How To Make It as a
First-Time Entrepreneur

Vinicius Vacanti is co-founder and CEO of Yipit. Next posts on how to acquire users for free and how to raise a Series A. Don’t miss them by subscribing via email or via twitter.

It was February 2010. We were noticing that a company named Groupon was taking off and a whole new industry was booming along with it.

Our idea for Yipit was simple, aggregate all these daily deals being sold by different companies and put them in one email. Plus, you could specify categories so that your emails were personalized.

The only issue was that we were working on a different product. The idea of trying yet another concept was exhausting.

So, we compromised by giving ourselves 3 days to build it.

In the first two days, we quickly built an email capture, sign-up flow to collect preferences and a script that would send people an email with the deals that matched their preference.

But, how would we get the deals in our database and categorize them correctly as “restaurant” or “concert tickets”? We would have to build a crawler to parse the deals from HTML from various sites and write a classification algorithm. Not a daily task for us.

So, we took a shortcut. Instead of building a crawler, my co-founder and I would crawl out of bed at 3 am and manually enter the deals into our database. Plus, when you’re doing it yourself, classification was easy. We did it all manually.

Within 3 days, we released Yipit and it took off. We got press and became known as the leader in the industry. Three months later we raised $1.3 million and a year later another $6 million. Today, we’re 25 people, over a million people have signed-up and we’re on a path to profitability.

The funny thing is that within a few months of our launch, several competitors emerged and they all had crawlers. But, from our users’s perspective, we were more advanced since we had categorization which was definitely no easily automated task.

We didn’t actually build a real crawler for the first 9 months and just kept scaling manually by hiring more data entry professionals. Instead, we were able to focus our resources on improving the product and user acquisition.

It’s now clear to me that not building that crawling technology early on was one of the reasons our startup succeeded.

Taking this “manual-first” approach was our secret sauce.

Many Startups Take the “Manual-First” Startup Approach

We’re not alone in our “manual-first” approach:

• AngelList started with Nivi and Naval manually collecting startup applications and manually matching them up with potential investors. I know because Yipit was one of the first startups to use AngelList to raise funding
• ZeroCater, a Y Combinator company, started with just a big spreadsheet trying to connect companies with restaurants that would cater
• Groupon started with just a WordPress blog and manually sending PDFs with the first vouchers
• Grouper, another Y Combinator company, also started with just a spreadsheet trying to match groups of people on dates

Benefits of the “Manual-First” Startup Approach

There are many benefits to taking a “manual-first” approach to some of the trickier technology challenges including:

• Fastest way to get to the “moment of truth”. Having your potential customer evaluate your product and see if it addresses their need is the moment every founder is trying to get to and doing things manually allow you to quickly get there.
• Easy to change your solution if it doesn’t work. There’s no code to re-write, there’s no sunk cost. You just have to change how you’re manually doing something.
• Will really understand what to automate with tech when you’ve been manually doing it. When you’ve been manually providing the solution, you’ll know exactly where the pain points are that you should be automating.
• Can really wow your potential customers. When you do things manually, you can try different things that really wow the customer and see which ones are worth trying to scale.
• Customer doesn’t know how your product works behind the scenes. They won’t judge you for your manual approach because they don’t know that’s how you’re doing it. All they will care about it is that your product works.
• Your product will “just work”. Because you’re manually providing the solution, the product will just work. When trying to implement a solution with technology, it can be very hard to make sure that it just works.
• Helps you focus your time on the problem, not the solution. It’s very tempting to fall in love with the technology behind your solution only to painfully realize that the problem you set out to solve isn’t a real problem.

Next time you’re building a new product, I hope you’ll consider a manual-first approach to some of the trickier aspects of your solution.

Reid Hoffman, founder of LinkedIn, once said: “If you’re not embarrassed by your first release, you probably spent too much time on it.”

I also think it’s true that: “If people don’t laugh at how you first implemented your product, you probably spent too much time on it.”

Vinicius Vacanti is co-founder and CEO of Yipit. Next posts on how to acquire users for free and how to raise a Series A. Don’t miss them by subscribing via email or via twitter.

