Tag Archives: infrastructure

THE LEAN STARTUP

blacksmith hammer - The Hammer SourceMichael Pollack of Rocket Fuel Labs

Verbatim, Part 4 – John Jonelis

“If it doesn’t work, get a bigger hammer.” – Butch Fischer, Local #1 Boilermaker Foreman

Entrepreneurs need a wide array of management and technology talent to build truly extraordinary companies. How do you fill those gaps while remaining lean?

What if you could draw amazing talent from a common pool as needed? What if that source was a fully functioning development studio?  What would that look like? A number of pictures spring to mind:

  1. Lower cost for each company due to pooled resources.
  2. Increased success because talent is there when you need it.

This is the picture I’m getting of Rocket Fuel Labs. They are part development studio, part incubator, part product-development resource, part innovation think tank. I’m continuing a conversation with Michael Pollack, their CEO, and he’s indicated that he wants to hone in on specific concepts.

.Rocket Fuel Labs logo - Large

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Discovery

John—Okay, let’s say I’m a customer that meets your criterion. What am I buying?

Mike—Sure, let’s walk through it. The first step is discovery. And discovery is, I think, hard for a lot of entrepreneurs. But at the conclusion of this process there’s a discovery doc, there’s a lean canvas.

Typically the start of this process is something that doesn’t get enough attention but is really the most important thing you can ever do—customer development.

Most startups fail. Not because they don’t build enough product. Most actually build too much product but never identify who their target customer is. The first step in discovery is, “Who are we targeting?” And once that’s been addressed then, “What are we building?” Because the WHO is the most important piece.

John—That’s why you stress prototyping and the lean canvas.

Mike— I agree with the agile, lean startup mentality, because we want to validate in the real world. I think Steve Blank got it right. I think Ash Maurya is spot on.

John—I thought that all came from Alexander Osterwalder.

Mike—Actually, I think it all came from Boyd John Boyd—brilliant man—military_strategist—fascinating guy—I highly recommend reading up on him. There’s one book in particular called BOYD.

BOYD

See it on Amazon

Iteration

Boyd was a Marine pilot. Top Gun was his idea. During the Korean conflict, he became fascinated by a practical question—why certain pilots succeeded and others didn’t. If you think about air-to-air combat skills, during WWII, they were very good, but in Korea, MiGs with Russian-trained Chinese pilots were taking out American planes. Our military was trying to figure out why it was happening. It’s interesting and has ramifications for most any competitive pursuit.

The Air Force at this time believed that the best pilots were the smartest pilots. They were recruiting these guys from Harvard and from Yale. They were saying, “We’ll get the most educated people.” And what John Boyd identified very quickly was that what made the best fighter pilots actually had nothing to do with decision quality. It had everything to do with decision quantity.

John—You’re saying that paralysis by analysis is not a good thing in real time, whether it’s in a dogfight or in business.

Mike—Exactly. If you’ve heard of an  OODA loop—that’s Boyd—Observe, Orient, Decide, Act.

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OODA loop - Boyd - courtesy Wikipedia

OODA loop – Boyd – courtesy Wikipedia

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What he found was that the best fighter pilots weren’t the smartest or the best classically trained. The best were the ones that could make the most decisions fastest. His maxim was that decision quantity trumps decision quality.

As it pertains to a startup, what I found firsthand was this: If we designed a product that didn’t work, we pivoted. As I’ve told my teams in the past, and I ardently believe it: “Speed kills when you don’t have it.”

John—That’s a great quote. The way you state it makes me stop and think.

Mike—NOT making a decision IS a decision, and the more decisions you make, the greater the likelihood that you’re going to get to the right one because every decision, if you’re doing it right, is based on a hypothesis. You should seek to prove or disprove that very hypothesis.

What makes the lean model exciting is using data to make those pieces actionable.

Michael Pollack

Michael Pollack

When you think about the customer development process, you want to put things in place that enable those OODA loops. Are the entrepreneurs able to make a decision? Because every decision should yield more data. More data means more decisions—more decision quantity. Again, when you’re in a dogfight, quantity trumps quality.

