What can entrepreneurs learn from Restaurant Impossible

Lately, I am hooked to a reality TV show on the Food Network called Restaurant Impossible. In the show, Chef and Restauranteur Robert Irvine is given the mission of turning a failing restaurant around in 2 days on a $10k budget. Each episode typically starts with Chef Robert coming into the restaurant to assess the situation. Next he creates an improvement plan, which typically includes doing a physical makeover of the restaurant with the help of his interior designer and general contractors, revising the menu, training the staff, cleaning the kitchen, or introducing additional modern dishes. It’s quite a feat to turn a failing restaurant around in 2 days and with $10k budget. To be honest, I do find the show to be dramatized sometimes and still don’t buy the fact that their $10k budget can realistically produce the kind of interior decor that the designer had conceived. That aside, the show is still entertaining and even educational. Entrepreneurs can learn a lot about identifying problems in a business, turning a business around, and running a business. Here are some of the take aways from the show:

  1. Listen to the customer
    Sometimes the restaurant featured in the show is simply out of step with the market. The root cause of this problem is often attributed to the restaurant failing to listen to its customers and continuing with the path of producing the same food or maintaining the same dinning atmosphere. To get a critical sense of what the restaurant is lacking, Chef Irvine often starts his assessment of the restaurant by simply asking the customers for their critique of the restaurant. Establishing customer feedback loop is key for any business. Feedback doesn’t need to explicit like asking customer directly. Sometimes tacit feedback is just as good in finding out what customers want. Body language like smile, cringe, and puzzle can be very telling about what they think of your products and services. So be critical, observant, and engaging with customers.
  2. Know the bottom-line
    It amazes me how many restaurant owners in the show don’t know what their operating costs are. Some owners don’t even know that they are losing money until Chef Irvine reveal it to them after he looked at their books. Business is all about the bottom-line. Understanding cost is a fundamental imperative for any business. Any entrepreneur should know the cost and cost structure of their business like the back of his hand. If there is no mechanism for tracking costs and revenues, they should be established. It doesn’t need to be sophisticated. Tracking financial/performance metrics by pen and paper is still better than not knowing what’s going on in the company.
  3. Set (high) standards
    Chef Irvine is relentless when it comes to food quality. He trains kitchen staff to maintain a high level of standards. Food must be made with fresh ingredients or mostly with fresh ingredients. No compromise. If a dish doesn’t meet the standards, it gets tossed to the trash rather than to have it served to the customer. Chef Irvine is also adamant about service too. Waiters and waitresses must meet and even exceed needs and expectations. Chef Irvine expects the staff at minimum know the menu well and be able to describe and make recommendations as well as being attentive to customers. But you can’t foster an environment of high standards, unless you clarify expected standards with the staff. Chef Irvine is good with setting clear expectations and even giving feedback to articulate how the standard is not met and what needs to be done to address it. Similarly any business should set high yet attainable standards, clarify them to employees, and finally provide constructive feedback to maintain those standards.
  4. Keep it simple
    In the show, Chef Irvine is often seen revising the menu. Not surprising, most restaurants have big menu with multiple pages, which makes it hard for the customers to select the dishes to order. Also, big menu makes food prep difficult due to a large variety of food involved. The message is clear. For any business, it is better to be in the position of doing few things very well, than to doing many things mediocrely.
  5. Creativity
    To turn things around, Chef Irvine would create new dishes to appeal to the customers. He did so not by using more expensive, new ingredients or complex techniques. He uses existing and often run-of-the-mill ingredients that are already found in the kitchen to create those new dishes. Basically the same ingredients, but combined and cooked differently using simple techniques. The moral of the story is that in the face of constraints and fewer resources in a failing restaurant, Chef Irvine is forced to rely only on improvisation and ingenuity to continue using the same ingredients to yield better results. Call it readjustment, improvisation, or recalibration. Sometimes constraints in business can be drivers to creativity and produce good results.

Well, those are my main take aways from the show. The show is not only entertaining, but for those who are running a business, it is also educational.

