My friend and colleague Bill Aulet (currently Managing Director of the Martin Trust Center for MIT Entrepreneurship and Senior Lecturer at the MIT Sloan School of Management) has just launched his new book, “Disciplined Entrepreneurship – 24 steps to a successful startup“.
There are a million books out there teaching various aspects of entrepreneurship, many of them I consider required reading for any aspiring entrepreneurs in today’s startup ecosystem. But I agree with Bill when he says that all these books and materials teach only a part of the whole. First timers need a comprehensive introduction to the whole tamale. Which Bill does fantastically in a nice dose of MIT style firehose.
Bill hammers home the importance of testing your assumptions in the field. Other books do this too, but Bill makes it practical. The single most fatal mistake an entrepreneur can make is to get so attached to their starting idea that they push forward despite warning signs along the way. A rigorous approach to testing assumptions is a powerful weapon against getting caught up in the focus group of one.
What I particularly like about this book is the approachable way Bill demystified the sales process, explained sales models, and outlined how to quantify and track key metrics like LTV (Life Time Value for a customer) and COCA (Cost of Customer Acquisition) beyond the blunt instrument of a financial statement. The chapters on sales and marketing are particularly valuable to technical founders who haven’t personally seen marketing and sales in action.
Another wonderful thing about “Disciplined Entrepreneurship”? It doesn’t discuss product roadmap until Step 24 of 24 – which is exactly apropos. First, you establish your right to exist. Then, you can worry about product roadmap. A product no one buys is not a business. Fixating on future products before the value proposition has been proved on the first offeringis a fool’s errand.
Here are some quotable (tweetable?) quotes that I particularly like:
- “The single necessary and sufficient condition for a business is a paying customer.” (On why having a product no one buys doesn’t make it a business.)
- “Focus is the most important skill for an entrepreneur.” (On not boiling the ocean)
- “If there is already a market research report that contains all the information you need, it is probably too late for your venture.” (On why one must do primary research instead of relying on Google search to learn about the market and customers)
- “Get started doing, rather than getting stuck in analysis paralysis.” (On not agonizing over whether you have picked the right beachhead. You have incomplete data – just make a call and get going.)
- “(Entrepreneurs) overestimate the enthusiasm their customers has on their product.” (Touché.)
- “If the only feedback you get is ‘everything is okay’, then it is likely the customer doesn’t care much about your product and its value to them.” (On anticipating and embracing negative feedback)
- “You cannot will a market to exist any more than you can change the laws of thermodynamics.” (On the need to be willig to change fundamental assumptions, including the choice of a target market, based on new data)
- “Free is not a business model.” (Enough said.)
- “Costs shouldn’t be a factor in deciding price.” (On how cost based pricing almost always leaves money on the table.)
- “It is always easier to drop the price than to raise the price.” (Duh!)
- “A sound ratio for the LTV to COCA is 3:1.” (Via David Skok – a good guideline for unit dynamics once a startup has reached product market fit.)
- “The COCA will almost always start at a very high point because you need to first create the market.” (Something a lot of first timers don’t realize, causing panic, when it is part of the process to develop the business model.)
I very much enjoyed reading this book and the many examples. If you are a first time entrepreneur who wants to learn what questions to ask, definitely add this book to your collection. It is a dense read, but it will arm you with the vocabulary and concepts to probe deeper in each area. Highly recommended.