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The MVP

John—So you’re making a minimally viable product for your client, then you’re going out and testing it, and you’re asking the customer to react, and you’re changing the product and repeating the process…

Mike—Exactly. And so part of what we’re doing is giving a startup the infrastructure to do just that. We can deploy software in ways that you couldn’t ten or fifteen years ago. In our business, we want to bring that capacity to entrepreneurs. Then we actually teach the lean process along the way.

Increasingly people are asking us to do online marketing for them because people assume, “Hey, I’m not getting customers—I must have a marketing problem.” Just because you’re not getting customers doesn’t mean you have a marketing problem.

  • It could be that you don’t have product/market fit.
  • It could be that your customer development was insufficient or you didn’t ask the right questions.
  • It could be that the product doesn’t work. There could be all sorts of elements there.

We talk to a lot of startups. We put them through discovery and they get jazzed by our process and we get excited by it, too.

  • What is the need?
  • What should we be selling?
  • What is the market missing that we can deliver better?

Don’t tell the market those things. Test your hypothesis. Let the market tell you.

John—You let the customer respond to your MVP. You rebuild it to the need and keep discovering new needs and filling those needs that the customer never thought to ask at the beginning of the process. The customer doesn’t know how to do that. Most people aren’t thinking in those terms, they’re thinking marketing studies, focus groups, surveys.

Mike—Exactly. Henry Ford has a great quote in which he said: “If I asked my customers what they wanted, they would have said a faster horse.” Innovation is an iterative process. We’re trying to figure out the gaps in the market.

Our methodology is agile. Agile gets thrown around a lot and I think it’s kind of hollow at times. What agile means to us is this: We’re going to iterate with you. And we’re going to help figure out the problem. We want to spend time with the people feeling the pain because that’s what you need to know in order to build thoughtful solutions.

Modern-Day Venice.

Make it Stick 

As I ride back in the water taxi and gaze at the gleaming buildings it feels like a slice of some modern Venice.  A few quotes from the interview turn over and over in my head. I’m sure Pollack doesn’t lay claim to them all, but these strike me as significant:

ON VISION—“People have a hard time separating cause and effect. You can’t fix effects, but you can treat causes.”

ON INFRASTRUCTURE—“Good infrastructure is a platform. You build on it, just like software. The highway system provided the platform on which McDonalds could provide roadside dining. Hilton and Marriot could build massive hotel chains.”

ON COLLABORATION—“If I’m the smartest person in the room I know I’m in the wrong place. As the dumbest person in the room, you work harder, you think harder, you prepare for every question, and you do your homework even deeper before going to that meeting, so you can over-deliver.”

ON DISCOVERY—“Where’s the pain in your business? Once we do the whole inventory, it’s just like taking something apart. What’s working and what’s not working?”

ON MARKETS—“I never knock the competition because I’m sure they’re doing a great job. Competition helps. It creates a market. If I see inefficiency, I want to challenge it and do better.”

ON INTEGRITY—“My firm and adamant business philosophy is that I sincerely and always want to under-promise and over-deliver.”

ON EXECUTION—“A lot of entrepreneurs have an idea, but don’t know how to execute it. Even if the idea’s great, it comes down to execution. There were fifty facebooks before there was Facebook and they were all good ideas, but Mark Zuckerburg out-executed them all.”

ON THE PIVOT—“Speed kills when you don’t have it.” Ω

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BACK TO PART 1

Contacts

Rocket Fuel Labs

  • Specialties – Startups
  • Industry – Computer Software
  • Type – Privately Held
  • Company Size – 1-10 employees
  • Founded 2013
  • Expertise – Web Development & Deployment, UI/UX, Online Marketing, Product architecture, E-Commerce.
  • Headquarters – 222 W Merchandise Mart Plaza #1212 Chicago, IL 60654 United States
  • Website – RocketFuelLabs.com
  • Email – Info@RocketFuelLabs.com
  • Phone – 855-4FR-LABS
  • Fax – 312-620-9655

Photos courtesy Wikipedia, Amazon, John Boyd, The Hammer Source, Michael Pollack

Chicago Venture Magazine is a publication of Nathaniel Press www.ChicagoVentureMagazine.com Comments and re-posts in full or in part are welcomed and encouraged if accompanied by attribution and a web link . This is not investment advice. We do not guarantee accuracy. It’s not our fault if you lose money.

