Discussion Topics

Continued Influence Effect Some investors will hold onto their preconceived notions even when presented with corrected information. For example, a startup positions their company as providing a service but they don’t mention they have recurring revenue. Recurring revenue shows scalability while service businesses typically do not. Even after the investor learns about the recurring revenue, […]

Courtesy Bias Courtesy bias is a cognitive bias defined by Wikipedia as the tendency to give an opinion that is more socially correct than one’s true opinion, so as to avoid offending anyone. Courtesy bias arises when an investor tells the startup what they think the startup wants to hear rather than what the investor […]

Base Rate Fallacy The base rate fallacy is a cognitive bias defined by Wikipedia as the tendency to ignore base rate information (generic, general information) and focus on specific information (information only pertaining to a certain case). One-off sales to specific companies while helpful do not define the startup’s growth forecast.  Investors should look at […]

Bias Blind Spot The bias blind spot is a cognitive bias defined by Wikipedia as the tendency to see oneself as less biased than other people or to be able to identify more cognitive biases in others than in oneself. All investors have blind spots and biases. Investing in experiences causes one to be biased […]

Confirmation Bias Confirmation bias is a cognitive bias defined by Wikipedia as the tendency to search for, interpret, focus on and remember information in a way that confirms one’s preconceptions. Investors bring their recent investment experiences to fund new startups. If the investor recently lost their investment in a deal in a certain sector, then […]

Availability Heuristic The availability heuristic is a cognitive bias defined by Wikipedia as a mental shortcut that relies on immediate examples that come to a given person’s mind when evaluating a specific topic, concept, method, or decision.  The availability heuristic operates on the notion that if something can be recalled, it must be important, or […]

Bandwagon Effect The bandwagon effect is a cognitive bias defined by Wikipedia as the tendency to do (or believe) things because many other people do (or believe) the same. Investors follow the lead of others. The more investors following a deal, the more investors are willing to join. Investors look for lead investors who will […]

Anchoring Anchoring is a cognitive bias defined by Wikipedia as the tendency to rely too heavily, or “anchor”, on one trait or piece of information when making decisions (usually the first piece of information acquired on that subject). Investors tend to attach to the first thing startup pitches and stick with it. If the startup […]

Build a Moat Warren Buffet once said, “I look for economic castles protected by unbreachable moats.” In the startup world, investors look for a competitive advantage that can build a moat around the business. “Me too” businesses are difficult to fund because anyone can start one and compete. To build a moat around your business […]

Repeatable Systems Repeatable systems are a key element in growing and scaling a business. Once the business is up and running, the founder should start to build repeatable systems. Anything you do more than once should be documented. The key steps should be written down and followed each time you do it. This saves time […]

Start With Why A key concept in aligning people’s motives is to start with the Why. The Why represents the motives behind people’s actions and their purpose. The How represents the methods or steps to get there. The What represents the results or outcome to achieve. To align the team in your startup, start with […]

Social Proof Social proof is the idea that people look at others to see what they did and then copy their actions.   The need for social proof can be found throughout the startup world. Customers will look to see if others have bought the product before they buy it. Investors will look to see if […]

Gamification Gamification applies game-design techniques to applications outside of gaming. Game techniques can make the application more engaging and productive. Here are some gamification techniques to include in your application: Establish flow in the software which is a combination of challenging and workable. Break large tasks down into smaller ones that give the user a […]

Open Platform vs. Closed Platform Open platform vs. closed platform is a key concept in the startup ecosystem. It defines how the startup will interact with customers, partners, and others. A closed platform is one in which the startup restricts access in order to monetize its content. It’s often called a “walled garden” which one […]

Freemium Freemium is a key business model in the startup world. It’s a pricing strategy that provides a product or service for free in order to attract more users.   After the user is engaged with the product, the company can upsell the user for paid services.  The freemium strategy is highly scalable as it can […]