HackStar Boston 2011 (Part 2)

TechStarsIn the first part of the article, I recount my HackStar experience at TechStars Boston. Today, I am going to talk about the impact of HackStar has on me and my current endeavor of doing a startup.

Before joining the program, I had thought that my time as a HackStar would be spent mostly coding, which is something I was more than happy to do. While being a HackStar is a lot of hard work, the truth is that I found that there is more than just battening down the hatches and code. To my surprise, HackStars are actually treated as participants of the program, just like any of the team members in the program. While Hackstars don’t get the one-on-one mentorship (since we are not founders), we like the teams have access and participate in activities like lectures, talks, and workshops led by mentors and guest lecturers. Of course there are times when I had to skip a few of the classes and events as I needed to spent more time working in tasks that may be time sensitive. However, I found these lectures and workshops extremely valuable (more so than the classes on entrepreneurship that I took in business school). TechStars lectures and workshops have highly relevant, useful content for starting entrepreneurs to take their startup to the next level. I would encourage any HackStar to attend these classes as much as possible. At the end of the day, it is all about time management and balancing between working on a project and attending classes. Nonetheless, HackStars at TechStars Boston really have unprecedental access and opportunities.

As an entrepreneur who recently started a startup called Invantory, I regularly seek veterans who are doing or have done a startup before. Conversation with them often bring new insights and perspectives, which adds tremendous value and clarity to what I am doing. The network that I built at TechStars has been very beneficial in this regards. Since starting Invantory, I have met with mentors and alumni asking them for their help and advice. In fact, many of them were enthusiastic about helping me in my endeavor. I have also found it gratifying to see how the teams grew in maturity and confidence during the course of the program. I am happy for the alumni of TechStars 2011, with whom I still maintain close interpersonal relationship. I really enjoyed the camaraderie of TechStars Boston.

I have had a long career working in big firms. Nonetheless I have always contemplated with starting my own company and struggled in pondering what is best for me. Do I choose job security and stability over starting my own startup with no or little money? The HackStar program provided that opportunity for aspiring entrepreneurs like me to try out the startup life for 3 months and gain skills that they can immediately apply when they can become real entreprneurs. The program has influenced my outlook, identified seeing what is missing, and discovering what are needed to be done in the context of building my startup.

TechStars’s official HackStars webpage provides a pretty comprehensive list of compelling reasons for joining HackStar. But if you are an aspiring entrepreneur and that your objective is to gain more exposure as well as expanding your network in this space, the choice is a no-brainer. Feel free to reach out to me if you have any questions about the program.

HackStar Boston 2011 (Part 1)

TechStarsIn this blog I hope to share my personal insights to TechStars Boston, a startup accelerator program, from the perspective of a HackStar. The term HackStar is a TechStars slang for a hacker (typically a software developer, a UX designer, or any technical contributor) who provides his/her time and technical skills to help companies selected for the program to become viable businesses by the end of the program. I joined TechStars Boston class of 2011 as a Hackstar in March 2011. For me, I didn’t apply for the program directly or formally. In fact the process happened quite impromptu. I first learned about the program from friends Brent and Eric at Everture, one of the incoming teams, two days before the start of the program. As I already know the managing staff at TechStars, I quickly arranged a meeting to meet with them to learn more about the program before being invited to join the program as a HackStar by the end of the day. The opportunity was great timing since I was transitioning from the industry to the freelance consultancy and entrepreneurship space in the software and Internet space. I already had some spare capacity which allowed me to commit to the program full-time. I also can’t pass up the opportunity of working with the incoming TechStars cohort and learning more about doing a startup. So my decision was really a no brainer. I accepted the invitation and joined the program.

