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Brian Soule

May 13, 2008

The Most Important Lesson

90% of entrepreneurs are ready to jump in and start building their product right away. They have a great idea for a product, their friends have told them how good it sounds, and the last step to becoming the next entrepreneurial success story is to build the product and start selling, Right?


The reason so many entrepreneurs fail is that they don’t validate the market. They practice a ready, fire, aim development style. Successful entrepreneurs practice ready, aim, fire by validating the market_._

Market validation compensates for most of the risk of entrepreneurship.

Once risk has been mitigated; your venture will give you the profitability of a start-up with the security or an investment. And that is the most important lesson.

Read on for an explanation of Market Validation from the second chapter of Rob Adam’s book: A good hard kick in the Ass, Basic Training for Entrepreneurs. Rob Adams works with Austin Ventures, providing venture capital to start up companies. His book provides a valuable perspective through the eyes of a professional VC. While the whole book is a valuable resource; the most valuable section, by far, is the second chapter on market validation. The chapter is titled you don’t know your customer as well as you think you do.

Continue to...


May 13, 2008

Market Validation Guide

Building a product without market research is like shooting a gun without aiming.

The Benefits of Market Validation:

1. You get the product right the first time Instead of spending $10 million on a prototype that has to be redesigned, you spend $1 million and get the product right the first time

2. A beta community emerges You gain a community of customers that will give you feedback during product development

3. You identify a wide potential Customer Community (Quality sales leads)

4. You can more easily raise smart investment capital Market research, customers, and development communities eliminate risk and make smart VC’s eager to invest.

5. You clarify your competition Market Validation Consists of four steps Secondary Research Stage 1- Explore the Pain Stage 2 - Envision the Solution Stage 3 - Establish Credibility

As the pyramid suggests, key validation activities include:

Identifying research contacts

Obtaining progressively more useful research

Contacting hundreds of people

Secondary Research

 - Research competitors and potential customers using the internet  - Read the Industry press, including Information Week and Red Herring for a sense of current technology trends. Also, check out vertically focused periodicals in the industry being targeted.  - Obtain reports from respected analyst groups, such as Forrester Research, Gartner group, Giga, International Data Corporation (IDC), Meta Group, and others.

This research does not qualify as market validation, it merely prepares you for...

Market Validation Stage 1: Explore the Pain

Stage 1 involves three steps 1. Construct hypotheses about the prospective market. Who needs the product most? What does this market look like? 2. Gather data to prove or disprove your hypotheses 3. Isolate the most searing pain points Who needs the product most? What does this market look like?

Examples:  The product is critical for companies growing at 50% a year or faster; ten to twenty people communicate with customers. Or, product is most appealing to young professionals living in urban areas.

Typically, you obtain your Stage 1 interview contacts via mailing lists from industry trade magazines or trade groups. Interviewees should include the full spectrum of people who may come in contact with your product-those who will use in, buy it, recommend it, pay for it, technically review it, and so on. All these groups have requirements. Your task? find out what those requirements are.

When interviewing, watch out for two unproductive interview tactics: 1. Leading the witness. Don't ask questions in a way that makes it more likely to get the answer that you want. Like "Don't you hate it when..." or "wouldn't it be better if". These questions will retrieve answers that are not objective. 2. Selling the solution. Do not talk to customers about the solution at this stage. You are after only one thing: a clear view of customer experiences and environments, requirements for performing a particular task, and the source of customers' most intense pain.

A hypothesis almost never holds up. “you know you are getting close to the right answer when you’ve radically modified where you started.”

Market Validation Stage 2: Envision the Solution

Stage 2 involves testing one hypothesis against people who experience the pain firsthand, or understand that pain. Stage 2 is more qualitative than Stage 1, It involves some face to face meetings. Stage 2 contacts are people who, in stage 1 interviews, expressed especially distressing pain, a high degree of interest in a possible solution, and a willingness to be contacted again.

You can also consult the heat map’s hot spots for additional customer contacts. You might be amazed by what happens. Even when you call hot spot contacts you haven’t spoken to before, they might want a solution so desperately that they’ll ask for a demo-right now. Thought leaders within the market space make good stage 2 candidates as well. In interviewees, having pain is more important than entrepreneurial enthusiasm.

