Startup

The 9Mile Innovation Framework©: Evaluating Startup Teams

9Mile Innovation Framework graphic
9Mile Innovation Framework graphic

In the last blog, we introduced the 9Mile Innovation Framework. Over the next few weeks / months, we’ll elaborate on each one of the milestones constituting this framework. Of course, we’d love your feedback – good, bad, ugly – as we share our thinking.

As any investor or experienced entrepreneur will tell you, it all begins with the team. A great team is a necessary (though not sufficient) condition for entrepreneurial success. That implies that you can have a great team and not have a successful business, however you'll likely never see a successful business that didn't have a great team at the helm.

While there are innumerable ways to slice this pie, at 9Mile Labs, we think of the team in 3 dimensions: Completeness, Chemistry and Competence.

We think of a complete team comprising of 3 roles - hacker, hustler and visionary. Just to be clear, these are 3 roles, not 3 people. The 3 roles could be fulfilled by 2 people or 5 people. The hacker is the person(s) on the team who can write code and build product. The assumption is that this person is not just a full-stack developer (UX/UI, data, back-end) but can also function at different levels (architect, customer interaction, coder, project manager). The hustler sells. The hustler builds relationships, knows how to be empathetic towards customers, listens well and is great at serving as an advocate for the customer. The visionary is the person who probably came up with the original idea and is likely the key product and design expert on the team. In many ways, the visionary is the soul of the team, has the conviction to not just pursue the idea relentlessly, but also owns the mandate to pivot when necessary.

Chemistry is alignment of the core values and vision of the business among the co-founders. One of the workshop leaders at 9Mile Labs – Lindsay Andreotti – describes vision as the compelling description of where the business wants to go and values as the guiding principles for the business. A great positive marker for team chemistry is if the team has successfully worked together, especially in a high-pressure environment such as a startup. It is important for co-founders to know that they can have an impassioned argument and then go get beers later; articulating your deeply-held convictions, yet knowing that winning the argument is subordinate to the success of the business is critical. If everyone agrees with each other all the time, the team is probably not pushing the limits of its intellectual potential far enough, or else the team is not diverse enough to bring a broad set of perspectives to the table. Politics or hidden agendas, if they exist in an early-stage startup, are a sign of misaligned incentives and a sure-fire indicator of trouble.

Competence is the idea that no matter what the skills of the co-founders, they think of themselves as the being the best in the world. They seek excellence in what they do and always maintain the perspective of competing globally, not merely locally or regionally. This translates into not just their own performance, but also into hiring and firing decisions as the team grows.

Team Graphic1
Team Graphic1

Entrepreneurial Aptitude is one quality that has been the hardest to pinpoint, has the element of “we’ll know it when we see it,” and is perhaps the greatest indicator of success. Entrepreneurial aptitude is a composite of many traits we have observed in successful entrepreneurs, including focus, self-awareness, grit, curiosity, a self-starter attitude, ability to deal with ambiguity and a knack for accomplishing a lot with very little. These entrepreneurs also have the ability to constantly learn, create and apply new rules very quickly as they go through experiences. We find that entrepreneurial aptitude is incredibly hard to measure with the standard evaluation mechanisms such as resumes, profiles, questionnaires or even interviews. We believe the only way to measure it is to watch people operate in the real world. At 9Mile Labs, we have designed a set of real-world exercises in our accelerator selection process to provide us a glimpse into this aspect of the team, we’ll share more as we learn more.

Based on the above, we have devised a simple rubric for helping entrepreneurs evaluate the quality of their team. If the leadership team of hustler, hacker & visionary is not in place, we assign it the color red or highest risk. We believe however, that the existence of a complete team only mitigates some level of risk, even with the chemistry and competence on the team, hence it gets a “yellow” rating. The team has achieved a green only if the founders have a proven ability to bring on board the best and the brightest people to support their vision. Most people can attract someone into Google or Facebook by offering great pay and benefits. However, as a startup, the only currency the founders have is equity and more important, their conviction and passion around the startup. Once a co-founding team can inspire others with their vision and dream, that’s when the team turns “green.” This capability is also a test for the selling abilities of a CEO. You see, the CEO is always selling, to customers, investors and to potential recruits. If you can’t sell great people to come on board your company, it’s only going to get harder.

