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How To Run Your Business Like A Silicon Valley Start Up

The term 'start up' used to mean 'just getting going', now it means 'potential billion dollar brand'. So there's no reason why your business shouldn't act like an audacious tech start up in Silicon Valley.

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The term 'start up' used to mean 'just getting going', now it means 'potential billion dollar brand'. So there's no reason why your business shouldn't act like an audacious tech start up in Silicon Valley.

Guides

How To Run Your Business Like A Silicon Valley Start Up

The term 'start up' used to mean 'just getting going', now it means 'potential billion dollar brand'. So there's no reason why your business shouldn't act like an audacious tech start up in Silicon Valley.

Share this article

Sometimes I find myself sounding like a Monty Python Yorkshireman: “We used to 'ave to get up out of shoebox at twelve o'clock at night and lick road clean wit' tongue”. That’s because when I first set up a business – way back in 2001 – it was called ‘starting a small business’ and the only help was a bloke in a grey suit at the local Business Link.

Nowadays you get to be a 'Start Up Rockstar'  with a whole set of methodologies, meetups and billion-dollar-buyouts as inspiration.

There’s an amazing amount of really good advice available today, and I find the best has been built on the scientific minds from West Coast U-S-of-A. But when people think of Silicon Valley start ups, they picture clever tech widgets and 20-something CEO’s. Yet it’s not just new tech that’s being built – there are principles that will help any company regardless of their status or sector.

So what are these lessons – and how can you apply them to your business?

Lean and Mean

You may have already heard of a book called The Lean Start up. It’s a phenomenon, the bible in every technology accelerator, tech start up or brand innovation lab all over the world. You know it isn’t just some new fad when the US military starts to apply its principles to arms acquisition.

Heard of the phrases ‘minimum viable product’, ‘build, measure, learn’ and ‘pivot’? They are all from The Lean Start up. And you should have heard of them, because they will make your business run better.

The basic principle is one that turns traditional thinking on its head. Back in 2001 I’d be encouraged to write an exhaustively researched business plan. Then spend all my money making a ‘perfect’ first product, before launching with enormous fanfare (with the rest of the cash).

The big problem is that a business plan is theory, not proven practice: a hypothesis. What if that clever product or service isn’t actually wanted by your customers? By the time you find out, it’s too late.

Apple

Apple still uses the principles of build, measure and learn in everything it produces.

The Lean Start up argues you should do as little as possible upfront, until you know it will work. Get a minimum viable product out as a limited release into the market. Your customers then give you feedback – data – from which you refine your product. You build something, measure its performance, from which you learn. It’s an iterative process.

So set up a simple web page promising a new product or service and see how many people sign up. If no-one does, then maybe it’s not such a great idea. Web apps like Unbounce allow you to rapidly create marketing pages without a developer – so you can test literally hundreds of ideas to see which gets the most interest.

If people don’t like your ideas, then you pivot – you change direction.

Test like a scientist

Steve Blank teaches at Stanford University, and it was his work on customer development that underpins The Lean Start up. He is leading the way in creating a more scientific model for turning start ups into scalable businesses, and as he says, “a start-up is an organisation formed to search for a repeatable and scalable business model”.

You should get acquainted with tools such as the Business Model Canvas, which allows you to conceptualise your own scalable business model (as distinct to your business plan) on one page. This is available in an easy-to-use iPad app, which I find is a great way to channel and map your thinking. It even generates a spreadsheet of forecast profit and loss based on the model you build.

But to find the right business model, you need to try things out. If you treat your business activity as a series of hypotheses which you test, you will begin to see which are working.

"If the data is positive, do more of it. If it’s bad, then get some new ideas to test"

Take your web site. Are you looking for sales, email sign ups, blog shares? How are you tracking how your web design performs? The iterative approach to business planning should also be applied to your web design.

A heat-mapping tool called Crazy Egg is very revealing if you want to find out if your web design actually works: by installing some javascript you see where people click and scroll on the page.

So what? Well, five years ago we invested in a start up which launched with a ‘buy’ and ‘sell’ button prominently on the home page. After 60 days we saw that 96% of all traffic never clicked on the ‘sell’ button. The business changed strategy (and web design) soon after finding out that fact.

A more advanced technique (for those with a lot of web traffic) is A/B testing. This means you test multiple page designs simultaneously, for example setting a control page (with a blue ‘buy’ button) while also directing traffic to a different page (with a yellow ‘buy’ button) – measuring which performs best. Web software products like Optimizely or Visual Website Optimizer help you to do this.

Act like a pirate

One of the problems with measuring your activity is that it creates a lot of data. To see the wood for the trees you should make sure you only focus on a handful of essential metrics – pieces of information that shows whether you are moving forwards towards, or away from, your plan.

Legendary Silicon Valley investor Dave McClure is a rock & roll type, who roams the world effing and blinding while advocating his start up development methodology – Start up Metrics for Pirates: AARRR! This stands for Acquisition, Activation, Referral, Retention, Revenue. I’d highly recommend Googling and watching some of his talks.

He says you should focus on a handful (at most) of key data points, metrics which you track week in week out. However the key is to take action based on what this information tells you: they become ‘actionable metrics’.

If the data is positive, do more of it. If it’s bad, then get some new ideas to test. How many people do you have to phone before you close a deal? How long does it take for your customers to pay you? How many people read your blog, and then convert to customers?

My company Techdept sells a service to clients like Microsoft and BBC Children In Need. We exchange our time and skills for money, so how we manage our time is the single biggest driver of our success.

We use a cloud platform called Workfront to detail all of the tasks in the company, while logging time against them. This allows us to quickly see projects that have over-run, and work out why. A simpler tool is Harvest, which lets you easily track time from your desktop, in a browser and by a mobile app.

Getting focused on your actionable metrics means you do whatever it takes - every minute of every day - to get them better.

Open source business

The concept of continuous improvement is hardly new, but how do you do this in your business, day to day?

Combining the idea of iterative improvements, with an open collaborative approach (which owes a lot to open source software development) we invite all the Techdept team to improve how we operate – as we operate. So whether you’re the intern or the founder you can highlight inefficiencies, and propose solutions. We ask: is there a better way to do this?

We call this approach The Open Business System, and at its core is the idea that we can and should continuously improve. We collate data from internal and client reviews after work is completed, operational business software, and by employing an anonymous feedback platform called Tinypulse.

We document everything into a ‘system’ (basically a series of checklists) – which is communicated to the team, a training manager keeps on top of it. We say: ‘the system is the boss’, ‘you can change the system’, ‘therefore you are the boss’. This attracts young staff, keeps them engaged and stops the requirement for managers to “manage”.

I find that these Silicon Valley start up lessons are liberating. They mean you can worry less about your untried ideas, as long as you make sure you get feedback from those that are going to buy it – not just your internal teams. And if you can find out what your customers really want, you’re one giant leap closer to becoming that Start Up Rockstar…

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How To Run Your Business Like A Silicon Valley Start Up

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