TechStars Boston 2011 WorkshopThere were 12 teams that participated in TechStars Boston 2011. The teams brought a diverse background to the program. Geographically, half of the team were from outside of Boston with 3 teams from the UK, Estonia, and Israel. There was also more female representation in the program with 2 female founders and 1 female co-founder. The teams represent a pretty diverse group of businesses ranging from enterprise software to game to even hardware. I just love the diversity of the cohort. One of the important aspects of TechStars Boston has always been the people. The staff, teams, interns, and HackStars at TechStars Boston are all part of a very big, fun family. Everyone learn from each other. It’s an amicable, highly-collaborative environment. Teams and HackStars collaborated with each other. HackStars have as much to receive and learn from the teams as they do in contributing to the teams. Strong relationships extend beyond the program. TechStars also fosters building strong relationships with mentors, investors, and the startup community. The program invited veterans in the startup space to come mentor the teams or run workshops with variety of topics that are pertinent to the success of the companies.

Skill sets and seniority can very considerably among HackStars. However that didn’t distinguish any HackStar from the others. We are all equals despite our age, seniority, and background. HackStars assist anyone (staff and teams) in every way possible. Nonetheless, it is easy to get overwhelmed sometimes. HackStars could be assigned to a team long-term or be allocated to different teams or projects for quick hacks. There were 12 teams in our cohort and every team needed engineering help in some form or capacity. As a result, it was important to coordinate any work with the managing director. Katie Rae, the managing director at TechStars Boston, often asked for our preference in the types of projects we are interested in working. This helps her to coordinate and manage the needs as well as interests between the teams and Hackstars. The first six weeks at TechStars can be overwhelming for everyone. Something that I learned in my former job is that the busier people get, the more important it is for everyone to meet and sync up on a regular basis. One advice I have for any HackStar reading this post is that you should try meeting with the managing director at least once a week to sync up even if it is for 10 minutes. During the meeting, try to provide some feedback of the teams, update him/her what you are doing, and mention any coming tasks (standard stand-up meeting format from the Agile methodology). In general, there is no right or wrong way of doing things. The HackStar program, just like TechStars is constantly evolving. It’s a startup environment, so don’t be afraid to be a self-starter and be creative, while staying professional (always).

There are more I would want to write. But I have babbled enough (for now). I will continue the second part of this article in the next blog post tomorrow.

MassTLC Seminar: SaaS Business Model Update – Creating and Managing Revenues

GloveLast Thursday, I attended a seminar organized by Massachusetts Technology Leadership Council (Mass TLC) where speakers shared and discussed their experience and provided real life examples of how they had implemented SaaS business model in their organizations. Topics discussed in the session were focused around specific areas such as revenue model, customer acquisition, customer retention, and pricing. Here are the notes I took at the event.

David Skok, General Partner at Matrix Partners

David keynoted the event and provided a detailed framework for analyzing profitability, cashflow, and sales strategy in a SaaS business.

David presented these key metrics for anyone in operating in the business of SaaS:

  • (Customer) Lifetime Time Value (LTV) – this is an indicator of how well a SaaS business is performing. LTV relates to how much an average customer will return in value to the business over its predicted lifetime. In plain speak, LTV measures a SaaS business monetization performance.
  • Customer Acquisition Cost (CAC) – this is the business sales and marketing expense incurred over a period to acquire a customer. Basically, CAC measures a SaaS business cost.
  • Churn Rate – known also as attrition rate, this is a measure of net customers acquired or lost (through service or subscription cancellation) in a SaaS business.

David compared LTV with CAC and stressed that every SaaS company should strive for a CAC/LTV balance of:

LTV > 3*CAC (and good SaaS business are in the 5+ range)

David also talked about the growth of a SaaS company. It’s all about timing, don’t invest too early and burn cash as a company spends a lot of money during growth phase. SaaS companies need to know how to best utilize capital to maintain the key metrics and understand when is the best time to grow a company. On the latter point, David emphasizes that company growth usually coincides with one of the phases of a SaaS company. Get them right first before growing.

  • Search for product/market fit
  • Search for repeatable and scalable sales model
  • Scaling the business

David’s presentation can be found here.

William Daly, Manager of Professional Services at Iron Mountain

William gave an introduction to Iron Mountain and talked about their first customer, a leading financial company, they acquired. He highlighted how addressing the needs of their first customer changed their product/service offerings and business model. He ended the presentation emphasizing personal touch and connection goes a long way for any SaaS business.

