Startup Validation Roadmap

The biggest enemy to entrepreneurship is what we call premature scaling, which is actually doing the right things prematurely. It's good to scale. It's good to do scaling activity, but when you're ready to do scaling activity before you're ready will kill your startup. My rule of thumb as an investor is I don't want to see an early stage company burning, meaning having negative cash flow greater than $35,000 a month. 90 plus% of the litigation in entrepreneurship revolves around co-founders and co-founder issues. And so having toxic co-founders is the absolute worst situation. And we switched the brand to banana pages cuz they were yellow. Cuz yellow and banana have a 98% correlation in the humans, right? Like you did a test with me earlier in this podcast. If I say the word banana, yellow is one of the first things association. Yeah. And so banana pages, that's saying we're taking the old industry of yellow pages, making it more fun. Absolutely was a phenomenal success. It set me on a career trajectory. Our company on a trajectory 500% growth in three years. Okay, we're going to get going. Episode 11, the Startup Ignition podcast. Thank you so much for subscribing, following, sharing, commenting, everything you guys are doing. It's so awesome to see the traction that we're getting. Although it be small and maybe inconsequential to other people, we enjoy it and it's we're so grateful. So, thank you so much. Here we are. I'm Tyler. So, welcome back to the Startup Ignition podcast. This is John. We are your co-hosts. And today, we are actually not joined by anybody today. It's just us. We're here to talk shop again on startups, on validation, on early stages, on foundership, on uh entrepreneurship, anything startups. That's what we're going to discuss today. But today, as always, we're going to start with an icebreaker that I'm going to spring on to John. My dad has no idea what's coming, and I think this is going to be a fun one. So, are you ready? Yes. Episode 11, icebreaker, just to get into the mood and get into a comfortable state. Um, I'm This one's called the startup snap associations. Okay. So, I want to hear your snap uh uh association with the words that I'm going to ask you. Okay. Okay. So, we're going to go through and we're going to kick off with an icebreaker and I have 15 words that I'm going to read to you and I just want to know what you immediately think of when I say these words, okay? And and I'm trying to dig into my dad's rich history. You know, he's been in the entrepreneurship and startup world for, you know, 30, maybe even 40 years. We don't need to reveal his age or how OG he truly is. It's been 40 years. It's been 40 years. But so think of your whole past. Think of your whole history and think of what comes to mind out of all history when you hear these words. And there's startup terminology, but I just want to I'm just curious. Okay. Ready? So really good. First one, remember snap and immediate thought. Okay. pitch deck quality graphics uh terms problem solution. So you think of investment when you think of pitch deck. So investing terms because I've reviewed thousands and thousands of them. Okay, ready? Here's another one. Think uh aqua hire. Uh what do you think of caution? Be careful. Uh aqua hire is when a large company uh is acquiring a smaller company just to get the people and not necessarily the business model or the business. Often the business gets shut down later because they just wanted the people. Why do you think of caution though? Because entrepreneurs have to be careful. They could be giving up a lot of upside by selling early for a low acquires are low amounts. So I think of caution because they're offering you they're not paying for the product. They're just trying to get the people to join their company and they have to buy the company to get that to happen. So, they're paying bottom dollar. Yeah. Okay. Okay. Hockey stick. Hockey stick is uh I'm not asking you what the definition. I'm asking what's your association. Scalability. Scalability. That's what comes to mind when I see hockey hockey stick. When I think of hockey stick, I think I still think of pitch decks. I associate hockey stick with a an entrepreneur's pitch, a founders's pitch. Okay. Burn rate. Um burn rate is negativity negative association. Yeah. Um be very you know again caution warning red flag uh you know burn rate but every startup burns. Yes. But you got to be careful with it. So I think of 35,000 which is my magic number of burn rate. I think if you're over 35,000 a month in burn rate you're burning too much. Burning too much. At least for the early stages. So remember this that's for you know depends. I mean, if you're going to get mega money and squander money a lot, you're going to burn a lot. I mean, there's people have, you know, in the 2021 period got, you know, $350,000 burn rates. Of course, they ended up with a bankrupt company and nothing. Yeah, but I'm just saying my rule of thumb as an investor is I don't want to see an early stage company burning, meaning having negative cash flow greater than $35,000 a month because they should be able to get to customers paying the way and not have to go much to product that based on circumstances and vertical markets and stuff like that. But that's my number. I if I if the founding team can keep it under 35,000 burn rate, thumbs up. Yeah. Okay. Here's a newer term. Zombie. Zombie. Walking dead. Yeah. So, what do you what's your SNAP association with zombie? Zombie is walking dead in a business context for me. It just says a company that like that company $350,000 burn rate, you know, have 700,000 a bank, two months left. Zombie Walking Dead. Yeah. So, zombie startup. Okay. Angel investor. um savior, angel helper. I mean, I view angel investors as people that help and mentor and provide capital to startup companies. Um, angel investing is a huge way bigger than venture capital. So, professional venture capital firms do X dollars and angel investors do much more. Yeah, I think I think maybe just because I grew up around you, I think angel investor John Richards because you you were an angel investor for 30 years. Yeah, angel investors um are just it's a big part of my life and you know. Okay, next one. SNAP Association, MVP, uh minimum viable product uh the minimum amount of features in order to get a customer to pay you something. Like when you think of MVP, do you think of a person, a company, or do you just think of the term? MVP, I think of the product. Yeah. You think of product? It's a product and it's got to be the minimum feature set in order to have a customer pay you. Okay. SNAP association. Remember, anybody, anything from your whole tenure past. Okay. Vulture capitalist. Uh a derogatory term that we use in justest. I use it for dramatic effect in talking. And then I try to teach to all my venture capital friends out there that uh when venture capitalists appear to look like vulture capitalists that they're actually doing what is needed to protect their limited partners. And I try to teach entrepreneurs that when they think of VCs being bad, they're doing what they need to do to protect their limited partners. But at the same time, it's fun to use that term venture vulture capital because it has great dramatic effect when you're mentoring. Do you think of a firm or p? Don't say anything but firm or person when you hear that term. Vulture capitalist, not a specific person. I think of a vulture capitalist is the actions that can be perceived bad by an entrepreneur that a venture capital firm does that may not be bad because they're doing the right thing with their fiduciary responsibility, but to the entrepreneur it appears bad. For instance, when a vulture a venture capitalist appears as a vulture capitalist, maybe when that entrepreneur needs follow-on money to survive and the venture capitalist delivers the news, we're not giving you any more