I view good experiments as the most critical skill to improve as an entrepreneur. The problem to avoid is bi-fold: (1) throwing everything at the wall to see what sticks and (2) not completing experiments before starting new ones. It boils down to what the purpose of a startup is and I adopt the definition that a startup is searching for a business model. Searching means discovering information and experimentation is the best way to do that.
Taking care of legal matters
The second class started with an introduction to the legal concerns of a new startup by Doug Branch, a director and senior attorney at Phillips Murrah in Oklahoma City. Doug covered three main areas: (1) corporate formation, (2) allocation of equity and (3) protection of IP.
Here are the slides Doug used – OU SLPA Legal Workshop discussion deck.
We discussed the benefits of LLC vs C Corp (go C corp if you’re expecting professional investment in your company). All of my teams are going to LLC route, which is easy to file for and easy to manage. We talked about equity and at this very early stage in the game, decided to just set the value of each business at $250k and revisit that number after the teams got deeper into the customer development process. And finally we looked at protecting IP and the importance of having employee agreements with everyone who works for the company in order for the founders to retain control of the technology,
The teams all need to have their organizations formed by next week so they can receive their university funding. One team also suggested having a checklist they could use to make sure they were doing everything properly. I will develop that and post it here when the checklist is done.
Lean Startup and Talking to Customers
The biggest mistake most new companies make is assuming they know what the customer wants. And the main reason most companies fail is because they don’t find enough (if any) customers for the product they made that they thought people would want.
Here’s the worksheet I use to teach my customer development process – OKC worksheet. Generally, it involves open-ended questions (tell me about your frustrations), digging deeper with why questions (why does parking your car in a shady lot make you feel uncomfortable?) and finally proposing solutions through a hypothesis-prototype-results cycle. That looks like this:
The purpose of an experiment is to collect information – to see if a given hypothesis is right or wrong. That’s why each hypothesis is framed as a yes/no question, so it can be validated/invalidated.
My goal is that each startup team will run at least one experiment per week over the life of the accelerator. Ideally I would like that pace to pick up as we move along, so by the middle of the summer teams will run multiple experiments per week. We are accelerating after all! vroom vroom.
Here are the experiments the teams came up with.