Bill’s presentation can be found here.

Jim Kizielewicz, Senior VP and CMO at Kronos

Jim started his presentation with an overview of Kronos’s product offerings. It has been challenging for Kronos transitioning from a license-driven business model to one that provides both SaaS and perpetual-licensing. At the end, Kronos adopted a system that includes their traditional business model of offering perpetual licensing and one offering SaaS. They then broke their product/service offerings along the dimensions of pay, deploy, and manage, and designed bundles that comprise varying degrees of these dimensions.

Traditional License Managed Services Hosted License SaaS
Pay License License License Subscription
Deploy (Hosting) at Customer at Customer at Kronos at Kronos
Manage by Customer by Kronos by Kronos by Kronos

Under this strategy, Kronos first let the customers select a product and then allow them to pick a bundle that fits the customers requirements and budget.

Jim’s presentation can be found here.

Drew Fortin, Senior Manager of Internet Marketing at Compete

Drew gave a recount on one of Compete’s past marketing campaigns on driving free account holders to convert to paying customers. A few years ago, the company started speaking their brand and engaging more deeply with free account holders through a more streamlined online presence. The result created Compete Pulse, the company’s online magazine/blog, a series of white papers (to get white papers, users have to ask questions which turned out to be great), and expert educational content where partners in other domains are involved (Compete don’t claim to be an expert in everything, they refer to other partners who know their domains better). Conversion jumped from 0.85% to 1.25% while number of free accounts increase. There were no change in product and just marketing alone increased sales by 30%.

Drew Fortin’s presentation can be found here.

Cory von Wallenstein, VP of Product Management at Dyn

Cory discussed two tactics that the were used at Dyn to combat churn rate (reducing attrition and improving retention):

  • Don’t ask customers whose accounts are due to expire on Friday, Saturday, or Sunday to renew their subscription because their motivation to renew is low during the weekend. Defer notifying the customers about the renewal till Monday. This tactic change increased renewal rate from an average of 62% to 85%.
  • The Support team typically hears from people who dislike or love the product, but not from people from the middle. The company implemented a policy that whenever Support has the time, they proactively reach out to the customers in the middle asking them about the renewing their subscription. The team also asks if customers want to auto-renew, which generates huge upsell.

Cory also mentioned that customers love transparency and simplicity. It seemed contradictory to conventional wisdom at first to consolidate all DNS services into one service package. But Dyn did it anyway with a simple call to action, and all key metrics increased as a result.

Cory’s presentation can be found here.

The speakers were insightful and provided valuable information about the SaaS business model. The event was definitely a good one.

Credits

Icon by Shine 7. Free for personal use.

Boston mobile startup weekend (Nov 12-14)

Startup weekendLast weekend, Doerte and I attended our first Startup Weekend in Boston. For those who are unfamiliar with Startup Weekend, it is a franchise-based event that takes place in various cities around the world to promote entrepreneurship across the globe. The event takes connects entrepreneurs with like-minded people germinate an idea over a weekend – so even if you have a day job you can still fully participate in this event.

I hope that this blog provides some insights and what to expect at Startup Weekend with my recount of the last Boston Mobile Startup Weekend, which took place from November 12th through 14th. Before we even talk about what happens at Startup Weekend, we have to ask ourselves why bother going to one? Here are some of my reasons:

  1. You got an idea, stop being a wannapreneur. Maybe you are still in a funk or are too afraid. Well, stop procrastinating, and  do something about it. Attend a Startup Weekend.
  2. Network and meet potential co-founders. You may be a non-techie with a tech idea or a developer who needs a business person. Guess what? You need to connect with people and get them join you in your venture. Sitting at home isn’t going to do it. Go spend a weekend with other passionate people and think about how you can change the world. And what better way to find and work with a potential co-founder under pressure during Startup Weekend.
  3. Build a product. What good is an idea if you can’t bring it to fruition? Build a prototype of what you or your team envisions.
  4. Form a business around it. You are not only launch a product but a business. Why should MBA students have all the fun. Analyze and figure out your target market, customer demand, industrial trends, competition, and go-to-market strategies. Many teams continue with their projects and even turn them to viable business after Startup Weekend ends.
  5. Awesome learning experience. The event provides you with opportunity of doing something new. You get to learn form your team mates about a new skill or idea. Execution is hard – making difficult decisions, working under constraints, and doing tradeoffs; but you learn by doing.
  6. Have fun. Need I say more.

