Over the course of the past four months, we have met with 60+ Cincinnati entrepreneurs, as well as numerous meetings with leaders in the Cincinnati startup ecosystem. It’s been been an even mix of exhilarating and grueling.
We’ve been itching to to get started with our first investment/client.
Today, we’re proud to announce our relationship with Cladwell. The quality of the founding team is stellar, they’ve followed Running Lean diligently to validate the business concept, and we have confidence that we can help them tremendously to execute the business model.
We will perform services at a significantly reduced billing rate, while earning a small ownership stake.
Over the next few months, Differential will dedicate 1000+ hours building the MVP. Work starts on Monday.
Services we will provide
- Work to prove or disprove the primary revenue model, based on current hypothesis.
- Evaluate business assumption risks. Prioritized by combination of impact (if our assumption is wrong, how damaging is it to our business model), and uncertainty (we don’t want things hanging around that we are clueless about). Build a risk queue in Trello, and start on the first the first few learning experiments.
- Define MVP & break work down into feature queue. We will break the vision for the software down into features using the format “As a X, I want to Y, so that Z.” We sequence these in terms of both immediate business value and learning.
- At an agreed point, begin recruiting staff to take over aspects of the work from Differential.
- Create a V1 “master plan” for customer acquisition based on early tests, research, & customer development.
- Define KPI’s and tracking systems and process in place to test/optimize metrics.
- Establish a lifecycle messaging engine to engage, retain and re-activate customers.
- Get first version of the software in customers hands within weeks, not months.
- Get the product started with a solid foundation including effective use of collaborative source control tools, lean documentation, automated integration and unit testing, and continuous deployment to commodity cloud service providers.
- In the same way that it’s important to have clean back-end code, it’s critical to establish semantic HTML and minimal, modular CSS to ensure ongoing evolution of the process isn’t slowed by sloppy early work.
Testing the "venture studio" model
As a final gut-check before diving into a deal, we reached out to Brad Feld. We’ve spent a lot of time recently with his written works Startup Communities, Venture Deals, and Do More Faster. All awesome books, by the way.
He seems accessible, so we dropped him an email. He responded to us in five minutes, which really blew our mind. Kudos, Brad!
After a few few back-and-forths, he typed this:
“I think you will have a lot more long term impact by creating a great, significant new company and leaning in and engaging with the broader entrepreneurial community as peers. As you become financially successful, then put some of your capital back into the community as angel investors. In the near term, engage with the existing accelerators to help them be more successful, rather than simply create another vehicle that sort of competes, but also generates a diffuse focus for you.”
We considered that path, but it just doesn’t seem like the right thing to do, right now. Doing a startup would definitely be lower friction. However we have a passion for disrupting the way technical services are delivered to startups. In the same way Lean Startup defines a new way for startups to operate, we believe there is a better way for service providers to interact with startups that align interests better.
The alternative to hiring a service provider, "just go find a cofounder," is much easier said than done in the current Cincinnati ecosystem. Too many good people are tied up in comfortable, low-risk jobs. Another facet to our mission is to be a gateway drug to help pull talent into an environment where they're being more gently introduced to the startup ecosystem.
Tune in to our journey this spring
Both the Cladwellians and Differentiali will be blogging + tweeting throughout the journey, starting next week with details from week one. Here we go!