How to Grow Your User Base – That’s what I’m reading tonight

I found this interesting report by AppSumo on How to Grow Your User Base. I still didn’t read it, but it seems very interesting and I’ll start reading it tonight. You can download it for free from the link below:

http://www.appsumo.com/rational-growth-pdf/?rf=brws

There is a small trick, you need first to send a tweet about the report to be able to get access to the free download. And I think you should use your desktop to be able to get access, your mobile will not work.

The Disruptive Startup Cycle

Every startup that is trying to disrupt it’s industry goes into this cycle:

“First they ignore you, then they laugh at you, then they fight you, then you win.”

– Mahatma Gandhi

 

5th StartupQ8 Event Summary

The 5th StartupQ8 event was one of the best events we ever had. Our speakers that day Haider and AlMowazi.com team did absolutely great. As usual, the full post is in Wamda.com and below you’ll find a part of it:

“Our fifth monthly Startup Q8 (Kuwait) event may have been our very best. We had two sessions:

  • Designing Customer Experience by Haider Al-Mosawi
  • An interview and open discussion with the co-founders ofAlMowazi.com, an online secondary market for unlisted equity shares. 

I started with a short brief about StartupQ8 and why it exists, and then Haider Al-Mosawi began his session on designing your customer experiences. Here are some of his major conclusions: 

  1. Prioritize and focus on the customer experience. How people feel about your company and dealing with yo…..Continue reading here

 

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StartupQ8 6th Event on 25th of March

Next startupQ8 event will be in the 25th of March. This is our 6th event and this time I’ll also be one of the speakers 🙂
Below is the full schedule:

7:30PM – 8:10PM How to build your startup? by Abdullah Alshalabi
8:15PM – 9:00PM Interview with Dawrat.com co-founder Mohammed al-Suraye
9:00PM – 9:30PM Networking

Please register here

Below is a more friendly version of our event schedule that you can share with your friends 🙂

startupQ8 invitation

Great Event in Kuwait Next Week

We just found out about this even that will happen next week (from 16th till 18th of March) in Kuwait that I think everyone interested in Tech and startups should attend. Visit this link to read more and register www.socionetforum.org/ . I was shocked that so many great names are attending without us knowing!! Anyway below are some of the speakers that I’m excited to see in Kuwait:

  1. Mr. Khalddon Tabaza, Managing Director of iMENA,  Amman Jordan
  2. Wael Attili Co Founder, Think Arabia.  Amman, Jordan
  3. Mr. Kaveh Gharib, Twitter, San Francisco , USA
  4. Mr. Ahmed Alfi, Founder and Chairman of Sawari Ventures, Egypt
  5. Dr. Saad Al-Barrak Chairman,Ila Group
  6. Mr. Abdulaziz Al-Loughani – Venture Capital, Global, Kuwait – our dear friend 🙂

 

And many other names that I wish I got to meet and chat with. Unfortunately I will be in Dubai at that time, but strongly encourage all entrepreneurs to go there and network with these great and experienced speakers.

Below is the full list of speakers:

Speakers

 

Burn Rate – What? Why? How?

So now you have a startup with a cool product and you are ready to launch your product in few days. That’s amazing, Bravo. But, what’s your burn rate?  Hmmm, what are you talking about!!! The Burn Rate is the amount of money you are spending every month to sustain your business. They call it Burn Rate because in Tech startups most of the money is actually spent in salaries and not in buying assets. That’s if the idea didn’t work everything is burnt, you’ll not have any assets to sell to recover your initial capital as opposed to other type of businesses that involve asset purchase such as restaurants, grocery shops or car shops.

Burn rate

Let say you are a team of 3 people and you started a company called The 3 Amigos and your family invested US$50,000 in your company and you agreed on the following:

1- Everyone will get paid US$1,000 per month to work full-time in the startup

2- You’ll rent a small office that costs US$500

3- You’ll hire a great part-time designer and pay him US$500 each month

4- You’ll spend US$1,000 on marketing and sales every month

5- You’ll spend US$250 each month on cloud storage and technology

6- You’ll have a budget of US$250 that you can spend in other stuff that is not mentioned above

So what is your burn rate in this case?? Your burn rate will be = (1,000 x 3) + 500 + 1,000 + 250 + 250 = US$5,000 per month. That means the US$50,000 you have raised will support your business to survive for 10 months  (50,000/5,000). Now that’s assuming you don’t make any revenue during this period, which is usually the case for most startups.

The most important number that you should have your eye on is how much money you have in the bank. Forget about the income statement and the balance sheet and focus on the simple cash flow statement, how much cash is out and how much cash is in and how much money is left in the bank. 

Another number that you should understand is your break-even point. Let say on average you make US$50 in revenue per sale, then how many units you need to sell to break-even? That’s a 100 unit per month (5,000/50=100). In summary you are burning US$5,000 per month and you need to sell 100 units to cover these expenses.