Team Graphic2
Team Graphic2

In our next post, we'll elaborate on how we coach our teams to think about understanding the pain point of their target customers.

9Mile Labs is a leading Enterprise / B2B high-tech accelerator based in Seattle. 9Mile Labs celebrates the graduation of its fifth cohort on Mar 3, 9:30am; register as our guest with promo code “GOLD” at http://m9.9MileLabs.com

The accelerator is currently accepting applications for the upcoming program (beginning in July, 2016) at http://apply.9MileLabs.com.

The 9Mile Innovation Framework© - A Structured Methodology for Building Technology Companies

When we ventured into the startup accelerator business over three years ago (read our story here), we knew we were headed into brand new territory. The startup accelerator business model was pioneered in 2005 by Paul Graham at YCombinator (YC) and then subsequently adopted by many others after high-profile YC successes such as AirBnB, Dropbox, Heroku and others. We were perfectly happy to replicate a proven model, but we also wanted to ensure we continued to learn, iterate, refine, and innovate.  And the only way we knew how was to constantly talk to our customers - i.e., entrepreneurs and investors - and try to deeply understand their challenges and pain points.

These conversations are the genesis of the 9Mile Innovation Framework, our foundational methodology for helping launch and grow startups. Using Steve Blank’s customer development methodology and Alex Osterwalder’s Business Model Canvas (BMC) tool as a starting point, we began to build our own proprietary framework for company creation and growth. While we found the BMC to be a great tool, we also needed a foundational framework that helped us with the following

  • - A tool to assess a startup’s progress over time, including a self-assessment tool for entrepreneurs to track their own company’s performance.
  • - A high-level model for creating enterprise and B2B startups that are focused on solving real-world problems and on customer traction.
  • - Provide us a common language to discuss startup progress, challenges, and solutions with entrepreneurs, mentors, speakers and investors.
  • - A clear foundational structure for our entrepreneurship and company-building curriculum.

With the 9Mile Innovation Framework, we have a tangible rubric we can use to gauge the current and future success of the companies graduating from the accelerator. Since 9Mile Labs is only successful if its companies are successful, the framework also serves as a measure of how our own business is progressing. Applying the framework to everything we do, there is no hand waving, subjective arguments, or seat-of-the-pants rationalizing. If something isn’t working, we go back to the drawing board and refine our framework.

Just a side note: we don’t claim that every concept in our Innovation Framework is original. We read books, browse startup-oriented publications, follow prominent bloggers, and speak to many people every day. And when some concepts resonate with us, we incorporate them into our thinking – consciously as well as inadvertently. For example, we read a startup-oriented book called Nail It, Then Scale It and really liked that term and started using it; we heard the term “Hacker, Hustler, Visionary” from somewhere else and promptly borrowed it. All innovation builds upon existing ideas; progress comes when you pick “borrowed” ideas and build on them with original thinking (read “Borrowing Brilliance” by David Kord Murray).

The 9Mile Innovation Framework has nine key strategic steps necessary to build any company from idea-to-execution (Figure 1). We call the first five steps in our framework the “Nail It” stage, so termed because investment in scaling activities such as marketing and sales is useless until a startup has achieved these five basic milestones. No business should spend time and money building a product that no one wants. It’s also important to note, that even though there’s a certain sequential nature to this model, startups of course sometimes hit these milestones in different order. Here’s a brief description of the five steps in the “nail it” phase of our framework:

  1. 1. Team: Investors, especially early-stage ones, invest in teams first, then the market and idea. At 9Mile Labs, we look for a complete team comprising three roles - hacker, hustler, and visionary.
  2. 2. Pain Point: The business idea for a startup must be rooted in a well-understood pain point for a specific customer segment in a significantly large market.
  3. 3. Competitive Differentiation:  Every early-stage startup must have an understanding of, and build strategies for creating sustainable differentiation against competitors.
  4. 4. Value Proposition: The value the customer receives from the startup must be significantly higher than the total cost of ownership from using the startup’s solution.
  5. 5. Product: The actual product the company builds, first as an MVP, later beta, and then as a complete product, must be based on an in-depth understanding of the customer’s pain point and the value delivered to the customer.

