5 ms·

>Many (most?) of these companies I've seen could have started with a smaller fit. That could test the market theory for cheap (Lean) - cheap in terms of time an

>Many (most?) of these companies I've seen could have started with a smaller fit. That could test the market theory for cheap (Lean) - cheap in terms of time and money. If the fit is good one ends up with a small business with medium good margin - and a way better idea of what the scaled up universe looks like. One model that also works before that phase but that's eschewed is consulting in the sector founders want to enter. They'll gain insight into what people say are problems, what problems people pay for, and the wisdom to know the difference. They'll meet stakeholders between users and economic buyers who might later sign the checks. They'll build a network, gain in expertise and credibility, explore potential beachheads, hear what will be their messaging, and discover rough go-to-market strategies all the while having positive cash flow. This works in their favor if/when they'll want to raise for they will come in homework in hand and coin in pocket. Even if they jump way past MVP like you pointed out, they'd be ahead of someone who didn't do that. Granted, it's service revenue but with money, like with a few things in life, you tend to get offered more when you're already having some regularly and can walk away.

djbusby 3y ago
Yes, I love this way to start. The practice selling is the biggest benefit IMO. Your other points are solid.
ricardobeat 3y ago
How would you start consulting in a sector you have no experience or proven track record with? I can’t see how this advice would apply to say, Dropbox, Zalando, Stripe or any other success story that comes to mind.
- spacebanana7 3y ago
  I imagine most consulting is operation specific rather than sector specific. For example, the experience of raising a few rounds of VC money would provide opportunity for financial consulting; the experience of hiring 50 engineers for HR consulting; or spending a few million on ads for marketing consulting. Disclaimer - I have no consulting experience.
- Jugurtha 3y ago
  >How would you start consulting in a sector you have no experience or proven track record with? Like billions of people, since time immemorial, have started at their first job ever. How would they start at a job in a sector they have no experience or proven track record with? That argument cuts deeper with directly creating a product with no experience or proven track record. The point of my original reply wasn't that of mutual exclusion, it was that of "de-risking", and a lot of the work is about reducing risk. Heck many if not most questions investors ask are about figuring out risks and their types. What's your story? (i.e: expertise and relevance of why you think you might be onto something or right about something or seeing a pattern, etc) Interviews? Do you have traction? Sales? Sign-ups? Usage? Growth rate? Churn? Many technical people start coding right away because it's easier for them, but that's precisely why coding might have to come later: the technical risk is lower for an engineer than the other types of risk, so they should check those first. Is that a problem people know is a problem in the first place? That means prospects need "information/education", which impacts on your marketing and on your sales process (instantly becomes high-touch). It could obviously mean you're creating a whole new market, and if you win, you could win big, but it adds risk. Have they spent spent money trying to fix it? How did it go? You can start building the product right away, then hope people know about it, love it, and buy it. Knowing people people have fallen off buildings and survived will not entice me to try my luck. Even in consulting, this is useful. When the founder and CTO left, ~65% of employees left and I took over. I killed about a dozen projects we were involved in that were not generating revenue and were only a distraction. I was a contributor in practically all of them and, for some, was the main person (i.e: 70% of the code, and support, client relation, invoicing, ensuring we get the check, and you bet cashing it). The first thing I pushed for was revamping the very way we were doing "consulting" starting with qualifying prospects before anything is done, then understanding the problem before a word describing a potential solution is uttered, and it took as long as it needed until we got the problem down, and iteratively scoping, managing expectations, being aligned on what "success looked like" and pushing for all the stakeholders to be involved (execs/economic buyers and the users, including those who were adamantly against our "intervention" and understanding all the politics of whichever enterprise client we were serving), extracting a set of features, prioritizing for impact and usefulness, etc. and then and only then, we'd start building. All these steps were carried out while explaining the rationale of thought processes so the team could understand the whole process (and eventually each member would be able to operate on the whole life-cycle, create a company, build product, etc). Then extracting all this experience into a scoping document we'd send a prospective client so they do this effort, as opposed to doing ten or more meetings to come up with this (and our clients thanked us, saying that that document, which was a set of questions, really helped them pin-point their own problem and clarify what it is they were after). Then, the second mutation (the first was overhauling our consulting process), was product. The "valuation" of the company was multiplied by a very large number, people turnover was ridiculously reduced, there was almost no-one leaving, and the service revenue generated in one year with mainly two people surpassed the almost 20 people, combined multi-year revenue since company creation. There's a famous Antoine de Saint-Exupéry quote that guides this effort: "Perfection is achieved, not when there is nothing more to add, but when there is nothing left to take away." PS: Excuse me for the muddle-head reply, I have something cooking.

