What I learned at IT entrepreneurship bootcamp
A couple weeks ago I participated in the Startup Bootcamp #DigitalHealth. Me and my team worked on creating a business plan for a smart diaper that’s based on a cheap humidity sensor built into the diaper. We won the best pitch award. In this post I will summarize my learnings from the lectures and just talking to experts in the field that were present.
Team
The founding team is of critical importance. Ideally you should know each other well. You should know how your team members react in stressfull situations. The perfect size is about two to three people.
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Source: Wassermann, Noam,The Founder‘s Dilemmas p. 7
Your miminum viable team should cover three aspects relevant to running a business and creating a functional product:
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Because in later stages you might experience some friction with team members it is important to define terms for such situation right at the beginning. For this reason you should create an internal founder contract. Law firms have contracts covering the following issues stored in the drawer ready to go:
| Vesting | IP-Covenant | Non-Compete Obligation | Drag-Along Right | Tag-Along Right |
|---|---|---|---|---|
| Problem: A co-founder decides to quit after some months and takes half the company’s stock with him. The other founder is totally screwed. | Problem: A co-founder leaves and prohibits the company from using his intellectual property, which the company needs to survive. | Problem: A co-founder leaves the company and is hired by a direct competitor to whom he reveals all his knowledge about the company. | Problem: A minority shareholder blocks the sale of the company that was already approved by a collective majority of existing shareholders. | Problem: A minority shareholder is forced to sell his shares for less than the majority shareholder. |
| Solution: Founder vesting is when co-founders agree that their founder’s stock will vest over some period of time. Differentiation between good leavers and bad leavers. | Solution: Company shall procure all intellectual property necessary to operate and develop the Company’s business is held by the company. | Solution: Co-founder agrees not to enter into competition with the company after he leaves the company. | Solution: Drag-Along: Enables a majority shareholder to force a minority shareholder to join in the sale of a company. | Solution: Tag-Along “Co-sale” Right: Right of minority shareholders to join in when the majority shareholder of the founders sell their stock. |
Startup Idea
In the end you need to come up with an idea that adds value to peoples lives. You need to solve some kind of problem better or for the first time. There are two different approaches: Problem identification vs. technology push.
Problem identification consists of interviewing users and experts and trying to understand their existing problems. Then you come up with a solution for their problems. A technology push on the other hand describes the case that you want to implement an existing innovation. Basically it means finding a use case for your solution.
It is generally not recommended to use your own problems as business ideas, because your own perception of them might differ immensely from the target audience. If you do it, you need to ensure to interview enough users to validate your hypotheses and implicit assumptions.
For our startup idea we used the idea of a technology push. The RFID moisture sensor is already developed and a real innovation. Finding a market where it delivers real value seemed easier to realise in the bootcamp setting where you don’t have much time for in depth user research.
Leap of Fate Hypotheses
Your leap of fate hypotheses are the core assumptions for your business idea. You differentiate between a value and a growth hypotheses. You need both. You should test them rigorously.
The value hypotheses tests whether the new product/service will create value for the customer. They should cover:
- Is this a valuable proposition for my target customers?
- Will customers be willing to pay for it?
- Will customers return?
The growth hypotheses should test how customers will adopt your product/service. Important questions are:
- Once the project has piloted and shown value, what mechanism will we use to grow it?
- How will we know if learnings from the pilot region apply across multiple geographies?
- How can we encourage and reward word-of- mouth evangelism?
Interviews
Business Models
Lean Startup approaches
The lean startup model focuses on short and customer-centric product development cycles. It aims at value creation and elimination of waste from day one. It is a counter-concept to the waterfall approach to product development.
A lean startup aims at creating validated learnings and focusing on whats absolutely necessary.