The Prescription for Startup Development

Limulus-Systems-IconGrowth, Engagement, then Revenue! That’s the mantra for startup development from Reid Hoffman, the founder of LinkedIn (as quoted in The Startup Playbook, by David S. Kidder). I suppose Hoffman should know, since LinkedIn has been a pretty successful venture. That mantra is also the path we have been pursuing at Limulus Systems, though perhaps less purposefully than one would like.

This is a somewhat uncomfortable place in which to be. Starting a business without having a definite source of revenue…? Both my grandfathers would be rolling in their graves. While I doubt that either of them ever wrote a detailed business plan for their ventures (a mill for making wooden bobbins in one case, a diner for the other), they surely knew how to make money from their ideas. This business of “build first, figure out how to make money later” would have been crazy-talk to them.

On the other hand, there seem to be a lot of recent examples of internet companies that have grown big without knowing how to make any money. Look at Twitter, having gone through an IPO and still casting about for the best way to monetize. It’s still an open question whether Facebook can make any money. Even Google had a hard time at the start before they figured out Adwords. Clearly, revenue is not required for growth and it’s possible to build something successful without a definite plan for monetization.

For my part, I haven’t completely ignored the issue of monetizing Funnelcake. After all, why would anyone go into a business that could never make a dime? Even I’m not that foolish. In fact, it’s been on my mind since the beginning. How could it not be? Regular readers of this blog may remember that I once wrote an ill-fated business plan including expected revenues from my brilliant idea (a long, long time ago on a project far, far away). No, I’ve thought about it a lot, especially since I have a personal stake in the game in the form of my own money invested.

One difficulty is that the advice on this topic is all over the map, so the best path is not clear. Some writers I respect have pointed towards the foolishness of going into a business without having a firm idea of how it will make money, while others have taken the build-it-and-see path of Reid Hoffman. They can’t both be right, so whom to believe? Never having done this before, I have no data points to support either point of view.

In the end, lacking any first-hand personal data, I have to go with my gut feeling on the subject, which is: a firm plan for monetization can wait, as long as we keep our eye constantly on the fact that in the end, Limulus Systems has to be a money-making venture. That leaves me with an uncertain feeling about the future, but that’s the nature of a risky startup.

Posted in Planning | Tagged , , , , , , | Leave a comment

Pre-Release Jitters

Limulus-Systems-IconWe are fairly close to releasing our Funnelcake app. Our plan is to submit a MVP (Minimum Viable Product) to the Apple App Store, so we can put in front of users to see how they like it. As I may have mentioned before, the MVP will not be a crappy product with a lot of bugs (we hope), but a product without a lot of fancy bells and whistles. The reason for submitting a MVP is because at this stage, we don’t yet know what our users will want. With the MVP, we can test the product with a minimum of upfront development at minimal cost. Then, once we know more about our users and their needs, we can start to build out the features they want.

One potential problem that has come up is the issue of reviews on the Apple App Store. There’s no question that our MVP won’t be fully ready for prime-time. It won’t have all the features people might want, might not look as polished as other apps, and it may have a few bugs to work out. As a result, it could garner bad reviews from people who don’t realize (or care) that this is an early release. App Store reviews are important to us – they can be a deciding factor for people who are on the fence about trying an app, and while we welcome constructive criticism, it would be unfortunate if a bunch of bad reviews kill the app off before we’ve even had a chance to develop it.

How to solve this problem? One possibility we’ve considered is to release the MVP under a temporary name for the purposes of testing and then later release under the Funnelcake name. We could use a completely different name, or a variation of Funnelcake, such as Funnelcakeapp. That way, any initial bad reviews would be wiped away when we withdraw the test version.

However, even if Apple would allow us to do this (which is not clear), it might not be the best idea. If we do gain any avid users who like the MVP, they will be sorely disappointed when it is withdrawn and development ceases on it. That might be a source of early bad reviews right there. Also, it’s not likely that we will get a lot of downloads without extensive promotion. I forget the exact statistic, but the percentage of apps that get 100 downloads or fewer is quite large…it takes more than just submitting to Apple to get noticed.

