Clickable mockups

Most teams think they need to build an interface that functions and looks real before showing it to customers to get feedback. Nope. It turns out that if you string together a few simple mockups with clickable hot-spots, you can still get great feedback in a fraction of the time. We’ve done this with companies like HomeAway, AVOS, and Duo Security by designing a few screens in a flow and then building a clickable version, using basic consumer software tools like InVision or Apple’s Keynote.

At first I thought these prototypes would be too rough to be useful. But time after time I’ve seen customers engage with click-throughs like they’re real products, and that helps you learn if the designs are working. It’s a great method to use before engineering starts to build a design.

Customer interviews

Instead of working in a vacuum, gather data to use as fuel for designing your product. Specifically, go out and find the people you think will use your product and talk with them about the problem(s) you’re aiming to solve. I know you’ve heard this a hundred times. Customer interviews are like flossing — everyone agrees it’s good for you, but it’s hard to build the habit.

It’s easy to get hung up on the details: How do you find people who will talk with you? What do you talk about? Relax. User researchers have been doing this stuff for decades, and there’s a wealth of knowledge about how to do it quickly and accurately. For starters, you can write a short survey called a screener to help you recruit the right people to talk to. Then, create an interview script to help guide the conversation.

If you want to know more, we created a research guide with plenty of tactical tips for finding and interviewing customers. Now you have no excuse. Get out of the building! (Then come back — there’s more good stuff below.)

Fake doors

You can quickly see whether customers will engage with a new feature by launching just the first part of it. We did this with CustomMade, a startup that lets people order custom-built products. Our idea was to let visitors save others’ projects for inspiration. But instead of laboriously building the whole feature, we just launched the first button. When we observed a huge number of visitors clicking the button to access that function, we knew we were onto something and built the rest of the feature. After a few changes like that, we saw a 3x increase in engagement. For more on fake doors, see Jess Lee’s excellent talk.

Recon

When teams design a new product, they come to the table with all sorts of assumptions about the competition. It’s easy to look at another product and have an opinion about which parts are valuable and which parts are broken. But if you guess wrong, you might just copy a bunch of functionality that your customers don’t actually need.

So we like to think of competing products as free prototypes. We watch customers use these products and learn very quickly which features are loved, unusable, ignored, or hated. With this knowledge, we can make better decisions in product design, marketing, and sales.

Micro-surveys

Surveys are a tempting way to learn from the comfort and safety of your office chair. But designing a good survey is surprisingly tough. Whenever I talk with survey scientists, I’m overwhelmed by all the ways you can screw up a survey design and unknowingly get bad (read: useless) data. So when we run surveys, we stick to a pattern we know works well.

We put the survey as close as possible to the behavior we’re trying to study. For instance, if we’re interested in why a customer picked one of our pricing plans, we’ll ask them with a small pop-up survey in the moment, not an email that might get read days later.

And we rely on open-response questions that let us hear directly from customers. You’ll learn more from reading 100 short responses than knowing that 32 percent of users chose option B in your survey. Here’s more on micro-surveys.

Prototype with real data

Clickable mockups are a good first step, but you can learn even more when you build a prototype that integrates real data. You might be tempted to start building the actual product at this point. You might even call that work-in-progress a prototype. But it’s not. Building a real product always takes longer than you think. If you really want to learn fast, build a true prototype – one that you’re not afraid to throw away.

When we were designing coupon pages with RetailMeNot, we needed real coupon data in order to evaluate our designs. So we built a prototype in two days. It was buggy and didn’t have many features, but it was just enough to get useful feedback from customers. And it was good we did, because it turned out that half our ideas weren’t working.

We iterated three more times, building prototypes and showing to customers, and were able to get to a design that improved both usability and click-through rates. Few startups build true prototypes, but it’s an immensely useful way to learn fast.

Site visits

Go to wherever your customers are, and watch them actually use your product. I know that sounds like common sense (or it should). But it’s too easy to think we know our customers from all the meetings, phone calls, and reports we’ve read about them. To deeply understand how people actually use our products we need to go to where they work, where they play, and where they live.

Recently, we were working with Foundation Medicine to improve their clinical cancer genomics reports. So we decided to visit oncology centers, watch how doctors used the reports, and see what we could learn. We were surprised to discover that the reports we’d worked so hard to design were often received by fax. Tiny text was hard to read and all color information was lost. It was an easy problem to fix, but we only noticed it through a site visit.

