Startup Weekend: How to Take a Company From Concept to Creation in 54 Hours (2 page)

5.
The failure rate of new ventures (startups had no formal rules, and were frequently
hit or miss
propositions).

6.
The slow adoption rate of new technologies by governments and large companies.

Fortunately for us, many of these elements have changed drastically in recent years. Not only are technology cycles speeding up and the cost of getting products to customers decreasing, but organizations like Startup Weekend are pushing knowledge and networks to greater numbers of entrepreneurs.

The Democratization of Entrepreneurship

What's happening is something more profound than a change in technology; the change is in the fact that the many inhibitors and limitations to startups and innovation are being removed. All at once, starting now.

Compressing the Product Development Cycle:
In the past, the time to build a first product release was measured in months or even years, as startups took time to execute the founder's vision of what customers wanted. This meant that they built virtually every possible feature the founding team envisioned into a monolithic release of the product. Yet time after time, startups would find that customers didn't use or want most of the features
after
the product shipped. The founders were simply wrong in their assumptions about customer needs, and they wasted considerable effort developing all those unused features.

Fortunately, today's startups have begun to create products differently. Instead of building the maximum number of features they can imagine, they look to deliver a
minimum feature set
in the shortest period. This lets them launch a first version of the product to customers in a fraction on the time. In fact, for products that are simply
bits
delivered over the web, a first product can be shipped in
weeks
rather than
years
.

Startups Built for Thousands Rather than Millions of Dollars:
Startups traditionally required millions of dollars of funding just to get their first product to customers. For instance, a company that developed software would have to buy computers and license software from other companies and hire the staff to run and maintain it. A hardware startup had to spend money building prototypes and equipping a factory to manufacture the product.

Today, open source software has slashed the cost of software development from millions of dollars to thousands. No consumer hardware startup has to build their own factory, as the costs are absorbed by offshore manufacturers. And the cost of getting the first product out the door for an Internet commerce startup has dropped by a factor of
10 or more
in the last decade.

The New Structure of the Venture Capital Industry:
The plummeting cost of getting a first product to market, particularly for Internet startups, has shaken up the venture capital industry. Venture capital used to be a tight club clustered around formal firms located in areas like Silicon Valley, Boston, and New York. While those firms are still there and growing, the pool of money that invests
risk capital
in startups has expanded, and a new class of investors has emerged. New groups of VCs called
super angels
, which are generally smaller than the traditional multihundred-million-dollar VC fund, can make the small investments necessary to help launch a consumer Internet startup. These angels make lots of early bets and double-down when early results appear. And the results
do
appear years earlier than they would in a traditional startup.

In addition to super angels,
incubators
like Y Combinator, TechStars, and the 100-plus others like them worldwide have begun to formalize seed-investing. They pay expenses in a formal three-month program, while a startup builds something impressive enough to raise money on a larger scale.

However, the penultimate events in this area are Startup Weekends: 54-hour conferences that allow developers, designers, marketers, product managers, and startup enthusiasts to come together to share ideas, form teams, build products, and launch startups.

Startup Weekends have also emphasized the fact that venture capital and angel investing is no longer a U.S. or Euro-centric phenomenon. Risk capital has emerged in China, India, and other countries where risk taking, innovation, and liquidity are encouraged on a scale previously only seen in the United States.

The emergence of these incubators and super angels have
dramatically
expanded the sources of seed capital. And this globalization of entrepreneurship means the worldwide pool of potential startups has increased
at least tenfold
since the turn of this century.

Entrepreneurship as Its Own Management Science:
Over the past 10 years, entrepreneurs began to understand a critical fact: Startups are
not
simply smaller versions of large companies. While companies
execute
business models, startups
search
for a business model. Or perhaps more accurately, startups are a temporary organization designed to
search
for a scalable and repeatable business model.

Therefore, instead of adopting the management techniques of large companies, which too often stifle innovation in a young startup, entrepreneurs began to develop their own management tools. Using the business model/customer development/agile development solution stack, these individuals first map their assumptions (in other words, their business model) and then test these hypotheses with customers in the field (customer development) and use an iterative and incremental development methodology (agile development) to build the product. When founders discover the assumptions that are wrong, as they inevitably will, the result isn't a crisis; it's a learning event called a pivot—and an opportunity to change the business model.

As a result, startups now have tools that speed up the search for customers, reduce time to market, and slash the cost of development.

Consumer Internet Driving Innovation:
In the 1950s and 1960s, U.S. Defense and Intelligence organizations drove the pace of innovation in Silicon Valley by providing research and development dollars to universities, and purchased weapons systems that used the valley's first microwave and semiconductor components. In the 1970s, 1980s, and 1990s, momentum shifted to the enterprise as large businesses supported innovation in PCs, communications hardware, and enterprise software. Nowadays, however, government and the enterprise are followers rather than leaders. Today, it's the consumer—specifically, consumer Internet companies—that drive innovation. When the product and channel are bits, adoption by 10s and 100s of millions of users can happen in years versus decades.