No, I think we just have to submit the app under our chosen name and hope for the best. If we keep the release announcements mostly confined to friends and family, we won’t get many other people downloading the app. There may be some negative reviews, but we just have to deal with them the best we can and continually improve Funnelcake to gain more positive reviews.

What do you think? Do we submit under a temporary name or just live with the potential for bad reviews? Is this a real problem or just pre-release jitters?

Posted in Planning, Progress | Tagged , , | Leave a comment

Thanks to Friends and Family

Limulus-Systems-IconIt can be a challenge to be personally close to a wannabe entrepreneur in a startup. They have a vision of the future that others may not share or believe in. That would be fine, but for the fact that their vision is all they want to talk about. They live, breathe, and eat for their grand vision of the world to come. It can make for boring dinner conversation when the only thought on the entrepreneur’s mind is how to achieve their next milestone.

Much of the entrepreneur’s spare time is spent figuring out how to bring their project forward, when perhaps it could be better spent playing with the kids or repairing the gutters. If you’re an at-home Dad like myself, you might have a little more time to work on your project, but if you’re simultaneously working a 9-to-5 while pursuing your dream….? That’s dedication. So what if the gutters don’t get repaired? There will be time for that after you make your big breakthrough…

Pursuit of the grand vision even disrupts their sleep. Personally, I keep a notebook at the side of my bed in case I wake up in the middle of the night with a brilliant idea. The purpose of the notebook is not so much to keep from forgetting those ideas, as it is to keep me from getting out of bed and firing up the computer at 3 a.m., waking up the dog, the bird, and everyone else. That sort of activity makes the entrepreneur come the morning.

Worse is when their projects start to cost serious money. Everything costs more than you thought it would. It began with small amounts of cash here and there, but then you get deeper and deeper in…it’s always the next round of funding that will finally put the project over the top. Meanwhile, your significant other wonders how the money could be better spent elsewhere and the rest of your family are feeling nervous about their contribution. Soon the entrepreneur finds that their vision has got to work, it just has to, because they’ve invested so much in it.

Living with an entrepreneur is tiresome on so many fronts. Therefore, to all those friends and family who have put up with me and entrepreneurs like me, hats off! Thanks, because it can’t be easy at times.

Posted in Epiphanies | Tagged | 4 Comments

Time For A(nother) Pivot

Books on Lean Product Development talk about the need to “pivot” often over the course of a startup’s lifetime, and boy, has that been true for Limulus Systems. What I mean by a pivot is a change in direction, based on new evidence during the discovery phase of product development. In The Lean Entrepreneur, Cooper and Vlaskovits define it, “To keep one foot firmly planted in one fundamental aspect of your business model, while changing other aspects.”

We’ve had so many good ideas…and so many have fallen by the wayside. Well, it’s great to have an idea for a product, but since no good idea survives first contact with customers (Steve Blank, The Startup Owners Manual), you have to be prepared to pivot without your ego getting in the way. Get too hung up on any one idea, and you may be destined for a disappointing failure.

Some of our pivots have been minor adjustments, some whole new ideas, new directions. We’ve kept our feet firmly planted in the idea of doing a software project, but which one? And how? That has changed quite a bit since Limulus Systems was first concocted. The short list of app ideas would include:

a. an iPhone app to provide voice control for other iPhone apps.
b. something vague to do with using as many iPhone functions as possible, such as the camera and accelerometer.
c. a combination TV Guide/social media app.
d. online non-profit fundraising app, a sort of digital raffle service.
e. a mobile app for the non-profit fundraising company, Escrip.
f. a “Facebook” exclusively for labor unions or other specialized groups.
g. a digital interactive anatomy text for iPhone.
h. a DNA and genome analysis app for mobile devices.
i. various game ideas (including one called “Bad Scout”).
j. an interactive iPhone version of the book, The Right Dog for You, by Daniel F. Tortora.
k. a digital scrapbooking app for iPhone.
l. a digital scrapbooking app for iPad.
m. a browser-based version of a digital scrapbooking application.
n. a scrapbooking application that pulls posts from various social media sites.
o. project (n) with a photo geo-location function for mobile.
p. project (o) with more of an emphasis on the app for geo-located photos, and less on aggregating photos from social media.

