Posted March 13th, 2012 by Nathan Furr with No Comments
Nail It then Scale It does a great job synthesizing the current thinking around disruptive innovations and entrepreneurship and channeling it into an actionable set of frameworks and processes. Both the recommended actions and there sequence seem very practical to me, and I think this should serve as a great tool for start-up teams. Congratulations.
Geoffrey Moore, Author of Crossing the Chasm, Escape Velocity and Inside the Tornado
Posted March 11th, 2012 by Nathan Furr with No Comments
Nail it, then scale it. Echoing the words of Paul Ahlstrom, the author of Nail It, Then Scale It, don’t grow before you’re ready; get your business model and infrastructure in place first. Many entrepreneurs are too focused on their own vision to listen to the friends and first customers who can truly help mold the product or service into perfection. That said, if you work diligently and intently on the model itself, building it with scalability in mind, the sky’s the limit—once you’re ready to grow. Think big, but focus small until you’ve proven that the model works, and can carry out the big vision. – Dave Kerpen, CEO Likeable Media
Full story at Best Advice I Ever Got: Dave Kerpen
Posted March 8th, 2012 by Nathan Furr with No Comments
Kisstixx Entrepreneurs Had Great Success on Shark Tank Show Because They Knew How to Start a Business
Read the book that launched Kisstixx to their success: Nail It Then Scale It.
Listen to the Kisstixx Broadcast: Speaking on Business broadcast by Chris Redgrave on Kisstixx – Download MP3
Author Paul Ahlstrom and a UVU Entrepreneur class discuss the advantages of the entrepreneur TV show Shark Tank for Dallas Robinson & Mike Buonomo the two entrepreneurs who launched Kisstixx, a new lip balm, by accepting Mark Cuban’s offer of $200K on in exchange for 40% of their company. Watch the Kisstixx episode
Here are some of benefits to Kisstixx for the Cuban alliance as discussed:
• Rock Star- Kisstixx gets a mega star to promote their stuff
• Doors open – Doors that were closed will now open with Cuban’s endorsement
• Counsel – Cuban is a terrific businessman. Dallas says he is very involved now with Kisstixx, one on one
• Inventory – Kisstixx will now get some big orders, exponentially larger than previously entertained. That means inventory and I thought I heard Cuban say he will finance it as part of his skin the game. That’s huge!
• Time – This may be the biggest of all. There are some 800 pound guerrillas doing lip balm. Kisstixx has chosen to protect their stuff using “trade secret” rather than “patent.” This means they have to be fast to dominate. Especially if they are the next “pet rock,” as Paul states, not having seen the deep bench of follow on Kisstixx products, then time is precious. Cuban gets them on the shelf fast. It’s a fast way to scale a startup business.
Advice for Entrepreneurs
When looking to launch an company like Kisstixx entrepreneurs should first learn how to launch a lean startup by building alliances or joining an incubator group like CEDO where they can get quick honest feedback. The startup book Nail It Then Scale It teaches entrepreneurs how to seek and receive feedback as they begin their quest for knowledge and the needs of their market. Friends and family will always tell you they love your idea but gather facts and data on your idea to avoid relying on beliefs and gut feelings. Conduct rapid, inexpensive, simple experiments to test your ideas in the market, rather than building a full blown product.
Posted February 16th, 2012 by Nathan Furr with No Comments
The industrial revolution transformed the business landscape, just as the managerial revolution transformed how we manage large firms. Today, a third revolution, an entrepreneurial revolution, is underway, shaking the very foundations of what we believe about entrepreneurship. What does this mean for entrepreneurs?
Take the example of Greg Whisenant at CrimeReports.com. As an entrepreneur, Greg was doing everything right according to traditional wisdom and it was killing his business. It started several years earlier when Greg’s apartment building had been robbed. Frustrated and feeling a need to do something about it, he joined a neighborhood watch group and offered to map crimes happening in the area.
As Greg continued, he came to believe that mapping the locations of crimes would align and empower the efforts of citizens and police to reduce overall crime in each neighborhood. So then he did everything right according to standard entrepreneurial wisdom: he had a big vision, built a product, landed a customer, raised venture financing and hired a team.
But despite his best efforts, doing everything right was leading nowhere quickly. In fact, after several years, Greg had still landed only one customer. But once Greg changed his process, in the next three years he landed over 2,000 paying customers. So what was the difference?
Several years ago, my co-author Paul Ahlstrom, a serial entrepreneur and experienced venture capitalist, set out to write a book, Nail It Then Scale It. Based on my research and his experience, we worked to describe a new entrepreneurial process. The process we articulated involved nailing your business and, for Greg and all entrepreneurs, the journey should begin by nailing a pain.
