Digital Insanity Magazine by Bruno Amaral

The True Measure of a Startup

Tue, 24 Apr 2018 10:42:19 +0100

This article was originaly published on Medium back in 2015. I am posting it here as well since the content still holds true after more than 2 years.

I follow the startup scene in Lisbon from a safe distance. It’s good to be close enough to understand what is going on, and it’s important not to focus too much and lose perspective. The same applies to a number of startups abroad.

For quite some time, I have felt we are building a broken ecosystem, akin to the dotcom era.

We are praising rock stars instead of sound managers and business people;
We pass on mantras like they were gospel, ‘fail fast’, ‘release often’;
For investors, the measure of a startup is its latest funding round;
Teams work hard to participate in competitions that will get them face time with investors;
Cities across the world compete over who has the best place to setup a startup business: boasting about cheap rents, talented human resources and good infrastructures;
Companies have been formed with the sole purpose of ‘accelerating’ startups. They provide them with mentorship by professionals. Some of these mentors have never tried, much less failed to start a profitable business;

This list could go on and you have surely found a great deal of rants and nay-sayers. The scenario is so psychedelic that we have began calling some startups ‘unicorns’, because their perceived value is over 1 Bilion.

Which isn’t to say that there aren’t worthwhile companies bringing in true innovation to the world. They are just outside the spotlight, most of the times at least. The startup-circus sells more newspapers, gets more page views and is much more entertaining to watch.

There are also some sound professionals that give their best possible advice and guidance. Sometimes this requires the modesty to admit mistakes, failures and fears. Again, we have to cut through the noise of the startup-circus so we can listen.

The web is filled with a discourse that can be divided in 2 categories. It’s either inspirational or pragmatic.

Inspirational is everything you find on how to build a corporate culture, how to manage people, how to stay motivated in adversity. CEO’s and their communication teams have been quite prolific in producing this sort of content.

Pragmatic content are tutorials, case studies and guides on how to design, apply growth tactics or write the best possible subject line for your next newsletter. Some of these guides can be pretty good, others are nothing more than click bait. You will come across articles for every step of this spectrum and some you will enjoy reading (after providing the webmaster with your email address in that annoying pop-up).

The problem I see in pragmatic content is that it focuses in the end result, applying any means necessary. It is therefore no wonder that we have seen a rise in ‘growth hackers’ instead of performance engineers or marketing managers.

Ironically, most pragmatic content lacks the ethics and values present in the inspirational category, which in turn is often guilty of over simplifying and lacking pragmatism.

Matters become worse when countless hours of reading from both categories lead us to conclude none of it can be applied to the problem we have. Books are a good exception to this rule, they can be inspirational, pragmatic and their knowledge applied to a large number of similar problems.

This is the point where I could claim that sharing knowledge that is both inspirational and pragmatic could save the startup business everywhere and fix the broken ecosystem. I won’t, because it won’t work. At this point, focusing in improving content being shared requires a lot of effort and risks drowning in the deluge of noise and babble.

We need a shift in how we think and build strategies. Part of the shift means measuring startups by what they are worth and not by their perceived (future) value.

Building a Model for Active Users

My proposal for this measurement is user growth and participation. A large part of what follows is taken from Eric Ries’ book ‘The Lean Startup’. On page 123 the book shows a chart outlining the percentage of users that navigate from the sign-up to the subscription process. It’s more than just a conversion funnel.

The chart felt like a good indicator of the health of the startup and a radar to pin point where the UX challenges were. The problem was that the chart was specific to a company.

As a solution, I built a scale of participation for the different types of users:

Not registered (visits but never signed up or does not login)
Lurker (signed up but does not perform any action on the site)
Observer
Participant
Contributor

This scale was built after reading a paper titled ‘A Social Interaction Taxonomy: Classifying User Interaction Tasks in Web Applications’ written by Monika Steinberg, Nicole Ullmann, Jürgen Brehm. In it, the authors classify every action the user can perform in a website. For this use case we listed our interactions and ranked them from lowest to highest effort. In the cases where this method was tested, high effort tasks also involved added value for the startup. (For mobile and desktop applications, the chart on the paper may require updating.)

With this framework in place we are able to collect data on what actions are being performed and ascertain the level of participation (engagement) of the users with the site. This sort of monthly or quarterly report can later be used by marketing and UX, investors and management.

Example charts of the Active Users dashboard

Making use of the charts

Cross referencing this information with geographical demographic data helps marketing plan in a more strategic way.
UX and graphic designers can focus their attention in specific actions or steps of the user journey.
Management and Investors can use the data to make decisions and adjust their strategy.

Given the required transparency, the startup ecosystem would know for a fact the health of each company inside it.

This raises questions regarding the value of a User and if that value should change over time or not. There is also the question if we are dealing with unique users, such as what is supposed to happen with Facebook, or duplicate users, like what happens on Reddit. Let’s agree that this use of User Participation as a metric for startups as a whole is close to a Utopia.