 

9Mile Innovation Framework graphic

Figure 1: The 9Mile Innovation Framework

Achieving maturity on the “Nail It” steps leads a startup to the “Scale It” part of the framework. The startup has the beginnings of a good business and now needs to take things to the next level. Of course, the “Scale It” part of the framework remains iterative as well, with startup teams learning what works and what doesn’t as they work to build a scalable, repeatable, and profitable business model. Things change, and the entrepreneurs must be ready to go back to square one or pivot if necessary. Here are the four steps in the “Scale It” part of our framework:

  1. 6. Go-To-Market: Create clear messaging and positioning statements that resonate with the target customer segment, as well as demand generation strategies to target those customers.
  2. 7. Customer Traction: Tactics and strategies employed to achieve and track exponential, proven, sustainable customer growth against non-vanity metrics.
  3. 8. Business Model: Bringing together much of the work in prior milestones, the business model must be scalable, repeatable, and profitable.
  4. 9. Funding Strategy: Every startup should clearly think about its funding needs and explore options such as customer revenue, strategic, angel, or venture investment.

Creating the 9Mile Innovation Framework grew out of our conviction that, while raising money is a very important activity for a startup, a much more important success metric is customer traction. However, amid headlines about unicorns and multimillion-dollar funding rounds, startups sometimes start thinking of funding as the ultimate objective, as opposed to a means to building a successful business.

Following this broad introduction to the 9Mile Innovation Framework, in the next post, we’ll dive into the specifics of each milestone introduced above. First up, the team. Tune into our next post to find out how we evaluate successful teams.

9Mile Labs is a leading Enterprise / B2B high-tech accelerator based in Seattle. 9Mile Labs celebrates the graduation of its fifth cohort on Mar 3, 9:30am; register as our guest with promo code “GOLD” at http://m9.9MileLabs.com

The accelerator is currently accepting applications for the upcoming program (beginning in July, 2016) at http://apply.9MileLabs.com.

Meet the Accelerator —9Mile Labs partners presenting, judging and hosting this month

It’s October. Wow, already? But it’s a busy month with Cohort III at the midway point and serious work ahead! It’s also one of our favorite months at 9Mile Labs because of the bustle of B2B tech activity in the Northwest, much of which we look forward to participating in. Here’s a snapshot of where to find our team this month… B2B Startup Meetup October 8, 6:00-7:30 pm, 9Mile Labs Offices, 999 3rd Ave., Suite 700, Seattle

The Northwest's first B2B tech startup Meetup kicks off October 8 in our offices. Sponsored by Altus Alliance, Summit Law Group and 9Mile Labs, the Meetup will launch important discussions about the most fundamental, yet essential tool every B2B company needs to know and understand: a winning B2B sales process. Effectively designed and executed, the sales funnel will determine your marketing needs, headcount, forecast, product roadmap, bottlenecks to close, how you compare to others in your industry, and a lot more. RSVP here.

DreamForce

October 15, 5:30-6:45 pm, The Westin St. Francis San Francisco on Union Square

9Mile Labs Partner Sanjay Puri will present on the panel “Meet the Catalysts - Advice from the Hottest Enterprise Accelerators." Come to hear from the directors of some of the hottest enterprise Accelerators around, and find out if an Accelerator program is right for your business startup.

Startup Next

October 14 through November 12, Startup Hall, 1100 NE Campus Parkway University of Washington

9Mile Labs Partners Kevin Croy and Sanjay Puri are judging and advising young entrepreneurs at this awesome month-long event. Startup Next is the #1 startup pre-accelerator in the world, helping graduates get accepted into 9Mile Labs, Techstars, 500 Startups and many other top accelerators.

DubHacks

October 17-18, The Hub, University of Washington

DubHacks hosts the top college hackers in the northwest, and Kevin Croy will help judge the next generation of innovative software and hardware tech. This is a killer event for seeing the latest innovations coming out of UW, and every demo, app and idea reveal seems more impressive than the next.

 

And looking ahead to November, you’ll want to save the date for:

B2B Startup Weekend

November 7-9

After sponsoring the world’s first B2B Startup Weekend, the 9Mile Labs team is excited to sponsor another edition of this event. Sanjay and Kevin will judge and mentor another hot new pool of entrepreneurial talent at this year’s Startup Weekend. Don’t miss the event that is the drumroll to one of our biggest events of the year: Milestone9!