Technology Adoption Lifecycle Technology adoption lifecycle in the startup world shows how new technologies and products are adopted first by lead users and technologists.  Following this group are early and late-stage majority users. The laggards are the last group to accept the new technology.  This concept comes from Geoffrey Moore in his book entitled, “Crossing […]

Forcing Function Forcing function is an activity or event that forces one to take action and produce a result. Forcing function is a mental model for how to set up a startup so it produces a result.  Here are some examples: Precommitment — in selling your product use monthly or annual contracts that prescribe follow-on […]

Technical Debt Technical debt is a concept in software development that accounts for additional work to recode a program that was developed quickly rather than properly. It’s the result of prioritizing the speed of development over the quality of code. To manage technical debt in your business consider the following: Define the technical debt currently […]

Thought Experiments for Startups A thought experiment is a hypothesis laid out for thinking through its consequences. Many great thinkers have used this technique to solve problems. Galileo used it to prove his idea that mass does not influence acceleration when he dropped both a heavy and light ball from the Tower of Pisa to […]

First Principles First principles are basic truths that cannot be deduced from any other proposition or assumption. Founders should base their startups and products on first principles. First principles research requires direct contact with customers to uncover the core problem. By going back to first principles the startup founder can approach the problem from a […]

Second-Order Thinking First-order thinking looks at solving the immediate problem. Second-order thinking looks at the consequences of solving the problem. To practice second-order thinking, ask the question, “and then what?” Most people look at the world through first-order thinking such as: “That product is on sale, I should buy it.” Second-order thinking asks the question, […]

Probabilistic Thinking Probabilistic thinking is making an estimate using math or logic to determine the likelihood that an outcome is going to happen. This often involves statistics and historical data. If the revenue in a company has grown by 10% for each of the past five years, then probabilistic thinking will point to a growth […]

Economies of Scale Economies of scale is an economic principle in which the costs of delivering a product go down as the volume goes up. Over the life of a product, the cost per unit should decrease. For startups, this means the cost to build your product should go down as you ramp up sales. […]

Jobs To Be Done Jobs to be done is a mental model in which you look at the customer’s workflow to determine what they might need to complete their jobs. This concept came from Clayton Christensen and provides insight into what product your startup should build. It provides a framework for understanding customer needs. As […]

Circle of Competence Circle of competence is the area in which one has a skill or expertise. Tom Watson the founder of IBM once said, “I’m no genius.  I’m smart in spots and I stay around those spots.” You don’t have to be an expert in everything to be successful. You do need to know […]

Schlep Blindness Schlep is a tedious or difficult journey. Schlep’s blindness is overlooking the obvious startup ideas as everyone is used to working in a current manner. Most founders can’t see many ideas because of schlep blindness — they know how hard it is so they don’t consider it.  Look for ideas you want to […]

Power Law The power law is a key mental model for venture investing.  The power law states that the majority of the returns will come from just a few of the investments. Similar to the Pareto principle, 20% of the deals will account for 80% of the returns. In venture capital, the power law requires […]

Total Addressable Market The total addressable market is the size of the market that represents the total potential revenue for a product.   This is the market that could ever buy the startup’s product. In the startup world, there’s truly no limit to how big a company can grow. Investors look for business opportunities with large […]

Flywheel Effect The flywheel concept comes from the industrial world in which a large mechanical flywheel gains momentum from small steps and eventually creates enough momentum to generate its own motion. In the startup world, the flywheel effect refers to an alternative to the sales funnel by building a growth machine by connecting strategy with […]

Agile Development Agile development takes an iterative approach to building software. Instead of one monolithic development, agile proposes incremental changes. Agile is a useful mental model in the startup world as it fits well with the startup dynamic. Startups use agile development as they are still learning about customer requirements. As the customer base expands […]

First and Last Mover Advantage In startup markets, there are advantages to being the first mover and advantages to being the last mover. Here are some advantages of being a first mover: The first mover in a market can gain market share due to the lack of competitors. The first mover can gain branding and […]

