An instrument for decomposing complex problems into simplified solutions, is the strategy of first principles thinking, often otherwise known as reasoning from first principles, and is often leveraged by self-made geniuses such as Elon Musk. In other words, a form of mental reverse engineering.
Techtello best puts it as realigning your mindset to demarcate from conventional wisdom, questioning and validating one’s beliefs. Humans are inherently governed by values and perceptions, belief systems that we learn to reasons with, influencing our minds to apply shortcuts in the form of conclusions learned previously.
Something a product manager should have ingrained in her or his mind, this hypothesis-driven thought process advocates breaking down a complex problem into its fundamental building blocks, down to its pure essence, diving down to the basic truths, and separating facts from assumptions. You then reconstruct your view from the ground up with those validated truths.
In Amazon, we employ as part of Correction of Error (COE) investigations, a mechanism employed to discover the root cause, the five why’s, a tool that helps us discover the essence of a problem, or in this case, the fundamental pillars of a component.
Children inherently think in first principle because they inquisitively question everything, from why do you go to work, why do you need to eat, why do you need to sleep. A fundamental leadership principle of Amazon, the learn and be curious principle, encourages questioning perception and opening yourself to an alternative reality. Breaking the autopilot trap your mind inclines to follow.
In his quest to getting a rocket to Mars, Elon Musk concluded upon first investigation that the cost of buying a rocket is extremely cost prohibitive, over $65m. With that fundamental problem as a barrier of entrant into the space race, Elon embraced physics to employ first principles reasoning:
Breaking down his problem into the fundamental components a rocket, instead of buying a finished rocket, he created his own rocket from raw materials, and that is what resulted in the founding of SpaceX. The company successfully cut the price of launching a rocket by 10x, decomposing a problem into fundamental components, and rebuilding.
The minimum viable product (MVP) is a powerful concept that allows you to test your ideas. It is not to be confused with the minimal marketable product (MMP), the product with the smallest feature set that still addresses the user needs and creates the right user experience. The MVP helps you acquire the relevant knowledge and address key risks; the MMP reduces time-to-market and enables you to launch your product faster. This post discusses both concepts, and it shows how you can use the minimum viable product to create a minimal marketable one.
You have heard of the minimum viable product(MVP) no doubt, well product managers have what is called the minimum marketable product (MMP). MMP is a product or service that meets the selected customer’s needs.
The minimum viable product (MVP) is a powerful concept that allows you to test your ideas. It is not to be confused with the minimal marketable product (MMP), the product with the smallest feature set that still addresses the user needs and creates the right user experience. The MVP helps you acquire the relevant knowledge and address key risks; the MMP reduces time-to-market and enables you to launch your product faster. This post discusses both concepts, and it shows how you can use the minimum viable product to create a minimal marketable one. (Source: Roman Pitchler)
Take the Apple Watch for example, it’s marketable customer needs are indeed narrow, and rather than being a device for the masses, it satisfies a particular niche market. As opposed to regular watches, Apple’s smart watch provides the ability to receive notifications from your iPhone, an extension that notifies the user through a vibration, when a text message, or phone call is coming in, or an in-app push notification is happening.
Whilst limited, the users can also use their smart-watch to send pre-baked text messages back, as well, and whilst it has an app ecosystem, the apps are meant to be a mere extension rather than replacement to one’s phone.
The obvious benefits of an MPP is that it speeds up development-time-to-market, with lower development effort and larger return on investment. An even greater benefit, is the quick time-to-market means product owners can listen to their users quickly. Even if in the case of Apple they are mostly early-adopters, that vital early and rapid feedback especially in a new category of products means the company is able to respond, adjust and pivot more rapidly.
The least rigid the future roadmap of the product, the better it is, because your roadmap should pivot and adjust dynamically, based on user feedback and reactions, and a minimal product as far as functionality means precise and targeted feedback is more readily available, more focused with the allowance for each individual features and components to be individually validated.
MMP is more focused on less is more, smallest feature-set. That addresses the users needs, with the right level of simplistic UI t hat can be sold and marketed successfully.
The key to creating a successful MMP is to “develop the product for the few, not the many,” as Steve Blank puts it, and to focus on those features that make a real difference to the users. To discover the right features, the MVP is a fantastic tool. (Cited in Roman Pitchler)
Conflict Resolution Management is a skill that many trained project managers learn, when working with stakeholders, but something that young entrepreneurs never learn, until it really happens. In fact 62% of startups fail because of co-founder conflicts, and it’s something that really scares venture capitalists. In fact, there’s a saying in Silicon Valley that it’s better to have an A team with a B idea, than a B team with an A idea.
