Ef Berlin: Failing without mercy

By Dan Spooner, EFBE1 Cohort Member
26 June 2018

Article18 Minute Read

Today marks the end of the 12 week ‘Form’ process at Ef Berlin, and what an amazing & intense 3 months it’s been.

So, the bad news is that I have left the process without a company (someone get the violins out), but don’t despair, this isn’t a story of failure; it’s a tale of personal development.

Not founding a company was always the biggest risk in joining Ef, and as everyone well knows 95% of start-ups fail. However, as one friend put it ‘It would have been even weirder if it had worked out’ — finding that perfect contrarian idea, co-founder, customer problem, market & investor in 12 weeks is no easy task which requires a healthy dollop of luck too.

What I have left with are some amazing learnings which I have carefully formed into a multicoloured GIF-heavy A-Z… (Berlin style-y). It’s mainly a log of my main learnings at how to fail successfully at Ef.

Whats next? I’m not entirely sure. One of the key things I’ve learnt is that I love building things and talking to users, so I’m keeping my eyes peeled for the next opportunity to work on an awesome B2C product. For now, I’m taking some time to rejoin the real world alongside digesting everything that I’ve learnt over the last 3 months.

So onto the A-Z — grab a coffee and maybe a paracetamol for the aggressive GIFs.

A: Action List

The speed at which you move through the ‘action list’ at Ef is used as a measure for a good team. However, it’s fair to say I got bogged down in the question of ‘What makes you the perfect team to do this’ opposed to finding an acute customer problem that we could solve using technology.

The temptation is to focus on what looks good on paper, opposed to building a business that you believe in.

It’s also all too easy to retrofit a customer problem to the idea, especially in the Ef pressure cooker. Investors can quickly smell if the problem you are solving is not a true HOFP — ‘a hair on fire problem’.

A HOFP is a problem so big that if your hair was on fire you would use a brick to put it out, in lack of other less painful solutions. You’re encouraged to find that customer problem alongside what ‘brick’ they are currently using to put it out.

If I was to join another Ef cohort I would be careful to come into the process with a set of problem areas I wanted to work on and not pre-formed business ideas.

B: Behaviour

Some snaps from the ‘Skype Shopping Experiment’

It’s been great to get back into the field and get stuck into some user testing. This has always been my favourite part of being a PM — talking to customers. Over the 12 weeks I worked on 6 ideas and conducted a range of user tests, interviews and experiments to explore a variety of customer problems.

I’ve had multiple opportunities to flex new user research methods and explore interesting user groups. From interviewing the elderly to understand the complex nature of loneliness (thanks to everyone who donated their parents or elderly relatives) to millenials who struggle to save for their retirement.

Advert for recruiting participants.

One of my favourite tests was our ‘Skype Shopping Experiment’. In order to test our idea of a ‘3D shopping experience in Mixed Reality’ we decided to shop for people using Skype. We thought this would be the leanest test to validate our idea without a single line of code.

The results were interesting, yet non-conclusive. It dawned on us that we had a behaviour change start-up on our hands — we were expecting customers to change their behaviour to use our product. In hindsight this was an arrogant expectation. Also, in very few cases did the experiment actually enhance the users shopping experience. Venture Capital is already incredibly risky. It’s even riskier if you’re betting on behaviour change.

Regardless, I did have fun running around Berlin shopping for people, despite the raised strange looks from fellow shoppers.

C: Customers

This has been my first time doing B2B customer development. I thought I would hate it, but actually loved it. One of the things that surprised me was how effective cold messaging on LinkedIn & via email (using tools such as ContactOut & Streak) was.

I managed to speak to some amazing people from over 50 companies of varying sizes — from small SME’s to an international retailer with turnover of US$486 billion. People are eager to help entrepreneurs and help them out where they can.

This was super refreshing and I will definitely play it forward in the future. A massive thank you to anyone who accepted my cold LinkedIn request, took my call or who connected me with people around the world. It was amazing to pitch to such influential people.

D: Deadlines

Finding a co-founder in the wild is difficult. Whilst Ef describes the crux of their product as bringing cohorts of founders together, I would argue that time & deadlines are the key benefits of starting a company at Ef — especially for someone who has been employed since they left Uni.

As anyone who has worked on startups or side projects knows, finding the time alongside the commitments of a full time job is super difficult. Deadlines constantly slide and motivation is hampered by tiredness. Ef gives you the time and breathing space to start your own venture, provides financial support and most importantly to me, deadlines.

Incredibly tight deadlines force you to make bold decisions, take risks and work that little bit harder to get the results you need. These deadlines make Ef an intense experience, but they accelerate growth of your idea, team & company.