money. Yeah. Yeah. So, yeah, vulture capitalists like putting companies out of business or giving them horrible terms or but they have they have to do what's right to protect the interest of their limited partners. All right. Okay. Next one. Toxic. Toxic. Um I think of people and personalities. Yeah. I I think of bad co-founder relationships. Yeah. Yes. And just toxic anything. I've had toxic mentees. Not many, but some. I've had toxic mentors. Not many, but some. uh just in you know suppliers, customers just toxic toxic people that make business. Yeah. Mo 90 plus% of the litigation in entrepreneurship revolves around um co-founders and co-founder issues. And so having toxic co-founders is the absolute worst situation in entrepreneurship. Okay, here we go. Yep. Yep. We're ending the next three with the next three. They're all fwords. Ready? Okay. Uh oh. Failure. Failure. Uh necessary part of the process. I don't view it as bad. Um, ultimate failure, yeah, that's disappointing, but fail, failing fast and trying things and experimenting is a great thing and a huge part of entrepreneurship. Yeah. For instance, like people that uh would come to the boot camp we run and they come for the kickoff three days and they find out their idea sucks and they need to abandon it or they find out they're not really entrepreneur material. They should just go be the best employee they can be for somebody. Yeah, that's that's see that's part of the game. That's a good failure. It's good. Failure is a great teacher. So you don't necessarily associate it with negativity. No, failure to me cuz fail fast and move on. Failure has a slight ring to it like that. But for me, I've learned over the years that failure is actually a teacher and a part of the process towards winning. Okay. Second to last F word, fit. Fit. I think of all the different fits we teach about from product market fit but going to founder mark fit to you know product promise fit all the different types of fit in the realm of what we're talking about here on a podcast about entrepreneurship fit to me is where you have the different pieces of a company that all fit together and match up so that you can be on your way to success. So fit's a positive thing. Yeah. So okay it needs to be assessed and measured. Yes. So of course product market fit, founder market fit, whatever all the fits. So now last one, FOMO. What do you snap association? What do you think of people that have that personality of fear of missing out? FOMO and that you know they are inde FOMO to me is indecisive. So people that are indecisive and can't decide between two or three OP options placed before them, they're worried about making a decision and moving forward because they don't want to miss out on something else. I I think of FOMO and investing like party rounds um you know in FOMO investors who are don't want to miss the next unicorn or want to miss the next big thing or not selling for a good gain hoping to get more later and then the whole thing goes down the tubes. So like in in entrepreneurship and business it's often where we say you know I have a story one of my best friends in life had a company worth about $60 million but he had the fear of missing out on more gains and he set a goal to hit get a $90 million exit and then he got slapped with the 2008 financial crisis. Yeah. And it completely lambasted his company and one year later he sold it for 3 million. Yeah. So $60 million company, 10 offers, wanted to get to 90 million. Recession hits, sold it for 3 million in the recession. So FOMO for you is almost missing opportunities, not fear of missing out. I guess that is the same thing. Yeah, it's fear of missing out on more upside. It's always a question you have to ask yourself. Would you be more upset if you missed another 50% on an already great gain or if that whole already great gain went down to a loss? I think the smart investor will take the gain. Yeah. That's why in venture smart entrepreneur in venture I say if I can make 10 times of my money as a preede investor, I'm out. Yep. Because I know it can go to zero. Yeah. Okay. Those are the last three Fs of our uh SNAP associations. Okay. So I I was thinking that to start the podcast, so that was a great icebreaker. But now for the first moment of the uh of the podcast, the first segment, I would like to talk about something that happened to me yesterday. I went to um this meetup group here locally. I was asked to speak and uh be a visiting VC to address this group. Actually, it was a it was a developer meetup. It was um an AWS um centric meetup here in Utah and you know there was a ton of developers in the room and you as a venture capitalist that also has a very significant development background having developed some yourself and you have an incredible graphic skills and all that but you also were the founder of Dev Mountain uh uh coding boot camp. Yeah coding boot camp the first and most successful I can relate and I' I usually work really well with developers. I understand and and get, you know, their perspective on things. And I I love just sitting down. Tell me more about your experience because I haven't heard much about it. Yeah. So, we so I went and I addressed it them yesterday and just kind of gave them a market, you know, update of what we're looking at in venture, you know, what's coming around the corner for startups. And this was a group of honestly very prominent developers that are very well paid, have great situations and jobs. Are they with entrepreneurial organizations or are they with big companies? No, they're with big companies. And so I was very delicate around saying, "Hey, like leave your 9 to5 and come work at a startup." But and also the where the meetup was at, it was hosted in a very large prominent brand here that is a hirer of all these. So these are like big company developers and software engineers. Yeah. And and data scientists and kind of big data guys and because again they're uh with they're AWS specific developers and it was a large a large group and it was a fun time but again I kind of brought to them about you know maybe generating more ideas having side projects understanding the startup ecosystem a bit more as that relates to VC how to raise funds if that's something they're interested in what are the different types of investors and at what stage should you go in and and and address or visit with these types of investors of where you're is this a napkin idea is this vetted out have you built product are you scaling are you growing and so anyways at the end of the I gave gave this whole presentation. It was about a 40-minute presentation and I had some great questions afterwards and I know the organizer of event. So, so I I went out and and talked to everybody. But at the end, I got a ton of people coming up to me that basically revealed like I am working on something on the side. I am doing this. I and I feel like almost every developer or every technologist has something on the side so that they're they're curious to know this world and they want to know how do I get into this or how do I take this idea and actually make it come to fruition. And because I in my presentation I did say, hey, taking a startup, taking your idea and growing it and putting traction behind it and and and scaling it is one of the best wealth generating events that you could ever have in your life. That's the way that us as Americans, as United States citizens, we can get uber wealthy. Like the rich are business owners, the rich are entrepreneurs and asset owners. And so they came up to me and they said, "How do I go about doing this?" And I basically realized in my in my address or in my speech I didn't talk a lot about the boot camp. And so when I had these indiv individual conversations all of them were like okay how do I get from napkin idea to validation from validation to this to that to the next stages of business. And I was like our boot