Boston Mobile Startup Weekend Friday Night

Boston Mobile Startup Weekend Friday Night

Now that you know the why’s. How do you sign up for one? First, you need to stay tuned for future Startup Weekends in your area. To do that follow @startupweekend on Twitter, look out for announcements on the official Startup Weekend website, or start plugging into your local startup community and stay abreast of what’s happening in your area – perhaps the best place to start is to subscribe to the local edition of Startup Digest. Anyone (techie or non-techie) can register for an upcoming event in the local area. Even if an event is over subscribed, don’t get discouraged. Talk to the organizers, they can get you in especially if you are a developer or designer.

Doerte pitching at Boston Mobile Startup Weekend

Doerte pitching at Boston Mobile Startup Weekend

Startup Weekend kicks off on Friday evening with a series of keynote speeches by established local entrepreneurs to prep the participants up for the event. These speeches are terse so that activities on the first night can move along quickly. Immediately after the keynote speech, you can either pitch an idea of yours and form a team or join a team to pursue the idea.

Sometimes there may even be a workshop scheduled just before Startup Weekend officially begins. In our case, we had a developer’s workshop on developing for Android, iPhone, and Windows Phone 7 in the afternoon before the official start to assist developers get up to speed with the skills and technology in the mobile space. Don’t expect to pick up new skills in one afternoon with this pre-event workshop, it is just a crash course to get yourself set up for contributing at Startup Weekend.

Our team, tired but focused

Our team, tired but focused

On day 2 (Saturday), you go back to the hosting venue, meet and work with the new team to develop the idea as far as the team can go; often to the mock-up stage, some to working prototype stage, and a few even to production stage (one team published a WP7 app by Sunday night, this is rare but possible). The first few hours involves a lot of brainstorming in defining the scope of the product and the business model. By early-afternoon, most team would have determined the market viability of the product and devised go-to-market strategies as well as coming up with basic design of the prototype. My advice for people new to Startup Weekend is to think big and come up with a compelling but realistic business model. For product development, start small by developing a simple but functioning prototype, which by the way score your team points in the product development category, for Sunday night presentation.

Michael and I demoed our prototype at Boston Mobile Startup Weekend

Michael and I demoed our prototype at Boston Mobile Startup Weekend

On the third day (Sunday), you get the whole morning and afternoon to refine your product and slide deck before presenting your team (now a startup) in front of panel of judges, participants, and even press and investors. It’s really gratifying to see how much teams can accomplish in setting a foundation of a startup in a weekend. As for our team, we didn’t take home the bacon but it was fun and we are planning to pursue the idea. Also congratulations to Hitchery who won for their social game based on virtual hitchhiking.

If you still have questions about Startup Weekend? Check out the official FAQ from Startup Weekend, a great read for a first-timer to the event. The most important thing is to stay motivated, be a team player, and have fun during Startup Weekend. Needless to say, I had a blast last weekend.

Remember that Startup Weekend is just a start. The team, business model, and product you built at Startup Weekend can turn into something real and big. Do continue the project and relationships outside of Startup Weekend.