Vinicius Vacanti is co-founder and CEO of Yipit. Next posts on how to acquire users for free and how to raise a Series A. Don’t miss them by subscribing via email or via twitter.

I remember reading the first few pages of Steve Blank’s book, Four Steps to Epiphany, and thinking two things:

• This is not exactly a page-turner
• This is a really smart way of thinking about startups

Soon after, I started attending the Lean Startup meetup in New York and reading Eric Reis’s writings. I was believer.

One of the main principles is to release an early prototype of your idea to potential users to get their feedback.

But, despite being all in on the Lean Startup movement, we didn’t do that.

Why Didn’t We Release an Early Prototype?

Our current idea, Yipit, would find all the deals happening in your city (sample sales, happy hours, retail discounts) and would send you an email with the best 7 based on your interests and your locations.

It would have taken us just a week to have launched an early prototype.

We could have measured success based on whether people opened and clicked on the emails. We could have manually created the emails with deals we found and used MailChimp to send them out. There was no need to build any tech infrastructure.

But, we came up with all sorts of excuses why we just couldn’t release an early version.

Six painful months later, we finally put out the product. It didn’t work which was okay. What was not okay was realizing that our excuses for not releasing earlier were all wrong.

The Excuses We Came Up With

The bright side is that, 6 months later, when we iterated Yipit into a daily deal aggregator, we learned to ignore the excuses and released a prototype in 3 days that took off right away.

Below are the excuses we had and how we realized they didn’t matter:

• It wasn’t good enough yet. We thought manually sending deals wasn’t good enough. We were guessing and didn’t really know. It turned out that six months later, the automated version full of features wasn’t good enough either. We could have learned why it wasn’t good enough 6 months earlier and spent that time actually trying to fix it. Instead, we just guessed why it wasn’t going to work and guessed wrong.
• We didn’t want to give a bad impression to those early test users. I can safely say that this doesn’t matter. Those early test users just don’t care. After we re-launched as a daily deal aggregator, we got exactly one email from a user saying they missed the sample sales. That’s it. In fact, many of those early users enjoyed seeing our product develop.
• It needed these extra features. We thought we had to have a web view, people had to specify where in the city they lived, it needed to have links to the source of where we found the deal. None of these were right. We were guessing. Had we launched in a week, we would have quickly realized these features weren’t going to make a difference.
• It was going to take us a few months to build the tech back-end. We shouldn’t have built it. We should have just used MailChimp to send the emails. For the next iteration of Yipit, we didn’t build the back-end. Users don’t know what your tech back-end looks like. Focus instead on getting the user experience right.
• It needed to scale to accomodate hundreds of thousands of users. No, it didn’t. We weren’t going to get hundreds of thousands of users. Not anytime soon. We should have just been worrying about getting our first 1,000 users.
• Someone will see what we’re doing and copy it. If our idea had any merit, then there would have been at least 10 other groups of people out there also actively working on it. In fact, there were many groups of people working on a daily deal aggregator. But, because we launched in 3 days, we were the first ones and got most of the press attention.
• A potential investor will see it. I’m not sure if an investor actually did see it. But, even if they had, it’s not a bad thing. Investors like to see the progress you make as a product and as a team.
• TechCrunch will write about us when we’re not ready. They won’t. We spent a bunch of time trying to get people to write about us and they didn’t. Also, in some crazy scenario where someone writes about our terrible prototype, I can safely say it won’t matter in the long run. Startups succeed because they have a good product and not because they got good launch PR.

Vinicius Vacanti is co-founder and CEO of Yipit. Next posts on how to acquire users for free and how to raise a Series A. Don’t miss them by subscribing via email or via twitter.

Getting feedback on early versions of your prototype is crucial to a startup’s success. You’ll learn more the first day a user tries out your product than the previous 2 months you’ve spent thinking about it.

But, aside from getting user feedback, we really benefited from getting the chance to show Yipit to experienced entrepreneurs and investors.

We would often come back from those meetings and make major changes to our initial prototype plans.

But, it’s hard, especially as a first-time entrepreneur, to get their attention. Their time is their most valuable asset and they can’t meet with everyone.