Preparing for stage 2 interviews

Using the stage 1 market data, create:

·         A  first pass presentation. The presentation outlines the pain you will address, the market segment with the most biting pain, and – at a very high level, how your solution can solve this pain.

·         A prototype of the solution. Screens illustrate the user experience and provide a high level demo of basic functionality.

While conducting interviews, your team hits each one of the stage 2 contacts with the presentation and prototype. All the while, you carefully record their feedback. Initally the influencers will inevitably respond less than favorably to all or part of your proposal. Your team must simply go back, tweak to reflect the feedback, and iterate through the process again. You will focus on features that your customers care about.

Stage 2 results are indispensable, in three key respects:

·         Product features – when customers are tormented by their pain, a quick solution is all they want. They’re not really interested in bells and whistles.

·         Core Customers. – the customers you interview in stage 2 will morph into beta sites for testing your initial release.  The interviewees of stage 2 tend to stick with your startup. They will act as partners who help keep you close to the customer as the years go by.

·         A fine tuned presentation and prototype. Stage 2 feedback enables your team to sharpen these critical artifacts to the point where, when the “heavy hitters of stage 3 are approached, these leverage influencers quickly understand what you are doing  - and are more than willing to lend their stamp of approval.

Market Validation Stage 3: Establish Credibility

By the time a startup enters stage 3, it is about 90% there in terms of being ready to set sail as a viable venture. You use stage 3 to forge that final 10%. Here, your team creates a base of influence for building credibility

Stage 3 is meant for contacting thought leaders interviewed in stage 2, representatives of well known analyst firms such as, Aberdeen group, forrester research, gartner group, giga, idc, and meta group, editors of vertical publications that sell into the market. Consulting firms such as Accenture, eds, kpmg, or pricewaterhouse coopers, whose clients may be in a position to implement the proposed solution.

As you visit these people with your fine tuned company presentation and solution prototype, here’s what you aim to do:get them excited. Excited about your company, about the product, and about your startups prospects. Give your presentation and collect feedback. Hone the presentation until it expresses your solution’s advantages with absolute clarity and conviction.


The process is worth it for three key reasons:

·         Visibility in analyst reports and publications. Industry analysts are paid to spot new trends and promisiong companies. Theyre more than happy to spread the word about any new company that impresses them. So are the editors of publications.

·         Revenue possibilities. Consulting firms love to introduct new technology solutions that make a read difference in their client environments. They also like to be the first on the trigger with this.

·         Easier financing. You can incorporate positive analyst feedback into the presentation you use to obtain major financing from top tier investors. When raising money,a positive quote from a well known analyst gives you an enormous advantage.

By the end of stage three, your companies case is no longer hypothetical, it is proven. Your market is precisely targeted. Customers are already on board as advocates, partners, and advisors. Major industry influencers are in the loop and excited. Your team can progress with the confidence that it is addressing the market’s actual needs.

Apr 17, 2008

This Truck Driver makes 2 Million a Year

You are probably wondering, How is it possible for a single truck driver to make 2 million dollars a year?

I'll answer that question with another question, How is it possible for Exxon Mobile to make 39.5 Billion dollars in a year?

The answer is arbitrage; when something is worth more in one location than somewhere else.

Back to the truck driver, he is an independent contractor that works with BP. His job is to drive around Italy, fueling the underground tanks at BP stations. After fourteen years on the road he decides that his truck is getting old and that it's time to sell the old and lease a new large capacity rig. He finds a buyer, in Egypt that will pay a good price for the tanker. So the trucker takes a week off to escort his truck on a boat to Egypt.

When he arrives in Egypt, the trucker notices that the price of gasoline is a mere .95 cents per gallon. (Global gas prices listed here.) He thinks about how great it would be to buy gas at .95 cents in Italy. Then it hits him...

He postpones the sale of his tank truck and uses his savings to fill the truck with 8,000 gallons of unleaded gasoline. He catches another ferry back to Italy and sells the load to an independent gas station for 4X what he paid for it. He can't believe how his good fortune, he has made almost a years salary in just a few days.

How does he make 2 million a year? Let's look at the math,

8,000 Gallons of gasoline costs $7,600 in Egypt 8,000 Gallons sells for $47,600 in Italy. That mean that the Egyptian gas can be sold in Milan for $40,000 Profit. Or $4.00 profit per gallon.