Credits: Hacker Chick for some of the pictures taken at Boston Mobile Startup Weekend

Reading materials for building a digital media startup


I often look to the Internet for inspiration and information for starting a company. Now that I am starting a software/web company, I find the online resource indispensable and relevant to my endeavor. So I have compiled a list of relevant online articles and blog posts that I read and have provided some value to me in starting and building a digital media startup. Here’s the list:

Entrepreneurship Wisdom and Advice

Ideas

Strategy and Framework

Competition

Product Design

  • Minimum Viable Product (MVP) – Nivi, Venture Hacks (Recommended)
    Intro to minimum viable product, a strategy for a rapid development and release of a product or feature to help validate product and market assumptions. A follow-up to this post includes real world examples of MVP.
  • Minimum Desirable Product (MDP) – Andrew Chen (Recommended)
    One criticism of Minimum Viable Product (MVP) is that the framework helps answers questions about a startup from a business perspective. A variant of MVP, calls Minimum Desirable Product (MDP) looks at the startup from a usability and user perspective. Great read if you are committed to creating an insanely great product experience. Here’s a follow-up to the post (with slides included).
  • Design Tips for Startups – Thomas Petersen
    Great design tips for web startups.

Product Development and Management

Business Model

Sales and Marketing

Leadership, People, and Culture

Funding and Pitching

I also want to give a shout-out to Stanley Tang. While compiling this list, I constantly referred to his blog post: 256 Must-Read Content for All Tech Entrepreneurs. It’s a great resource.

Startup Bootcamp 2010

Startup Bootcamp Logo Today I attended Startup Bootcamp at my alma mater to listen to entrepreneurs talk about how they started their companies. And the student organizers have done an amazing job of organizing the event and bringing people together. Great job and thank you.
Here are the videos covering the event. I took some notes during the event and here are some of the key take-aways:

  • Prototype early. From Mick Mountz, founder of Kiva Systems: “Focus on the product early on.” The first iteration of the product should be focused on getting a proof-of-concept. Don’t over engineer it (yet). There will be cycles of learning. Your product will be made bulletproof iteratively. Along the same line, Bill Clerico of WePay mentioned that you should not be raising money until you have some sort of prototype. I agree with Bill although this advice is more relevant to web or software startups where the product lifecycle is very short.
  • Customer validation or product feedback is important. Mick Mountz advise that entrepreneurs find 1-2 customers early in the process, especially those with the highest pain, to try the product and then invite them for feedback. And when you evaluate their feedback, as David Cancel said, you don’t want to be in the “middle.” What this means is that either your customer loves or hates your product. This way you know how to deliver a product that they will truly love. Ayr Muir of Clover Food Lab (they serve delicious organic vegetarian for $5 and under BTW) engages his customers by observing their behavior. When he sees someone who doesn’t finish his sandwich, he knows that there’s something wrong.
  • According to David Cancel, every entrepreneurs must ask him/herself this: does anyone care about your product? There are problems in the world, your products need to solve a problem and to make someone’s life easier. If you can’t get anyone to care about your product, the rest doesn’t matter.
  • Creating and maintaining the right culture at a startup is important. Look for good people to form a team. “‘A’ people recruit ‘A’ people. ‘B’ people hire ‘C’ people…” – George Bell, former CEO of Excite.
  • “Be prepared to throw away things” says James Lindenbaum, founder of Heroku. Hard work leads to understanding and clarity. The implementation (or code) is just a by-product. Don’t get too hung up on your product implementation. Startup is a learning process.
  • The ego of the founder(s) can lead to the failure of a startup – Bob Metcalfe, founder of 3COM.
  • You need to do a startup with a set of motivations. It’s a lot of hard work. You have to motivated and love what you are doing.
  • Alexis Ohanian, founder of Reddit, says: we need more entrepreneurs even if they are from overseas. The country needs talents to keep its economy competitive. Keep international students here to start companies. I couldn’t agree more.
  • Again, from David Cancel: stop reading Techcunch. It’s a distraction. Focus on delivering and pay attention to your customers to solve their pain points.

Since I am doing a startup (more about this later), the talks were inspiring and insightful. I believe that there’s no archetypical process on how you start a company. Even some of the points that the speakers made contradict with each other. That’s why every startup story is different. This is fine. There are many paths to success. But one recurring theme from all these anecdotes I heard is that if you have an idea, you need to start it. If I have three things to say about startup, they will be: just do it, focus on the product, and find good people – cofounders, employees, mentors, and investors – who not only share but implement your vision. So to quote David Cancel on this: #JFDI – Twitter hashtag for just f*cking do it. And that’s the real take-away.