E: Edge

I’ve wrote about ‘Edge’ in Week 6. At that time that I was seriously considering what I was doing at Ef — I felt edgeless, at times spherical.

I felt I was clutching at straws and even started looking into spaces such as swimming for inspiration! In hindsight those were desperate times.

The temptation with ‘edge’ at Ef is to pick an area you find interesting e.g. Fintech or Blockchain to be ‘on-trend’ — however, trust me it will come back to bite you if you do this. Stick to something that you know so you can hit the ground running.

F: Fear of Failing

One of the main reasons my final team broke up was due to my realisation that I was starting the company for the wrong reasons. I was working 18 hour days, not because I was passionate about the project, but because I was scared to ‘fail’ Ef. As one of the ‘Form Associates’ put it ‘Ef is a place that people who have never failed come to fail.’

The fear is slightly different than ‘failing fast’ in a product management context as in this case it’s your company instead of a product or feature. However, once I realised it was just the fear of failing that was keeping me in the process, and not passion about the business, then I was able to move on.

G: Gut

I had the privilege to talk to an ex-founder in SF who had started 5 businesses over the last 10 years — the original purpose of the call was to try and cultivate a lead but we quickly started chatting about his start-up journey.

After pitching the idea and explaining the concerns of investors at Ef, essentially that our idea was ‘too early’ for consumers and the market, he asked me one question:

A: What would you say to people that say you are too early?

B: I would tend to agree that we are early with the idea, but it has potential to be massive over the next 5–7 years.

A: The fact that you are not challenging the investors opinion, and seem to be agreeing with them, means you don’t believe enough in the idea. If you truly believed in the idea you would challenge this opinion more. Be 100% honest with yourself by asking ‘Do you want to build this company for the next 5 years?’ If there is any hesitation in saying ‘yes’, think about quitting whilst you’re ahead. This is your gut talking.

This brought everything to the surface I had successfully suppressed. I didn’t believe enough in the idea or mission to continue working on it. My gut was telling me to work on something else, alongside maybe laying off the German beer…

What this also taught me was that I need to solve a problem that I’m passionate about. It needs to be an organic mission, I don’t want to start a company for the sake of starting a company. This was probably my biggest learning — thank god for my gut.

H: Hustle

Hustle is a concept which is often spoken about at Ef. In order to get ahead in the game your encouraged to act like a honey badger (which also acts as the internal mascot for the company builder).

This is by far one of the most enjoyable parts of starting your company. Your empowered to do anything in your power to get shit done.

BBC’s ‘Hustle’ — they made it look so easy.

In order to do this well you have to take yourself less seriously and leave all ego at the door. This means cold emailing, calling, scrounging for free conference tickets, experts time and finding unique ways to get customer insights. After putting the notion of shame aside, I quite enjoyed it.

I: Imposter

As I discussed in my last post imposter syndrome has been a good friend of mine at Ef. I took a step back and realised this has defined my whole career until now. But one of the key things I’ve learnt is that everyone feels this way to some degree.

Whilst it’s difficult to not doubt your own ideas or outputs — trusting in your ability is the only way your going to convince others that you are following the right path — especially if you are leading a team. This is super important at Ef as a big part of the game is selling yourself to others to fundamentally find your co-founder.

So, using all the information and data that you have at that time, you have to make an informed decision, fail fast (which Ef celebrates) & learn from every misstep.

J: Jack of all trades

Ef is one of the only places where in many instances it’s useful to be a ‘jack of all trades’.

This is because you have to quickly switch between designing, business development, user research, pitching, crunching numbers, market research, setting up business accounts and networking. If context switching isn’t your thing, then being a founder probably isn’t for you.

However, it really helps at Ef to be the master of one — which ultimately translates to your ‘edge’. Your edge can be deduced by your background or passion.

It was only very late in the program that I took the time to work out what mine was. I would recommend anyone heading into Ef to have a good think at what you are exceptional at before you join Ef.

K: Kahneman’s Sandwich

Whilst practicing investor questions with a fellow founder Rob (check out his promising InsurTech start-up here) I realised something that I had been thinking about for a while.

Rob was able to take the information that I had told him about our idea and reword it to sound 10x better. It was exactly the same components in a different order. It sounded so much more exciting than what I had pitched. I scribbled down everything he said.

On a basic level this taught me that speaking through ideas with as many people as possible is essential when constructing a captivating narrative for a team, or in this case, investor.

What it also reminded me of is cooking. I hope I’m not alone in admitting that I hate the taste of my own cooking. I’ve always wondered why. Even when following a recipe which has exactly the same ingredients, it’s never tasted as good as someone else’s version.

