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10/05/12 | Uncategorized

The Minimum Viable Startup (October 10 In Palo Alto)

Generate your business model hypothesis and validate your idea on October 10 in Palo Alto – Women 2.0 members save 50% on tickets with discount code “Women20oct”.
By Roger Rappoport (Founder, StartUp Info & Partner, Procopio)

The startup world has developed a vernacular of its own which, for those of us whose daily lives are spent immersed in startups, seems like a first, rather, than second language. However, to friends, family and the uninitiated, we might sound as though we are talking as if from the real, rather than proverbial, Mars and Venus!

Take the other day, as I was discussing a really exciting startup opportunity with a friend, which went something like this. “I met this really cool technical founder. She is a real hacker, had a couple of hackathons, and is almost there on an MVP that could be disruptive in the space she is going after. It’s a SaaS play, probably freemium model to start, although one never knows how many pivots there may be along the way. If she gets into Y Combinator, gets protection around her IP and executes, the pain and the TAM is so huge, that her premoney on the A is going to be ridiculous!”

It is at this point that I got a few nods of agreement denoting a deep understanding of the potential, but the glazed look and vacant stare probably belied my friend’s true thoughts that demanding clients, the 18+ hour work days, 6 days a week, had driven me to either excessive daytime imbibing or to partake in activities involving controlled substances, for other than medicinal purposes!

Well, I’d like to add another descriptive startup term into the mix, which I (and a couple of friends/colleagues) have coined the “Minimum Viable Startup” or “MVS”, which we often use when discussing and evaluating the stage of development of, and ultimately the merits or chances of success for, a particular startup (not any of my clients!), given where they are at the time of our discussion and where we see them headed.

Today, I often see that founders place so much of an emphasis on an MVP and, although one of the most critical components of an early stage startup, an MVS is more than the sum of its MVP. I have seen many an exciting MVP with enormous potential end up on the startup scrap heap, for reasons that had nothing to do with the viability of the MVP itself.

I recently met a founder with a stellar MVP that, before incorporating his company, may have made promises to a “co-founder” for a percentage of the equity. However, after making that promise, the founder slogged away on the startup, but the “co-founder” did little to nothing. The issue arose post incorporation (a year later—first mistake) when it came time to formalize the cap structure and issue shares.

The founder wanted to ignore/renegotiate the previously agreed upon equity split so it would reflect the actual contributions made – which, not surprisingly, caused the co-founder to go nuclear, the longstanding relationship and friendship between the two to instantaneously disintegrate, and then came threats of multiple lawsuits. Since the cap table was in flux, the company was unfundable, and may have lost valuable launch and scale time and probably any competitive advantage that it might have had.

We use the term MVS to denote that a founding team has done all of the right things along the startup journey – from ideation through validation of the hypothesis, soft launching an MVP, testing the model, preparing for and scaling the business, taking care of the structural business and legal elements that investors will expect (actually demand) to see, and an often overlooked, but so critical component of success, developing a sound funding strategy to raise the right amount of money, at the right stage of the company’s life cycle and product development, selling the appropriate security, to the right investors, so as to ensure that exit proceeds for founders are commensurate with the level of time and effort (and pain, sacrifice and deprivation) that goes along with most startups.

After our last Boot Camp in Palo Alto a couple of months ago where we had almost 140 entrepreneurs in attendance, I met with Brant Cooper and Johnny Chan to discuss the event and the feedback given by participants. In reviewing the survey results, we noticed a common theme in response to the question as to what participants would like to see covered that wasn’t.

A significant portion of the audience wanted to get real world, practical tools about what to do (and not do) to get to an MVP, how to actually accomplish an effective launch of an MVP (not in abstract terms), and what and how to test and retest to ensure validation and future scale.

And so the notion of the MVS and the The Minimum Viable Startup as an all-day “complete solution” workshop was born, which we believe to be unique and of real value to startup entrepreneurs. The full-day workshop, which will take place at the Four Seasons in Palo Alto, on October 10, 2012, will be an intensive, immersive and experiential event. More info and register here.

Using examples drawn from our own experience at developing startups, Brant (product and customer development), Johnny (launch and scale) and I (business, legal and funding strategy) will simplify the complexity of validating an idea, developing a product, and building, funding and scaling a successful startup, while avoiding the most common mistakes often made along the way.

Using the MVS methodology, we will cover the four distinct milestones to help get startups on the road to success, including how to:

  • Generate and validate (using Lean Startup principles) a business model hypothesis (market segmentation and discovering the value stream)
  • Execute an effective soft launch of an MVP on a shoestring budget
  • Validate, test and identify critical success factors, and prepare for scale
  • Scale the business model

As an integral part of these milestones, we will deal with what entrepreneurs need to do to develop and execute the right funding strategy, appropriate to each stage of a company’s development, navigate around legal, fund raising and other issues, so as to avoid the most common pitfalls often made, which may ultimately make a significant difference as to whether or not a company is fundable, the sources and types of capital that will be attracted, who controls the company, the economic impact on founders upon exit, and a company’s likelihood of success.

If you are in or just contemplating a startup — think MVS! An entrepreneur’s approach to her or his startup, whether anticipated or in process, should, I believe, be to take a broad, holistic approach, which is complete and integrated (or at least educate herself or him as to the various components comprising an MVS), so as to maximize the potential of ultimately creating an MVS rather than just an MVP.

Procopio, the firm in which I am a partner, is proud to support an organization such as Women 2.0, in Silicon Valley and San Diego, that promotes the interests of the female tech community in California and far beyond.

In recognition of the tremendous platform provided by Women 2.0 to facilitate this goal, we are offering all friends and supporters of Women 2.0 a 50% discounted registration fee of $70 (regularly $140.00) when you use the code “Women20oct”. In addition, a portion of that registration fee paid by participants will be given back to Women 2.0 to “further the cause!!”

To find out more about the all day MVS workshop, click here.

About the guest blogger: Roger Rappoport is Founder of StartUp Info. He is a practicing corporate attorney at Procopio, serving clients in San Diego and Silicon Valley, focusing almost exclusively on representing emerging growth companies, and helping first time and serial entrepreneurs develop and implement strategies to build, finance and grow their startups. Follow him on Twitter at @start_uplawyer.

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