And there were more…but why belabor the point? With (p) I think we’ve now got something that will work, or at least something that is worth testing in front of users in the real world. Watch and see though – there will probably be another pivot before we’re done.

Posted in Progress | Tagged , , , , , , , , , | Comments Off

More Ideas for Marketing

Limulus-Systems-IconLast post, I listed social media sites that we will use for marketing Funnelcake (our app, not the fried dough). The major social media sites will undoubtably be an important means of getting the word out about our app, but that list represents just the beginning of our marketing, not the end of it – there are many other ways to reach out. There are blogs to connect with, user forums that will require our presence, print media, our own blog, and more.

As I know from experience, bloggers are always looking for the next blog topic, so if it can be made relevant to their interests, why not encourage them to write about Funnelcake? If we can promise a blogger inside access to the product and current development, we may be able to peak their interest and get a favorable review.

Print media is also a means of getting the word out. Print seems a little limited these days, but most newspapers and magazines have online versions, and there’s a cache to print that a blog doesn’t quite have. When the time comes, we will want to do a traditional press release to all the major media outlets that are likely to cover our story. Newspaper and magazine reporters, like bloggers, have space to fill and if we can help them do it, all the better for both of us. I don’t see us paying for print ads, that’s too expensive, but if we can get into an “App of the Week” story in print, all the better.

Some of what we do for marketing will depend on how people end up using our app since we don’t yet know where it will gain the most traction. Our marketing efforts can be tailored according to which markets resonate with the app in initial testing. For example, we’ve been thinking people with young children might be interested in Funnelcake, so we’ll try to get noticed on Mommy blogs and parenting websites, possibly running ads on those sites. Maybe the app would be a hit at weddings? We can get mentions on blogs and sites for wedding planners. Will fans at sporting events want to use our app? There are blogs and websites for those too.

There’s more we can do…there’s always more. SEO (Search Engine Optimization) for our website will be important when we have figured out our main audience. If it’s people who are thinking about taking casual photos for their wedding, we sure want to come up first in a Google search of “digital wedding album”. Trade shows? Why not? Again, using wedding planners as an example, there are all sorts of wedding-related events we could go to where we could showcase our app. Who knows what else? Maybe we’ll create our own Flash Mob photography events where everyone will go somewhere and create an album using our app.

And of course there is the ever-important Word Of Mouth – you, the reader are an important part of our marketing effort. Yes, you. Building awareness of our app via the web is great, but the best advertisement is a person recommending our application to a friend. Once we’re live, I hope that you’ll go to it!

Posted in Planning, Useful Information | Tagged , , , , | Comments Off

Getting Connected

Limulus-Systems-IconIt goes without saying that almost any product these days needs a web presence. Unless you’re producing special limited-edition hand-made goat cheese from a small farm in the Ural Mountains – or perhaps even then – you’ll use the web to tell the world that you exist. Maintaining a presence on the web may not be your only marketing strategy, but will have to be a component of it.

This is especially true for a web-based product like we’re planning here at Limulus Systems. Our success will be determined to a large degree by how easily we are found on the web; and when you talk about being found on the web, you’re talking about using social media. We need to use social media effectively to be noticed.

One thing that was holding us back from engaging in the conversation was lack of a name. Without a name for the product, we can’t easily put ourselves out there. Recently however, we’ve begun to settle on a product name: Funnelcake. It brings up the idea of creating your own “funnel” of images or social streams, it has the word “fun” in it, it’s a little whimsical, and it seems to be testing well with early-stage users, so we’ll stick with it for now.

Having a name in place makes it possible to start setting up social media. So far, our social media outlets are:

  • Pinterest – Funnelcake
  • Facebook page – Funnelcake (on my Facebook account)
  • Instagram – FunnelcakeApp
  • Twitter – FunnelcakeApp
  • Tumblr – FunnelcakeApp
  • Google+ page – Funnelcake (on my Google account)
  • YouTube (through Google)

Don’t bother looking for much activity on these sites yet, as we’re not quite ready for that yet. Soon though! Also, are there any missing from this list? Any others that we should sign up for? Where else would you go looking for us on the web? Let me know what you think.

