Interview With Dirk Stevens of Wondergraphs

Dirk Stevens of Wondergraphs

This post is part of an ongoing series of interviews with successful entrepreneurs who have bootstrapped their companies to profitability. Read the other entries in our Inspiring Interviews series.

Wondergraphs is a beautiful, simple-to-use reporting and analysis service that has recently started to take off. Dirk Stevens is responsible for product design and business development for Wondergraphs. They are bootstrapped and successful; a great story. Here’s my interview with Dirk.

Me: Tell me about Wondergraphs and what you do.

Dirk Stevens: Wondergraphs is a Software-as-a-Service platform for business analytics and reporting. We want to help businesses get value from their data in spreadsheets and databases and help them to share reports with stakeholders in a simple, easy to use and efficient manner.

My role in Wondergraphs is focused on product design and business development. I am an all-round guy with a passion for technology and business so you could say this is my dream job. My colleagues Kim and Ruben are technology wizards and build our magic – from product to infrastructure it’s amazing what these guys pull off. In addition they do the day-to-day interaction with customers on everything related to technology.

Me: How has bootstrapping played a role in the growth and development of Wondergraphs?

DS: Bootstrapping has primarily meant working with a limited budget. I don’t think we would have done things differently if we’d have had an investor on board; we’d for sure would have moved a lot faster.

Bootstrapping keeps us focused on cash, keeps us lean and keeps us on the customer development path in a natural manner.  Those are the fundamentals for a sound business. But bootstrapping can be miserable too. When you know you could move faster if you had just a little more cash or when the team is so small that you have to do things you are not that good at or don’t like doing. In a funded company the roles in the team are more specialist and focused and probably more efficient.

It’s said that with outside financing entrepreneurs are less hungry. I am not too sure about that and I am not sure if that’s so relevant. A good entrepreneur certainly wont be less hungry! And with more people and money on board from the start, it could be that some people have a lessened sense of urgency, but from a pure business progress perspective 10 people giving it “just 90% is still twice as fast than 3 people giving it 150%…

Now that we’re through the tough parts of building the business and we’re at the point of scale, I am happy about the great things we learned and achieved. I recently met with a fellow entrepreneur who has been funded with several $million and he is jealous of our independence, while we are jealous of his resources.

Me: What marketing advice do you have for other startups on a bootstrapper’s budget?

DS: Ooh…I believe marketing is something we could have done better so here’s some thoughts on principles that I believe set the tone for how we market and sell.

Build a beautiful product that eases a real pain of real customers. We’re down to earth guys who believe in classic economics: offer clear value and charge fair money for it.

Be real and love what you do. If you take pride in building your business and making a difference in your market then people feel that and like to be associated with you and tell their friends and colleagues.

Take things step by step. Our first marketing campaign was sending a video of our beta version to a few potential customers.  We didn’t want to bite more than we could chew. We have a complex product and in the beginning our technology was too immature to handle many customers at once. Our TechCrunch article last week was our first large scale marketing and was planned a long time ago because we wanted to make sure that we’d be able to support many customers.

I’d ask all fellow entrepreneurs to please keep your marketing environment friendly and limit the useless plastic marketing crap. We can do without all that polluting crap we receive in the mail or when visiting a conference. (How many bottle openers, bags, mini-mouses and whatnots do we need?!)

Me: What advice do you have for new entrepreneurs when it comes to choosing between bootstrapping and seeking outside funding?

DS: Rather than spending time on courting people with money by running spreadsheets and predictions of the future, I believe you should build your minimum viable product and start selling as soon as possible so you get money from customers and learn from your customers. Your customers are really your investors – they’re as vested in your success as you, they give you money, quality time and feedback, and they certainly don’t want to run your company!

Maybe along the way, you’ll find an investor who shares your passion for your product or market and can afford to fund you based on your dreams (because you probably have little facts to prove it’s more than dreams) and that would be great, but don’t count on it.

Software development freelance work is in general easy to find and well paid, so we started Wondergraphs with a few months consulting projects to get some cash in.  That cash gave us about a one-year runway.

Me: What financial advice do you have for other bootstrappers out there?

DS: I have got a question on scaling growth that maybe on other bootstrappers’ minds also? At what point would you consider attracting outside funding and what form would you prefer? Or would you rather fuel your growth by giving out more stock options to hire talent? Have you ever thought of asking partners for some form of investment?

Your Turn

How would you respond to Dirk’s questions? I’ll post my own response in the comments.

Please take a few minutes to look at the Wondergraphs blog and follow Dirk on  Twitter. Thanks again to Dirk for the great interview.

Beginning CustDev for Bootstrappers

Google Master Plan (frame 3)

Customer development is well-published topic, so I won’t spend time defining it or rehashing it’s benefits. This post is all about how to get started with custdev in a bootstrapped environment. Custdev can be used in any business environment, but it’s particularly useful for bootstrapped companies, where budgets are usually tighter. Also, it’s best to use the customer development process when starting on a new business or product, as opposed to trying to add it in later in the product development cycle.

In a nutshell, the goal of customer development is to help get you to a product that appeals to customers in a decent-sized market. You accomplish this by constantly validating your assumptions about your new product and making changes when those assumptions fall apart.

First Steps

If you’re considering bringing a new product to market then customer development is going to be your best friend (or your worst enemy, depending on the results). Before you spend any time actually developing your product you should start the process of validating it. The validation process itself is pretty simple. The methods depend on how your new product relates to your existing products.