Plus, even if they do meet with you, it doesn’t mean they will spend real time thinking about your product — the kind of time it usually takes to yield breakthrough product and marketing ideas.

So, how do you get their attention? Well, it seems like one answer is to get into TechStars.

TechStars Mentors

This is my first year helping out with TechStars as a mentor and they have been emphasizing that what makes TechStars different from other programs is their impressive list of mentors.

At first, I was definitely skeptical that the list of mentors was just that, a list.

I’ve come to see that the program, spearheaded by David Tisch, does a fantastic job of getting mentors involved.

They organize one-on-one meetings with the various companies in the program and get mentors to pick a specific startup to actively mentor.

I fully realized the power of the program when I get an email from one of the startups asking for feedback on their prototype.

I opened the email and the “to” field blew me away.

When I had sent a similar email about the first version of our prototype, it was to five college friends, my brother and my mom. His “to” field included:

• Fred Wilson, partner at Union Square Ventures
• Andy Smith, co-founder of Daily Burn
• Michael Galpert, co-founder of Aviary
• Rachel Sklar, Editor at Large of Mediate
• Josh Stylman, co-founder of Reprise Media
• Nate Westheimer, NYTM organizer and formerly head of product at AnyClip
• Eric Friedman of Foursquare and former associate at Union Square Ventures
• Amish Jani, founder and managing directory of FirstMark Capital
• Matt Galligan, co-founder of SimpleGeo
• Jeremie Miller, inventor of Jabber

Seriously?! That’s a ridiculous list of people to send over your initial prototype.

Aside from getting great feedback from them (both on the product and vision), if some of them start using the product in ernest, they could bring many more additional users.

I wish we could have sent Yipit to a list like that.

Vinicius Vacanti is co-founder and CEO of Yipit. Next posts on how to acquire users for free and how to raise a Series A. Don’t miss them by subscribing via email or via twitter.

Traffic Bumps via Chartbeat

Vinicius Vacanti is co-founder and CEO of Yipit. Next posts on how to acquire users for free and how to raise a Series A. Don’t miss them by subscribing via email or via twitter.

Last Saturday, we woke up to a surprising alert from Chartbeat, we had a new record for most active visitors on our site Yipit.

It turns out that CNN had run a two minute segment profiling Yipit. By Sunday, they had aired the segment four times and we easily had our best ever two-day stretch across all key metrics including user sign-ups.

Did we get it because we had raised money, crossed 100,000 users or hired an expensive PR firm? No. The following is how it happened.

(If you’re having trouble with the video, try refreshing the page)

Listening to Our Customers

Yipit’s primary product is to aggregate the best daily deals in your city (Groupon, LivingSocial, BuyWithMe, Yelp, Scoop St and 160+ others) and email the best ones to you based on preferences you set.

Since launching Yipit in February, we’ve had a policy to reach out to users that unsubscribe to collect feedback. We send them an email explaining that we’re a startup and offer them a $10 amazon gift card to get on the phone with us for 10 minutes and explain what happened.

I know that sounds like a lot of work, but we actually use a virtual assistant to handle the entire process of setting up the call. We just have to do the calls and everyone on the team does the calls.

In June, we got an unsubscribe from someone with a gmail address. We reached out to him and he explained via email that he had unsubscribed because he lived in Connecticut and didn’t think he would be able to use the New York deals we were recommending. But, he also explained that he was an executive producer for CNN’s Money Unit and wanted to set up a call with us.

Customer Development Process Got Us Profiled

It turns out that he was really impressed with two aspects of how we were running Yipit:

• We were reaching out to our unsatisfied customers to get their feedback on how to make Yipit better
• We had pivoted from an overall deals and coupon aggregation service to just focusing on daily deals based  in part on those user feedback calls

After the call, he said they wanted to feature us on a series called “The Turnaround” that focuses on a business that makes a change that leads to more success. As he was telling us about the series, I was thinking to myself that the series really celebrated successful pivots, a key tenet of the customer development process popularized by Steve Blank and Eric Ries. We were getting profiled because we were following the customer development process!

Were We Just Lucky?