.Copyright © 2013 John Jonelis – All Rights Reserved

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2 Comments

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FASCINATION OF A THOUGHT LEADER

rocket-fuel-labs-launches 2Michael Pollack of Rocket Fuel Labs

Verbatim – John Jonelis

I always enjoy the scenic water taxi ride to the Chicago Merchandise Mart where the huge high-tech incubator known as 1871 lives and breathes like a sleeping dragon in a cave full of gold.

Michael Pollack, CEO of Rocket Fuel Labs is waiting for me. His firm provides the technology to launch new companies.

Turns out, I’m in for a treat—a conversation with a genuine thought leader. Mike is a highly intelligent man exploding with enthusiasm. I get the preliminaries out of the way, then sit back and simply say:

“Tell me about Rocket Fuel Labs.”

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Rocket Fuel Labs logo - Large

Mike – Let me take a step back and give you some background on myself and Lance Ennen, then how Rocket Fuel came together.

In my career, I’ve lived at the intersection of sales and technology. I started my first business when I was 12 or 13—I was building and selling computers. I used my mom’s credit card and bought a tremendous amount of individual pieces of hardware. This is in the early 90’s, at a time when a desktop computer is about $4,000 to $5,000.

Michael Pollack LinkedIn2

Michael Pollack

Note – Not only does Pollack organize his thoughts, they burst forth at a phenomenal rate of speed.

John I personally bought a computer for $5,000 about that time. And it seemed real pricey a year later.

Mike – Okay, so there you go. My competition, Gateway, was charging $5,000. I, as the kid down the street, was charging about $4,500. I was making great money on that. The margins were phenomenal. I was 12 years old and that was more money than I knew existed in the world, right? That was such a tremendous sum.

And I learned a fascinating lesson in my life and my career as well. I was buying all this equipment and keeping it in my room. Stacks of motherboards, processors, video cards, cases, and all the pieces. I’d say, hey, you want a new computer? I’ll build it for you and be your free tech support. It was great. It was a very good business.

But it was right around that summer when Dell said, “We’re gonna do a back-to-school special and cut the price down from $5,000 to $3,000.” My margins went completely upside down and I learned a very important lesson about managing your inventory properly. I had all this stuff that was bought at the wrong price. My prices couldn’t sustain a market, and that was the first lesson I learned about keeping as lean as possible. All those profits I made on the first five or six computers I lost on the following nine or ten. At that point I said, “Wow, this is a tough business. Michael Dell is killing me.” As a twelve-year-old, I just couldn’t compete with what he was doing in Texas and so it was an important lesson.

From there I did programming for a bit. As a kid I took things apart. Vacuum cleaners, VCRs, anything I could find. I had great parents. They gave me a tremendous amount of opportunity and I probably took advantage of it a little too much when I was younger. Maturity is recognizing your mistakes and operating within those bounds.

John – Just like Richard Feynman. As a kid, he made a business of taking apart radios and fixing them. I used to read his books to my son as bedtime stories.

MikeRichard Feynman is a personal hero! I think he’s an absolutely fascinating man. An important physicist of enormous stature. His books, Surely You’re Joking Mr. Feynman and What Do You Care What Other People Think both make for great reading.

Note – It seems that Pollack is not only brilliant, but well-read.

Surely You're Joking Mr. Feynman

See it on Amazon

Mike – I started a number of businesses and my personality pulled me in the direction of sales but I could also understand technology. As a kid, I did everything from sell Cutco knives door-to-door to being a PC tech at Best Buy.

But my career moved into an interesting avenue. A very good family friend started a freight brokerage. If you know people that work at C. H. Robinson or Echo Global Logistics—these companies that manage the trucks that you see on the road—it’s a really big business, and it’s a business that most people don’t think about.

Consider this room. Everything gets here by truck, right? In America, the domestic trucking industry is $300 Billion.

$60 Billion—with a “B”—of that goes to domestic truckload brokers. To walk you through that world, there are about 3-4 Million full truckload shippers. These are the manufacturers who put stuff inside of trucks. Take the company that manufactures this couch, for instance.