camp that is literally what our boot camp is made to do. It's for the early or budding entrepreneur to understand what to do and what not to do when building your business. And so I just realized, oh man, I missed a a really great opportunity, but it's also something that people are curious about. And so I thought today for a few minutes we could talk a little bit about the boot camp because we do have a boot camp coming up. And the boot camp is something that, you know, people who are interested in entrepreneurship are actually interested in. And there was a lot of questions. I didn't want to self-promote at the event. So I I kind of held back, but at the end everybody was like, "No, that that is what I would like to do. I'd love to come and learn those things about how to get my idea off the ground and actually how to do to our listeners and viewers. We're going to do that a little bit. Yeah. So, do you want me to tee it up with some background and history a little bit? Yeah, sure. Okay. Okay. So, yeah, give us the rundown of the boot camp a little bit. Okay. Well, let's just go back on the modern boot camp industry. um towards the um end of the great recession which was 2008 to 2012 basically um it became apparent that certain skills could be taught better in a short-term intensive boot camp than a 4-year college degree. So, we've used the term boot camp before, accelerators, incubators, different things like but the modern day boot camp since the late 2000s to me is a definition of a short-term intensive educational experience. Right? That the purpose of which is to teach the STEM part of education. If you've never heard of STEM and what it means is a shape of a T. A T has a stem and then it has the broad cross horizontally across the top. Stem means the basic skills to get stuff done. And the T across is the emotional quotient, the interpersonal skills, working with other team members. Yeah, maybe we can have Jordan throw up a graphic because that's a pretty popular graphic in STEM. So, so bottom line is this. It turns out that universities are still important because you go to a university as a young person to develop not just the STEM but also the horizontal part of the tea. So you need to develop your ability to work with others and be around others and and have that emotional quotient as well as knowing the facts and how to get stuff done skill-wise. Yeah. But to imbue the skills to give a person skills sitting for four years talking in classes and doing a few hard skills is hard to get in a four-year degree. But it turns out you could have a 90day boot camp taught by been there done it experts and say this is the skill I'm going to teach it to you and here's how you do it. you can in 90 days get more than out of a four-year education. That really hit the mainstream in the late 2000s, early 2010s. And so the boot camp era was born. And one of the first places it started was in software development. Yeah. Because at universities, teaching computer science is often a discussion of nebulous concepts and high academic concepts, not teaching you how to actually code a product for the commercial environment, get it to market and have it be as bug-free and work on the bugs and make customers like it and use it. That's coding and software engineering in a commercial environment. So, it turns out that instead of a 4-year computer science degree, you could actually learn the skills of coding in 90 days. You were one of the leaders in this environment. You were you launched Dev Mountain with your co-founders here in Utah and became one of the earliest and most successful coding boot camps in the country and you were highly rewarded four years later when you sold it and created your own wealth. But that boot camp idea of imbuing this skill is really interesting. So there's lots of places. Another one we saw is like digital marketing. Marketing boot camps. Yeah. Marketing digital marketing. Sales boot camps. Sales boot camps. We've seen now boot camps. So what happened was I was coming off of uh being at Brigham Y Young University and teaching for 12 years becoming one of the top entrepreneur educators in the country. But I left for two years to go to Google and I helped Google come to Utah. So, and I committed to Google when I helped sell an asset to them and committed to help run that for a couple years. But when you were done, when I was done, yeah, a lot of people came to me and said, "Don't take your entrepreneur education and curriculum and your skills transfer back into the four-year program." Four-year program and also in a in a hard to get into university and hard to get into program. Yeah. Bring it out in the community so anybody can get it. And that's basically what you did with Dev Mountain. You brought software engineering, coding skills to the masses. And that's what a boot camp for entrepreneurship could do. So that's the idea was born. Let's do the startup ignition boot camp and teach entrepreneurship skills, not having to go to a four-year degree business management and sit for four years, but get them quickly in matter of weeks or even days. Do that. The boot camp was born in 2015. We actually followed Lean Starter principles and said, "Is there interest in this?" There was overwhelming interest and in two days we filled up the first cohort. Yeah. And we're now almost 60 cohorts in. Yeah. 60 cohorts. I think 10 years ago, 600 alumni of the program, 600 different ventures. So, so basically what it is, it's a short-term intensive boot camp that has taken my curriculum and how I teach entrepreneurship and put it into the boot camp. about 80% of it you could go find anywhere out on the internet and find a lot of the teachings and learnings. About 20% of it is more original content for me. And so, but what the boot camp does is put it together in a very intensive short-term way in the right cadence and the order of education and learning the skills. And so what we do is we start with a 3-day kickoff. Yeah. and then give three months of mentoring afterwards. So the boot camp combines three critical elements, the curriculum and knowledge. Okay. The mentorship to apply and implement it and then access to network. Network is basically getting access to peer mentors or to other subject matter experts and to actually go out and start networking even beyond us as instructors. This combination makes it very potent. Um, we've almost never received a rating on a 0 to 10 scale of under eight. We've had a few eights, mostly nines and tens. We overd deliver on the value. It's tuition based only. We're not taking any equity like accelerators, incubators, and venture. I think that's a a common misconception of the boot camp, too, that people first think, oh, is this an accelerator? No, it's not an accelerator. It's kind of like a pre-acelerator. Yeah. And we we charge a very small tuition for the value we're delivering because we just love to teach and share and help. But the boot camp is super intensive and its mission is to help a startup, whether you've started it or not, if you're just got ideas bouncing around your head, or if you're even at a million dollars of revenue that's stagnant, we can help you get on track and do the right things in the right order. Our slogans that we use in the boot camp are like the right things in the right order or what to do and what not to do. Yeah. Because the biggest enemy to entrepreneurship is what we call premature scaling, which is actually doing the right things prematurely. Yeah, it's good to scale. It's good to do scaling activity, but when you're ready to do scaling activity before you're ready will kill your startup. And to break it down even further, and this is kind of what I realized yesterday after the event when I had everybody come up to me and ask me, "Oh, Tyler, how do I get, you know, progress my idea prog into a startup and into something successful?" There's stages that you have to hit in a