The composition of co-founders vary, from two best friends who decide to work on an idea together, to ex-college classmates who decide to form a company, to colleagues at work who decide to co-found a company. Picking a co-founder is critical to the success of a project, and in most cases, you pick someone you really know and can work with, with a proven track record of collaborating together, but still, conflicts inevitably happen sooner or later, so what can you do about? Firstly, let’s identify the types of conflicts that co-founders commonly get suckered into, and the common conflict resolutions to solve those.
Delegation of decisions
Say one co-founder may like an idea, but the other doesn’t, we suddenly have conflict. This usually occors when you don’t divvy up the duties and responsibilities clearly enough, to have boundaries that you can each respect. Usually a good composition of co-founders is one where each of their skills are complementary, say one is more tech-savvy whereas the other is more business-savvy.
By setting clear deliniation of responsibilities, you should trust in the other’s capabilities to make decisions. You should of course provide a diplomatic mentality to set out your reasons why you may disagree, but ultimately, once you’ve done your best to convince, show your faith and trust in the other co-founder by letting him have ownership over his decisions. The worst that can happen is, you try the decision and if it doesn’t work out, pivot, because one thing startups have over larger companies, is that they can pivot more rapidly because they are far more in-tune with their markets.
A Co-founder works harder than the other
So, we aren’t really going to envisige a modern startup with punch-cards right? I don’t think in any scenario you will find each co-founder working the exact amount of hours, all the time, consistently. So get that expectation out of your heads right away!
Comparing a technical co-founder and her programming efforts, up against a marketing co-founder that is working on cultivating a user-base, is like comparing apples and oranges. There may be quiet times for business co-founders, or designers, whereas the coding effort is still going at full-steam, but the next week things may change, and they may end up doing crazy hours trying to reel in new deals.
This goes back to the first point above, where co-founders need to trust each other, and delegate responsibilities appropriately, and if it seems like there is a continual uneaveness in workload, discuss that and see if you can offload anything to even out the work.
Equality in Equity
Related to the previous point, discussing who gets how many shares in the company. This is a very contentious issue and something that really riles up co-founders. Does the co-founder that came up with the idea get more than the rest? Does the CTO get more than the CFO?
Well, I can tell you, if you all started out at the same time, divide it up equally, it’s that simple! It won’t matter in the end if you distrust each other, or let greed give one person more equity, because you won’t even have a product, and venture capitalists won’t even want to touch your toxic environment.
When Diplomacy Fails
When all things fail, seek outside counsel. I always recommend companies have at least 5 mentors, as well as board directors outside of the company, because it adds an outsider’s perspective, balance and wisdom that you definitely don’t have.
Getting an outsider to broker your disagreement will allow you to move on, so think of it as couples therapy for co-founders. You hate to be in this situation, but you have to agree to the outcomes, and going through the tough times with respect and civility will make you greater negotiators.
Nothing venture capitalists hate more is co-founders who cannot get along, and if they sense anything like that, they will pull-out as soon as they can. Maturity and conflict resolution are not attributes that young co-founders have instilled in themselves, but something that needs to be learned quickly. Being civil, open-minded and remembering that you don’t convince with authority but rather by selling your points makes for a healther debate, than being abrasive.
Everyone co-founders options should matter, but you should also have a structure in place where responsibilities are delegated clearly, and co-founders lean on each other for consel. Ideas will change, and companies pivot many times, but if you turn your relationship with your other co-founders into a toxic one, it will eventually break your company, and will be part of your resume when you work on another startup.
We have just talked about how to compose your board of directors, last post, but what about composing your board advisors? Broadly speaking, board of advisors serve to counsel you on matters based on their experience, whilst not being financially invested the same way your board of directors are.
An advisory board is a body that provides non-binding strategic advice to the management of a corporation, organization, or foundation. The informal nature of an advisory board gives greater flexibility in structure and management compared to the Board of Directors. (source: Wikipedia)
You lean on to your advisors for solid advice, and receive equity in the form of common stock (rather than preferred, which your investors would get), and something around 0.25-0.5%. But they shouldn’t act like directors, as they don’t have any binding power to vote. So, when composing your board of advisors you should have the following in mind:
EXPAND YOUR BOARD OF ADVISORS LIBERALLY
Unlike the board of directors which function better when smaller, you should let your board of advsors expand largely, but composed of those in the industry that are smart and capable, with insight and even networking/connections, like you would do with your board of directors.