AARRR AARRR stands for Acquisition, Activation, Retention, Referral, and Revenue It’s the mental model for the customer lifecycle. In growing sales this model breaks down the process into stages and steps which the startup can metric as follows: Acquisition —  find users through multiple channels Activation —  excite customers with your product  Retention —  bring […]

Inversion Mental Model The inversion mental model generates new startup ideas by inverting the problem. By looking at the problem in reverse you can ideate new product solutions and business models. This technique tests the assumptions and gives us a new way of thinking. For example, instead of asking “how can we build the best […]

Earned Secret The earned secret mental model postulates that you should have some information that most others don’t before launching a startup. The earned secret gives you an edge over other startups through a key insight into the customer or industry. Those outside an industry have little or no insight into it. Insight comes to […]

Minimum Viable Product Mental Model The minimum viable product called MVP tests the market before building the final product. The MVP is designed to gain customer feedback and show market validation to the investor. It tests the riskiest assumptions with small experimental products. The MVP is not an early version of your go-to market product […]

Product Market Fit Mental Model Product market fit is a mental model that demonstrates your product meets the market’s requirements.   It’s a key milestone in the journey of the startup as it’s the point of inflection for growth and later scale. Without product market fit the startup will most likely fail. A startup has achieved […]

The Idea Maze The idea maze is a mental model for how a founder sorts through the plethora of ideas to find the right one on which to build a startup. There are many choices including the problem to solve, product to build, and how to monetize. In navigating the idea maze for your startup […]

The Babe Ruth Effect The Babe Ruth effect mental model comes from Babe Ruth who once said: “I swing big, with everything I’ve got. I hit big or I miss big.” The mental model postulates that it’s better to take big risks than to avoid failure. Eventually, the big risks will pay off and will […]

Regret Minimization The regret minimization mental model helps you make difficult decisions by projecting yourself into the future and looking back on the decision to be made. Jeff Bezos once said,  “I knew that when I was 80 I was not going to regret having tried this.” Today you are your present self. Tomorrow you […]

Disruptive Innovation The disruptive innovation mental model describes a simple innovation starting at the bottom of a market and then moves up the curve to overcome the industry incumbents. This mental model was first defined by Clayton Christensen in his book The Innovator’s Dilemma. Industries with expensive products are overtaken by companies operating in overlooked […]

The Why Now “The why now” mental model builds the case that now is the right time to launch and raise funding for a startup. Timing is key to a successful startup launch. Launch too soon and the market won’t be there. Launch too late and the competition will be too far out in front […]

Introduction to Mental Models A mental model according to Wikipedia is “an explanation of someone’s thought process about how something works in the real world”.   It is a representation of the surrounding world, the relationships between its various parts, and a person’s intuitive perception about their own acts and their consequences.” Mental models help solve […]

Product Roadmaps The product roadmap is a shared resource that outlines the vision, priorities, and direction of a product over time. It aligns the goals of the company to deliver the product and sets the expectations of the customer. The first product is the minimum viable product and sets the starting point for the product […]

Pre-seed Product Work The minimum viable product is one of the more challenging products to design. There are many choices and limited resources available. In designing your MVP consider the following: Scope into your core technology in building out the first version. Eliminate as much of the surrounding building as possible. Take a specific use […]

Product Reporting It’s important to track the key metrics for your product. Here’s a list of numbers to capture: Customer acquisition cost — the cost to acquire a customer. Customer lifetime value — the total revenue received from each customer on average. Churn rate — the percentage of customers dropping out each month. Conversion rate […]

Product Usage Metrics Metrics are a key tool in product management. In managing a product track these metrics: Customer acquisition — track the performance of the product in acquiring new customers. This is often done broadly across all products but should be done by each product as well. Customer adoption — track the performance of […]

Product Development Process There are many approaches to product development. Here are some approaches companies use: Defines the ideal process. This lets the process work out from project to project.  Systematizes development activities. The core systems are made available to the team to use as they like. Focus on the customer and their needs. They […]