On the other end of the equation, there’s a hundred thousand trucking companies. Ninety six percent of those companies operate 10 or less trucks. A lot of mom-and-pop outfits. There’s those big orange trucks you see on the road from Schneider or J. B. Hunt or Werner or Swift, but those big companies are actually in the minority. Only about a hundred of them.

In the middle, there’s fourteen and a half thousand brokers. Those brokers consume that $60B and effectively, those brokers are like glorified travel agents.

John – They’re routing all the trucks. Are they making all the money?

Mike – Not all of it, but a lot of it. Very little overhead. They’re doing this mostly over phones. It’s an old-fashioned travel agency model.

I started as a salesman and realized our tracking software just wasn’t very good. You need to make sure you assign the right truck and get the best price. Then when the truck is actually moving, make sure it gets from Point A to Point B. If the truck encounters an issue, it needs some way to facilitate that.

So we designed a software platform called Autobahn, which was a freight brokerage trading system. The name invoked something sexy, like a Mercedes Benz cruising down the highway at high speed when in reality we’re moving trucks around the country.

John – Did you know that the German Autobahn helped us win WWII?

Mike – Yes, it’s interesting. When you read Eisenhower’s memoirs, one of the things he’s most proud of is the Eisenhower interstate highway system, which is a direct replica—a rip-off—of what he saw in the Autobahn.

NoteOnce again, I’m taken aback by Pollack’s intellect and enthusiasm. 

JohnHe did that?

Mike – That’s correct. He saw the Autobahn and said, “Wow, the ease in which we could move through the country—the effectiveness of their mass transit system was so eye-opening…One of my first initiatives when I come back to America will be the Interstate Highway System.”

I worked on logistics for a long time and know a couple facts about the highway system that will blow your mind.

1.) The reason bridge heights are set at thirteen and a half feet, is that at the time, in the 50’s, the United States had nuclear mobile-launched missiles. That was the height at which they had to be to get under the bridge and that’s where bridge heights come from to this day in America.

2.) The other thing that was mandated was for every ten-mile stretch of highway, there had to be a one-mile strip of straight highway so in the event that airfields all got destroyed by nuclear war, we could land airplanes on the highway.

Pretty clever, actually, how they did it. It’s a really well thought out bit of technology. It’s a fascinatingly cutting-edge technology for the 50’s. It’s infrastructure. Like a platform. Like we do software now.

Think about that. What I find fascinating about logistics in particular is that good infrastructure is, effectively, a platform. And you can build on it. If you think about the highway system in this country, it provided the platform on which McDonalds could provide roadside dining. Hilton and Marriot could build massive hotel chains.

When I think about that infrastructure, I think about our business; I think about Rocket Fuel Labs.  It’s about providing technology infrastructure to allow businesses to build on. That’s where I get really excited about what we’re doing here.

rocket-fuel-labs-launches

Note – I don’t know how you readers feel about it, but I find this conversation fascinating and don’t want to shred a single paragraph. I’ll pick up where we left off in a future article. Verbatim.

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Contacts

Rocket Fuel Labs

  • Specialties – Startups
  • Industry – Computer Software
  • Type – Privately Held
  • Company Size – 1-10 employees
  • Founded 2013
  • Expertise – Web Development & Deployment, UI/UX, Online Marketing, Product architecture, E-Commerce.
  • Headquarters – 222 W Merchandise Mart Plaza #1212 Chicago, IL 60654 United States
  • Website – RocketFuelLabs.com
  • Email – Info@RocketFuelLabs.com
  • Phone – 855-4FR-LABS
  • Fax – 312-620-9655

Photos courtesy Rocket Fuel Labs, NASA, LinkedIn, Amazon.com

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GO TO PART 2

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Chicago Venture Magazine is a publication of Nathaniel Press www.ChicagoVentureMagazine.com Comments and re-posts in full or in part are welcomed and encouraged if accompanied by attribution and a web link . This is not investment advice. We do not guarantee accuracy. It’s not our fault if you lose money.

.Copyright © 2013 John Jonelis – All Rights Reserved

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.

13 Comments

Filed under 1871, angel, angel capital, angel investor, big money, Chicago Ventures, Consulting, Entrepreneur, Entrepreneurship, Innovation, Innovation and Culture, Internet, Internet Marketing, Invention, investor, jobs, Marketing, new companies, Software, vc, venture capital