…we argued to Greg that he needed to stop building, get into the field and uncover the Monetizable Market Pain—a pain so significant that customers will return your cold calls.Unfortunately, most entrepreneurs begin with their idea and build a product. Instead we argued to Greg that he needed to stop building, get into the field and uncover the Monetizable Market Pain—a pain so significant that customers will return your cold calls. If you don’t uncover a Monetizable Pain (and we measure that by 50% of your potential customers being willing to return your call), then you probably don’t have a sustainable business worth your blood, sweat and tears.
So how did Greg do this?
He stopped building and started talking to everyday people and police departments. He quickly discovered that everyday consumers wouldn’t pay for his service and that police departments hated his advertising-based business model. At this point, Greg and his fellow founders began to despair, but as they continued to listen (rather than sell), they discovered some crucial pieces of information.
For one, police officers were fascinated by the data possibilities of the website and were excited about leveraging the Internet to increase the quality of their communication with citizens. Police chiefs and officers could now use a data “dashboard” to track trends and daily activity.
As the enthusiasm built in each conversation, the CrimeReports founders learned that police would actually pay them to post their data – advertising wasn’t necessary. As they continued to learn and refine their prototype, the feedback from customers was astonishing. Their customers said things like:
“This blows other choices out of the water.”
“We’ve been trying to do this for years.”
“It used to take us six months to get this kind of data. Now we can get it the next day.”
The number of police departments purchasing the product went from one customer to over 2,000 paying customers in three years. And not only did customers clamor to sign up, but the CrimeReports website jumped in popularity with everyday citizens. Applying the process was nothing short of transformational.
Nathan Furr is an Assistant Professor of Entrepreneurship at BYU’s Marriott School. He received his Ph.D. from Stanford University’s Department of Management Science & Engineering, as part of the Stanford Technology Ventures Program. Furr’s research and writing is devoted to the management science of entrepreneurship and translating it into practical insights. He is also co-author of Nail It Then Scale It.
Posted October 26th, 2011 by Nathan Furr with No Comments
Startup Business Model:
I see more and more entrepreneurs who seem to have everything going for them – vision, motivation, passion, even a good business plan, product, and money, and yet they can’t close customers. Maybe it’s time to look harder at the mantra of a new breed of gurus and successful entrepreneurs, including Steve Blank and Eric Ries, called “nail it then scale it” (NISI).
You can review all the specifics of this approach in a new book by Nathan Furr and Paul Ahlstrom, appropriately titled “Nail It then Scale It: The Entrepreneur’s Guide to Creating and Managing Breakthrough Innovation,” but I will net it out here. I found their five phases of the process to be compelling, based on my own years of experience mentoring startups:
Full story at Forbes: Adopt the New Startup Business Model
Posted October 26th, 2011 by Nathan Furr with No Comments
Zions Bank “Speaking on Business” Broadcast
Chris Redgrave the host of Zions Bank “Speaking on Business” radio program and former general manager of KSL NewsRadio in Salt Lake City featured Nail It Then Scale It this morning on KSL 102.7 FM. You can download and listen to the radio broadcast MP3 here.
October 25, 2011
This is Chris Redgrave for Zions Bank Speaking on Business.
Over 20 years of work, reading dozens of books on entrepreneurship, raising more than $500 million and participating in the growth and investment of more than 100 companies, investor Paul Ahlstrom identified patterns of success . . . and failure.
The death rate of innovation and start-ups is around 80 percent, which doesn’t mean the idea didn’t have value. Paul and BYU professor Nathan Furr discovered one of the reasons for the death spiral is the order of the process. So, they co-authored “Nail it . . . then Scale it,” a business book dedicated to the “studied” process of successful innovators. This is a “how to” book about starting your own business.
The book is intended for business people who want to launch successful products by first understanding how their innovation fits the customer’s needs. It teaches how to set up a relentless pursuit in solving problems by understanding what the outcome looks like to the customer before building it.
Believe it or not these are some of the steps often overlooked because of the love affair between the inventor and the idea. The entrepreneur’s excitement of scaling, or accelerating, the program often overlooks what the customer is trying to accomplish. By scaling too early, before you nail it, you can waste important investment dollars on product development.
The authors have real-life examples of how the “Nail it then Scale it” model has been successfully applied. For example, the company Crime Reports was following the traditional business program until they fell into the three myths of entrepreneurship.
When challenged with funding and a looming business crisis, which the authors say forces you to focus, that’s exactly what Crime Reports did. In the beginning they had passed over an extremely important step in their customer’s assessment so they stopped everything until this was mastered. Within one year, they went from one to 200 customers and within three more years to 2,000 customers.