Clearly we had been very fortunate that one of the users that unsubscribed happened to be an executive producer at CNN. But, maybe we weren’t as lucky as it seems.

Isn’t the job of journalists to try out new services and report on them to their readers? I would expect that your earliest customers consists of not only early adopters but also a handful of influential tech journalists, magazines editors and executive producers.

In other words, aside from the many benefits of getting feedback from your early customers, yet another reason to talk to customers is an opportunity to have more meaningful conversations about your startup with the journalists who are trying it out. If you have good and meaningful conversations with them, they will probably be more likely to tell their audience about you.

Vinicius Vacanti is co-founder and CEO of Yipit. Next posts on how to acquire users for free and how to raise a Series A. Don’t miss them by subscribing via email or via twitter.

Odysseus resisting the Sirens

Vinicius Vacanti is co-founder and CEO of Yipit. Next posts on how to acquire users for free and how to raise a Series A. Don’t miss them by subscribing via email or via twitter.

On my three year startup journey that lead to Yipit, I had over 30 other completely unrelated ideas. Each time I got the idea, I would immediately start sweating profusely for three straight hours in a ridiculous state of unbridled excitement and optimism. Sounds great, right? Not really. Those new ideas and the emotional frenzy were a serious distraction.

To be clear, the “ideas” I’m referring to are the ones that have nothing to do with your current startup. Switching your startup’s focus to a related area based on what you’ve learned (i.e. pivoting) is a winning strategy and one that Yipit employed twice.  This post also assumes that you are and have been actively working on an idea.  If you haven’t started yet, experimenting with new ideas is a great way to start.

In our case, Yipit had always been about organizing local information and we had been working on it for a while. But, along the way, we spent significant time on other unrelated ideas including:

• Social version of delicious (summer of 2007)
• Tool to recommend the best version of the online video you were currently watching (spring 2008)
• 140it.com: Bookmarklett that smartly shortens your tweet to less than 140 characters. Over 350K tweets shrunk (spring 2009)
• UnHub.com:  2-minute personal website creation using your existing third party profiles. 10K accounts, 40K monthly unique visitors (spring 2009)

I now think of these new ideas as the Sirens of the startup journey. If you listen to their call, your startup journey will cease to make progress. Each of these projects were serious distractions from our initial vision of organizing local information.

The Temptation

To understand why these new ideas can be so tempting, I refer you to the incredibly insightful startup transition cycle.

The gist is that when you have a new exciting idea, you are in a state of “uninformed optimism”.  As you spend more time on the idea and start learning about all of the issues, you get into a state of “informed pessimism”.  This is a bad state that eventually leads you to a “crisis of meaning” where you either turn the corner into “informed optimism” or crash and burn.

Most startups are in “informed pessimism” and heading to a “crisis of meaning”. And, that’s when the Sirens start calling with new exciting and unrelated ideas.  Those new ideas are tempting because they are still in the “uninformed optimism” stage and seem so much better than your current idea.  I fell for it several times.

The Danger

Your ability to become a successful entrepreneur is about taking your current “informed pessimism” idea and turning the corner into “informed optimism”.  If every time you get to the disappointing “informed pessimism” stage, you impatiently hop back to a new idea at “uninformed optimism”, you’ll get caught in a never ending cycle. You have to be patient long enough with your idea to see if you are able to turn the corner.

The Solution

I finally learned to resist these new ideas after reading Tim Ferriss’s post. I now see those ideas for what they really are, “uninformed optimism” ideas. They may seem amazing but you just don’t know about all the issues associated with them.

So, if you are in the “informed pessimism” stage, either plug your ears or tie yourself to the masthead like Odysseus and keep working on your current idea.  Don’t be seduced by the Siren call of that exciting but shallow unrelated idea.

Vinicius Vacanti is co-founder and CEO of Yipit. Next posts on how to acquire users for free and how to raise a Series A. Don’t miss them by subscribing via email or via twitter.

thegongshow:

When I talk to startups about the benefits of constant, iterative user testing in product design cycles, many people think that cost is a hurdle.