Milestone9

November 20, 2:00-6:00 pm, Washington State Convention Center

Our bi-annual event features the graduating companies from the current 4-month 9Mile program. We’re planning incredible speakers, content, technology demonstrations and an opportunity for startups and entrepreneurs — whether out of college or out of Microsoft and Amazon — to meet the investors, mentors and advisors that can help build their companies into hot market performers! Email us if you’d like an invite to this event.

Seattle B2B Entrepreneur Meetup Group

While Meetup groups are a super effective way to connect with fellow startups, entrepreneurs and technologists in any community, Seattle is craving one that is focused on the needs of the B2B entrepreneur. Why you ask? The answer is simple, B2B startups have a different set of challenges and opportunities to consider than their B2C counterparts, which we outlined in a blog post earlier this year. One of the biggest factors impacting B2B startup success rests on the effectiveness of the early marketing and sales strategy. It’s just not the same selling to an enterprise or retailer as it is selling to mom or her kids. In an effort to address that need, the first Seattle B2B Tech Entrepreneur Meetup will focus on the B2B funnel — arguably the most important sales tool for any B2B entrepreneur.

Join the partners, mentors and companies from the 9Mile Labs accelerator program, along with masters of the sales funnel at Altus Alliance for a discussion on how to master your own B2B sales process. You’ll learn about the most fundamental, yet essential tool that every B2B company needs to know and understand — a winning B2B sales process. Management needs it to grow the business and manage sales. Sales needs it to manage the pipeline and sales engine. Investors demand it to value the company and determine investment worthiness. So, effectively designed and executed, the sales funnel will determine your marketing needs, headcount, forecast, product roadmap, bottlenecks to close, how you compare to others in your industry, and a lot more. Whew, that’s important stuff!

We’re looking forward to the short session from Altus Alliance and then informal networking with other like-minded entrepreneurs over drinks to talk about the business trends and opportuntiies that matter to B2B’ers like us. We’ll see you there!

Sell it Before You Build It.

If you want to have paying customers, and increase your chances of funding you must, “Sell it before you build it.” That was the title of my recent talk at 9Milelabs, a Seattle-based accelerator that provides mentors and other resources to startup companies looking to get off the ground. The key message of the talk was this: by interviewing 100s of prospects in your proposed market, you can segment the target market, identify must-have versus nice-to-have features, and secure buyers for your product before you’ve written a single line of code.

This process is called “Market Validation.” We adopted market validation while building GoToMeeting, AppFolio, and now SecureDocs, a virtual data room used for both startup fundraising and mature companies going through M&A or IPO.

Most people think of GoToMeeting as the 800 pound gorilla of web meeting solutions. When we launched GoToMeeting, success was a long shot. There were 100+ other collaboration solutions already on the market from companies like Webex, Microsoft, IBM, and Lotus. As a new entrant, the small guy, market validation provided a roadmap on how to compete with the big guys.

Here are some specific examples of how GoToMeeting benefitted from market validation: By segmenting a specific part of the market (SMB), we were able to do away with 80% of product “requirements,” the majority of which were only applicable to enterprise companies. Instead of planning based on what we thought we knew about the web-collaboration space, we actually talked to hundreds of people- all potential customers- and in the end decreased the work we needed to do by months. SMBs didn’t care about 87 different features. They only cared about 3 things: Ease of use, price point, and sharing their screens as quickly as possible. Instead of 87 features, we focused on a download that was 200K or less, a UI with an oversized play button, and an all-you-can-meet pricing strategy. We also validated the business model to make sure that the proposed price point would allow us to acquire customers both online and through sales.

By spending the time up front, we avoided wasting time building a product the market didn’t want and we had customers willing to pay for the product when it was done. Take these lessons and apply them to your business. Get out there and validate!

For added incentive, consider this: early-stage companies with paying customers are much more unique and attractive to VCs, who review hundreds of “promising” companies every year. Sell it before you build it and you are much more likely to be rewarded in your business and fundraising efforts!

About the author:

Albert Oaten is a serial entrepreneur, investor, and VP of Market Development at SecureDocs, Inc., a partner of 9Mile Labs, offering free virtual data rooms to all 9Mile Lab companies raising their first round of funding.