Gamification of the Product In designing your product consider adding gamification to it. Here are some key elements to consider: Include goals for the user to accomplish with the product. This makes it engaging for the customer. It also provides a benchmark on how much the customer uses the product. Provide control over the product […]

User Experience Design The user experience of the product must be designed into the product from the beginning. Here are some key points in researching the user experience: Understand the user’s goal and what they are trying to achieve. The user may be trying to generate a report or store key information, or analyze data. […]

Product Data Product data is the information about the product used for product management purposes. Here are some key data points to capture and maintain: Customer tests for new product features. Capture A/B test data into a central repository as the answers may be useful for building future features. Key metrics such as customer engagement […]

Product Development Priorities There are many features to add to a product and never enough resources to do all of them. Consider these points in prioritizing your product development: Look for lost sales to find high-priority features to work on. Focus product development on customer requests. Look at how the customer is solving their problem […]

MVP Mistakes In developing a minimal viable product avoid these mistakes: Trying to create your vision fully in the MVP. The MVP will be a greatly reduced version of the envisioned product. Taking customer feedback literally. Customers will provide feedback and ask for specific features.   In building a product you must look at the bigger […]

Product Features The features of your product will determine your competitive position in the market.  For any market, there is a baseline set of features that customers will expect. To enter the market your product must provide these basic services. To beat the competition your product must have differentiation features. Differentiation features distinguish your product […]

Product Adoption Product adoption raises awareness about the product and drives users to sign up for it. A strong product adoption process generates more customers, reduces churn, and increases customer loyalty. Product adoption comes in stages as follows: Awareness — first make your customer aware of your product. It is important to educate the customer […]

Product Experience Product experience is the customer’s engagement with the product. Consider these customer touch points in developing the product experience: Sign up — this is the stage customers commit to the product and join. Make sure you have an easy signup process that states clearly what the customer will receive. Onboarding — this is […]

Product Research Before building your minimum viable product, you’ll need to research the space. Here are some key points to consider: Know your customer and their problem very well. Many founders start building a solution to a problem that they only know superficially. Talk to at least fifty prospective customers about the problem to understand […]

Product Research Best Practices In researching your product include these best practices: Always be researching when talking with prospects and customers. Focus on the audience and their needs and not the product and its features. Identify the customer journey and how your product fits into it. Track the user’s thought process in engaging your product […]

Product Innovation Innovation is a part of product research and development. Product innovation provides a competitive advantage, opens new markets, and increases sales to existing customers. Determine how much you will spend on product innovation. Set a budget for people and time to work on those innovations. Base this budget on demands from customers as […]

Product Development Challenges Product development in a startup brings several challenges. Here’s a list of key challenges to overcome: Picking the right problem to solve. There are many problems to solve so it’s important to select the right problem up front.   You’ll need a compelling solution and a means to monetize it. Building the first […]

Minimum Viable Product Product development begins with a minimum viable product. In building your MVP, set constraints with respect to development time and selling time.  In software development, it takes six months to build the product and six months to sell it.  If you can’t build it in six months you scoped the product too […]

Source of Failures in Product Development There are many challenges in product development. Here’s a list of failures points to watch out for: Inexperienced developers who mean well and work hard but lack the experience. Hire for the skills you need rather than try and build the skills on the go. Growing a product from […]

Challenges in Product Development Product development brings many challenges to the startup. Here are some key points to watch out for: Funding takes time to raise so focus your product development on MVPs and draw as many lessons to be learned as you can from each one. Building a product that actually solves the customer’s […]

Outsourcing Product Development Many startups outsource their product development. Here are some key points to consider before outsourcing: Outsourcing gives you access to additional skills and resources you may not be able to hire yourself. It can also lower your costs as you pay for the work to be done through contracts rather than salaries. […]

How to Reduce Costs in Product Development Product development often runs over budget. Here are some steps to reduce costs: Start with good planning and define the goals clearly. Many projects launch with unreasonable expectations. Track the progress using metrics to know how you are doing.  Make sure the team is up to the tasks […]

