Agile Philosophy

From idea to sales, a startup’s launch path is invariably convoluted and confusing.  Regardless of industry or idea, successful entrepreneurs share a common philosophy that helps them navigate the tempestuous sea and build thriving businesses.  The lessons in this chapter capture the philosophy of the Agile Entrepreneur and create a solid foundation to build upon.  It will help you frame your thinking and maximize your discovery process.

There are two overriding themes that emerge in this chapter.  First, the best entrepreneurs realize that they don’t have all of the answers.  They’re able to walk the fine line between being focused yet agile, and visionary yet reactive.   This crucial theme is carried throughout the book, especially in the next section on feasibility.

Second, founders understand that starting a company is not about dreaming, it’s about doing.  This is the biggest factor that differentiates the winners from the losers.  Some people plan, others act.  The best founders are quick to make decisions and then act immediately.  They realize that few decisions are final, which means it’s almost always better to act first and plan later.

As you read through this chapter, look for these themes and apply what you can to your startup immediately.

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Resourcefulness, Not Resources

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Even the best-funded startups are resource-constrained.  Entrepreneurs have to make every expenditure count.  It’s the nature of the game.  Realizing this, the best founders don’t fixate on their lack of resources, they become masters of resourcefulness.  Rather than worry about what you can’t do, get creative and figure out a way to make things happen.

As frustrating as it may be, resourcefulness can work wonders for your startup.  Being resource constrained forces you to be more disciplined and build more intelligently.  Some of the greatest PR stunts ever devised resulted from a lack of resources.  AirBnB made its first worldwide splash by renting the entire country of Liechtenstein for $70,000 a night.

One way startups become resourceful is to partner with other organizations that already have what you need.  To reach potential customers, for example, you can team up with an organization that already caters to your market.  Hitch a ride with someone who’s already done the heavy lifting for you.

Be creative and get resourceful.

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Stop Experimenting and Start Building

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When you have a new idea, you have to prove it’s feasible by constructing well thought-out experiments.  You already know this.  But testing a business idea is not the same as building a business.  Inevitably, there comes a time when you need to either start building the business or nix the idea entirely.  It’s easy to convince yourself that you need to do a few more tests before committing.  Like it or not, you’re running out of runway and you need to take action one way or the other.  Don’t let analysis cause paralysis.

How do you know when to take a stand and really commit?  First, you have to be confident that you thoroughly understand the customer’s problem.  You pass this test when you can predict specifically what customers will say or how they’ll react.  Second, you must have an effective solution.  Do customers agree that you solve their problems?  There are a number of ways to gauge this, but cold hard cash speaks the loudest.

You will never be 100% certain of anything in a startup.  The key is to balance action with experimentation in a way that keeps your business moving forward.

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Launch to Learn

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The foundation of the agile startup is that you don’t have all of the answers, you have to get them from the market.  You’ll have hunches as to what the right answers are, but these are dangerous assumptions, not facts.  You could be solving problems that no one cares about.  The best way to learn the truth and convert assumptions into facts is to launch your company.  Create a minimally viable product (MVP) that has the smallest feature set required to land your first customers.  Your vision and early customer interviews will help you design the first version of the product.  Then you can get an actual product in front of customers and react to their feedback.

Your intuition will tell you that everything needs to be perfect, so launching quickly will probably feel very wrong (at first).  But your MVP is only the first release and not the ultimate vision.  You will keep building, expanding and developing your product.  But now with customers in tow, you can be sure that you’re solving real customer problems.  Don’t wait—the only way to learn is to launch.

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It Ain’t a Problem ‘Til It’s a Problem

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It’s easy to overthink and overanalyze issues with your startup when there are so many unknowns.  Projecting into the future, your plan highlights key risks and potential downsides that you might encounter over the next few years.  Instead of worrying about things that might happen in the future, your overriding focus should be on taking the next step forward.  There’s only one thing that you can plan on – nothing ever goes according to plan.  The problems you worry about will rarely be the problems that you actually encounter.  A common “problem” that web startups worry about, for example, is being able to scale to handle millions of users.  Founders usually start worrying about this before they’ve landed their first user.  As a result, the team spends weeks or months overbuilding to prepare for a flood of users.  Only the flood never comes.  Instead of being productive refining the app, learning from users, or addressing pressing issues, the team focused on solving a problem that wasn’t yet a problem.  When you start worrying about the future, realize that it ain’t a problem ’til it’s a problem.

