Kicksend pivots, sort of.

Before, Kicksend used to be like every other file transfer web application out there. "Share files easily with friends", they said.

<hypothesis>

That's not enough. How are they different? What makes them unique? Is file sharing really that big a problem??

They look at their logs and realize, "duh! everyone is using this service to send personal videos and pictures to friends". It's kind of an Instagram moment. Not many people sending across pdfs and docs.

Scratch file sharing. Let's be all about sharing pics and videos with friends since that's what they're sharing anyway. We also neatly skip the whole "sharing of pirated material problem" that generic filesharing services might face.

Added bonus, personal pics and videos are so important that people may be willing to pay to back them up in addition to transferring them.

</hypothesis>

Kicksend now is all about friends & family sharing pics. Tagline: "Send private batches of photos & videos to people you love". Awww.

Start with a Customer, End with an Idea

Two guys are sitting around shooting the breeze. One of them turns to the other and says, "You know, we should build a better search engine based on number of links to a given page...". Fast forward a couple of years and these guys have gone from startup to internet behemoth.* Whenever someone hears this story, they lament to themselves "Why didn't I think of that? Links to measure page reputation. So simple!"

What most people forget is that they had no idea how to make money from it. They just had a great idea and ran with it.

That's how things remained for decades. Startups were a high-risk, high-reward game till lean came on the scene. The Lean Startup adds an element of validated learning to de-risk the process. The intent here is to validate that your idea is something that people are willing to pay for. Using minimum viable product (MVP) principles, you validate the assumptions behind your idea while spending minimal resources and time. Think of it as maximizing the learning/spending ratio.

From Customer Development to Product-Market Fit, the idea is the starting point. The idea reigns supreme.

Here's the idea-first process from a high-level perspective:

1. Have a great idea
2. Create a product based on the idea
3. Find someone who will pay for using your product (or do this before #2)
4. Repeat 2 & 3 with as many modifications as required (pivots)
5. Get rich

The problem here is that things can go wrong at any time in this process. Your idea could suck. Your product could suck. Your customers don't see enough value to pay you. When all these steps line up just right, you become successful. Else, you crash and burn. Not good odds.

Flipping the process is exactly what it sounds like: have the idea last, identify paying customers first.

1. Find Paying Customers
• Your objective is to find people who will pay for your solution when you try to sell it to them
• Find a type or group of customers who already pay for things that they get value from
• Small businesses would be a customer. They already buy insurance, anti-virus solutions, advertising space,etc
2. Become Your Customer
• Learn to think like your target customer. Immerse yourself in their world. See things from their point of view.
• You should be able to rate a product's attractiveness from their point of view. What are their trigger words? Would they rather pay a large upfront fee for unlimited use or a pay-as-you-go model?
3. Feel Their Pain
• Now that you are in their world, find their pain points.
• What bugs them?
• What prevents them from being better, bigger, faster?
• What part of their job do they hate the most?
4. Have an Idea & Pitch a Product
• Once the pain is know, pitch an idea or product designed to kill that pain. 
5. Sell the Product
• If the previous steps were executed properly, you should be able to sell the product very easily.

The key advantage of idea-last startups is this: As you progress through the steps, your odds of creating a profitable solution actually increases.

Also notice is how linear the process is when compared to idea-first startups. There are no iterations. In the latter, you  iterate and shape an idea till it fits a market. In this case, you identify a market and create an idea that you know they want. You identify paying customers. They're going to pay for *something* if they see value in it. We know that because they're already paying for things they're seeing value in. The best way to create value is to alleviate pain. So, we know that anything that eliminates or alleviates pain for your customer will be a solution they will pay for. QED.

So the next time you're thinking of starting something: Start with a customer,End with an idea.

* Don't tell anyone but the whole Stanford PhD story is pure SV spin :)

Your Startup can be a Freerider

What's a freerider? In this context, a freerider is one company using another resources without compensation. Sounds evil, right? Here's an example: people go to Gateway stores, understand the kind of PC they want and then order it online at Dell. Dell gets big. Gateway goes out of business. Does it still sound evil? More like the invisible hand of the market doing its work.

I was reading about Target's woes when it comes to competing with online retailers and it occurred to me that a startup can be a freerider. 

Be Like Amazon

Clearly, free-riding is not a viable long-term strategy as the companies that are subsidizing your existence will eventually die. Let's amend the strategy to: You start freeriding at first, get big and then fend off secondary free-riders who attack you.  That's what Amazon did. They were, at first, a low-cost alternative to offline stores. Customers do their research offline and then order at Amazon. Now, the dynamics are reversed. First, Amazon has a valuable resource in terms of user reviews of products (educational material and social proof). Second, Amazon may not be the lowest cost provider in a given category. Shouldn't someone be free-riding on Amazon? Nope. The Amazon user experience is such that it's very easy for someone to order something at Amazon once they've done their research. End result: Amazon did well in converting customers who wanted education into purchasers via a slick experience.

Find Your (Unwilling) Host

The key characteristics shared by companies that are unwilling hosts for free riders are:

• Undifferentiated Products - PCs are generic, Groceries are generic, Books can be ordered from anywhere. Look for companies and industries selling products that are not differentiated.
• Unrewarding or Broken User Experience - Look for companies and industries where the user experience is so broken that you can just slip right between the customer and the host with a superior UX.
• Wrong Focus - Gateway had higher markups because they spent *money* to maintain a physical presence and workforce to educate the customer hoping that this would translate to loyalty. That did not work. Customers appreciated Gateway's educational service but their dollars went to Amazon.
• Provides a Valuable Resource or Service - Gateway providing educational services to choose undifferentiated products helped Amazon because Amazon did not have to invest in customer education.

Don't be an (Unwilling) Host

At some point, you're going to be a host. How do you fight off free riders (now or later)?

• Full control of Differentiated Products -  Apple has stores. Apple has an awesome sales service. Do you see anyone free-riding them?
• User Experience - Make it easy for people to buy from you once they've reached a decision with your help (like Amazon does).
• Lock in Customers -  Be so great that customers don't want to explore other options. Apple is such a great example of this. The people who bought the iPad probably had an iPhone. The people who bought the iPhone were people who had the iPod.