djbusby 3y ago

Yes, I love this way to start. The practice selling is the biggest benefit IMO. Your other points are solid.

ricardobeat 3y ago

How would you start consulting in a sector you have no experience or proven track record with? I can’t see how this advice would apply to say, Dropbox, Zalando, Stripe or any other success story that comes to mind.

spacebanana7 3y ago
I imagine most consulting is operation specific rather than sector specific. For example, the experience of raising a few rounds of VC money would provide opportunity for financial consulting; the experience of hiring 50 engineers for HR consulting; or spending a few million on ads for marketing consulting. Disclaimer - I have no consulting experience.
Jugurtha 3y ago
>How would you start consulting in a sector you have no experience or proven track record with? Like billions of people, since time immemorial, have started at their first job ever. How would they start at a job in a sector they have no experience or proven track record with? That argument cuts deeper with directly creating a product with no experience or proven track record. The point of my original reply wasn't that of mutual exclusion, it was that of "de-risking", and a lot of the work is about reducing risk. Heck many if not most questions investors ask are about figuring out risks and their types. What's your story? (i.e: expertise and relevance of why you think you might be onto something or right about something or seeing a pattern, etc) Interviews? Do you have traction? Sales? Sign-ups? Usage? Growth rate? Churn? Many technical people start coding right away because it's easier for them, but that's precisely why coding might have to come later: the technical risk is lower for an engineer than the other types of risk, so they should check those first. Is that a problem people know is a problem in the first place? That means prospects need "information/education", which impacts on your marketing and on your sales process (instantly becomes high-touch). It could obviously mean you're creating a whole new market, and if you win, you could win big, but it adds risk. Have they spent spent money trying to fix it? How did it go? You can start building the product right away, then hope people know about it, love it, and buy it. Knowing people people have fallen off buildings and survived will not entice me to try my luck. Even in consulting, this is useful. When the founder and CTO left, ~65% of employees left and I took over. I killed about a dozen projects we were involved in that were not generating revenue and were only a distraction. I was a contributor in practically all of them and, for some, was the main person (i.e: 70% of the code, and support, client relation, invoicing, ensuring we get the check, and you bet cashing it). The first thing I pushed for was revamping the very way we were doing "consulting" starting with qualifying prospects before anything is done, then understanding the problem before a word describing a potential solution is uttered, and it took as long as it needed until we got the problem down, and iteratively scoping, managing expectations, being aligned on what "success looked like" and pushing for all the stakeholders to be involved (execs/economic buyers and the users, including those who were adamantly against our "intervention" and understanding all the politics of whichever enterprise client we were serving), extracting a set of features, prioritizing for impact and usefulness, etc. and then and only then, we'd start building. All these steps were carried out while explaining the rationale of thought processes so the team could understand the whole process (and eventually each member would be able to operate on the whole life-cycle, create a company, build product, etc). Then extracting all this experience into a scoping document we'd send a prospective client so they do this effort, as opposed to doing ten or more meetings to come up with this (and our clients thanked us, saying that that document, which was a set of questions, really helped them pin-point their own problem and clarify what it is they were after). Then, the second mutation (the first was overhauling our consulting process), was product. The "valuation" of the company was multiplied by a very large number, people turnover was ridiculously reduced, there was almost no-one leaving, and the service revenue generated in one year with mainly two people surpassed the almost 20 people, combined multi-year revenue since company creation. There's a famous Antoine de Saint-Exupéry quote that guides this effort: "Perfection is achieved, not when there is nothing more to add, but when there is nothing left to take away." PS: Excuse me for the muddle-head reply, I have something cooking.