Psychologist Daniel Kahneman explains this in his analysis of sandwich making. He explains:

“When you make your own sandwich, you anticipate it’s taste as you’re working on it. And when you think of a particular food for a while, you become less hungry for it later. The sandwich that another person prepares is not ‘preconsumed’ in the same way.”

In other words, when you make a sandwich yourself it often feel less novel and thus less desirable. It has exactly the same ingredients as if someone else made it, but doesn’t taste as good.

I think this is the same as the business idea you’re working on. It’s easy to lose interest in an idea once you start working on it, it doesn’t taste as good after a while — and thats often why I prefer to hear about other peoples ideas, or in this case to hear Rob rephrase my pitch in a way that makes it tasty again.

What I’ve learnt is that it’s all in the mind, and that by acknowledging this and being confident in your ability, you realise that when the ingredients are the same, you have as much right to win as anyone else.

L: Luck

Whilst a lot of variables are in your control as a founder, it’s always good to remember that there is a huge amount of luck needed to make all the stars align. You can set yourself up for success but more often then not, luck might not be on your side this time — and thats OK.

M: Mapping Cultural Differences

 

Erin Meyer — The Business Culture Expert

Cultural working styles are massively important to understand and something I hadn’t truly appreciated or researched before. I would recommend anyone to explore Erin Meyers work on cultural differences. Many of our working habits are rooted in early educational practices, resulting in drastically different ways-of-working per country.

Erin breaks this down into: Communicating, Evaluating, Leading, Deciding, Trusting, Disagreeing & Scheduling. She has then studied these cultural tropes and plotted each country on what she calls the ‘culture map’.

One of the teams I formed suffered from poor communication — instead of talking it through I took it as a personality clash — which is completely the wrong way to look at things. We used the culture map to understand how our working styles differed which helped us to move on.

Once you have understood the cultural differences in ways-of-working you can quickly understand how to move forward and address these differences in your team. I will take this learning to all new teams I have the pleasure of working with.

N: New Business Models

A question which I’ve deduced is pretty pointless is ‘Why wouldn’t [BIG TECH GIANT] do this? You will be constantly asked why wouldn’t Amazon, Apple or Google build what you are describing. A great way to articulate a reply other that ‘they are slower than you think’ or ‘they won’t’ is to think in terms of defensible moats.

Your business can have the following traditional moats as outlined by Jerry Chen from Greylock Partners: Economies of Scale, Network Effects, Intellectual Property, High Switching Costs or Brand & Customer Loyalty. But these are being challenged with the current wave of disruption which leverages data to build Systems of Intelligence.

This is where you can win against the big boys. I cant do this theory justice in this post so you can check it out in full here.

O: Owning outcomes

‘Owning my own outcomes’ has now become second nature.

Ef teaches you that no-one else is going to steer the decision ship other than you. If you don’t have conviction in your decisions then you are wasting your time — and at Ef the opportunity cost of working with the wrong person is too great to ignore the writing on the wall.

I went through 5 co-founders at Ef, so maybe I got too good at this? A full debrief of the first 4 breakups can be found here. It really has been like Love Island —just without the ?.

P: Pyramids

Take it away Frank.

I wasn’t expecting to have a Frank Ocean reference in this post but thought it might be a nice treat for those who have made it past the halfway mark (however it has no reference to pyramids in this case).

You spend a lot of time at Ef working on the communication of your idea in readiness for investors and potential customers. One method that is super effective is the Pyramid Principle which was born in the depths of McKinsey.

The pyramid principle states that “ideas should always form a pyramid under a single thought.”

Therefore, when pitching an idea it’s best to start with a clear statement which is reinforced by 3 arguments. I will take this into every pitch, talk or meeting moving forward.

Q: Questioning

Question everything. Interrogate reality. I found ideation to be the most effective when you challenge the status quo & assumptions about how the world works.

This did nothing for my stocks of post-it notes but resulted in over 400 ideas over the 12 weeks. Some useful methods of ideation can be found here.

R: Revenue

Working on business models from scratch has also been refreshing. Whilst the business model will directly influence revenue, you can also use it to build defensibility into your business.

Take, Tinder for example. The beauty of their business model is that it’s symbiotic with the product i.e. whilst the service is free in order to continue to ‘swipe right’ you need to upgrade to a ‘Gold’ or ‘Premium’ account. This capitalises on the user behaviour (of looking for prospects in a bar) which they identified early on and is far from an afterthought.

By thinking through your business model, and understanding that your core product will be the one that sustains you, will help you build a business that drives revenue alongside attracting venture capital.

S: Sales

I wont forget the feeling of getting our first sale. That first Letter of Intent (LoI) to use our product. It felt amazing. I couldn’t believe it when they sent the letter back, signed!

