4 Must Read Books for Planning Your Tech Startup
Before I launched Sparkello, I’d worked on a few side projects that I had hoped would evolve into something more, but I’d always approached them from a technical point of view rather than a business one. It was a case of, “Well it would be cool if someone built this.” It was only over time that I started to educate myself on what it would take to make a business successful (note: I’m not there yet).
Over the last decade or so I’ve read several books on technology, business, and startups and to be honest most of them were just recycling a lot of the same old ideas. However, there have been a few where something clicked for me in such a powerful way that I can say that it provided a complete change in my thinking and approach.
This is my greatest hits list.
1. Business Model Generation
Alexander Osterwalder & Yves Pignuer
I first came across this book a few years back sitting lazily in the office of a former colleague. He was a senior solution architect at the organisation I use to work for and he had a hundred things strewn out across his desk. I don’t know why he had it, the IT department we worked in was a support service for that organisation, and technology wasn’t our core business, but this book piqued my interest and it turned out to be invaluable to me.
As a software developer, I had long had plenty of ideas for software products but I didn’t really know how they would work as a business other than a vague notion that if I built it, then hopefully someone would buy it.
This book really opened my eyes to how to strategically plan a business around a product, which up until that point wasn’t something I really understood or considered.
The invention of the Business Model Canvas has probably been the most transformative development in business planning in the last decade. The ability to distil a business model on to a single page and understand how different aspects of that model interact with each other enabled me to understand how a business model works together to form a strategy. The examples provided within the book also enabled me to understand different methodologies and business models that I had never been aware of.
On top of all that the book is extremely easy to understand as it’s presented in a highly visual way that many business books have tried to copy since. If you buy the Kindle version of this you’ll miss out on a great deal of its value, this is one book you’ll want a hard copy of.
The authors founded a company, Strategyzer, that has now produced a whole series of books, each covering different aspects of the business model and product development process. My view is that each of these provide less value than the original did but they are still worth a read. The sequel Value Proposition Design is probably the exception to this as it drills into specifics of developing products against customer needs.
2. Hooked: How build habit forming products
This is one of those books that started out as a long blog post and got stretched out to book length, but the information presented is extremely valuable. As the name describes it goes into detail on the psychology and methodology that makes people fall in love with their tech products.
The core idea is based around using a combination of intrinsic motivators and extrinsic motivators built into your product’s user experience to create feedback loops. Over time this repetition builds a psychological habit among your users that is automatic.
The one element of this process that shocked me the most was the concept of variable reward and how this increases product usage compared to predictable results. It’s the same process that drives addictions like pokie machines and social media.
Obviously when taken to the extreme this can become a negative (social media addiction for example), but the methodologies described here can be used for any kind of product development.
Use this knowledge for good instead of evil.
3. Zero to One: Notes on Startups or How To Build The Future
I picked this book up on a whim during the last week of my old (terrible, soul crushing, life wasting) job while I was still busy contemplating if I would just take a break before moving into a world of seemingly lucrative consulting and short-term contracts, or if I really would give starting a business a crack. It was exactly what I needed at the time.
If you don’t already know, Peter Thiel was a co-founder of PayPal, and the first investor in Facebook. He is also kind of a weird guy with some arguably problematic political views. All that said, it’s hard to fault this book.
Perhaps best described as part business advice, part philosophy, Zero to One is a very insightful view into Thiel’s decision-making process. The books title refers to the process of creating a completely new type of product that doesn’t exist yet. Most companies simply seek to replicate and incrementally improve on the work of a competitor increasing the frequency of that type of product from 1 to n. When a company manages to create a truly new and innovative product the frequency of that type of product in the world moves from 0 to 1.
Theil details the seven questions he asks whenever he is evaluating a company and then goes about explaining each of them in detail over the course of the subsequent chapters.
- The Engineering Question
Can you create breakthrough technology instead of incremental improvements?
- The Timing Question
Is now the right time to start your particular business?
- The Monopoly Question
Are you starting with a big share of a small market?
- The People Question
Do you have the right team?
- The Distribution Question
Do you have a way to not just create but deliver your product?
- The Durability Question
Will your market position be defensible 10 and 20 years into the future?
- The Secret Question
Have you identified a unique opportunity that others don’t see?
Presented along with a reasonable dose of wit, Zero to One might just be one of the most thought-provoking books I’ve ever read.
4. Traction: How any startup can achieve explosive customer growth
Gabriel Weinberg and Justin Mares
This is a recent find for me but it seems to fill a missing link which is how on earth am I supposed to approach the marketing and distribution aspect of my business.
I’ve got to admit that that I don’t think I really understood the “Channels” section of the Business Model Canvas. A lot of the examples and explanation focus heavily on distribution in the physical sense. How do you get your product in your customers hands? Which retailers will you sell through? It was all about the physical supply chain.
With a digital product the distribution aspect seemed obvious. You distribute your product through your website or via an app store. That part is easy. The hard part is “How will anyone even know you exist?”
Of course, this is a question that physical products face too, but typically a lot of the hard work is done through negotiating a distribution deal with a retailer. Once that’s done you know your product will have a certain amount of exposure just by being on the shelf or in retailer’s product catalogue. Advertising also plays a role in how it sells, but by contrast getting an app in the App Store is easy which is why a few million other apps are there too.
But having your app in the App Store with no built-in profile or download history is a bit like having your physical product sold in a Costco, in aisle 76, on the bottom shelf, and shoved to the back after a toddler kicked it. With digital products the traditional rules of how a product is distributed have completely changed.
While most other books on startups discuss this topic in anecdotes and vagaries, this book provides 19 specific marketing channels for gaining traction on your product uptake while also providing in depth examples of how to execute each of them. Traction provides a very specific methodology that they call Bullseye for zeroing in on the best marketing strategy for you at a point in time. I’m still going through this book, but it’s been very valuable so far.
That’s it, that’s my list. I hope this helps somebody, and if it doesn’t then well at least you got to witness a lacklustre example of Target Market Blogging.
Did I mention Sparkello? It can really help you with recording your goals. You can make a nice vision board and keep it in your pocket on your phone. You should download it. You really should. It will make you feel good. So good.