Python, I am able to jump in and start looking at what that would entail. It is a great feeling.

Progress so far:
mastery: Ruby, Rails, Javascript, Dojo, CSS, MySQL
productive: none yet
literacy: Java, Python, C, Objective C, PHP, jQuery, Google App Engine
untouched: Perl, Django, Spring

This week, I am working on the iPhone stack with Objective C and leveraging Python on Google App Engine so I can move that one into the productive column.

My basic approach is still holding. I read a book and make flash cards, then as I exercise or find free time, review the cards. I rotate through existing stacks so that they stay fresh.

We will see. I won't know if this is a productive line of effort for another 3 months when more of the technologies move into the productive or mastery column.

Social Mobile Applications - what I see emerging

I have been going around for the last few weeks and looking at what people are working on and what seems to be getting traction. I have been describing it to friends as the social mobile revolution. People are taking older, successful ideas and asking themselves if there is a social or mobile aspect that would totally revolutionize how people use this product.

Can collecting data from people's phones that is geo-tagged make restaurant reviews better? One idea that won at Startup Weekend was FoodSpotter. It allows people to take photos of dishes that they enjoy at a restaurant with iPhone. This is then tagged by location and collected at a web site. Then you can use your phone to track down a dish rather than a restaurant. My wife understood the concept in 3 seconds and wanted to use it.

The common thread is that restaurant reviews have been around a long time. They serve a basic human need. However, almost every person now has a camera in their phone, and that camera knows (or soon will know) your location. This makes for an easier and more interesting version of the old product.

The second area is leveraging the social graph that sites like Facebook are creating. What would make restaurant reviews more interesting is knowing the opinions of people in your friendship network. Broadcasting out to your network or receiving from your network information about dining is more meaningful than a review by someone you don't know.

Again, it is taking a proven model and enhancing it with the two most exciting platforms to arrive in the last 3 or 4 years. I have been slow on the uptake but I am starting to see the new pattern. Now, I just have to find an area that hasn't already been staked out and turn over someone else's non-social, non-mobile apple cart.

The difference when you customer acquisition cost is $0

I spent the day at Facebook Rev's incubator launch event. Very interesting to think about what is common between all the startups. They all are iterations on successful business models from both Web 1.0 and Web 2.0. Travel, dating, jobs, etc. We have seen these models work pre-Internet and post-Internet.

There is a revolution in the distribution/advertising model that changes the business model. As an example, online dating took a $5 billion dollar industry and changed it into an insanely profitable $400 million dollar industry. I see the social networking companies doing the same thing.

Over and over at the event and after, I was asked by investor types, what is the monetization model???? As a coder and entrepreneur, I talked shop with the startups and here is what I discovered. When your customer acquistion cost is exactly zero per user, and your cost to service the user is around $.001 per user per month, you don't need much monetization. Most of the companies can put up some sort of advertising and get all of $.01 per visitor per month. This is a 90% profit after cost of goods sold.

If you look, Facebook's market share is at 250 million. A 10% market penetration will lead to a $250,000/month business with very little cost.

I think we are in the next revolution. It is making me rethink old assumptions and ask myself what business niche hasn't been overturned yet???