The distance from Cairo to Milan is 1599 miles. Let's say that you take a ferry that travels at 20 knots or 23 mph, It will take you about 69 hours if somehow you had to travel the whole distance by boat. (realistically you could drive up the Italian peninsula at sixty mph) Add in a few hours for filling and emptying the tank, waiting at the border, and you can complete an entire cycle in a week. (144 hours)  If you complete one cycle per week for a year, that's $2,080,000 annual gross profit.

As if that wasn't exciting enough, the process really gets interesting when you add in another truck. Let's say you have a company with a fleet of five trucks, you could be making $10,400,000 before expenses.

If you had a 15,000 DWT tanker (which is a small boat with a capacity of about 4,000,000 gallons) you could have a one cycle profit of... I'll let you do the math.

Obviously some research into the trade procedures, taxes, liscences, equipment, and transportation issues are required, but the fundamentals are the same.

So, Who is this truck driver? It's you.

Apr 11, 2008

Wakeaid has hired 6,602,224,175 employees

We have opened up wake aid so that anyone who provides valuable work or ideas can be paid for their efforts. It's very cool, and a bit radical.

Check out our announcement, You are now the CEO of WakeAid.

What do you think?

Apr 8, 2008

Why Bother Having A Resume?

I can't help it, I have to link to this Seth Godin entry. It's called Why bother having a Resume?

The guy has a great sense of how to work for fun. It's contagious.

Mar 27, 2008

How to Become 66 Percent Smarter in 15 Minutes...Without Opening a Book

It is possible to become 66% smarter by using simple mental simulation techniques.

Brain scans show that when people imagine a flashing light, they activate the visual area of the brain; and when they imagine someone tapping on their skin, they activate the tactile areas. A review of thirty-five studies featuring 3,214 participants showed that mental practice alone - sitting quietly, without moving, and picturing yourself performing a task successfully from start to finish- improves performance significantly. Overall, mental practice alone produced about two thirds of the benefits of actual physical practice.

Think about how much idle time you spend each day.  Time spent acting is a fraction of the time we spend waiting for that moment. Instead of just watching TV, imagine what's going to happen next. Instead of merely sitting in the car on the highway, imagine who you are going to talk to that day and what you are going to say to them. The more visualization you do the smarter you get. Some of the best visualizers can predict what people are going to say, what happens at the end of a complicated movie, and yes, solve complex mathematical equations. 

Mental simulation is a simple technique that you may already use. Mental simulation is the reason people use bathing or showering as a brainstorming technique. Bathing takes away distractions that keep us from visualizing the future. It's no wonder that Alan Greenspan spends two hours a day soaking in the tub.

Mental simulation improves skills,  problem-solving, and emotional management.

    Mental simulation can build skills. Mental simulation helped people weld better and throw darts better. Trombonists improved their playing, and competitive figure skaters improved their skating.

    Mental simulation helps with problem solving. Even in mundane planning situations, mentally simulating an event helps us think of things that we might otherwise ave neglected. Imagining a trip to the grocery store reminds us that we could drop off the dry cleaning at the store in the same shopping center. Mental simulations help us anticipate appropriate responses to future situations. Picturing a potential argument with our boss, imagining what he will say, may lead us to have the right words available when the time comes (and avoid saying the wrong words). Research has suggested that mental rehearsal can prevent people from relapsing into bad habits such as smoking, excessive drinking, or overeating. A man trying to kick a drinking problem will be better off it he mentally rehearses how he will handle Super Bowl Sunday: How should he respond when someone gets up for beers?

    Mental simulations help us manage emotions. There is a standard treatment for phobias of various kinds - spiders, public speaking, airplane travel, and others. Patients are introduced to a relaxation procedure that inhibits anxiety, and then asked to visualize exposure to the thing they fear. The first visualizations start at the beginning of the fear. For example, someone who's afraid of air travel might start by thinking about the drive to the airport. The therapist leads the patient through a series of visualizations that get closer and closer to the heart of the fear ("Now the airplanes' engines are revving up on the runway, sounding louder and louder..."). Each time the visualizations create anxiety, the person pauses for a moment and uses the relaxation technique to restore equilibrium.