The authors of “Nail it then Scale it” like to say, “Entrepreneurs innovate, customers validate.”
For Zions Bank, I’m Chris Redgrave, speaking on business.
Posted September 21st, 2011 by Nathan Furr with No Comments
My friends at Startup Genome just released a report on why startups fail. After analyzing surveys from 3,200 startups they concluded that of the majority of startups that failed, 70% fail because of premature scaling. Although, I did not run the analysis, based on the research I conducted for my recent book, Nail It then Scale It, I couldn’t agree more—most startups fail precisely because they try to scale too early. Oh yes, and by the way, premature scaling also kills innumerable new projects at existing businesses as well, so innovators everywhere, beware.
But what is premature scaling anyway? In the report released by Startup Genome, I define premature scaling as “spending money beyond the essentials on growing the business (e.g., hiring sales personnel, expensive marketing, perfecting the product, leasing offices, etc.) before nailing the product/market fit.” While it sounds simple enough, the message of Nail It then Scale It is that most startups are dying and they are dying because they are doing good things but doing them out of order. In other words, they are doing things that seem to make sense, like investing to build the product, hiring good people to help them sell it, developing marketing materials, and essentially doing all the kinds of things that big companies with lots of resources do when they are executing on a known opportunity. But most startups are chasing an idea: the founders, no matter how much they believe in their idea, are operating on a guess about an unknown opportunity with a potentially unknown solution. All these unknowns mean we need to manage the process of coming to market differently and number #1 on the list is to avoid spending money scaling the business before you have really nailed what customers want and how to reach them. As the report points out, it often takes 2-3 times longer than founders expect to really nail the product before scaling the business really becomes appropriate.
Although it may seem over simple to ask, the reason that premature scaling kills startups is primarily two-fold. First, premature scaling uses up your precious cash more quickly, which means you have less runway to discover that you were wrong and readjust. One of the smartest strategies for a startup is to save cash wherever you can because it gives you more chances to try and get the fit between your product and the market correct. Think of it like a baseball game: the old model of entrepreneurship was to throw all your money into taking one big swing whereas the new model is preserving your cash so you have as many swings as possible to try and hit a home run. My friend, and superinvestor at Floodgate, Ann Ko points out in her lecture at Stanford, in today’s business environment you never want to run out of chances to iterate. Second, premature scaling actually makes you less agile. Specifically, when you start hiring people and investing in your product, you become organizationally and mentally committed to your current approach—you’ve paid money and obligated yourself to a particular product or strategy and doing this makes it worlds harder to change. In economics this is known as the sunk cost trap and in psychology this is known as escalation of commitment—in both cases it can kill a startup quickly.
So why do entrepreneurs fall into the premature scaling trap? Because of what I call the Entrepreneur’s Paradox. Essentially, if entrepreneurs didn’t really believe in their ideas, they would never have the courage to risk their effort, reputation, and money by taking action. But precisely because entrepreneurs believe so deeply in their idea, they jump into action by investing in creating a business, building a product, and then spending the money to try and sell it. What they almost always overlook is one deadly fact: that their belief is only a guess at what customers want that needs to be quickly and iteratively tested in the market before doing all those other “good” things.
In future posts I’ll write about a startup that is part of my Lean Startup Research Project that avoided the premature scaling trap. The entrepreneurs at Burt, a fascinating company revolutionizing the advertising world with novel advertising analytics, almost fell into the premature scaling trap several times. They waited patiently until they had really nailed every aspect of their business and now are scaling successfully today. I look forward to sharing more about their story in the future.
Posted May 8th, 2011 by Nathan Furr with No Comments
The Nail It Then Scale It startup business model is a time tested formula for starting a new business. Entrepreneurs and startup incubators all over the world are adopting the new startup business model to launch their companies.
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How to Nail the Business Model as discussed in Phase 4:
1. Validate the Financial Model
“Fixed Costs and Variable Costs: First, as a rule of thumb, try to keep your costs as low as possible. Keeping your burn rate low will preserve your options and allow you to fall down, get up, and restart several times before you actually get to the end of the runway.”
2. Iteratively Launch the Product and Go-to-Market Strategy
“As you launch the product, you should continue to iterate with your customers, evolving the product to fit their needs. But you should also slowly be transitioning to the point where your product is becoming a complete solution and as sales continue, you change it less and less until the sales model becomes truly scalable.”
3. Develop a Business Dashboard with Continuous Data Flow
“As you begin to grow the business, identify the metrics that are most relevant to the growth of your business and keep a close eye on the data. Gut feelings can only take you so far whereas data gives you facts which lead to real insights.”