Yet, startups seeking funding should rely heavily on user participation and share that information with their investors, if for no other reason to show their money is being put to good use.

This metric is also a valuable tool for those managing collaboration and knowledge management within a company. In a granular level, you will be able to pinpoint the most active users and the ones less engaged with the tools you are using.

Startups will die

Not all, but most of the startups will die if their managers and investors switch to metrics that focus on user participation and behaviour. There will be no pivot tactic or funding round to save them. That is a good thing, believe me.

The startup circus is crowding the ecosystem and keeping the truly valuable companies from thriving.

You can argue that this sudden demise will mean less choice for the user. It will no doubt mean less choice, and it will also mean less crappy options to choose from. Users will also be forced to demand more out of the good and services they are purchasing online. From this, the startup may see the need for a premium / paid service instead of dragging around a freemium service plan that in the end may result in its demise.

Dynamic Systems have a way of stabilizing themselves. The startup ecosystem is not different.

The real zombie apocalypse is already here

Some startups are dead already. They are feeding on vanity metrics, page views and distracted investors.

The only way to stop these Zombies is from within the management or through the investors. This is where the hard work comes in.

For management this means having the courage to embrace User Participation and a true Active User system to measure the health of the company. It also means to pass along this way of working to other startups.

For Investors it means enforcing a culture of transparency and knowing how to deal with facts when they don’t go our way. Doing this with empathy is a rare skill.

This attitude is hard and harsh, but please refrain from telling me it’s not possible. There are examples of startups that have put these ideas to practice. Such as Buffer.

Accelerators, incubators, and the like will have to take this one step further and present hard numbers on how many startups they have helped grow and how. It’s easy to boast about how many startups you have had in your programmes; how many you supported and how many saw investment. Instead of taking a cut and moving on, these companies need to follow up and see which ones succeeded.

The idea that 90% of the startups fail and that that is to be expected, is rotten to it’s core. It’s a shield used as an excuse for poor performance.

It is imperative to focus more on the ones worth saving. The only way to know which ones will survive is to bring back a focus on the user and hard business metrics.

Images for this article were kindly provided by Mário Pires, of Alves&Pires. Give them a call if you are looking for a good content creation team in Lisbon.

By Bruno Amaral on November 1, 2015.

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Exported from Medium on April 23, 2018

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Daria Nepriakhina

Every consultant should build a company

Sun, 05 Jan 2014 17:13:37 +0000

It doesn’t matter how well you know your trade, if you are a marketing, public relations or IT consultant, or any other for that matter, you should build a business to know what your clients are going through.

This thought has stuck in my mind ever since Photowalke.rs got off the ground and we had to deal with a world of financial complexity.

You need a business model, a business plan, an accountant that knows what he’s doing (and can communicate it), you need to invest your own money from the get-go, and you need to let go of the fear that it won’t work. Right now, you haven’t even begun to do actual work.

But let’s skip ahead and imagine you have finally jumped those hurdles and can finally run at your own pace, working up a strategy to grow, setting a plan and counting how much you will need to put that plan in practice. You come to realise that you have very little margin for error.

And now this guy shows up. He’s a consultant and works for a marketing agency or some general business consultancy and tells you of a world of marvellous plans and amazing strategies that may grow your business 10 fold ! You agree on a fee, after you’ve stretched your investment budget beyond its limits and he starts off with a digital campaign of seo, cpm, cpa, cpc, remarketing, social media, crm and the kitchen sink.

In the end you get a bunch of powerpoint slides with reports and figures, great results and amazing KPI’s from each of the digital campaigns he was running. Yet your business grew by 2 or 5%, at most. At this point you may get a speech about how much you both learned from the experience and how you can improve for next time.

This is a common pitfall in some consultancy models and one that many small businesses may fall into because they work on a tighter budget.

I have always been a firm believer that a consultancy is a relationship that grows in unison (as I’m sure most agree) and complain regularly about not getting any feedback about business KPI’s. Did the campaign lead to any sales? Are customers making repeat purchases?

But even if everything goes according to plan, there is still the problem of the manager thinking he is all knowing and powerful. Rarely do I hear stories of managers listening to feedback the consultant got from his research or observation of reactions to a campaign. Those in charge of management and operations tend to look at consultants and agencies as mere executors of a plan and disregard the valuable role they can have in bringing community insight to the organisation’s strategy.

Photo by furlined @ flickr.

A New Perspective

Mon, 23 Sep 2013 12:20:22 +0000

This blog was a bit stuck in the dark ages of blogging and was in need of a redesign, in all definitions of the word: a new look and a new reading experience, as well as a revised editorial line.

Fortunately I know some amazing people, one of them being Diana Costa.

With her help, there is now a new logo and a new design. It is more focused on the content and the reading experience and adapts gently to any screen size.

I liked her solution so much that instead of applying it to an existing wordpress template I went the extra mile and coded it all from scratch. It is using the latest Twitter Bootstrap Framework with a 16 column grid instead of the usual 12 columns. This saved several days of coding to get the first prototype.