Posted in Progress | Tagged , , , , , , , , | 3 Comments

Curio 8 – A Review

Limulus-Systems-IconEvery now and then, I like to talk about some of the software tools I’ve used recently for Limulus Systems. In this case, it’s an application for thinking and planning, Curio 8.

I’m a big-picture thinker. That means that I like the 30,000-ft view of things, where you get a general sense of what is going on without all those messy little details. However, the devil is in the details, as they say, so sometimes it’s necessary to focus on them. For myself, I can find it hard to organize my thoughts when I have a lot of little details to ponder in making a decision or sorting out a problem. I like to have all the details laid out in front of me in one place, like a wall full of little sticky notes, each with a separate idea on them. That way, I can work with the details, while still maintaining my higher-up view.

That’s the idea at least, though it doesn’t always work in practice. In my workspace I don’t have a wall big enough for anything but the smallest project, and sometimes a project don’t lend itself to being put on a physical wall (i.e., web links or other digital information). Not only that, my work space is my living space and I would just as soon that it wasn’t cluttered with little slips of paper half-falling on the floor. I need another solution.

What I use instead is a software solution in the form of Curio 8 by Zengobi. Described as a “digital notebook”, this is a terrific Mac program for organizing your thoughts. I like it because your data can take on so many different forms in the application. MInd maps, outlines, simple notes, tables, images, web links, Google docs, even audio and video recordings, it all goes onto your canvas. Almost anything you can think of for your project goes into the application.

There are loads of tools to create lines, arrows, and boxes, to link everything together and organize your thoughts. It allows you to visualize my data in a number of different ways and since it’s easy to use, it enables you to get ideas down quickly without the app getting in the way.

Curio has a number of advanced features that I never use and can’t comment on, like integration with Evernote, creation of todos and calendar items for iCal, and the ability to manage the metadata of your work canvas. These may be useful for some people and I am sure they work well, but I find I am most effective if I don’t get bogged down in features unrelated to getting my ideas down quickly.

There are a few areas where Curio will fall short for some people. If you’re a big fan of mind maps, you might find map creation in the app to be a little less feature-rich than a dedicated mind map program. LIkewise, outlines and lists are not as sophisticated as they might be in an app like OmniOutliner. The Jack-of-all-trades nature of the program means that certain bells-and-whistles features are not included, making the application easy to use, but possibly frustrating for someone who wants more. My biggest pet peeve with the program is that while there are a huge number of fonts to choose from, the fonts are not presented in the font in question, so unless you happen to know what “Copperplate” or “Gloucester MT Extra Condensed” looks like, it can be very hard to decide on a font. As a result, I mostly end up using Helvetica, which is a little boring, given all that Curio is capable of.

Overall though, the balance of features versus ease of use is just right in Curio. So if you’re a Mac user in search of a creative way to organize your thoughts, take a look – it’s free to try out.

Posted in Apps, Reviews | Tagged , , | Comments Off

The Personal Side of Startup Funding

Limulus-Systems-IconLately, I’ve been thinking about how to fund Limulus Systems.

We’re still running a tab on The Bank of Friends and Family and are not in immediate need of a cash infusion but at some point, possibly in the coming year, we may need more substantial sums to take us to the next level. If we did need raise money, what would that look like? What would a serious investor require of us?

These questions have led me to two books, Raising Venture Capital for the Serious Entrepreneur by Dermot Berkery, and What Every Angel Investor Wants You to Know by Brian S. Cohen and John Kador. Angel investment is perhaps the more likely path for us, but Raising Venture Capital was also useful for getting a sense of what investors look for in a company.

On thing I was surprised about is how personal the whole fund-raising process is. Both books describe a lot more meet-and-greet, a lot more getting-to-know-you, than I would have thought necessary. What difference does it make what your investor’s personality is? Why should it matter how and your investor interact? It’s all about the cash, isn’t it?