startup. And that's what you're saying. Do the right things in the right order. Right. Typically, there's five stages in in a startup, right? You can you have the idea stage, you move to a modeling stage. Maybe we can get the graphics put up. Yeah, we'll have Jordan throw throw this up. Jordan, throw up the startup and investment road map. So, let me start on the validation road map, but even at the very end, well, let me just finish the the stages real quick. You have the idea stage, you have the modeling stage, and then you move into this traction stage, and then you build phase, and then you go into scaling. So those five stages that you have is kind of what the boot camp takes you through. And that's why your comment of, oh, it doesn't matter if you're in the idea stage or if you're in the build or the scaling stage, if you have a million dollars in revenue or if you're brand new there, we're teaching that whole spectrum and or that whole path of basically how to get from idea to product market fit to scaling and on your way, right? But we spend a huge amount of time in the idea and business development because that's honestly where most entrepreneurs are. If you have it makes no sense to build infrastructure and scale a company that has no validated business model, right? But to get to that point like most entrepreneurs are in the idea or the modeling or even the beginning of trickle of traction stages. So if you're in the traction or the build or the scaling phases, you've probably taken a long time to get there and have already learned the hard way how to get to those places. So what the boot camp does, it kind of accelerates you through that process, which is instead of going and taking two years, $2 million and a ton of failure, you let's do it in two, we've seen it done from literally idea to product market fit in two weeks. Some people take six months. It just depends on how much time and effort you're putting into it. But again, that's why that whole phase of building and that those stages of entrepreneurship or stages of a startup, anybody can come in and learn because that's what we're taking. So, let me put an umbrella comment on all of this. The validation roadmap, which hopefully you're seeing the graphics, um is really centered on the concept that when you're a startup entrepreneur, a founder, your job is to take your idea and your hypothesis for a business model and derisk it over time. And you want to do that as rapidly as possible. D-risking it is important because what's the risk? We're derisking the risk of failure. Yeah. Okay. So you want to decrease as you go forward in your venture the risk of failure. Yeah. And so the d-risking process happens as you start validating your idea and then validating your business model. Yeah. Because then you scientifically using the scientific method of hypothesizing, experimenting and proving your hypothesis right or wrong. you will then eventually arrive at a winning business model which then transformed your venture into now a question of execution not praying for a business model. So in the idea phase, you have this idea. Once you validate that idea with a target market that it is somewhat viable and actually wanted, you move to that modeling phase. You build out the model, right? The business model canvas, the nine different channels and the aspects of a business model. You flush all that out. Once you have the model, you move to beginning tractions. you start finding piloting customers or first customers, five to 10 of them, getting them on, seeing if this is actually working in the market, right? There's an order and a process to it. And this is thank goodness for the advent of lean startup and a shout out shout out to Steve Blank, the father of lean startup who brought it to the world and took boot camp is based heavily around lean startup principles. We like to say that startup ignition is lean startup on steroids or startup ignition is a curriculum a set of knowledge the and the skeleton of that is lean startup on which everything else hangs right so everything builds off and lean startup methodologies are very important there's a system and a set of uh processes and tools that are employed in order to validate your idea and then validate your business model and we take people through that very painstakingly and it's not often easy because many people discover the idea sucks. Many people discover their hypothesis for a business model will not work and there it and these are good things to find out. That's why we say you have to have a lot of fast failure up front in order to get to a winner and also be willing to move off of that first idea. And this goes back to why do people fail in entrepreneurship is because they fail too slow and they don't get to the hard questions and get the hard answers quick enough. They feel they fail too slow but they also fail too expensively or too long. Right? Like I was again in this conversation after the event that I spoke at yesterday. I had entrep not entrepreneurs honestly developers technicalminded employees come up to me and say man I've actually even made move because they're technically savvy. They've made movement on their product, right? They started building a product, a software product or an app or whatever it may be, sinking six months of time into it without actually figuring out is this viable? Is this validated? Is there a customer segment and a market that can hold those customers big enough for this product to even exist? They need to inverse that, right? The whole problem. I'm going to look straight in the camera. Be clear to our listeners. But I'm saying that's where failure comes from. Yeah. Let me be clear to listeners and viewers. Product development without business model development will lead to failure. To the exclusion of hypothesizing and validating a business model, when you're working on a product, you are doing the right thing too early and that's called premature scaling. Right thing, wrong order. Yes. Super important to understand. You have to earn the right to build. This means that you hypothesize a business model around your idea. You go test that hypothesis and see if the customers have the problem or pain or need that you think they have and they're willing to pay for a solution before you start building a product. Don't assume they're going to think like you. Don't assume just because you think it's great that they're going to think it's great. When you prove that out, then you've earned the right to start building your product. And I I literally said those three sentences or that paragraph to those people after the event and I think I saw a hundred light bulbs go off. They were like, "Oh yeah, I probably should talk to target customers." Because here's the problem. Most product centric or product focused entrepreneurs just want to build the product and then they think but it's not even that though. It's because they have the access and the ability to do that and they think that's the easiest next step. They don't want to get out of the building. They don't want to have conversations. They don't want to go pre-sell. It's not very fun talking to people and it's scary. Shoot down your idea. And with millennials and younger, it's literally a proven fact. We don't like having conversations. We don't want to jump on phone calls. We want to interface over text, over email, online. We don't want to get out of the building and and actually do the hard work to validate with a customer segment. We'd rather sit behind a keyboard and build and especially with AI these days. Yeah. Let's give a quick teaching on why that's so important. I want you to think about this. This is why you don't do this validation work with surveys alone either. Because you ask somebody, here's the problem we're trying to solve and here's our devised solution. And you do it just through an online survey and say, do you think that's a good