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There is No Silver Bullet

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There are no easy answers in the startup game.  There’s no immediate resolution or obvious solution.  There’s no single idea that, when it dawns on you, will guarantee your victory.  Capitalism is so efficient, obvious opportunities are exploited immediately.  It will take years of blood, sweat, and tears to win.  There’s no way around this.  The only thing that’s going to change the world is you.  It’s you getting the prototype ready at 4 A.M., four hours before a big demo.  It’s you schlepping it across town to meet with customers and get feedback on your latest release.  It’s you flying across the country to make that first big sale.  It all comes down to you.  But this is a good thing, because all of the trials and tribulations you will go through are barriers to entry for prospective competitors.  Starting businesses is a tough racket.  It’s about making your own luck by putting in the long hours and moving forward one step at a time.  Don’t look for a silver bullet because it doesn’t exist.  There are only lead bullets — and it takes a lot of them.

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How’s Your Project Going?

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If you’re like most entrepreneurs, you are constantly coming up with new ideas.  You get inspired, brainstorm, bounce ideas off of your friends and family, and are always on the lookout for disruptive opportunities.  Think about these early ideas as projects, not startups.  There is something noncommittal and exploratory about the term “project.”  The instant you call it a startup, your commitment escalates.  People around you assume it’s serious and start rooting for you.  This increases the table stakes, and causes you to stop exploring and start selling.  It sounds trivial, but human psychology works in strange ways.  Call it a project until you’re ready to really give it a go.  Once you do, focus on it exclusively and stop exploring other projects.

Calling it a project allows you to keep an open mind and objective outlook, which greatly reduces the likelihood of you forging forward out of ego.  How’s your project going?

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Get In Over Your Head

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A big difference between large company managers and small business founders is the rate at which decisions must be made.  As an entrepreneur, you have to make rapid-fire decisions constantly.  You won’t have all the information most of the time, either.  It’s easy to put off a decision to wait for more information, a mistake known as paralysis by analysis.  To overcome this paralysis, realize that, especially with startups, decisions are temporary and nothing is set in stone.  If you make a bad call, learn from your mistake, take a mulligan and try again.  Much worse is to avoid decisions and block your progress.  You’re better off making a wrong decision now than not making any decision at all.  Make decisions quickly and react to what happens.  Push forward constantly and challenge your team to make quick progress.  If you’re doing it right, you should feel slightly uncomfortable with your velocity.  Anything less and you’re probably going too slow, and opportunities will pass you by.  Get in over your head and see what happens.

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Who the Hell Are You?

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When it comes to creating a thriving business, your initial idea is probably only 1% of the equation.  Make that 1% of 1%.  The other 99.99% depends on how the founding team executes, which is why venture capitalists back teams, not ideas.  This begs the question – who the hell are you to start this company?  What’s your background and why are you going to succeed instead of the Ph.D. coming out of Stanford who’s willing to work 120 hours a week?  How are you going to beat the serial entrepreneur who has already started and sold three companies, all in this same industry?  What do you bring to the table?  One objective way to get to the bottom of it is to talk to potential advisors or industry experts (not friends and family) about your background and whether you can actually pull this off.   How convincing are you when you make your case?  You might be able to sell them on the idea, but can you sell them on you?  It’s not a deal killer if you’re not the right person, but you need to surround yourself with the right team.  Identify what you lack and be sure your team makes up for it in spades.

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Forget About Google

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Here are two truths about starting a company that might surprise you: First, you don’t have to create the next Google to be financially successful.  There are more millionaires made from boring block and tackle businesses like stanchion manufacturers or shampoo distributors than high-flying tech stars we read about in the Wall Street Journal.  Second, you’re more likely to fail if you start out trying to create another grand slam like Google.  Why?  Shooting for the moon requires more capital and time, brilliant and brilliantly executed strategy, and – most importantly – a lot of luck.  As you start up, realize that you don’t have to create the next Google to make a lot of money.  And don’t be ashamed of the fact that you’re trying to build a $10 million business instead of a $10 billion one.  While all your friends are trying (and failing) to take down Google you will be laying the foundation for your personal independence and wealth.  Keep working away, and you never know – one day you might wake up to discover that you’ve become the next Google.

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Don’t Drink the Kool-Aid

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Many founders become so enamored with their businesses that they lose sight of the very customers they want to serve.  They seem to forget that customers have the ultimate say as to whether the businesses lives or dies.  Instead of confronting these unknowns head-on, they postpone or avoid the tough conversations.  It’s understandable – grappling with reality is scary, and means that you might have to admit that you’re wrong.

Don’t fall for your own sales pitch.  You have to be honest with yourself – will people really pay for what you want to sell?  Is the market big enough to make it a real business? Are you the person to pull it off?  Ask the tough questions and don’t take anything for granted.  One of the best ways to do this is to list your key assumptions and share them with your advisors and partners.  They will challenge you to ensure that you’ve covered all of the potential pitfalls.

Webvan burned through $1.2 billion dollars before calling it quits.  Don’t be afraid to find business-killers, as it’s better to find out early and adapt or move on than to waste your time and life savings on a pipe dream.