T: Timing

Timing is everything for a start-up. Most of the feedback that we received is that we are too early — both in terms of tech adoption and customer behaviour. This is a critical question to address early on — are you ahead of your time? Just on time? Or late to the party?

Gartner tech hype cycle.

The other question to ask is where does your underlying technology sit on the Tech Trends hype cycle? In my final team we were working on a AR/VR platform — two technologies which you can see sit between the ‘Trough of Disillusionment’ and ‘Slope of Enlightenment’.

This directly correlates to how appealing the space is to investors. This is mainly due to many investors being stung previously by investments in this field (Blippar, Layar) and the lacklustre adoption of VR headsets.

U: Uncertainty

promise…

A day is a long time at Ef. Things change by the hour if not minute. Ambiguity and uncertainty sound similar concepts but have subtle differences.

After working at some awesome start-ups & clients as a Product Manager it’s become second nature to embrace ambiguity with seemingly endless iterations and pivots towards your vision. Ultimately, being employed provides some level of assurance of stability which balances the ambiguity.

However, this process has taught me to embrace uncertainty, where you have to ride the Ef wave and see where it to takes you. It’s been a steep but amazing learning curve. What’s testament to this is that I’m not freaking out that it hasn’t worked out as planned. It’s slightly unnerving.

V: Validating your idea

The one area that I have also enjoyed is the challenge to validate or invalidateyour hypotheses.

In order to do this you cannot be precious about your idea — you have to see that there is higher potential in identifying customer problems instead of designing the research to ensure that you validate your idea.

Don’t let the fear of being wrong invalidate your findings. Talk to customers, follow the Mom Test and really understand your user’s key problems, behaviour and how they fix it today.

W: Why?

Investors are going to ask plenty of questions. But you also need to ask yourself some whoppers too. Why is this better? Why are you the team to build this? But the key question I would advise anyone asking themselves is ‘Why do I want to spend 5 years working on this’.

If your answer is half-hearted then take a step back and consider if you really want to build that business because it’s going to be even tougher if you don’t have a concrete reason why.

X: MischMasch

I love Germany.

So I’m cheating here — ‘X’ is proving to be difficult.

MischMasch has been one of my biggest revelations since moving to Berlin. MischMasch is a concoction made from orange juice + cola + lemonade. It actually tastes pretty good, but is not the best for those on a diet. We built our final team in a similar way to how I imagine the team at Fritz-Kola devised this magical carbonated experiment.

We took my background in B2C retail (my ‘edge’) and mashed it together with my ex-co-founder’s unparalleled background in Mixed Reality (XR). We decided to build Squarespace for Augmented Reality commerce — to bring the best of the physical shopping experience with the scalability of e-commerce.

Whilst, on paper we were a great team to build this, I realised later that I had forgotten the fundamental question that every product person should continually ask themselves: What problem are we solving for the customer?

This is the key mistake, we, and a lot of teams make: finding a contrarian idea and then retrofitting the customer problem to fit the tech solution. It just doesn’t work. We need to remind ourselves to leverage technology to fix fundamental problems and use the best tech, may that be AR, Blockchain, AI or a simple UI to fix the problem for the customer in the best way. This problem & solution combo will form the foundations of your product and/or business so you have to get it right.

In this case we didn’t get it right and for fear of ‘failing Ef’ I buried my head in the sand. It was only when I took the weekend off to evaluate how the company was progressing that I realised our mistake which had made everything harder including sales, customer development and pitching. We had retrofitted the problems to fit our idea. By then it was to late, our team broke-up (for the final time) and we were out of Ef. The dream was over, for now…

Y: Yoyo

I’ve felt like a yoyo-founder at Ef. During the last 12 weeks I have been the potential CEO of 6 businesses in a range of verticals. You can check out why these teams didn’t work out in more detail here.

At times this is emotionally and mentally exhausting — one minute you are imagining yourself as the CEO of a B2C pension app for millennials the next you are building a wearable device to stop the elderly from falling over.

I’m used to ambiguity, but this was a crash course in true ambiguity where things change by the minute. I learnt to keep a calm head, appreciate the potential of these ideas and embrace the chaos.

Z: Thanks

Ok. So cheat #2. I cant find anything that fits with ‘Z’.

I want to say a massive thanks to anyone that referred me to a friend, a potential customer, user, who replied to my cold LinkedIn messages, took a call, imparted advice and helped me over the last 3 months. I owe many of you a ? or two.

Also I would love to thank everyone at Ef for taking a punt on me and giving me the opportunity to build my own company — it really is unlike anything else you can do in your career and I wouldn’t have changed it for the world.

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