idea? Yes. No. kind of sort of or you give them a scale and they just click something in a form like for instance it's we know this like for instance if someone were to ask me do I think a business size good it's different if I say that is a fantastic idea I cannot believe how good that is that's a yes in a form what about if they ask me the question I go yeah it's so you're saying there's different responses that you need to listen to there's different gradients of yeses and validation and that's why you need to be with the people in person when you do this work at the core because the most humans communicate mostly by body language and tone of voice more than the words they're saying. Yeah. So it's like do you think this idea is good? Uh yeah. Do you think this idea is good? Oh, I would buy that tomorrow. Right. So that there are both yes on a form. Yeah. Those are both check mark yes on a Google form. Right. So that's basically what the boot camp does is take you through that whole process and make sure you're not missing steps. you're not doing it out of order and that you're doing it in the way it's supposed to be done, building real business. And then it also adds on top of it, we have a very important component on founding and ownership and capitalization. A huge amount of the problems in entrepreneurship revolve around founders and capitalization and how you divide up the equity and what you do at the very beginning first 30 to 120 days of a company. It's because there's a bunch of other outside factors. Outside of having a good idea, outside of having a good business model, outside of getting traction, there are factors that can take a company down that are very important like co-founding, equity ownership, uh, entity creation, legal issues, co-founder problems, and we go over all that and we go over all of that too, right? So it so yes idea business model those being 10 out of tens you have to have a bunch of other factors 10 out of 10 as well. Yeah. Yeah. And then and then we get into certain uh build and scaling issues. Let's define that real quickly and maybe that can be shown up here. The first phase of a new venture is actually the validation phase or what we call the search phase which is searching for a viable and sustainable business model. So we often call that nail it. Let's nail the business model. Then people think the next and final phase is the scale phase. Scaling a validated business model. And now you just scale it and grow it. But in order to have scale work, you actually have a hidden step in between called the build phase. And this is where you have nailed your business model. And you have to build infrastructure. For instance, some of the infrastructure is how you going to sell it. How you going to onboard and activate those customers? How are you going to retain those customers through great customer service? All these infrastructure issues need to be built in order to support the heavy weight of scaling activity. We can't just go start scaling without systems in place. The build step or phase is to put in the infrastructure and the systems to allow you to scale. So it's not just nail it then scale it. It's nail build scale. Right? So that is in a nutshell what we try to communicate within the boot camp and and again I hate bringing up and using these devs that that I were talking to but that's what spurred this whole conversation and honestly this episode of the podcast is yesterday when I was communicating all that to them. They kind of told me wow like that's a lot. I don't know if that's where I want to go with this. And I'm like, yeah, being a founder is a hard job, but where there's risk and where there's hard work, there's almost always reward, right? So they were like, man, so I'd have to quit my 9 to5, go all in on this thing, go and validate, build a business model, test, hypothesize, test, hypothesize, pivot, pivot, take x amount of time, get traction, scale, grow, build, get to an acquisition. They were just like wow that is a lot. I'm like yeah there is a spectrum of tolerance for this kind of work right the risk tolerance of hey are you very risk tolerant or are you very risk averse right it's like I had to explain that to them and that's okay wherever you fall cuz I know technically minded and developers I don't want to stereotype but most of the time they are very risk adverse right they like the stability and the safness of what they're doing which is a highpaying amazing 9 toive job take taking that away and putting yourself in a risky situation. It It's scary sometimes. And so I said, "Hey, Mr. developer, if this is if entrepreneurship and founding is not for you, that's totally fine. But there is a spectrum. Don't be at a startup and be at a very safe, mature, safe company. But there's a spot in the middle where you could go and join a startup where you can still make a salary and also maybe have some piece of the rock or some little small piece of the pie. And being the technical co-founder is a great situation. You don't have to be the idea guy. You don't have to be the business model making guy. You can go and join and use your skill set in a different way and be a part of a co-founding team or even one of the first employees of a startup. We know many people who have had success in entrepreneurship in that category as well. So I said that's why I said there's a spectrum to this. So we could unpack that and talk for hours just on your last few sentences. Yes, we could. So, but that that was what I was trying to communicate to this group of developers yesterday. And and so that's why I thought, man, like not that we want to self-promote the boot camp and sell anybody on it because at the same honestly, it fills up by itself. We don't need more people to come through. But yeah, but if you're interested, we'd love to have you. We want people that really want to We want people who are interested in two items I think we need to point out in retrospect. Um, one, it's very important you understand when I talked about nail it, build it, scale it. Jordan, put up that graphic in the nail it phase or the search phase for a business model. It's very important. We teach that you don't have to quit school. You don't have to quit your job to be in that phase. If you are 100% committed to your startup by being only working even in the search phase on that startup, you'll go faster. But you can certainly go to school, have a job while you're during the search phase. It just will take longer and but that's acceptable. But once you've nailed the business model and you're going to go into the build phase and the scaling phase, you obviously have to be full-time committed for any kind of scalable venture. That's important. I just didn't want people to think they need to quit their job to do validation. But they they but I was taking them through that process and they were starting to line up everything like, "Oh, okay. So once I do find this, I would have to drop my job. Yeah. Or go find fundraising to get to give me some kind of payment or salary to keep me going. And they were just like, oh, I don't I don't know if that's the path I want to go down. So the the knowledge and education of this boot camp is also quite the second thing I want to bring up is quite transformative. In other words, it will change how you think and approach business and entrepreneurship significantly. Um that's um very important to understand and that's why it's also important to keep in mind that all of the founders in a venture need to be similarly indoctrinated on this. For instance, we have a policy. We we kind of look at founders primary secondary tertiary founders and that word means within a founding group there's often one or maybe two primary founders and then there's secondary. And that doesn't mean there's more um important or beneficial founder. It's just there who there needs to be a leader who came up you know who's the CEO