Being a lean startup means that we should first consider all these ways to learn, and then pick the fastest, cheapest method. I’ve listed seven methods that we’ve found work well at startups, but there are plenty more out there. Once you start looking, you’ll be surprised at the variety of ways you can learn incredibly fast, saving you and your team precious time and money (and heartache).

Braden Kowitz leads Google Ventures Design Studio. Follow him on Twitter@kowitz or through his team’s blog Design Staff.

Photo courtesy of Shutterstock.

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So what have I seen?

The fact is that accelerators and early-stage investment programs, particularly in Europe, are not really very differentiated yet. As the market matures we’ll see more vertically-focused programs. In fact, this is already starting. The U.K.’s Springboard, for example, just launched Springboard Mobile. There’s also GameFounders in Central and Eastern Europe, which focuses on the games industry.

But there’s still a long way to go

Where is the advertising technology accelerator, for example?

We’re going to see more and more of this, and it’s a good thing.

Why? Well, in having a tight vertical focus, an accelerator has clear positioning — which helps it immensely in marketing. It’s also likelier that the contacts and mentors on a vertical program have are directly relevant to the startups in the program. Same goes for potential business partners, VCs and acquirers. Finally, there’s a lot more potential for synergy in the portfolio. Take our adtech accelerator, for example: a startup creating an advertising network could benefit from the other startups on the program that are creating analytics, retargeting or creative management services.

And if the products don’t work out, there’s a higher chance of targeted talent acquisitions — potentially a good result for entrepreneurs, and a slight hedge to an investor’s risk.

Contrast this to a non-vertical program.

While getting in early-stage startups guarantees that they will run into a lot of similar problems, there is a lot of slack too.

Let’s assume that 10 startups meets 20 mentors from all over the industry: smart, experienced people who have great input for many ideas but don’t know everything. In most cases, a mentor who doesn’t know your business inside out will still give advice — but it will come from the perspective of an imaginary user, instead of from an industry expert, potential client or business partner.

That’s a real waste for everyone. Startups should be doing user testing and customer development all the time, not wasting precious mentorship time and relations for that.

And even if they really want to help, a mentor who doesn’t know anything about the games industry and doesn’t play games will get frustrated by talking to games startups. Equally, a B2B SaaS expert will mostly give input from their perspective, even if the startup in question is a social B2C product: I’ve seen more than one ‘white-labelled B2B version’ idea thrown around semi-reluctantly in meetings like this.

Having been to quite a few demo days and looked at various programs closely, sometimes it seems like the only common problem for the startups in an accelerator is getting follow-on funding. This, in turn, means that a lot of the participants are all-too clearly engineered for their demo day as an investment opportunity — a single make-or-break moment. But for investors looking for future stars, this can be frustrating as they need to cut through the pitch-clutter of different startups who are all aiming for the same end result.

Instead, a ‘lean accelerator’ should focus vertically to eliminate waste and shorten the iterations. Granted, from an investor’s perspective this decreases the diversity of a portfolio, but hey, you’re investing in early-stage startups: there are more important ways to manage risk than portfolio diversification.

For this reason, I’ve been watching the development of corporate accelerators — like Telefonica’s Wayra, Deutsche Telekom’s hub:raum, or even the BBC Worldwide Labs — with interest. While it seems in some regard that they’re just me-too programs, their deep vertical expertise and contact base can make them very appealing for startups that fit the profile.

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Leah Culver, Convore co-founder and Grove founder

Convore, the group chat startup that launched out of Y Combinator’s winter 2011 class, did pretty well in a lot of ways. The service, which was free to use and inspired by the 23-year-old Internet relay chat (IRC) protocol, was well-received by the press and amassed a solid following across a wide variety of different users: Businesses, developer groups, conference attendees, and plain old consumers.

But according to Convore’s co-founder Leah Culver, that just wasn’t enough.

“There’s this weird area that you can fall into as a social consumer app if you don’t have a million users or more,” Culver said in an interview this week. “You have plenty to keep you busy, but it’s not enough to get advertisers interested, it’s not enough to make venture capital firms interested. So the question becomes: What do you do with a middling social app?”