Turns out it’s about a lot more than that. In the case of venture capital, a representative from your venture firm will end up on your Board of Directors, advising and guiding your company. If you are taking cash from an angel investor, you end up with a mentor who will want to use their experience to give you tips. In either case, it’s a more like taking on a new partner than it is like getting a car loan. You need to trust each other, and trust a lot, since there may be a lot of money at stake.

For you, the entrepreneur, it makes a big difference whether you can work with your investors, since they are going to be part of your company, like it or not. It can be easy, or it can be hard, and how it goes is dependent on how well your personalities mesh. To get the “right” investor, you need to know a lot about them, and that only comes via your personal interactions. Are they going to work hard for you? Do they understand your business? Are they interested in the long-term growth of the company, or are they looking to get out as soon as possible? Do you trust them to follow through on further investment when things aren’t going as planned?

From the investors side, a big part of the equation is clearly the startup team. While the company may have a brilliant idea, if the team looks like they can’t execute it, investors will stay away. In Brian Cohen’s book, he says that he would rather be involved in a startup with a mediocre idea but a great team, because a great team can always recover, whereas a mediocre team will be unable to execute no matter how good the idea is. It’s not just about having brilliant team members; investors look for a team that will be able to work together. Therefore the personal interactions between team members, as well as their interactions with the investors, all determine the likelihood of getting funding.

This need for a personal touch seems to be especially true for angel investors. Often they are not really in it for the big payout – they can’t be, since the likelihood of earning their money back investing in early-stage ventures is so small. Angel investing is a very risky business, generally undertaken by people with money they can afford to lose. Angels’ motivation, more often than not, is something else: to be a part of something new and interesting, the chance to help mentor a small and growing venture. Personal satisfaction and the chance to “give something back” is their goal.

You’d think that investment decisions would be made on the numbers, but the investors’ gut feeling about a particular start-up team is clearly also important. Sure, you need the business plan, you have to come up with milestones to be met for future rounds of funding, demonstrate that you have a viable market, that sort of thing. Don’t get me wrong, the numbers count. But keep that smile on your face, because it counts too.

Posted in Books, Epiphanies, Useful Information | Tagged , , , , , | Comments Off

Patent Pending

Limulus-Systems-IconRecently we’ve come up with a really good idea for the application. In fact, it’s a bloody brilliant idea, novel enough that it may be worthy of a patent. Now, I’m not going to tell you what the idea is (for reasons explained below), but it’s pretty cool. What I would like to talk about here is the idea of getting a patent.

Having a patent for your product can be great. It can protect your intellectual property against interlopers, allowing you to operate in your competitive space for seventeen years, which is a lifetime in the software world. Having a strong patent position makes you a more valuable company, which is great for small startups that may be looking to be acquired by a larger, more established company. There’s also the personal factor, which is that it’s undeniably cool to have a patent under your belt. It looks good on resumes, and there’s a level of personal satisfaction in being able to say that you came up with something novel and useful.

Lest you think that having a patent is all honey and roses, however, there are some distinct downsides. There is, in particular, a real tension between the patent process and the lean development we’re doing at Limulus Systems. Lean development demands that you constantly put your idea in front of potential customers, testing it with them, and modifying your idea based on what you learn. It’s a continuous cycle of learning and modification, as you figure out who your customers are and what your product is. The most important aspect of this is that you are constantly putting your idea in front of people.

The problem with patents and lean development is that patents require the opposite approach. They require secrecy. To get a valid patent, the fewer people who know about it, the better. The reason for this is that the idea must be novel, and must not be out in the world before your patent is filed. After all, if it can be shown that your idea is already out in the world, it is not novel, and therefore not worthy of a patent. The only way to guarantee your patent idea does not get out is to keep it a quiet as possible.

At the very least, anybody outside the project who hears your idea must sign a Non-Disclosure Agreement (NDA), which is cumbersome and off-putting for some people. Sure, you can get NDAs from those few people you meet face-to-face to test your web application, but what about all that virtual testing you were going to do? You can’t get everybody who sees your website to sign a NDA. Besides, the NDA is only a legal cover for you, a fiction of sorts. What are you going to do if someone signs a NDA and tells another person about your idea? Sue them? A cash-poor startup doesn’t have the means to bring that kind of suit. Better not to tell anybody in the first place.

