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Tag: startups

Startup syndromes: “The Iznogoud Syndrome”

1. Definition

The Iznogoud Syndrome can be defined as follows:

A startup strives to disrupt existing market structures instead of adapting to them.

In most industries, existing relationships are strong, cemented and will not change due to one startup. Therefore, a better strategy is to find ways of providing utility in the existing ecosystem.

2. Origins

The name of this startup syndrome is based on the French comic character who wants to “become Caliph instead of the Caliph“, and continuously fails in that (over-ambitious) attempt. Much similarly, many startups are over-ambitious in their attempt to succeed. In my experience, they have an idealistic worldview while lacking a realistic perspective on the business landscape. While this works for some outliers – for example Steve Jobs – better results can be achieved with a realistic worldview on average. The world is driven by probabilities and hence it’s better to target averages than outliers.

3. Examples

I see them all the time. Most startups I advise in startup courses and events aim at disintermediation: they want to remove vendors from the market and replace them. For example, a startup wanted to remove recruiting agencies by making their own recruiting platform. Since recruiting agencies already have the customer relationships, it’s an unrealistic scenario. What upset me was that the team didn’t even consider providing value to the recruiting agencies, but intuitively saw them as junk to be replaced.

Another example: there is a local dominant service providing information on dance events, which holds something like 90% of market (everyone uses it). Yet, it has major usability issues. Instead of partnering with the current market leader to fix their problems, the startup wants to create its competing platform from scratch and then “steal” all users. That’s an unrealistic scenario. All around, there is too much emphasis put on disintermediation and seeing current market operators either as waste or competitors as oppose to potential partners in user acquisition, distribution or whatever.

Startups should realize they are not alone in the market, but the market has been there for a hundred years. They cannot just show up and say “hey, I’m going to change how you’ve done business for 100 years.” Or they can, but they will most likely fail. This is all well for the industry in which it doesn’t matter if 9 out of 10 fail, as the one winning brings the profits, but for an individual startup it makes more sense to get the odds of success (even average one) greater. So you see, what is good for the startup industry in general is not the same as what is good for your startup in particular.

4. Similarity to other startup syndromes

The Iznogoud syndrome is similar to “Market education syndrome”, according to which an innovation created by the startup falls short in consumer adoption regardless of its technical quality – many VC’s avoid products requiring considerable market education costs. Whereas the Market education syndrome can be seen a particular issue in B2C markets, the Iznogoud syndrome is more acute in B2B markets.

5. Recommendations

Simply put, startups should learn more about their customers or clients. They need to understand their business logic (B2B) or daily routines (B2C) and how value can be provided there. In B2B markets, there are generally two ways to provide value for clients:

  • help them sell more
  • help them cut costs

If you do so, potential clients are more likely to listen. As stated previously, this is a more realistic scenario in doing business than thinking ways of replacing them.

I’m into digital marketing, startups, platforms. Download my dissertation on startup dilemmas: http://goo.gl/QRc11f

Notes on Customer Development

I keep forgetting this stuff, so noting it down for myself (and others).

1. Don’t ask “would you” questions, ask “did you” questions. People are unable to predict their behavior.

2. Don’t ask about your product, ask about their problem. Wrong question: “We have this product A – would you use it?”. Right question: “Do you ever have this problem B?” [that you think the product A will solve]

3. Only in the very end introduce your solution. Then ask openly what he or she thinks about it: “What do you see problematic about it?” Also ask if they know someone who would like this solution.

4. Listen, don’t pitch. Pitching is for other times – you DON’T need to sell your product to this person, you only need to hear about his or her life.

5. Repeat what he or she says – many times people think they understand what the other person is saying, but they don’t. Only by repeating with your own words and getting them to nod “That’s right” you can make sure you got it.

6. Make notes – obviously. You don’t want to forget, but without notes you will.

7. Make “many” interviews. Many = as long as you notice there are no more new insights. In research, this is called saturation. You want to reach saturation and make sure you’ve identified the major patterns.

8. Avoid loaded questions. False: “Is this design good?” Correct: “What do you think of this design?”

9. Avoid yes/no questions. What would you learn from them? Nothing.

10. Focus more on disproving your idea rather than validating it. In philosophy of science, this is called falsificationism. It means not claim can be proved absolutely true, but every claim can be proved wrong. Rather than wanting to prove yourself right (at the risk of making a false positive), you want to prove yourself wrong and avoid wasting time on a bad idea. Remember: most startup ideas suck (it’s true – I’ve seen hundreds, and most will never amount to business – be very very critical about your idea).

As hinted in the previous, customer developing is like doing real research. You want to avoid false positives – i.e., getting the impression your idea is good although it sucks; and false negatives which is to conclude the idea is bad although in reality it’s not.

In general, you want to avoid respondent bias, recall bias, and confirmation bias. These are fancy names meaning that you want people to tell you honestly what they think, and you want to interpret it in an objective way, not being too fixed on your initial assumption (i.e., hypothesis). Be ready to change your opinion, like Gandhi advised.