Pivot or perish

After analyzing Convore’s user metrics in mid-2011, the company decided a big change was needed if it ever wanted to prosper. The time had come to either pivot or perish. At that time, two of Convore’s co-founders, Eric Florenzano and Eric Maguire, decided to leave Convore and build another consumer-facing web startup called Boilerplate. But Culver opted to stay on and build a new project that deepens Convore’s IRC roots but narrows its user base to paying business clients who would use the chat service to for internal discussions. That business-focused IRC service, named Grove.io, quietly rolled out in early November.

Grove is built on the IRC protocol and allows any business to set up its own web-based private IRC server that includes features such as archives, search and channel access controls. The first 30 days are free; after that, business pay according to their size: $10/month for five users, $25/month for ten users, $50 month for 20 users, and so on.

Right now, Grove has around 40 businesses on board as clients, and has become especially popular with developer teams at tech startups. “Many developers specifically want to use IRC because it’s an open protocol, and it’s something they’re often very comfortable using,” Culver said.

Convore is still up and running as a free service, and definite plans for its future have not been solidified, but its business clients are currently being transitioned over to Grove.

Bootstrapped, but taking on big competition

Yammer is probably Grove’s most visible competitor in the enterprise communication tool space, but Culver says the products are fundamentally different. “Yammer may be fine for a company’s management or business teams, but we’ve found that often the developers want to talk to each other on something like Grove. If you are a programmer at a startup, IRC is how you want to communicate with your coworkers.”

A screenshot of Grove (click to enlarge)

Grove was built and maintained by two full-time staff — Culver and another developer, Jori Lallo — and a handful of contractors. The company has not taken on any outside money beyond Convore’s initial Y Combinator seed investment. But since Grove’s product is a paid, enterprise-focused app, VC funding is not a must-have at the moment

“We’re at the point that we would talk to investors, but the nice thing is we have paying customers so we don’t need to do it,” Culver said. She acknowledged, however, that bringing on outside funding would give Grove the ability to hire more full-time staff and build out additional features. Since Yammer currently has $57 million in VC investment and is said to be raising more, Grove could probably stand to beef up a little if it wants to be a serious competitor in the space.

Standing on the shoulders of IRC giants

But overall, it seems like Grove could really be on to something. I also think the service could punch well above its weight for a while, even without outside funding, just because of how it’s been built: For instance, since it runs the open IRC protcol, Grove already can work on a number of existing clients for desktop and mobile — the company does not have to build its own native apps. Standing on the shoulders of giants by using open protocols is a clever way to build a lean startup right now. And given the booming environment for web startups in Silicon Valley, if Grove can establish itself as a crucial service for developer-centric tech startups, it could have a nicely growing customer base for a very long time.

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Entrepreneur Steve Blank has spent a lot of time thinking (and writing) about how ineffective old-fashioned board meetings are when it comes to building and scaling startups.

This is the Internet age, yet founders and investors are still waiting six weeks to discuss progress over a long mahogany table? Startups aren’t small versions of large, slow-moving corporations. So why, Blank asks, do we treat still them that way?

The question was on his mind this spring, when Blank met with coder, entrepreneur and founder of Techcofounder Ben Mappen. Mappen came to pitch Blank an idea for a startup. But by the time the check arrived, Blank, one the biggest names in the lean startup movement was pitching Mappen on his vision for offering startups a more efficient, productive way to direct and measure their search for a profitable business model.

“The minute I heard his idea, I thought ‘Wow. Not only is this a great idea but this is really right up my alley,” Mappen said. “I asked him if he was doing anything with it and he said no. So he gave me his blessing. Driving home from that meeting I was like, ‘Holy cr** what just happened? I’m working with one of my heroes.” Mappen put his own idea on hold.

The result of that lunch meeting is LeanLaunchLab — a startup-building software based on lean startup principles and the customer development method of searching for a business model.

The blog-like software will allow startups to instantly record their progress and issues and serve as a narrative by allowing them to post customer interviews, surveys, videos and prototypes. Board members, investors, advisers and others will be able to view the project and add their input instantly. No need to wait for board meetings or coffee shop get-togethers.

“It’s a tool that completely shortens the feedback loop,” Mappen said. “Founders wish investors spent more time with them and shockingly, the investors I’ve surveyed feel they aren’t doing enough for their companies. The number one reason is lack of time. They don’t have time to for all the coffee meetings and phone calls and board meetings. Now, they can give advice on their own time. One hour a week per company is all it takes.”