who came up with the idea is the real charging person. But the most important thing is if let's say you have three founders in a company having one come through this boot camp and the other two not coming through the boot camp is not that great of an outcome because why? because the other two founders will not understand the massive transformation that the participating founder just went through. That's important to understand. So if the one coming to our boot camp is actually a secondary tertiary founder, we don't allow it anymore because the primary founder will not get what the secondary tertiary is trying to do now within their organization. So we always have to have a primary co-founder attend our boot camp or it will mess up the founding relationship the founders's relationship amongst themselves. So what's the summary of that second point I wanted to make? I wanted to say that it's way better to go through this transformative experience as a complete founding team. Right. Yeah. So, wrapping up a few of the uh the discussion on the boot camp, I what what could participants actually expect coming through here? Like the end product like if they come through the boot camp, where are they at? What can they have? What can they expect? Okay. So, the hardcore boot camp's mission is to help entrepreneurs get to a validated business model. Yeah. But we go beyond that with our mentoring. We will help them with building and scaling. Y um all that. But key is getting to a validated business model. Having a validated business model is like when angels sing or is the golden uh you know music playing. Yeah. It just when if if I ever am looking at you and talking with you and mentoring with you and I say and you feel you validated your business model, I go you have validated your business model. Well done. That's a magical moment. Entrepreneurship. Now it's just a question of are you the founder the one to execute which is synonymous with product market fit or no. Yeah. Yeah. Product market fit and validated business model are synonymous terms. That's when you truly academically scientifically have proven product market fit. And something I want to address with you is we could also say the boot camp helps you to derisk. Yes. what you're doing with that comment that you made earlier is every stage that you on that timeline of a startup and those five stages we tal every stage you progress through and every item of work you're doing you are derisking the whole way as you've come through this Tyler as my son and coming through and and following and doing all this you've now seen many cases that I've seen for decades but you've now seen what happens somebody comes into the boot camp they have an idea and it's a pretty good idea and they come in and they think the business model is going to be this one way and what market they're going to go after and how they're going to do things right and they get our training and they go out and do the use the tools follow the process and within a week they find out oh my gosh if I had done what I thought I was going to do I would have spent a year and lost so much money yeah and they get put on the right course and they're doing it very efficiently and low cost to get to the right answers you've seen that now multiple times time after time. That's the the thing is is this works. Lean startup works. The methodologies and the way that we do it, it's tough love. There's many many participants that come into our boot camp and find out their idea absolutely sucks. Then they also find out that what they thought the first business model was going to be and how they were going to go to market is completely wrong. They a lot of people come into our boot camp never having done any kind of serious discussion with their target customers and when we force them because we're we're a tough love boot camp. We make you do it right. Yeah. And they go out and have the first rounds of talking to real customers, it is a life-changing experience for them. And more often than not, they find out their assumptions were wrong. Yeah. But that that's in a form that's derisking as well. Yeah. Finding out your assumptions are wrong and go getting closer to the winning path is de-risisking. Yeah. But there's kind of two sides of the d-risking. You're derisking your personal life. Yes. Right. Why why do you want to take an idea and try to make it work in a market or customer set that doesn't exist? Take two, three, four, five years of your life. Take your life savings. take your grandpa Joe's $100,000 that he gave to you on just basic trust and or whatever any investor's money or any resources and of time or or or money or whatever it is and throw that down the drain. That's a huge risk. That's why everybody's scared of startups in the first place. So derisk your personal situation, right? Yeah. Here's a couple concepts that are important. Maybe we can get some graphics up on this too. For instance, if you start a company and let's say that it takes you 9 months to do what you could have done by following the principles we've been discussing and that we do discuss in our boot camp could have been done in three months. Those six extra months while you're doing that, you are burning the most important commodity you have, your time. You're probably burning money for six needless months. That's how companies fail. they run out of time and money. This is super important. What you want to do is compress the validation phase from this to here so that you don't waste all of the fixed expenses and burning of time that happen in wasted months, months after months. This is really important to understand. And so hopefully what you understand is that a thing like a boot camp and it's not just our boot camp. Get with anybody, a mentor, a program somewhere where they will hold your feet to the fire and make you truly prove that your assumptions and hypotheses are correct and true. The worst thing you can do is act on assumptions. The most expensive activity for an entrepreneur is acting on assumptions instead of facts. Yep. And that derisking of your personal situation, your family's going to be happier, your spouse is going to be happier, your life is going to be better, but also the investor is going to be happier, right? As you're making this progress in your startup, you're also derisking it for the investor. If you're seeking capital and you're making all this progress, you're generating idea, you're validating with the target market, you're building out that business model, and you're actually validating it and getting that product market fit. That is a d-risk situation for the investor. And the good news is lean start methodologies don't cost much money. You don't even need an investor to do lean startup most of the time. Yeah. So, so the interesting thing is is you should be talking to investors once you've arrived at that validated business model. Well, that's what we invest in, right? That's what everybody asked me at that event yesterday. They were like, so what what stage do you invest in or where are you at? Like what kind of revenues or what kind of ideas do you need to say? I said product market fit. Yeah. Validated business model. If you can show me your results and your documented proof that you have gone out and done this validation work of talking to a 100 customers and 80 of them said if you build this I will buy it and show me the detailed work that's gone into it. Not just in your head because a lot of entrepreneurs do do that. They say oh I've talked to 20 people. Okay where is it? What did they say? What's going on? And they can't prove it. But if you can prove it that's where we invest. Yeah. Yeah. It's so funny. I think of all the times I've asked an entrepreneur says, "I've talked to a hundred people and I know this was great." And I go, "Do you have records of who you talked to? What did they say? How did they say it? And what questions did