

Figure this out and you may have a business. - NSX2

Just got done with this pretty good book on marketing called "Selling the Invisible" by Beckwith.<p>Most important thing I got out of it was the points you need to cover to have a complete value proposition to any potential customer; you usually need to cover all points to get people to take their wallets out:<p>We are (who are you?), and we do (what do you do?) for (who cares what you do? who do you serve?) who need (what special needs do those you serve have that they can't take care of without you?).  Unlike our competitors (who are they?), we're different in this way (how so?) and that's important and people care about that because (what's the unique benefit to your difference?).<p>Pretty simple, but how many startups you think can fill in all those blanks?  I'd be willing to bet next week's beer money most people never think it through, from a marketing perspective, past the "who are we" part ... maybe the "what we do" part.
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motoko
A pithy homily does sell business books. I can't disagree.

But often the answers to these questions are found (or changed) by
experimentation. The point of a scrappy startup tends to be that
experimentation, not a sophisticated execution of a great idea.

I've read your comments, and while I appreciate your economics perspective,
and I do agree that's immature to pretend to be a sophisticated business when
really what's being built is a sloppy experiment, it's not going to be well
received to attack the focus of this community: experimentation.

~~~
NSX2
I don't see how most of your post has anything to do with what this post is
about.

This post is not about a "pithy homily". It's not intended to "inspire"
anybody with platitudes. This is about understanding the underlying reality of
what makes people care enough about your "experiment" to pay you money for it.

I was under the impression that people here were starting startups in the hope
they they may one day become successful businesses. To make that transition
all the questions above need to be answered. I thought that might be relevant
to some people as being able to answer all those questions is something lots
of startups, Y-related or not, have trouble answering.

> The point of a scrappy startup tends to be that of > experimentation, not a
> sophistacated execution of a great idea.

Well, that may be the point of _your_ startup, but this post was for people
who want their startups to be about good enough execution of an idea that
paying customers think is great.

That translates into financial transaction which translates into a functional
business.

Experimentation should be the points of students still in school, major
corporations with money to support it, and people who are tinkering while
having another source of income. If you quit all that and "dropped out" of the
system to start a business, well, the _only_ point is to figure out how to
start making money. Especially over the next 4-5 years.

To the extent the tinkering strays away from that and becomes absorbed in
itself for its own ends, you'll wind up with an interesting experiment, not a
startup that becomes a business.

That's not me "attacking" the delicate egos of any programmers, that's cold,
hard economic reality. Whine if you wish but people still won't hand over
their increasingly scarce money to you as long as you pout instead of figuring
out how to answer all the above questions.

~~~
motoko
I think that we should argue between ourselves in a long thread... starting
now. So far, I have the last word!

~~~
NSX2
How could that possibly be when this post comes after yours?

~~~
kajecounterhack
Because you, dear sir, have less karma in your post.

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choward93
Well put. While people say dont worry about the business plan, just get your
product launched, they really need to look at the overall idea of how the big
the market is. Know exactly who you are targeting and how big that target is.
Personally, i find the best way to do this is to write a detailed plan out for
your teams own benefit. Its worth the time to write your plan out now and make
changes before you spend hours on end coding the product, only to change
course. But thats the business students perspective for you...

~~~
NSX2
Not to mention that even an informal business plan forces you to do away with
your own fluff and focus on stone-cold reality that will not go away until you
address the questions it poses.

~~~
motoko
Lol, have you ever _read_ a submitted business plan? In my experience, most
business plans are exactly the opposite: focus on fluff.

~~~
NSX2
Uh ... not sure what business plans your talking about, but I would take the
worst business plan any VC gets and wager that more people would pay money for
whatever it describes, however poorly, then stuff that most programmers put up
on the web with a "me and all my programmer friends think it's cool, so give
me your money, how about it?" approach ...