Tips for Success in Product Development It takes a plan and persistence to bring a product to market.  Here are some tips to make your product development successful. You’ll need to bring passion to the project to see it all the way through. Use Minimum Viable Products to test out the idea and gather feedback.  […]

Product Development Using IDEO Startups can use the IDEO  method to build out their product development process. Here are the steps: Observation — observe the user and their pain points. Ideation/brainstorming — turn the observations into product ideas and use brainstorming to generate multiple variations. Prototyping — mock up an example of the proposed product […]

Product Development Team Dynamics Product development requires a team approach. Here’s a list of key points to consider: Assess the skills of each team member to understand the group’s capabilities. Set goals for the team before the project sprint begins. Lack of clarity causes confusion among the team members. Check the feasibility of the project […]

Product Development Best Practices Product development is an important function in a startup. Here are some best practices to consider: Maintain focus on the user. Involve other stakeholders in the process such as sales and marketing. Metric your product development process to know how you are doing. Focus on those areas with a strong return […]

Lean Startup Approach to Product Development The lean startup approach seeks to discover a product and business model that works. Unlike big companies which have a large staff to maintain an existing product line, the startup has little to no staff and works on finding new business opportunities. Startups use the lean startup approach in […]

Product Development Plan Here’s a checklist for launching product development for your startup: Research the industry for trends and competitors in the space. Talk with prospective customers about their pain points. Consider not only the product to be built but the revenue to be generated. Build out several Minimum Viable Products or MVPs. Plan out […]

Creativity Is a Process Ideation requires creativity.  Creativity is a process no different than any other activity. Here are some steps to follow in generating creativity in your ideation program: Start with preparation. Capture your ideas into a list for evaluation. Incubate the ideas. Spend time exploring the ideas listed. Identify the insight. The idea […]

Testing Your Ideas After generating ideas for your startup, you’ll need to test those ideas. Consider these points in your evaluation: Research the market on the product you intend to build and sell. Is it big enough and growing fast enough for a venture deal? Who is the competition and how are they positioned in […]

Basics of Product Development Product development should follow a standard process. It starts with a strategy. That strategy should align with the goals of the company and mesh with its current product roadmap.  The specific product should further the company’s business objectives such as increasing revenue, reducing costs, or holding off a competitor. The product […]

Where to Start Your Product Development It’s important to have a product development process for your startup. Here’s a list of what startups should do to get started: Focus on the customer’s pain.  Find that which is critically important and not just nice to have.  Do it better than the competition.  Don’t be just slightly […]

Product Development Using Stage-Gate Startups can use the Stage-Gate method to build out their product development process. Here are the steps: Idea generation — use brainstorming, market research, and other tools to come up with ideas. Idea screening — create a set of criteria to judge the ideas and determine what to pursue. Development and […]

Finding Your Value Proposition In ideating for a startup you must first start with a customer problem.  Once you find a solution for that problem, you then identify your value proposition. A value proposition is how you solve a problem and the benefit it brings to your customer. Here are the steps to find your […]

The Vision Problem In turning your startup idea into a product you’ll need to avoid the vision problem. The vision problem is having a product or service in mind and then trying to build and launch it as your initial product. Big vision products take years to develop in most cases. It’s not practical to […]

Legal Aspects of Ideation There are financial and legal aspects to startup ideation. Here are some key points to consider: Test your idea with a minimum viable product before investing substantial resources. All ideas look good until you have to actually build and sell it. As always there should be more than one MVP on […]

Use Design Process for Ideation In ideation for a startup, it’s important to follow a process. Consider these process steps for your ideation program: Empathize — understand your customers’ problems very well including what works for them and what does not.   This takes the research to a deeper level and includes the wishes and fears […]

More Mental Models for Ideation There are several more approaches to ideation for a startup. Consider these mental models for your ideation process: Move online — take offline interactions and move on to the web. Roll-ups — acquire other companies into your company or into a new one. Provide enabling technology — provide technology to […]