Having 7-9 advisors on your board is a good number.
JOIN ADVISORY BOARD PROGRAMS
According to Entrepreneur, if you don’t have many candidates that are willing or capable of serving usefully on your board of advisors, you can look at joining an advisors membership program. Companies like Vistage and CEO Clubs of Americacan help assign advisors, or even staff your board completely.
In addition to size and quality, you need diversity in your counsel. Those that have worked as founders in other startups (hopefully successful ones, but even failed ones) can teach you the ropes based on their experiences and knowledge-learned. Your peers, founders who have been there and done that, serve best to advise you on quarterly or monthly advisory meetings.
I would even think of having consumer advocates sit on the board, and have a direct bond with the grassroots of your company. For instance, a college representative if you are building a social media app for colleges (or they represent a high market segment of your product) so they can be your person on the ground and provide advice based on their daily interactions with their other peers.
LET THEIR EQUITY VEST OVER TIME
ReadWrite suggest giving your advisers equity that vest over time, so you can utilize them over a longer period of time, rather than having them cash and run. This also provides mutual interest ans assurity over a longer period of time, that the project will succeed.
As a founder, one of the critical yet often overlooked tasks is forming your board of directors. Picking the right composition of your board is the difference between having a functional company that is productive and competitive, and those that are deadlocked and hampered by greedy, self-interested individuals that make the process of decision-making near-impossible.
Your board of directors need to serve as promoting and helping execute the vision of the founders, rather than encumbering. They need to provide insight and guidance, help the young entrepreneurs navigate with the knowledge and expertise they have learned over time, which is in their interest, being the ones that have thrown money at your company.
Just as you would pick developers and engineers that build synergy in your team, the same needs to be said of directors. Being smart about your composition, the numbers, as well as who gets represented is critical, as you will be spending lots of hours in the office, and just like the need to be able to get along with your other founders, the same applies to your board. So how do you compose your board of directors?
Whom should sit on the board
Your board of directors can vote, so you need to have the right board member, that complements you, she or he is able to share your vision, and trusts you. That person needs to bring experience to the table, and diversity. If they are in finance, investor, legal, and more importantly, they can offer their expertise on those on the board, and provide particular advice. They could also be the type that are well-connected, and know how to navigate Silicon Valley, and have networks to tap on to.
Don’t have people who don’t actually provide distinctive skills and just occupy a chair, but rather focus on getting people that together, can provide the wealth and depth of knowledge to cover vital operational matters.
Your board of directors need to trust you, as CEO, to executive your vision responsibly. They fell for your pitch deck, and while they can provide their expertise on other matters (such as legal or financial), they can provide oversight but without the ball-and-chains. Another important thing directors can bring is outside perspective, that are independent. They don’t necessarily have to be an investor of your company but can bring an outsider’s perspective to the table,
TERMS AND BY-LAWS
Board of directors should normally serve for around 3-4 years, so setting a term-limit to that long allows for an appropriate refresh of the board’s brains trust, rather than recycling the same personalities and their knowledge. There should also be clear deliniated division of responsibility and powers as far as decision-making goes.
“When writing bylaws, you should be sure to clearly state who has the ultimate authority for making decisions about the company, whether the advice of the board is binding, and whether things like compensation or employment decisions are the board’s responsibilities or fall with the company’s management team.” (source: entrepreneur.com)
DON’T COMPOSE A BLOATED BOARD
The size of the board, like government shouldn’t be massive. Too much of a democracy can hinder decision-making, so choose to have the right size of people serve on the board. Generally, you have common directors which represent the common stock and it’s shareholders, so in this case, one or two of the founders.
When you raise money, you then would have preferred directors, representing your preferred stockholders (preferred stocks) consisting of lead investors and make decisions serving the interest of the investors. You would probably want to limit how many of these you have, to one or two.
Independent directors are outsiders that come in with an outside perspective on helping decisino making. These would be those that we mentioned earlier, such as attorneys, technology experts, ex-entrepreneurs. They should not hold any stock in the company, but rather help push decision-making along, and help break the deadlock in the board-room. Around 2-3 perhaps.
“As for the size of the board, business professionals say there isn’t one answer that will suit all companies. Most recommend having a body between seven and 15 members, but the important thing is to make sure to find the right balance for the size of your company. If the body is too small, the board won’t have a diversity of opinion; too large and it could get unwieldy and difficult to organize. ” (source: entrepreneur)