Within entrepreneur groups, there seem to be lots of questions about when you should quit your day job and go full time on your new startup idea.  Generally, I am a fan of keeping your day job as long as possible as everyone needs money to live and having a day job means you keep that income and reduce the stress of paying rent and buying beer and pizza.  In addition, when you start your new company, you are likely to be working nights and weekends so training yourself, your friends and your family on this new lifestyle is a good thing.  Also, by having very focused time on your new startup (part-time vs. full time) you will focus on the most important issues, the “critical few vs. the important many”.  Finally, you will find that doing your new idea will take alot longer than you planned, so letting that time play out while you have an income is a good thing.  Here are some rules that I would apply;

• Spend at least 3 months on your new idea – this means telling people what you are working on, finding customers, finding other people to work on it, making prototypes and getting comfortable that this is the one…
• Develop a workstyle that involves at least 3 nights/week and 1 weekend day, preferably with other people who you want on the team.  This will get you into a rhythm.  You might try to do some specific things on each night (product dev, customer dev…) and get you/your team into some form of Agile sprint process where you can define meaningful progress on all relevant aspects of the business.  Get into the hard working habit.
• Consider having 6-12 months of living expenses in the bank and discuss this with your family/partner/roommates…you need to know how you will pay the bills while you do the startup.  Depending on your progress, you could be courting investors at this time so that investment in the company is a trigger to quit your day job.
• Have a commitment of 3 people who will join you and quit their own jobs and understand their parameters ($, focus, understanding of equity stake…) – to build a big idea, you need people and having them lined up before you jump it will be important.
• Try to get verbal commitments from at least 10 customers (for b2b companies) or 100 consumers on how they would pay for your solution.   This is the hardest one to get, but if you are working on a big problem and you know where the market is, you should be able to have a group of people who are begging for the solution.  Sometimes not having a real product yet is even more powerful in the early days, but keep working on customer development, it will be critical.  Steve Blank has written about this extensively in his book The Four Steps to the Epiphany and you should read it.

If, after all these steps, you still have increasing excitement about the customers, problems, solutions and team, you can really consider taking the plunge.

image credit - http://www.etsy.com/listing/79054001/art-for-artists-motivational-print-quit

I get asked for my advice on new startups alot and I like to give it.  I have also been very fortunate and had great mentors, advisors and investors.  So, I can say that the best relationships are ones where the entrepreneur works hard to manage his advisors.  This generally includes;

• very regular updates – I like to do every 2 weeks.  This gives enough time for substantive progress, but not too much time to forget what is going on.  It also gets an early entrepreneur on the right cycle for future board meetings (monthly).  It can also usually be aligned with a software sprint releases so you usually have some good product news to share. Stay on schedule and do them religiously.
• provide the context  as backup – sometimes I can give advice with very little context of the exact specifics of the business, but if I think I need more detail, provide me links to supporting docs, your thinking, the choices you are weighting (pros/cons)…  You can also provide a summary of other thoughts from the team or other advisors to help me know the overall context of the decision.
• ask for specific help  - investors and advisors are usually busy and yet they really want to help. So make it easy for them to focus their time, effort and expertise on the things you really need as an entrepreneur and where they have specific expertise.  Laying out where you need help in an email, an update or a meeting is really useful to direct an advisors focus.  And, if applicable or when sending out to a larger group, be even more direct and ask a specific person to do a specific thing for you.
• choose the right venue – sometimes email works, sometimes a call, sometimes a 1:1 and in many cases you are better off to get the group together to discuss a more complex or important issue.   Choose the right venue  with a focus on the most efficient and timely way to get the input you need and no more.
• keep track of time - most of us advisors have a mental model of how much time we have to give to any one company.  This varies depending on our level of engagement and/or the specific needs of the company at any one time.  But, as the entrepreneur, keep this time in mind and try to balance it across advisors and across a timespan so we can stay fresh and alert.
• give credit and say thanks – it is always nice to give public credit to people who are helping.  it shows that you are listening, appreciate help and it often spurs other advisors to raise their game and do more.

As for the specific updates, I have written about that here and here and here so hopefully I am giving enough, specific advice.

Customer Development = The pursuit of customer understanding

Part of Customer Development is understanding which customers make sense for your business.  The goal of listening to customers is not please every one of them.  It’s to figure out which customer segment served his needs – both short and long term. And giving your product away, as he was discovering, is often a going out of business strategy.

The work he had done acquiring and activating customers were just one part of the entire buisness model.

via Killing Your Startup By Listening to Customers « Steve Blank.

I work on lots of new ideas for companies. I have developed the following tool that helps me (and it seems many others) to quickly develop and evaluate these ideas.

In the simplest form, it helps create an elevator pitch, (e.g. for www.gist.com – We focus on relationship centric professionals like sales, PR and recruiters (C) and, save them time (V) as they prepare for meetings, by creating dynamic full-contact dossiers (F) and charge them a monthly service fee (B).  It is not critical for this to be the marketing pitch, but it helps.

To get started on finding the “MVC” (minimum viable company), you need to start with the “smallest idea that is big enough” (a few customers, 1 value, 1 key feature and a clear biz model).

You need to identify real people you know (we built Gist for me and 2 sales guys, thx Kendall and Brandt) who can validate the idea, value, key features and their willingness to pay (which should be very high).  As you find representative people, you can abstract key attributes of them to start to generalize into “personas” which becomes your real target customer.  And from here you can start looking for the best beta users (more on that here)

You can then compare different parts of the model to see how well the idea works.  A few examples;

• C–V – does your target customer value what you are doing (e.g. saving time, qualifying leads, increasing revenue…) and how much (scale of 1-10)?  Is the value a real pain or just nice to have?  How do they solve this pain now?  How would they quantify value?
• V–B – is the value your delivering correlated to the business model?  If you save someone time, do you charge more depending on the amount of time you are saving?  Work hard to correlate these things by changing one of the other.  This ends up relating to ROI (return on investment).
• F–B – are the features you are building organized to support the different price points?
• C–B – does your customer usually buy in the model you are proposing?  What other services/products do they buy that are similar to yours and is the model similar for these products?  How much do they pay for related services?
• F–V – are the features you are building aligned with the value and in similar priority order?  If your value is saving time, do you consider each feature on how much time it can save the end user?