Also, did I mention that a patent application can be expensive? First, there are the basic filing fees and the need for a patent expert to write the claims and do the filing. Second, a patent is not as simple as “file it once and you’re done”. It goes more like this: you file, the patent examiner looks at the claims, and disallows some of them. You take the patent back to your lawyers, modify the claims, send the patent back in, the examiner is not quite satisfied, round and round it goes, until the examiner is convinced. All that going around costs in legal fees and at the end of the process you may still not have a patent if the examiners refuse it.

In addition, patents are expensive to defend, as evidenced by the recent Apple/Samsung battles, where each side spent millions. And defended they must be, because in the legal world they are not valid if you don’t defend yourself against interlopers. What if your opponent has deeper pockets than you do? You might be able to win out after years of litigation, spending more than your company is worth to defend the patent, but what would be the point? It would be a pyrrhic victory indeed if your company no longer existed.

For these reasons, a company might decide to keep an idea proprietary, rather than seek a patent. When you file for a patent, you must reveal the inner workings of your idea to show that it can be reduced to practice. However, once the idea is revealed in a patent, your competitors can figure out how to work around it or extend it. A patent tells the world what you are doing, whereas with a proprietary process, you reveal nothing. If it’s possible to keep your idea secret, the proprietary route may be the way to go.

This isn’t to say that a patent is a bad idea for a lean web application startup like ours. A patent is expensive, but so is having a competitor in your space. My take from talking to other entrepreneurs is: if you have a great idea and that idea is at the core of your product, you should go for it. If your great idea is more peripheral to your core product, then it may not be worth the time and money.

Posted in Progress, Useful Information | Tagged , , , , | Comments Off

Ssh – It’s Private

Limulus-Systems-IconConfess – have you ever read the all-important Privacy Policy for a website? I mean, really looked at it? Me neither. Most of us never bother, unless we’re prompted to when we hear something disturbing about a favorite website. Facebook is always in the news for its’ privacy policy, but what about all those other sites where you share information, like shopping sites? Do you look at the privacy policy of each and every one of them? Of course not.

Nobody reads privacy policies, but yet everyone cares, quite justifiably, about their privacy. You have to in the digital age, since the repercussions of making a mistake can be so substantial. At the very least, you can get a lot of spam you don’t want because your email address has been sold, and in the worse case your identity is stolen and your bank accounts are cleaned out!

At Limulus Systems, we likewise have had to develop a privacy policy for our website. My feeling in creating our policy is to follow the Golden Rule; that is, only do things that would be acceptable if they were done to you. I don’t want my email sold, and neither do you, so Limulus Systems shouldn’t do it either. I don’t want to be spammed, and neither do you, so Limulus Systems shouldn’t do that either.

The other important aspect of a privacy policy is to be as honest and upfront as possible. Don’t promise anything you can’t deliver and, as my mother would have said, say what you mean and mean what you say. If you are selling data, you must say so; likewise, if you are tracking the user with cookies, you have to report it. From a regulatory point of view, disclosure is more important than the specifics of what you are doing.

We’re still in the testing phase, so our privacy policy isn’t quite as well-developed as for an established company, but it’s still important that users know what we’re doing with their data when they sign up. I recently wrote up our policy with the help of The IT/Digital Legal Companion by Gene K. Landy. Our policy is fairly generic, but it states that we’re not selling or giving away your information, we are using cookies to get website analytics, we’re not going to view your passwords, that sort of thing. As we get bigger, we’ll have edit the policy to be more specific about what we will and won’t do with the data in users’ social streams. It’s perhaps annoying for the user to have a privacy policy constantly changing, but it’s necessary, since the policy has to be a living document, changing as features are added and users’ needs change.

If you have any interest in seeing our privacy policy, let me know and I’ll post it. You probably don’t want to read it though – we already know nobody reads privacy policies.

Posted in Progress | Tagged , , , | Comments Off