About non-interview methods, i.e. testing via landing pages.

a. Force customers to pay from the beginning – this way you see if the thing has value to anyone.

b. Needless to say: MVP. Create first the non-scalable, bare minimum solution. This is not even a product, it’s a service. Use manual labor over technology and get the user information through free tools like Google Forms.

c. If you get a high dropout, you need to make sure people understand the USP. For this, you CAN ask your friends’ opinions: “Do you get it?” But prefer friends without prior knowledge on the project, because they have fresh eyes.

Before conducting any interviews or tests, do some market research based on facts. Yes, I know Steve Blank says to “go out of the building” straight away and forget about traditional market research, but he’s not a marketing expert. Think a bit before you fly out the door: Who are your customers? Why them? Do they have money? Do they want to buy from you? etc.

You can use this spreadsheet for segmentation (not my doing, just copied it from Sixteen Ventures):

https://docs.google.com/spreadsheet/ccc?key=0ArHFxUyqbcmHdHp5VEY2eXNLby0zaHFKSDhpc0xEdkE&usp=sharing

Example questions from Cindy Alvarez:

  • How is your customer currently dealing with this task/problem? (What solution/process are they using?)
  • What do they like about their current solution/process?
  • Is there some other solution/process you’ve tried in the past that was better or worse?
  • What do they wish they could do that currently isn’t possible or practical?
  • If they could do [answer to the above question], how would that make their lives better?
  • Who is involved with this solution/process? How long does it take?
  • What is their state of mind when doing this task? How busy/hurried/stressed/bored/frustrated? [note: learn this by watching their facial expressions and listening to their voice]
  • What are they doing immediately before and after their current solution/process?
  • How much time or money would they be willing to invest in a solution that made their lives easier?

More points from Cindy (she’s a real specialist):

  • Abstract your problem by a level. For example, if you want to know whether someone will use a healthy lunch delivery service, ask about “lunch”
  • Start with an open-ended “Tell me about how you…” question. i.e. “Tell me about how you deal with lunch during the workweek”
  • Shut up for 60 seconds. This is a LONG, LONG time and it feels awkward. It also forces the person to go beyond the short (and probably useless) answer and go into detail.
  • Whenever you hear emotion in the person’s voice, prolong that line of conversation.
  • (You can prolong conversations by asking why/how often/who/where questions. It may take 2 or 3 or more of these follow-up questions to get at the interesting detail.)
  • Avoid yes/no questions. Whichever one the person chooses, it’s probably not useful for you.
  • Whenever the person starts complaining listen (and encourage it!) People are more specific with complaints than praise, and specificity is where you learn.
  • Challenge your pre-existing hypotheses by referencing the mythical “other person”. For example, “I’ve heard from other people that ______. Do you agree?” It’s easier for people to disagree with an anonymous third party than to disagree with YOU.
  • Avoid talking about your product or your ideas until the end – but then DO give the person the opportunity to ask you some questions. This is NOT a chance for you to sell your idea, it’s just an equalizer. You’ve been asking questions the whole time, now it’s their turn.
  • Thank them profusely and reinforce one concrete point that you learned.
    • Alwaaaaaayyyyys ask for referrals to 2-3 other friends who are roughly in the target market so you can interview them.

Here are some useful links:

http://www.quora.com/Customer-Development/What-are-your-favorite-methods-for-doing-problem-interviews-during-Customer-Discovery

https://blog.kissmetrics.com/26-customer-development-resources/

http://sixteenventures.com/startup-customer-development-hacks

http://practicetrumpstheory.com/how-to-interview-your-users-and-get-useful-feedback/

http://giffconstable.com/2011/07/12-tips-for-customer-development-interviews-revised/
If you have to read one book about this topic, read this one: http://www.amazon.com/Interviewing-Users-Uncover-Compelling-Insights-ebook

If you want to read another book, then it’s this one: http://www.amazon.com/Lean-Customer-Development-Building-Customers-ebook

If you need to read a third book, then you should stop doing a startup and become a researcher 🙂

Crowdfunding pitch to media – an example

Here’s an example on how to do PR for a crowdfunding campaign. It should be sent at least a couple of weeks prior to launch.

Hi [name],

this is [yourname] from [yourcompany].

We are preparing to release a new product in [yourplatform], and I wanted to give you heads-up since you wrote about [a competitor] six months ago. Our product is similar, but better 😉

Here’s why it is better:

  • [reason 1]
  • [reason 2]
  • [reason 3]

Here’s a link to press material including pictures and more information: [link]

The campaign will be launched on [date], so I hope you’d publish an article about us at around that time.

In the meantime, I’m of course available for any questions / comments!

Have a nice day,

[yourname] from [www.yourwebsite.com]

Tel. [telephone]

Skype: [Skype]

Email: [email]