And because the search function is paramount on any website, it is there at the header for when you need it taking up the whole screen so you can focus and find what you are looking. For an added bonus, check out what happens when you search and don’t get results.

But there is more.

To make the blog a more compelling experience I reviewed the whole editorial line I was following. So now you have the following categories, or perspectives:

Communication; Communication and Web

Not all communication is about the web, but the web is always about communication. If you want to check out the ideas and opinion, papers and articles on Communication and Relationship Management, then you need can follow the communication part which will include the web perspective as a sub-category.

Buf If all you care about is what’s new online and how it can help you communicate or how it changes the way we relate with each other, then you should read the Web perspective in its own single category.

This is a split-hair. I was inclined to just keep the Web category and drop it in favor of Communication or vice versa. But the web has always been social, always been about communicating and collaborating with people across the globe. Therefore they need to be present and intertwined.

Business

With so many things that change online and offline, what does that mean for business? This is where I want to share what perils and what opportunities show up whenever a major player like facebook, twitter, or google makes changes or when we as users switch from one platform to the other. This is also where I am going to expand on the idea of strategy and around the need for a concept of communication strategy, either digital or analog.

Geek

I don’t hide that I am a Geek and in fact I am quite proud of that. So it was only fitting that for a personal perspective I would embrace this trait. This is where I will share what is happening with me, the bits and pieces of code I come up with, the pet projects and aspirations. This is the window where you will have a chance to peak into my world of madness and coffee.

Three Perspectives on Strategy

Thu, 09 May 2013 22:46:43 +0000

When you work in Management or Communication you hear people talk about strategy all the time. They talk about the need for a solid business strategy, a stakeholder management strategy, a financial strategy, a communication strategy… and all that turns to something quite confusing when you realize everyone as their own definition of the concept.

First, lets please agree on one premise: Strategy is about long term thinking, a Plan is the way you assemble tactics to meet a specific objective in short or medium term.

1. Military Strategy

Sun Tzu is the first cornerstone in military strategy. Yet he does not give a short definition of what he understands to be “Strategy”, and the whole concept of “Art of war” leads me to believe he accepted a level of subjectivity in managing an army.

I know nothing else of military strategy other than that last paragraph and yet a quick search led me to NATO’s definition of strategy:

“presenting the manner in which military power should be developed and applied to achieve national objectives or those of a group of nations.”

But ever since I read Isaac Asimov’s “The Foundation” I see military strategy on a new light. To sum things up, the book talks about a planet deprived of any military strength and how in different points in time they had to resort to other means to assure their safety and independence. In the book, strategy has nothing to do with military strength nor is it about winning wars.

2. Business Strategy

Business Strategy leads us to Mintzberg, right? And in fact that is most of what I recall from my graduate training. Strategy was setting long term goals and objectives, managing resources in order to achieve those objectives. This makes a lot more sense to me than the military perspective.

In Public Relations this also makes sense because it gives the discipline a purpose: to monitor and scan the environment the company exists in while at the same time looking for opportunities to accelerate that strategy. Lets correct that: It made sense.

Today I feel it makes more sense to talk about Communication rather than in PR or Marketing as separate disciplines. At the same time there are areas like User Experience and Social Business that are proving to be crucial in achieving long and short term objectives. Business strategy is no longer just about managing resources.

3. Communication Strategy

This is where things get complicated. I started out by saying Strategy was about long term thinking exactly because there are a number of people who talk about Communication Strategy when in fact they should be talking about Communication Plans.

A communication plan would be setting up a Facebook Page or a Corporate Blog with a set of tactics aimed at making that new channel known and valuable to internal and external stakeholders.

A communication strategy would be to identify the need for a communication channel with specific Stakeholders and determine objectives, acceptable tactics and resources to be made available with the objective of influencing their behaviour and perception of the brand in the long term. This is a simplistic way to explain the difference, but it serves our purpose.

Jeremy Waite showed a very interesting view on communication strategy during his presentation at Engage 2013. Watch the 20 minute video below, he does more than showcase tactics, he explains how by looking at data different companies were able to identify long term objectives and choose tactics to achieve them.

Watching Jeremy’s presentation was what got me thinking about what is in fact Strategy. Only later, after watching the video again, did I realize that he talks mostly at a tactical level, in the sense that he does not go into detail about what should constitute strategic thinking (nor do I think it was the objective of the presentation).

In terms of Strategic Thinking he points us towards a TED Talk by Simon Sinek that you can watch below. The key takeway is that “people don’t buy what you do, they buy why you do it.”

Simon’s idea is solid, he makes a strong argument on why you should have strong core values with a strong vision and how those two elements make up the “Why” for what you do. Start with the Why and you will find out that you have a strong message for your key stakeholders but you still won’t have a Communication Strategy.

All this still does not feel enough to build a concept of Communication Strategy that can translate into a Strategic Thinking process and that can accommodate the changes the Web enforced upon society and the corporate world.

You have made it this far, so don’t stop and please leave a comment with your thoughts. 🙂