~~~
pg
When Greg Mcadoo of Sequoia spoke at YC last week he said that Sequoia looked
for startups founded by people solving problems they themselves faced.

~~~
NSX2
Good for him.

I'm sure he, like all VCs everywhere, says exactly what he means and would
_never_ tell an audience of prospective entrepreneurs what they want to hear
just so he doesn't narrow his own investment options in the future.

Not sure what a speach on venture capital funding has to do with creating a
successful business based on convincing customers to hand you their money, but
I digress ...

Let's say a "business" is defined as "getting a venture capitalist to write
you a check."

Try to get him to follow through with cold, hard cash for for, say, a problem
you face that nobody else cares about, let alone cares enough to pay for.

For example, go call him up and tell him, "I have this problem: there's this
annoying poster on Hacker News called "NSX2" and rather than manually respond
to posts he puts up that I disagree with, or, for that matter, rather than
respond to any such posters, in a flash of inspiration I created this superb
program that summarizes all the key points of my essays into a set of 79,
prioritizes their uses as responses, and anticipates what annoying posters are
most likely to say based on empirical data I've collected since starting
Hacker News and matches their anticipated annoying posts with a point in one
of my essays that has the most statistical probability to express what I
disagree with and how. Fund me."

Please let me know how that works out for you.

~~~
mixmax
"Not sure what a speach on venture capital funding has to do with creating a
successful business based on convincing customers to hand you their money, but
I digress ..."

VC's are an integral part of the setup for many startups that go on to become
successful businesses. The list includes Google, Cisco, Ebay, and almost all
other big tech companies.

~~~
NSX2
Perhaps you're aware that these days VCs are exponentially more likely to
invest in you if you have paying customers than if you have a solution you
think is interesting but nobody else agrees with you enough to pay you for it.

And I think Ebay was actually making money and showing a clear proof of
concept before it got funding. Google began during a period of collective
insanity; I doubt they'd be able to raise a penny with a similar starting
proposition today.

Cisco I have no idea about.

But as for "all others", not sure what you mean but Microsoft, for example,
was making money as a private company before getting VC to help with the IPO
process, and the terms they got investment on a clear indication of their
cash-based negotiating leverage at the time.

Oracle if memory of my reading serves correctly was making money first.

SAP had paying customers ...

When you say, "almost all other big tech companies" started off with VC as a
prerequisite, can you specify what you had in mind?

~~~
mixmax
What I mean is that not all products can be developd using only your own
money, and even less can be grown to successful business without taking in
money from investors. This is a normal procedure in many startups, where the
goal is to grow fast. This requires money, and this money comes from
investors.

And if the best search engine we had today was Altavista I don't think it
would be a problem for Google to raise money today.

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aneesh
well, the YC app asks at least 2 of these. so anyone who applies to YC thinks
about them!

What do you understand about your business that other companies in it just
don't get? (how so?)

Who are your competitors, and who might become competitors? Who do you fear
most? (who are they?)

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davidw
Sounds like the beginnings of a summary for SqueezedBooks.com :-)

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jakewolf
His books are great. Good advice about forgetting about who you are and
focusing on selling the benefits of your business.

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edw519
I have enjoyed all of Harry Beckwith's books. Short, to the point, all the
stuff that goes without saying but worth another read anyway. "What Clients
Love" is also very good.

"I'd be willing to bet next week's beer money most people never think it
through"

Are you a heavy drinker? If so, one of us can set up a poll while you get out
your checkbook.

~~~
NSX2
Sadly, I am not a heavy drinker. Usually 1 six-pack of Sapporo Light and 1
six-pack of some sort of Belgian white ale is my "thing."

But for what that's worth, that comes out to about $16 per week. Which I have
full confidence I'll get to keep the majority of based on a poll like you'd
describe.

I would venture that 95% of "startups" never get past my personal modification
of question #2 from the consumer perspective, ie, "We do this."

Consumer version: "What do you do _for me_?"

Go ahead and start your poll! I got 16 bucks to play with!