1. Related Products. If your new idea is a product related to an existing product that you have then you already likely have a built-in base of customers who could quickly validate your idea. Try to setup in-person meetings or phone calls with a few of those customers. Tell them about your new product and see if they are interested. Test their interest by asking them to start paying for the product then and there.

2. Completely New Market. If the product is in a new market then you’ll need to rely on the more traditional customer development methodology. Create a simple PPC campaign with a landing page that directs users to a mailing list. The number of entries to the mailing list is a rough approximation of the potential for the idea. Try to conduct interviews with the mailing list members and validate your idea.

Review Your Learnings

Are you getting the interest in your new product that you expected? If not, it may be time to pivot. Use the learnings from your interviews to make adjustments. If there is no interest at all in your product then this is a good time to cut your losses and let the idea die. If you decide to pivot then you should start from scratch with steps 1 and 2 above and validate the new solution.

If you did get some serious interest in your product then you should move ahead and start creating prototypes. Conduct another round of interviews and demos for the prototype. From there you can revise the prototype or move full-on into production.

This is a simplified approach to customer development. I whole-heartedly recommend you read some of the following books to get a more complete understanding of the process. Comments welcome!

Resources

What is Customer Development by Eric Ries

The Four Steps to the Epiphany (Affiliate Link) by Steve Blank

The Entrepreneur’s Guide to Customer Development: A cheat sheet to The Four Steps to the Epiphany (Affiliate Link) by Patrick Vlaskovits

Image Credit: jurvetson on Flickr

Lean Startup IS About Saving Money

Time

You always hear lean startup advocates say that it isn’t about saving money. That may be true in a very direct way, but, applied correctly, lean startup SHOULD save a startup money. Lean startup is all about reducing waste during the development phase. Waste can take many forms, including time, manpower, and opportunity cost… all of which have a direct impact on the bottom line.

The True Cost of Unwanted Features

Developing features that customers don’t care about is a surefire way to lose precious development time and money. You have to pay your developers for the time they spend building the unnecessary features. This is especially crucial in bootstrapped startups where salary budgets are tighter or non-existent.

It’s important to make sure that development time is spent on features that are highly-valued as identified by your customer development process. Not only will this make sure that you’re working on the right things, it’ll save you precious money in the short-term. You can never get your feature-set correct 100% of the time, but each pivot or iteration of your product has an associated cost that you need to minimize.

There is also an opportunity cost associated with each pivot. The difference in revenue that you would have earned if you had your product perfectly fitted to your market versus what you actually earned is an opportunity cost. Understanding that lost revenue potential can be an important motivator to continue pushing so that you can find the right fit.

What are your thoughts? Does lean startup actually save a startup money?

Quick Primer on Lean Startup

WIRED: Build a Web Web 2.0 startup

Note: This article originally appeared on our MediaLeaf company blog. I’ve adapted and updated it.

An entrepreneurial trend that has been gaining popularity and notoriety lately is lean startup. Lean startup (#leanstartup on Twitter) is the method of building a new business by focusing on customer development, reducing waste, and pivoting often. You can think about lean startup as the new business cousin of lean manufacturing.

I’m kind of late to the lean startup party, but I plan on using the ideology for the next MediaLeaf company. The basic tenants are simple, straightforward, and apply to any new business, not just online ventures. Here’s a very quick and high-level intro to lean startup as well as some links for further exploration.

Customer Development

Customer development is a method of using constant customer interaction to continuously refine your product and business model. Having a few potential customers early in the process that you can frequently check in with regarding your product is a way to gain invaluable insight into how much utility your product has and its ultimate potential. See my other articles on custdev.

Reducing Waste

In the software world waste can take several forms, including unnecessary features. Features that aren’t critical to your product or heavily used by customers are most likely wasteful; they have a cost in terms of development, support manpower, and time. These features can also draw interest and focus away from your core product. This ties in closely with focusing on a MVP (minimum viable product).

Pivoting vs Optimization

Pivoting is the process of refining your product’s feature set and function to increasingly improve user experiences or to better suit the customer’s needs. Pivoting is a completely different mentality than optimization. Optimization is taking what you have in place and improving it. A good example of optimization would be changing the color of a button on your signup form and A/B testing to see the improvement.

Pivoting is more about making functional changes, such as changing the focus of an entire business or feature. An example of pivoting might be a general contractor deciding that it would be more profitable to focus solely on building gazebos. Optimization would have that contractor trying to figure our ways to be a more profitable general contractor. This is an example of the “local maximum problem” or the “hill climbing problem”. Optimizing your current situation is all well and good, but you should also consider whether or not bigger opportunities exist.

Further Reading

The Four Steps to the Epiphany by Steve Blank (Affiliate Link)

The Entrepreneur’s Guide to Customer Development: A cheat sheet to The Four Steps to the Epiphany by Patrick Vlaskovits (Affiliate Link)

Steve Blank’s Stanford Talks on Customer Development

Brant Cooper’s The Entrepreneur’s Guide to Customer Development

Eric Ries’s Blog

Dan Martell’s Blog

OMG, Not Another #custdev Blog

People

I’ve been pretty successful as a web entrepreneur over the past 10 years. I think it’s high time for me to start putting some of my experience to use benefiting all the entrepreneurs out there. This blog is going to be about all things related to starting and running your web based businesses. I’ll write about what I know and what I’m interested in. I’m currently thinking there’s going to be a lot of talk about customer development and lean startup, since they’re both hot topics and very interesting to me.

So that’s what’s waiting for you here. Read more about me to get acquainted. Contact me at any time if you want to talk. I want this blog to be as conversational as possible.