Booking 10 in-person sessions in a rented listening lab with a one-way mirror and screen recording in NYC can get pricey: $100-$200 per *qualified* candidate, plus ~$1000 fixed-cost of lab rental… or, as an even more deluxe option, an all-included engagement with a user testing consultant can run a startup from $5,000 – $15,000. That kind of bill is not feasible when you’re trying to get ramen profitable. But, cost is no excuse for not doing regular user testing in the early stages of a startup. So, for the bootstrapped startups, here’s five inexpensive ways to start doing user testing right now:

1) UserTesting.com – This is a slightly more upscale solution (relative to the other 4 choices below), but for $29 you can get a user to do a 20-min screencast for you while they talk about their thought process outloud. If this sounds confusing, this demo of a screencast explains the value of UserTesting.com well. UserTesting.com has the advantage of providing candidates that are qualified to your specifications (such as: age, sex, social-economic characteristics) and you can have users do very specific tasks you request.

UserTesting.com was developed by an ex-co-worker of mine at Homestead who did some user testing with me on our site’s splash page. He is a sharp guy and great at iterative design, so I’m glad he’s making a tool he finds useful for user testing available to the public.

2) Camcorders and friends – This is perhaps the most economical solution, but also the most time-intensive solution on this list. Schedule family, friends, or even strangers of craigslist to come in and sit down in front of your computer and record their actions performing tasks with a camcorder and some simple consumer-grade screen recording software. It will take time to schedule, prepare, perform and analyze all these tests, but the value of having testers live, in-person is often underestimated. The best benefit of live, in-person testing is the ability to ask follow-up questions when you see users stumble in order to best comprehend their frame of reference and expectations at the time of the incident. If possible, try to get a friend who does not work at your startup to be an independent facilitator. Users are more honest with their feedback when they don’t think they’re talking to someone who works on the site day-to-day. [Update: wow, forget the camcorder.  Chris posted in the comments about Silverback, and it looks amazing.  Do that instead!]

3) Feedback Army – Get direct answers to questions about your site. This is a far more low-fidelity solution than the first to options, but it’s simple to setup and super cheap. $10 buys you one paragraph of feedback from 10 people. This type of testing won’t help much with usability (ie workflow issues), but FeedbackArmy is helpful in determining how your overall value proposition to users is received and how users self-report their user experience (ie how much they enjoy the site).

4) PickFu – How many times have you gotten into an argument with a developer or product manager over the size/color/iconography of a simple button? End those arguments quickly with evidenced-based experimentation. With PickFu, you can immediately A/B test stuff like images, buttons, wording, etc with 50 peoples opinions for $5. This isn’t for full-blown user testing, it’s more for making quick, one-off, informed decisions. PickFu doesn’t have the benefit of A/B testing directly in the context of your site, but it’s the ability to run A/B tests without the messy overhead of site integration is a reasonable trade-off.

Side Note: Both PickFu and Feedback Army are arbitrages on Amazon Mechanical Turk, so if you’re an MTurk ninja you could do this type of testing even cheaper by scripting MTurk directly. But, for 98% of tasks/purposes you should just pay one of these services to do the work of creating the MTurk HITs for you instead of re-inventing the wheel.

5) Starbucks – Seriously. Go down to your local Starbucks with two experimenters during coffee rush hour. Go to the person at the end of the line and tell them that if they’re willing to sit with you in front of a laptop and do a user testing session for 7 minutes, the other experiment will wait in line and buy you the drink of your choice. The person at the end of the line has nothing better to do than to wait in line, so they’re very likely to say “yes.” And, a $5 latte for 7 minutes of genuine in-person user testing is a bargain.

Another advantage of the three virtual solutions mentioned above (FeedbackArmy, UserTesting.com, and PickFu) is that they save you time too. Live user testing in-person takes time in preparation, executing the tests, and then creating actionable conclusions and analysis. All these virtual solutions significantly cuts down or eliminates these time requirements. Of course, you sacrifice impactfulness by not doing a lot of this work yourself, but oftentimes this trade-off is appropriate.

I’m sure I missed other useful software and web services, so please add your favorite ways to bootstrap user testing in the comments. So, stop reading blogs and go user test your site.