The product has received seed funding from Shawn Carolan of Menlo Ventures. More than 700 startups signed up to participate after it was first demoed in May at the Startup Lessons Learned conference in San Francisco. Now, Mappen is about to launch a beta version of the software, with an initial group of 20 early-stage companies to serve as participants.

While Mappen sees LeanLaunchLab as providing founders with a way to communicate complex information and get feedback and guidance for startups in between board meetings, he believes the product could really be revolutionary for early-stage and angel-funded startups — which typically don’t have formal boards or directors — as well as companies outside the tech orbs of Silicon Valley or New York City. For them, there’s no formal way to get advice and no great way for advisers, investors and potential advisers to actually see what progress the startups are making. Even those valuable Starbucks meetings are impossible.

“In places like Pittsburgh and Anchorage, [the] founders are no less smart. They’re no less passionate. They just have no access to capital,” Mappen said.

But for more established, venture-backed startups, Mappen said the boardroom will always have some value.

“We aren’t trying to completely replace the board meetings,” Mappen said. “There are somethings you need to do in a board meeting, like hiring and administrative details. But you shouldn’t have to sit back and rely on them for everything.”

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Once upon a time, in the year 2007, Dropbox consisted of two engineers coding in their boxers out of a shared  apartment in the North Beach neighborhood of San Francisco. To co-founder and CEO Drew Houston, launching a successful company, “looked like a never-ending trail up Mount Doom and there is all this fog ahead of you, and nobody tells you what it’s like.”

Despite a flair for the dramatic, Houston appears to have emerged from the fog in good shape.

On Monday, Houston shared the latest Dropbox figures during a presentation at the second annual Startup Lessons Learned. The day-long event in San Francisco was designed to bring together entrepreneurs and engineers interested in the lean startup movement.

Last year, the file-storing startup claimed a staff of 20 employees and 5 million users. Today, Dropbox has more than 60 employees and over 25 million people using the service in 175 countries. It’s attempting to translate Dropbox into a whole host of languages, starting with French, Japanese, German and Spanish.

The system has saved an astounding 100 billion files. As of today, people are saving 300 million files a day.That’s 100 million more files than users uploaded in April. And a fun fact from Houston: people save more files on Dropbox than there are tweets on Twitter.

As Dropbox grows, Houston said he’s had to spend a lot of time thinking about the company’s vision, corporate culture and organizational structure–or what he used to think of as “Office Space bull s***,” referring to the 90s cult-classic movie about draining cubical culture.  He says a large amount of responsibility at Dropbox is in the hands of a small number of people. The company employes 25 engineers, all organized in small, loosely coupled teams.  On the infrastructure management side, just three managers handle thousands of servers. And the site’s visual designer was actually hired as the Dropbox community manager. In fact, he had no professional experience as a designer.

“With startups, you just kind of have to get lucky and find the right people,” Houston said.

He says one of the biggest challenges to growth has been something banal– inter-office communication.

When the team was small enough to fit in one room, information just spreads naturally, Houston said. “But as we grew larger we had to start deliberately trying to figure out how to get the right info in the right people’s’ hands.”

However, when it came to attracting the right team, and getting everyone prepared to scale up, Dropbox resorted to a strategy similar to others before it. “We spent a lot of money and time making the office nice.” he said, “And we stocked the place with good food.”

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VCs Fred Wilson (left) and Ben Horowitz flank moderator Erick Schonfeld at TechCrunch Disrupt

“Building a company is really hard so you might as well build something important,” said Horowitz, of the new and influential firm Andreessen Horowitz. He said he’s disappointed to see smart entrepreneurs pitching him on small ideas like ad targeting optimization and avoiding expensive things like hiring a sales force, all because they’re holding themselves to bare minimum expenses.

But Wilson argued that the best outcomes for both entrepreneurs and investors result from investing small amounts of money in risky ideas, and increasing the commitment as risk decreases. This ensures that founders are minimally diluted, as they can hold onto their significant stakes in the company if they don’t get desperate for funding because they’re running out of money. Even Zynga, which has raised something like $220 million in funding, isn’t exactly a fat startup, contended Wilson, as it hasn’t lost money following CEO Mark Pincus’ initial investment. Rather, those hundreds of millions have been the “insurance money” to allow Pincus and Zynga to make large risky bets without putting the company on the line.