The Entrepreneurial Singularity:
The barriers to entrepreneurship are not just being removed. In almost every case, they're also being replaced by innovations that are speeding up each step, some by a factor of 10. For example, the time required to get the first product to market at Internet commerce startups has been cut by a factor of 10, as have the dollars needed to get the first product to market. Additionally, the number of sources of initial capital for entrepreneurs has increased by a factor of 10, and so forth. And while innovation is moving at Internet speed, this won't be limited to just Internet commerce startups. It will spread to the enterprise, and ultimately, to
every other business segment
.

When It's Darkest, We See the Stars

What does it mean that we are at the cusp of a revolution as important as the scientific and industrial ones? Revolutions are not obvious when they are happening. When James Watt launched the Industrial Revolution with the invention of the steam engine in 1775, no one said, “This is the day everything changes.” When Karl Benz drove around Mannheim in 1885, no one said, “There will be 500 million of these driving around in a century.” And certainly in 1958, when Noyce and Kilby invented the integrated circuit, the notion of a quintillion (10 to the 18th power) transistors being produced each year seemed ludicrous.

Yet, it's possible that we'll look back at this decade as the beginning of our own revolution. We may remember this as the time when scientific discoveries and technological breakthroughs were integrated into the fabric of society faster than they had ever been before, or when the speed of how companies operated changed forever. We may recall it as the time when we reinvented the U.S. economy and our gross domestic product began to take off, and the United States and the world reached a level of wealth never seen before. It may be the dawn of a new era for a new U.S. economy built on entrepreneurship and innovation. Startup Weekend is at the forefront of this revolution: a grassroots movement that brings technology, tools, and networks to the people who are most committed to creating positive change in the world. In short, this era may be the one upon which our children will look back and marvel that when it was the darkest, we saw the stars.

Preface

What Makes a successful startup? Blood, sweat, and tears (and fun) may help, but they alone can't do it all. Entrepreneurs need to put together the right team, with members who have complementary skills. They need to receive constant feedback from customers. They need to trust their partners and empower the people who work with them. They need to learn on the job, and consistently work to understand the marketplace.

Over the past three years, we at Startup Weekend have seen these things happen over and over again. We have been amazed at how much people can accomplish in the course of 54 hours at Startup Weekends across the world. Some people walk out of their first weekend session with a cofounder, seed money for the next several months, and hundreds of customers already signed up for their product or service. For most of our attendees, though, Startup Weekend is only the beginning. It is just the start of an exciting and demanding learning process that they will continue to experience in the years to come.

In the pages that follow, our goal is to take readers through the actual experience of Startup Weekend—what it's like to pitch your business idea to 200 strangers in 60 seconds; how teams struggle when they discover that other people have had similar ideas; what it's like to see how well someone works and how much they know within hours of meeting him or her; and what it's like to meet some of the most experienced and successful mentors in the startup world.

As much as we want anyone with a desire to explore entrepreneurship to attend Startup Weekend, we recognize that not everyone will. Therefore, this book will try to take the lessons of Startup Weekend and distill them for a larger audience. In the subsequent chapters, you will learn valuable information about pitching your ideas for businesses with others, finding the right team to make your enterprise a success, the value of experiential learning, taking your customers' and the market's pulse (even before your product is ready for launch), using different startup models for project management, and making the best use of your startup time—whether you are ready to become an entrepreneur for the weekend, or for the rest of your life.

Acknowledgments

Writing a book is a big endeavor and we would not have been able to accomplish it without the support of the Startup Weekend community. From the written and oral stories alumni and participants shared with us to the feedback we've received at every stage along our journey, this book is the result of hundreds—if not thousands—of individual contributions. Although there are too many people to thank individually, in a very real sense, every Startup Weekend participant has made their mark on our organization; therefore, although anonymous, they are essential pieces of the story.

The entrepreneurs who shared their stories with us are listed by name below. We cannot express how grateful we are to those alumni, friends, and supporters who shared their Startup Weekend experiences. We have tried to include everyone and we apologize if we've forgotten to name anyone.

We would like to extend a heartfelt thank you to the supportive and resourceful team at John Wiley & Sons, Inc. Particular recognition goes to our editor, Dan Ambrosio, and our development editor, Christine Moore. We would also like to recognize Naomi Riley for her assistance with the manuscript.

To the Ewing Marion Kauffman Foundation, we cannot express how grateful we are for what you've done to support and promote Startup Weekend and thousands of other passionate entrepreneurs throughout the United States.

We would particularly like to thank Carl Schramm and Steve Blank for all they have done and continue to do to support entrepreneurs. We are honored to work with you.

We would like to thank our Board of Advisors: David Cohen, Bo Fishback, Eric Koester, Dan Martell, Danielle Morrill, John Sechrest, and Nick Seguin; and the Startup Lawyer, Ryan Roberts. Your guidance, constructive criticism, and unstinting support have helped grow this organization in ways we never thought possible.