you ask them?" Well, I didn't have a script and I didn't write anything down and I don't know who I I can't tell you who I talked to. It's like, okay, then you're not a scientist, are you? You're giving me anecdotal stories that have no meaning. Or it turns out to be their mom or and grandma. I don't invest in that. I invest in entrepreneurial scientists who validate business models. Yeah. someone who goes to their mom and says, "Hey, is this a good idea?" "Yes, it is, honey. Yes, it is." So, yeah, that that that in a nutshell is the boot camp. We have one starting this May. We We do it every three months. We do it every quarter and um you know, we think it's beneficial, but at the same time, go to startup ignition.com. You can read all about if you're interested, you can apply there. We'd love to have any entrepreneurs that want to take this seriously and do this. And we'd love to see you participate. We just love to teach. We've made it as cheap as possible. We don't make a living from it. We just want you to pay a tuition. So, you feel committed and sacrificed and uh we want to help as many entrepreneurs as we can. So, move moving on in the podcast. I have another segment here that I've compiled some questions that I thought were pretty relevant. Um, and they come from a ton of different sources. One of which is our online community. Another one is uh very popular subreddits on Reddit where they're asking entrepreneurial and startup questions. And I thought we would take a couple of these and field them, give our responses and our thoughts and just tackle those together and just see what we come up with. So I have a few do we have cuz we're kind of low on time, aren't we? Yeah. Let's go. You know, we probably have another 10 15 minutes so we can make a good a good episode here. Maybe we cut this part out, but um so let's go to let's move on to these questions. We have some time for questions. Okay. And so here's one. And moving off of that topic of the boot camp, but also staying relevant to it and coming from there is what what and this is a question for you. What are the most common mistakes that you see early stage entrepreneurs make when they're trying to validate their business and when they're trying to validate they believe in the processes we've talked about, but they go out and try it and they make mistakes or Yeah. But what are the So when you're in this process of validation, what are what are the mistakes you see early stage entrepreneurs make and how can they avoid that? Okay, so uh number one, they do it by survey instead of in person. Um we talked about that if you read all the literature around lean startup and validation work, they deride the process of using surveys because you don't get the rich context of you do by sitting down with a person live. Well, our previous pulling on our previous podcast with Brian uh Christian Jansen of Limble CMMS. He literally said, "I was on this idea and I went and talked out talked to 200 facility managers and went to their facilities and talked to them." He's like, I even wanted to know the cuss words they used around the problem they were experiencing. That's how intimate he got in his validation process. That's what you have to do. core concept is that it's getting out of the building and actually talking to the customers one-on-one live. It's not just sending out a survey. Surveys are important earlier and when you're just trying to work on your idea and see if the idea is good. Maybe your first step into validation is okay to do a survey that frames you, but you don't get true validation without human to human. Yeah. Okay. Uh number two is one iteration only. Here's the issue. when people learn about this and go do it and it is transformative and I you have to we teach the law of statistics if you don't have at least 20 subjects as a scientist you can't extrapolate to a larger population so people will set up to go out and talk to their customers and they'll literally go out to two of them like one or two of them and it's true the first five or so are so transformative in your way of thinking about your idea they come back and go oh John I talked to two customers customers. I was so wrong. I've learned so much now. Oh my gosh, I can't believe I was going to do what I the way I was going to do it. Now I know what I need to do. And they've only talked to two people. And they go, I know I need to do this and that. And I go, no, hold on, Buckaroo. Okay, you've talked to two people. You can't make any conclusions till you've talked to 20. Yeah. And that's the law statistics. You can't extrapolate beyond, you know, let's say your target market is millions of people or, you know, extrapolate that thousands of thousands of business customers, right? From two people, you can't do that. You got to get to at least 20 and we'll tell you often you need to go to 40, 60, 80 or 200, right? But anyway, they what they do is they first of all go out, have a few conversations, and it's so enlightening, so enriching, so transformative that they think they've arrived. Yeah. They want to move quickly from that. Yeah. Then then let's say they do 20, they do 20 and they've learned so much and they now think they've arrived. What they haven't done is they need to it's an iterative process. It's not just one and done. Let's say that you go out and do 20 and you find out, yeah, I need to take a pivot here. I've got to change the way I was going to attack the market and my product needs a couple features I didn't think about. Okay, so I take that pivot and make it I don't stop going talk to customers. After making that pivot, I go back out with whether it's to the same 20 or a new 20 and I go out and test that and validate and validate with that validate the pivot. And that's really important. So, two common mistakes that will kill you is doing not enough and only one time through a set. Yep, I agree. Those are great. Those are great comments. Okay, next question that we have here. Do you have a story from your own experience of where you've pivoted one of your own ventures based off of customer feedback or market feedback and what lesson did you learn or what did you do in that circumstance? Many times. Okay. So, think back to your career. What's the biggest one you can think of? There's two huge ones. One was with the print yellow pages industry. Um, I assumed assumed that being formal telephone company like cuz I competed as an independent publisher against the telephone company that put out the big yellow pages for a market and I went in and did an independent competitive product. I assumed that the customer, the business owner buying Yellow Pages advertising wanted a formal suitwearing business-like company sales rep image. Mhm. Okay. And lived on that for several years being kind of a clone of the phone company. Somebody came to me and said, "Have you ever thought about being fun, no tie, you know, less formal with your customers and what that do?" I hated the idea at first. I assumed I was right. But I said, I better go check this out. And so then I started going out and talking to the users of the book and the advertisers of the phone book. So the business owners and the consumers. I had a two-sided market, right? I sold advertising in Yellow Pages book. Those young people out there that don't know Yellow Pages, we used to publish books this thick and distribute to every home and business in an area. And that's how you look stuff up. There was no internet. Okay. So, that um that yellow pages book I went has two users though or customers. When we talk about customer segments, some are non-paying. The advertisers paid me money for the advertising, but I had to get the users to use the book to look stuff up in order for the advertisers to get value out of it. So, I had to test both of them. Well, I went out and lo and behold, I discovered that we were weaker by trying to be a clone of the phone company and