Horowitz, besotted with the promise of dreaming big, responded by saying: “I have to pause because Fred has removed all the joy out of being an entrepreneur.” He pointed to big-thinking companies such as the electric car maker Tesla, which has raised hundreds of millions in private and government funding. “As an entrepreneur you really don’t have a choice. Often the idea and the market dictate the amount of money you need to build.” Wilson never really countered this point.

After Horowitz shot down Wilson’s self-described “fairly rigorous mathematical analysis” because it ignores the serendipity of startup opportunities, Wilson pointed out that Horowitz’ examples weren’t web companies. Sure, markets like automobiles and chips and biotech might need lots of money, but “in this sector, the web sector, I would argue there are very few ideas where the fat startup model makes sense.” This was his most salient point. Wilson also noted that managing large-scale companies takes experience, saying the first-time entrepreneurs he funded at Etsy, Twitter and Tumblr just weren’t ready. “I would not advise anybody to go fat startup if they don’t have that experience and that capability at day one.”

Asked by moderator Erick Schonfeld who made a more cogent argument, the crowd sided with Wilson. I found it surprising that the cite-the-spreadsheet argument was more compelling than advice to think big — but this was an audience of web startups, after all, where lean is the new black.

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Why Startups Aren’t Changing the World

Even though the current economic climate is not so hot, amazing advances in the open-source software movement, coupled with vastly reduced costs for such things as infrastructure, bandwidth and software services are allowing web-based companies to develop online products and services faster than ever before. And Internet companies themselves are developing non-traditional strategies that best meet the needs of the hyper-paced modern web marketplace.

Rapid Iteration Model/”Ship It!”
socialmedian founder and XING Chief Product Officer Jason Goldberg discusses the utilization of a rapid iteration model that allows development of “great products and enhancements that meet your needs.” Goldberg has evolved this model into something he terms “Ship It!” Boiled down, “Ship It!” means that product development cycles are run in quick succession, making user feedback explicitly part of the build process. Goldberg goes on to define an ethos that many cutting-edge startups live and breathe today: launching features publicly before they are “fully baked,” with the expectation that avid users will provide the feedback and direction needed to allow development teams to put on the final spit and polish.

We will launch new features before they are finished. Our plan is to get new stuff out there on the site and learn from our users as to how to make them better. You tell us what you like, don’t like, and want to see improved — and then we’ll do our best to keep up with your input.

Whereas for most industries it would be sheer folly to release products that were not yet perfected, on the Internet this is beginning to be more rule than exception, particularly for free and advertising-supported products.

Goldberg further strengthens his company’s policy of transparency by making himself available for answering questions and receiving feedback both on his XING profile and on Twitter.

The Lean Startup
Web-based startups are getting faster and more responsive, and they’re also getting leaner. Eric Ries, entrepreneur and co-founder/CTO of IMVU, defines the lean startup as “a disciplined approach to building companies that matter”:

It’s designed to dramatically reduce the risk associated with bringing a new product to market by building the company from the ground up for rapid iteration and learning. It requires dramatically less capital than older models, and can find profitability sooner. Most importantly, it breaks down the artificial dichotomy between pursuing the company’s vision and creating profitable value. Instead, it harnesses the power of the market in support of the company’s long-term mission.

So not only are startups becoming faster and more adept in rolling out product iterations, the lean startup concept allows startups to conserve resources while utilizing feedback and a rapid iteration model to find the fastest and most efficient path possible to maximum profitability.

The Microstartup
In November, Mahalo founder and CEO Jason Calacanis issued “The Future of Startups,” a proclamation on the state of startups and the Internet. Calacanis lays out that the era of “The Zero Cost Startup” (vastly lowered overhead, servers, hosting costs, and so on) has led to “The Age of the Microstartup.” Echoing the trends of the Rapid Iteration Model and the Lean Startup, Calacanis muses that “[m]icrostartups are amazing because they can try ten different things over a year with very little pressure to “break out.” This leads to a lot of people taking a lot more risk, starting a lot more crazy ideas.”

Low costs and freedom to “crowdsource” feedback allow, then, for a “Try Everything” era in which startups can spin out ideas, fail, and try again in rapid succession until finding the idea, product and business model that gains traction. In the microstartup model, the most important resource is the founders’ and team members’ time.

What do you make of the trend of web-based startups going rapid, lean and micro?

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