Usually in startups salaries are the biggest expense representing between 60-80% of total expenses. Moreover, the amount is also highly dependable on the place you start your business and the stage of your startup. Starting your business in Silicon Valley is much more expensive than doing it in Kuwait. And of course the more mature your startup the more employees you’ll have and the higher the burn rate. Fred Wilson previously posted a great post titled “Burn Rates: How Much?“. In short, he created a role of thumb of burn rate based on startup stage:

1- Building product stage: A team of 3-5 people building the initial product. Burn Rate < US$50,000/month

2- Building Usage stage: This is the stage after release, when you are focused in iterating the product, scaling the system for more users, and marketing the product to new users. Burn Rate < US$ 100,000/month (Hire more engineers and community manager)

3- Building the Business Stage: This is when you’ve determined that your product market fit has been obtained and you now want to build a business around the product or service. Burn Rate < US$ 250,000/month (Hire management, finance and operation people)

From a personal experience, I think for our case (the Middle East) all numbers should be divided by 8 or 10. So I’ll recommend keeping it in this range with the following time frame:

1- Building product: Burn rate = US$5,000 to US$10,000/ month for 16-18 months

2- Building usage: Burn rate = US$10,000 t0 30,000 /month for 12-18 months

3- Building business: Burn rate = US$40,000 to US$80,000 and increasing with time

In summary, every entrepreneur should know his burn rate because that’s a number every investor will ask you about and without knowing it you might run out of money without realizing. You should also know your Break-even point to have a better sense on how far you are from sustain your business from your own revenue.

Note: I’m no expert, the above is just my opinion and I’ll be happy to hear everyones feedback.

Validated Learning – By ABDULAZIZ AL LOUGHANI

Talabat

As an entrepreneur with investors backing my acquisition, nothing worried me more than whether “Talabat” (previously known as 6alabat.com) was catching more eyeballs or not.  Before that, I was an associate in a Private Equity “PE” house in 2007 (Global Investment House), and was accustomed to measuring progress by earmarking certain milestones through management teams in companies we invested in that stretched through the life of specific funds (typically 7 years).  Despite spending significant time and efforts working with management teams in portfolio companies, pressure on execution was always delegated to the management team on the Company level as we enjoyed reporting the results and collectively planning new milestones for specific investments.  Towards the end of 2007, I found myself doing a personal leverage-buyout (LBO) when my co-investors and I acquired a significant majority stake of Talabat, where pressure and I became very close friends.

As a managing partner of Talabat, I started redefining quarterly/monthly and weekly progress reports with detailed MIS daily reports for each side of the business we operated in.  By the time my partners and I completed the acquisition process, I had already taken a deep dive in the business side of the startup to take strong grip on it.  I later started to question what if we found ourselves building new features that nobody wanted? What if the features were key to our User Interface “UI” but customer experience didn’t capture the best of it? And in that case it didn’t’ really matter if we delivered it on time and as per budget!  Working hard was really a commodity, it all boiled down to how much of hard work and money being spent resulted in positive outcome.  I only hoped that our team’s effort was taking us closer to catching more eyeballs (the goal) and in case we hit a fan, at least we learned something valuable.  This was my first real life engagement as an entrepreneur which was only the first step into the door.

In my previous life, I was used to building high-level corporate/business strategies and execution came in the form of consulting work and minimal executive roles but as an entrepreneur, domain expertise, functional strategies and swift turns “pivots” were key to validate the learnings in the journey.  I learned that as entrepreneurs under pressure to succeed, we were “wildly creative” when it came to delivering results.  “You can’t take learning to the bank; you can’t spend it or invest it”; pressure was on and results had key weights to the scorecard of my co-investors.

Amongst the features we wanted to introduce in Talabat was Gamification.  “Gamification is the use of game-thinking and game mechanics in a non-game context in order to engage users and solve problems.  It is used in applications and processes to improve user engagement, ROI, data quality, timeliness, and learning.”  We introduced a points/reward system for our users which enabled end-users to order food and earn points with specific restaurants that qualified users for winning prizes; it was later called the “Nag-Negg Fiesta” in 2009.  In the design process of gamification, Nag-Negg was very well designed with an interactive crowd-sourcing content page and dynamic users’ charts (private & public) linked to users’ social networks.   The beta version of the design was marvelous and after functionally testing it for over 60 times, the Nag-Negg Fiesta was up and running very smooth.

Despite the positive functionality of the gamification ad-on to the website, the pool of customers we tested the campaign on was very narrow and did not represent a general mass of our client base.  A majority of transactions in the first couple of hours of the campaign launch were not captured in the Nag-Negg Fiesta restaurants’ universe, FAQ’s content did not cover all questions, points system did not make sense for the average user, restaurants’ were not happy, Arabic content of the ad-on was poor… and the list goes on.  It was devastating! Did all of our hard go down the drain? How are we going to react? Is “Plan B” actually worth taking a stab at? So many questions were falling on us…Focus was on solving the problem, and no attention was given for responsibility…at least for now.  After monitoring users’ behavior (heat map) on our main page for a couple of hours (during a peak hour) and collecting of real live data with first hand customer questionnaires, we quickly realized that our biggest flaw was in the sophistication level of the ad-on.  Within hours, the whole gamification ad-on was redesigned and after an “all-nighter of testing”, we re-launched the game on the morning of the following day.  Result? 60% surge in eye-balls month-on-month and unprecedented engagement with end-users, employees and restaurants.

“I’ve come to believe that learning is the essential unit of progress for startups.  The effort that is not absolutely necessary for learning what customers want can be eliminated. I call this validated learning…”  Our biggest take home from the gamification experience was that validated learning is primarily backed by empirical data collected from real customers; no other form of validation is as competitive or effective. GET YOUR DATA RIGHT!

Startup Teams – This Monday on our StartupQ8 Meetup

In every Monday we meet at 7:30PM  in Java Detour – Burj Alsour to talk about things related to startups. This Monday we’ll talk about Startup Teams, below are some of the stuff we are going to discuss:

 

– Why do you need a team for your startup?

– What makes a great startup team?

– How to create or find your startup team (your co-founders)?

– What kind of problems you’ll face in your team?

 

You can read more about this topic from our previous post “The Dream Team”. The meetup is open for everyone and no need to register or anything, just come, sit, listen and join the discussion. See you all tomorrow at 7:30 🙂

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