having the buttoned up brand and tie look. Yes. And but that's my nature is to back especially back in the day then to be that way. Yeah. And I found out actually no, they would welcome a funloving crazy yellow pages company more and it was really hard for me to swallow but all my research validation work validated that. So what what was the brand before and what was the brand after? The brand before was called Neighborhood Telephone Directories. Okay. Mhm. And we switched the brand to banana pages cuz they were yellow. Cuz yellow and banana have a 98% correlation in the humans, right? You did a test with me earlier in this podcast. If I say the word banana, yellow is one of the first things. Snap association. And so banana pages, that's saying we're taking the old industry of yellow pages, making it more fun. Absolutely was a phenomenal success. It set me on a career care career trajectory. our company on a trajectory 500% growth in three years unbelievable success and put my name as a CEO of a yellow page company on the map in the yellow page industry it transformed the entire industry every phone company changed their name every independent publisher nobody wanted to just be boring directories or yellow pages anymore it was trans I was famous for it okay second story was when I launched the first ever internet yellow pages I thought I was just going to put up my yellow pages on the internet. And I went out and talked to the market and found out that it would be way smarter for me to go beyond just my yellow pages going on the internet. What if I made the definitive single portal where all yellow pages would go through me to go out on the internet and create uh so I could have 40, 80, 100 different publishers on my portal, not just me as one publisher. Mhm. And that was give birth to the idea of yellow pages on the internet. So I went from putting banana pages online to a consortium play of having multiple publishers through one portal and me controlling and running the portal. And that gave birth to, as you know, as my son, the reason we have a lot of freedom of life is because I made that switch and change listening to the market and adapted to the internet. The reason we've had the life we've had is because of that change and and doing that. And so that is all because and often I disagreed. I thought one way and the market told me I was wrong. Yeah. So you have to move off of your thoughts and actually adapt to the market. Yes. Yeah. And pivot. Yes. It's very important. And this is back to one of the things you even like to quote because I've quote it so much and that is entrepreneurs are not smarter than the collective wisdom of their customers. Yeah. And we often think we are, but we have to be very careful. And I I remember one of the stories I have of thinking of that, hey, what's a time in my life where I listen to a market and made a pivot and what did I do? I remember when I was starting that that school that tech boot camp that I that we started the the whole idea was around scaling up founders or entrepreneurs with technical skills. But that market is not big. It's not very great. And I remember when we launched, we were trying to go to all these startup events and go to all of these entrepreneurial things. And sure, we found customers, but really what we had to pivot to and listen to the market was, hey, before you tell pivot, let's be clear, what you were trying to do was help founders, non-technical founders be able to work with software engineers better in the future by getting some knowledge of tech. But even skilling them up the very beginning was even hey the entrepreneurs are great idea guys but they have ab absolutely no technical skills. So you want to make tech co-founders stronger too. Well we wanted to make business founders or the idea guys to be technical co-founders to be their own technical solution. But as you listen to the market, but as we listen to the market, it that was great. But there was more opportunity in the career switcher where they weren't necessarily startup oriented or entrepreneurial per se, but they just wanted to get out of a line of work and move into they were a server at a restaurant. Yeah. Making 20,000 a year. Yeah. And you found out they wanted to make 80,000 a year as a junior developer. Yes. But how did they get there? Yes. They couldn't take four years off and and go to school. But we were super passionate about upskilling entrepreneurs. And we wanted to be the solution for founders. Hey, I'm an idea guy. I want to build a software or tech product or an application or whatever it may be. Okay, come to Dev Mountain and we're going to take entrepreneurs and make you technical. Yeah. No, we started positioning oursel rebranding, marketing, advertising to the career switcher. And that's when our business took off and the market was so much bigger and there was so much more of a pie. Right. And again, I know you're my son, but you you and your co-founders did a fantastic job with that business. It was, if you don't know, Dev Mountain, I believe it was the best coding boot camp in the country and they killed it. Yeah. So, so there's some realworld pivoting market validation and listening and moving off of an original idea or a feature of your idea or a a specific part of your business model and having to adapt and move. And that can do with features, product, the customer segments, the channels, how you go to market, anything. Yeah. And that's the whole business model canvas. A business model canvas is made up of nine segments, nine pieces that explain how all the pieces fit together and work together to create, capture and deliver value in the marketplace. That is what you need to figure out. And each one of those channels and each feature of those channels can be validated individually. So it's a big job if you want it to be and that's again why people are scared of it, right? They're like that's a lot of work. I don't know if I want to go down this route. Okay, well then don't. But this is the best way to create wealth. being an entrepreneur, being a startup founder, being a business owner. So, here's an analogy. If getting to the end result and having life-changing results financially and changing the world with better products and services is your goal as an entrepreneur, which it probably is, those are the goals. Okay, that's similar to let's say you have want to hit a target 200 yards away. 200 yards away. You need a rifle with a laser scope to do that. So, you can't just have your pistol on your hip and go and hit 200 yards away a small target. But with a rifle, with a laser scope, you can hit that target. So, these processes we're talking about is getting that rifle with the laser scope versus shooting from the hip because that's what a lot of entrepreneurs do. They shoot from the hip until they run out of time and money and fail. Yeah. Or bullets. Yeah. Yeah. Exactly. Okay. All right. Let's let's wrap it up. Yeah. Um this podcast has been great. Thanks for joining us and and and coming along the journey with us. We appreciate everybody who's liking and subscribing and following along. It was really cool validation to also I keep bringing up this event yesterday, but I met people who have listened to every single podcast that I didn't know from Adam and that's really cool to us and to me and to have that kind of a following and people who are actually appreciating and understanding and driving along with us of what we're talking about here. So, if you find this helpful, share it, comment, subscribe, you know, send it to a friend, send it to your entrepreneurial founder buddy, send it to someone you know that's working on a business. We really appreciate it and we hope we can help more of you out there. So, thanks for coming along, Tyler and John. We're signing off. This has been the Startup Ignition podcast. We'll see you next time. Thank you. It next to rock next to rock next to rock.