Here is the retrospective of my Lean journey to date, with the upfront acknowledgement that my journey has only just begun.
Phase 1 - The Commitment
When Dan Phillips and I first started talking about startup ideas in the spring of 2012, I went on a reading binge on entrepreneurship. There is one theme that came through in every book: make the commitment. I later captured this sentiment in a blog post Burning Your Boats and Bridges. In spite of spending my entire career in startups, this was the toughest phase for me, since I was weighing the known against the unknown; a job with good company / great team for the hope of building a good company / great team; predictable income for unknown income.
I spent a few months trying to de-risk the risks, analyzing and trying to identify ways to control every negative outcome. In the end, it just all came to me irrationally while driving into the office one Monday morning, when suddenly the risk of trying to start a company no longer felt like a risk. I think by then my family, friends and colleagues all knew I was going to do it. I may have been the last to know.
Phase 2 - Advisors
The formation of advisors was not a planned phase for me, but rather a natural outgrowth of a need to collaborate. My core team of advisors included The Sales Maven, The Startup Veteran, The Venture Capitalist, The Visionary Entrepreneur, The Connector, The Cheerleader, and The Maverick (you all know who you are ;) ). But I also received great advice and support from many people who were not official advisors, all of whom were essential to my Lean journey. The success of my early phases of the Lean journey are directly attributable to these advisors.
With hindsight I can pass on some tips for assembling a team of advisors for a Lean journey. Find people who have a vested personal interest in your success, and compensate for and extend your skill set. A diversity of opinion is valuable, and having a people connector or two doesn’t hurt.
Phase 3 - Market Research
Some people start with an idea, others start with a market. I consciously decided to start with a market this time. As a result my first few weeks were spent on the phone, calling executives, solution architects, account executives, entrepreneurs and distinguished engineers from cloud providers, systems management vendors, cloud management startups, and resellers / MSPs. Often the conversations yielded some small but useful insights, but sometimes the data came through like a fire hose (e.g. Citrix executive, Amazon solution architect).
My goal in this phase was simple: identify a starting customer and market hypothesis I could test. A board member from a previous startup was kind enough to provide me office space at his firm, which gave me a great support structure for performing the research.
Phase 4 - Market Testing
My first customer hypothesis was technology startups; my first problem hypothesis was that DevOps teams needed an integrated suite to manage the cloud (note: my former colleagues from SilverBack are thinking: didn’t we do something like that 12 years ago?). With a place to start, I produced the supporting hypotheses that would prove / disprove the market and problem hypothesis.
During this time I ran several experiments to test the hypotheses, always using my lean startup board as a guide. The tests included a couple concierge experiments, a marketing campaign (Adwords), many validation calls, wireframe A/B testing, and an MVP. I tried to keep myself as impartial as possible, reminding myself to follow the data. Several local startups were critical in helping me through this phase, and so I owe much thanks to the people at these companies for helping me acquire my early validated learning. I documented some of my lessons learned in a post 6 Steps To Running a Lean B2B Experiment.
In a few short weeks, I refuted the starting customer/market hypotheses, and moved on to Pivot 1. Pivot 1 was followed by Pivot 2, and then Pivot 3...
Phase 5 - First Customer
When I arrived at Pivot 4, I decided the try a new concierge experiment: the letter of intent. The purpose of the letter of intent was to see if I could get an earlyvangelist to commit to paying for my early MVP, which I had evolved through each pivot. I had two calls with my first target customer: one to the CFO and the other a VPE. The calls lasted 20 and 60 minutes respectively, and at the end, I had a paying customer. Confession: I was fortunate to be handed a qualified lead by the CEO and founder of my previous company, which proves my belief that if a Lean journey were a movie, the list of credits would be almost as long as the film.
With several prospective customers yet to call, I scrambled to put in place the necessary infrastructure to support paying customers - e.g. legal counsel, SVB account, incorporation. If I had taken a moment to think about it, I might have realized that with this move, I had quietly transitioned to a new phase of my lean journey: building a business.
Phase 6 - CEO Search
With paying customers and a small but growing pipeline, I had to make a decision: continue to bootstrap on my own dime, or raise venture capital. I also wondered whether I was doing myself a disservice being a solo founder. In the back of my mind I kept replaying the advice of the CEO & founder of DesigNET: “If you’re going to take on a co-founder, do it early so they can share in both the challenges and risks.”
So one evening I assembled my team of advisors in the boardroom of a local venture firm for dinner and a discussion. Our goal was to make two decisions: 1) whether to raise venture capital, and 2) whether to bring in a CEO. While the opinions were mixed, the general consensus was the market opportunity was unlikely to be won by a bootstrapped startup. The decision on a CEO was easier for me: when I looked at the venn diagram of my professional passions and the role of a CEO, I found there was very little overlap. ;)
I was fortunate on the CEO search. While I had three very good candidates, in the end my first choice was the person I had started the Lean journey with in the spring. The fact we had successfully worked together for seven years in a similar market (application & performance management) made it an obvious choice - but it also didn’t hurt that he had participated in building over $1B in shareholder value over his startup executive career.
Phase 6 - Fundraising
I hope to have some news to share on the fundraising phase in the future. In the meantime I will admit, this has been a very tough phase for me. Once you engage a few venture firms, you can quickly feel like fundraising is your new full time job. And there is an unfortunate truth that nags in the back of your mind: while the raising of capital can add great value to your business, the process of raising capital adds either no or negative value. In the meantime, I had paying customers to make happy, a product to continue building, and a long Lean journey still ahead of me.
So What's Next?
I know I am still at the starting gate of my Lean journey. Building a successful company requires years of hard work, a mulch pile or validated learning, focused execution, and a sprinkle of luck. I always think of a sailing instructor who summed up the difference between sailboat and motorboat owners: “With a motorboat, it's about the destination. With a sailboat, it's about the journey.”
With Lean, I think you need to focus on the journey, and let the destination arrive.