We talk to startups and investors, you get the value.
Not only by Christopher Columbus — let's talk about how essential it is not only to find your way, but also to stop in time, and even turn around. And also about what swimming "at random" is fraught with for a startup.
We talk to startups and investors, you get the value.
The first part of the series "5 salty lessons from sea expeditions for a young startup" taught how to choose the right partners and a team and how to calculate the resources so that a startup does not fall into the "valley of death".
Why remember Christopher Columbus during fundraising and how his experience helps to properly present a project, read the second part of the series.
The attractive name of this cape hides a story of struggle, disappointment and reversal. In the XV century, when Europeans had not yet discovered the sea route to India, trade communication took place only by land. It was very long, expensive and dangerous. Therefore, the minds of rulers, merchants and navigators were occupied with the idea- fix — to sail to India and establish a sea connection with it.
And if Christopher Columbus hoped to get to India by sailing from Europe to the West, then the Portuguese Bartolomeu Diash was interested in whether it was possible to do this by circumnavigating the coast of Africa. He gradually moved further along the African continent, until in one voyage he got into a violent storm near modern South Africa. Despite the storm, he sailed along the coast for two weeks, hoping to finally see the southernmost point of Africa and turn northeast to India. But the coast, like the storm, did not end, the team began to resent it: the fear of death was stronger than the illusory hope for Indian treasures. Diash was forced to turn back, not reaching the southernmost point of Africa about 200 km.
The cape where the ship almost crashed in a storm, he called it-Cape of Storms. But the Portuguese king renamed it the Cape of Good Hope, with the belief that one day this direction will give a sea route to India. And soon it happened: Vasco da Gama went by sea to India and back on ships designed by Bartolomeu Diash.
In the case of Diash, there was a not quite classic pivot. He did not discover new lands by turning aside. But he made an important strategic decision, which may have saved the life of the entire team.
In business, it is important to be able and willing to take risks, but you should not selflessly persist and ignore the fundamental rules. If you see that the indicators are not improving, the hypotheses have not been confirmed, then do not engage in self-deception and save the "brainchild". Change course or return to your home port before you crash on the rocks. No one needs your sacrifice for the sake of sacrifice.
This atavism of the Soviet past is still alive in our culture: I closed the project = I signed my inferiority as an entrepreneur. It is fundamentally wrong to treat mistakes as a shameful stain of biography, which should not be told even over a glass of wine. These are potential growth points. They say that a person tries, fills cones, gets up and tries again, gradually evolving as an entrepreneur.
Did you know that the Slack messenger appeared as a result of a pivot? At first, the team made a computer game Glitch, but saw in time that the market was not interested in it. Then they took the chat built into the gameplay and brought it out as a separate product. And everything worked out. Slack became the fastest growing business application, and was sold to Salesforce Corporation for $27.7 billion.
Of course, it is not necessary to change the concept every week. The founder of a startup should be persistent enough, and the project itself should be stable enough to check and refute, or confirm hypotheses. Changing the strategy just because a relative of a cofounder had a terrible dream is stupid. It just seems that the neighbor's grass is greener, and the competitors ' solution is more promising. First, test your own to judge its (not)suitability. But if you understand for sure that a pivot is needed-go ahead.
In general, treat the startup pivot as a correction, and not as sacred victims, death and rebirth from the ashes. Perhaps you should just change the monetization model without touching the product itself. Or add new tariffs and "buns" to "rock" users and launch the effect of "word of mouth".
Before the advent of the sextant and compass, sailors were guided mainly by the stars. Basically, 58 "navigation" stars were used, which helped to determine the direction with a relatively small error. In the Northern Hemisphere, the main landmark was the North Star. The line, directed vertically downwards from it, more or less accurately pointed to the north. On the other side of the equator, they were guided mainly by the constellation of the Southern Cross, which similarly pointed to the south.Of course, it was an imperfect technology. On a stretch of several thousand kilometers, it was possible to seriously miss. But these landmarks worked more accurately than, for example, the Sun or sea currents.
Navigation errors were expensive in those days. A large ship could run aground or break on the reefs. Small vessels were easily carried away by strong currents. If you think that the problem has been solved with the advent of radar, then this is not so. The presence of navigation tools does not guarantee their use. The largest disaster at sea in peacetime occurred in 1987. Then, as a result of the collision of the Philippine ferry "Dona Pass" with a Japanese oil tanker, 4,386 (!) people were killed. The crews of both ships were negligent in their work, and some navigation devices were simply not there.
In a startup, you can't move at random. You need to rely on fundamental metrics that will show the dynamics without embellishment. This should be done from the beginning, when the first users get into the marketing funnel. Even then, it is necessary to count how many users you have attracted, through what channels, how much they cost, what percentage uses your product in a week / month, and so on.
Metrics in comparison show the dynamics. "Yeah, this week we attracted 15% more users, but we earned 20% more. At the expense of what? How can we enhance this effect?" This is how tracking metrics helps you set the right goals that are profitable for business, and not just "work for work".
How, in principle, to understand what is important and what is not? Put hypotheses and test them. You need to determine the south and north from the "I have a cool idea" stage. Do your potential customers consider it cool? Does the market really need such a product? Are you ready to pay for it? How is this problem being solved now, and why is your option better? In fact, Customer Development is the answer to the several questions " why?", " how?", " what?", "how much"…
At the start, you need to put general, conceptual hypotheses to understand if there is such a pain, whether you can offer a unique solution and make money on it. The result of correct testing of hypotheses is based on numbers, on a certain quantitative and qualitative result. At the same time, you need to understand in advance what exactly will be considered a confirmation or refutation of the hypothesis.
OK, and what hypotheses are not worth wasting time on? How can I test them faster and cheaper? Mentors or other founders who have already passed these stages will help you here. And good books like "Testing Business Ideas" by David Bland and Alexander Osterwalder.
An amazing thing: a sailor who needs to go to the northwest, and who has accurately determined this direction, will not sail to the southeast without a reason. And entrepreneurs sometimes ignore the obvious market signals, stubborn numbers and continue to do what they believe in. Faith is good. This is a powerful motivator. Without faith, Columbus would not have won funding for his historic expedition. Vasco da Gama would not have sailed to India. And Thor Heyerdahl would not have crossed the Pacific Ocean on a raft, having traveled 6,980 kilometers.
But business, like navigation, is quite a mundane phenomenon. Figures, facts and calculation work here.