Notice that these visualizations focus on the events themselves - the process, rather than the outcomes. No one has ever been cured of a phobia by imagining how happy they'll be when it's gone.

Mar 20, 2008

How does Entrepreneurship Improve your Personal Life?

An Entrepreneur is someone who starts companies, right?

Well, yes. But an Entrepreneur also creates Ideas and Relationships. An Entrepreneur can create things as large as political movements or things as small as road trips. By definition, an entrepreneur creates wealth. Wealth can be defined in many ways.

An Entrepreneur creates Wealth

Wealth = Friendship, Knowledge, Financial Security, Freedom, Love, Intelligence, Achievement, Anything of personal value.  

The same basic skills apply to professional entrepreneurship, as they apply to any other type. Three Universal stages apply to wealth creation,

1. The Idea - Ideas often occur organically, a good entrepreneur appreciates problems for the opportunities they provide. Ideas can be simple - like inviting someone to a party, or complicated, like harvesting the motion of waves on the coast to generate energy. Often, in economic entrepreneurship, the person who crates the idea is not the person who starts a company around that idea. Ideas have far reaching consequences that can change the world for the better. Ideas have many forms, like a new joke, or style of golf swing.

2. The Introduction - Ideas can be introduced intentionally or by example. Once an idea is introduced, the responsibility of communicating and acting on that idea is shifted to it's followers. Without followers, an idea is merely a thought. during introduction, the majority of the idea is created in the shortest amount of time. Presenting an idea empathetically, and with confidence will give your movement good character throughout it's life.

3. Growth/Fruition - Some ideas require leadership, some don't. As your ideas become successful, just remember - it is easiest to perpetuate movements that benefit your followers. That can mean making complicated ideas simple, gifting shared moments of humor, or creating communities for people to be a part of. Think in terms of others, and you will be amazed at the changes you can make.

Destruction is a form of creation - Donnie Darko

Mar 18, 2008

Eagles Roost Moving

Eagles Roost started when my boss (Dr. Robert O'Brien of Virtual.MD) decided to move to a new home in Austin. They said the moving company would charge them around $2,800 for move. I jokingly said that I could do it half that price.****

That night I checked the figures for a do it yourself job.  1. A U-Haul could easily stay under $200 for the whole project,  2. A few college students would work for $150-200 apiece  3. New Ropes, Boxes, Blankets, and Tape should stay under $500 Four students, a truck and supplies would total up to about $1500 dollars.

Here is a moving estimate for an in town, two bedroom house from Moving from Austin, Texas to Austin, Texas Estimated Distance:    0 miles   Estimated Weight:    11,000 pounds Estimated Cost:    $4,900 - $5,900

That's $1,000 to $4,400 potential profit for one day's work! (or no work at all)

As the O'Briens are family friends, I decided not to charge them more than the job actually cost plus my hourly labor. I called two of my friends, who happened to be eagle scouts and a few Sundays later we were moving furniture into a U-Haul van.  Jokingly, we started calling it the eagle scout moving company. We knew plenty of knots and our band of movers managed to move the whole house without any damage to the furniture. The job ended up costing around $750 dollars. Our costs totaled to 26% of the original estimate.

We have completed one other job since then, with similar results. The name Eagles Roost Moving has really stuck as it conveys the trustworthiness that boy scouts are taught from a young age.

The best part of moving is that you get to sleep like a baby after the job. I would love to make this company grow into an Austin institution. I'm looking for good people to be a part of this company. Send me an email if you want to be a part of Eagle's Roost, or... Give us a call for your next move!


Mar 17, 2008

Start-up Company Goals

Three months: Solidify my business plan, assemble a team of extremely high caliber individuals, and start work on the business.

One year: Form Partnerships with at least three large organizations, Be mentioned in at least five publications, Achieve profitability and 300% yearly revenue growth.

Three years: Achieve a dynamic company brand known for challenging the orthodox culture of corporate America.

Mar 17, 2008

Embracing Openness: How I will Publish my life Content

In this blog I plan to track my entrepreneurial goals and accomplishments. I am 21 now, how many discoveries and achievements can I complete by the time I turn 22? Will my company go public before I turn 23?