News and blog posts from our students and faculty

Monthly Archives: April 2011

Our Commitment to Low Cost, High Quality Education

As we end our first year, I want to reiterate a fundamental value of Austin Center for Design: A commitment to affordable, quality education. The relative cost of graduate study in the US has grown out of control in the last few years, and I’m not the first to point out the untenable prices of higher education. Author of DIY U Anya Kamenetz asks “What’s to be done about dropout rates and outstanding student-loan debt that currently totals over $730 billion, or $23,200 per graduating senior in 2008?”

A design degree from any of the top schools in the country, such as CMU, Pratt, or Parsons, will run $32,000 a year, and the two year total of $64,000 will take most students close to 10 years to pay off at a monthly rate that rivals their rent. Students’ collective focus is shifting from a “winner takes all – house, car, and garage” lifestyle to one that’s more thoughtful, methodical, and purposeful, yet without a giant paycheck, this tuition rate appears absurd. With $64,000 in debt – likely on top of $150,000 in undergraduate pain – it’s difficult to imagine a new alumni embracing a risky job or opportunity. Yet it’s precisely those risky jobs and opportunities that we are hoping will solve societal woes – innovators and entrepreneurs.

MIT Media Lab’s new director Joi Ito has made affordable education a primary concern, and it’s clear that the school is responding to popular pushback against high tuition rates. I’m hoping to see drastic cuts in the tuition rate at MIT (both graduate and undergraduate tuition without room and board is $39,212 per year – that’s a quarter of a million dollars for an undergrad and grad degree), but I’m not optimistic – I understand the economics and politics of an endowment, and tuition rates generally go in one-direction only. SCAD – where I used to teach – pays its president just shy of two million dollars and demands a graduate tuition of $30,960 per year for a graduate degree. How can a student hope to pay this off in their professional career?

I wonder if these schools might think creatively about their business model – they are, after all, giant businesses – and find a way to subsidize the majority costs of the endowment in another way. What if universities pushed harder to encourage technology transfer, claiming minority investment positions in startups and helping find practical uses for the research that’s conducted in most research institutions?

It’s time that design schools took their user-centered design methodologies to heart, looking at their users – that is, their students – in a more humane light. Burdening a student with such phenomenal debt at such an early stage of their careers is criminal. The cost of education seems to be unrelated to the quality of delivered product – it is not an equitable exchange. And of all subjects, design claims a fundamental responsibility to change the world for the better, demanding empathy with users. Why, then, do we continue to put such a cost on this responsibility?

Austin Center for Design exists to transform society through design and design education. We hope to be able to utilize our tuition revenue in the future to fund the startups and entrepreneurs that complete our program – to create startup-specific scholarships and help these students achieve their visions. As we enter our second year and explore the legal logistics of this, we turn to our colleagues at other more seasoned and established design institutions and ask them to do the same. Consider how you can lower the cost of tuition, fund the passions of your alumni, drive innovation in the model of funding education, and change the way the educational system works in the US. I have no doubt that design will drive a charge for social and cultural change, but the scale of this impact will remain artificially constrained until our graduates can embrace financial risk where it counts – not when they enter school, but when they launch their own businesses.

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AC4D Startup Pocket Hotline in the news

Austin Center for Design students Chap Ambrose and Scott Magee noticed that the front-desk attendant at the local homeless shelter was overwhelmed. With a line of homeless out the door and the phone ringing off the hook, the attendant – likely making minimum wage – was unable to help any one client in a meaningful way, and was left to sacrifice depth for breadth, moving the line along and giving just enough information to get the phone calls to stop. With so many people interested in volunteering and helping the homeless (the Christmas dinner service is all full, thanks), why is there such a lack of professional, qualified help answering the phone?

Chap and Scott developed Pocket Hotline, an application that can route support calls to anyone qualified to answer. Instead of the calls ringing at the homeless center, a volunteer can receive calls on their mobile phone whenever they are “on call”. Pocket Hotline gives the phone operators a searchable index of information at their fingertips, allowing them to answer questions quickly and effectively.

Chap and Scott set up a pocket hotline for Ruby on Rails support, encouraging novice software developers to call in and talk to an expert. Rails Hotline was picked up by Hacker News, and in just a few days time, they’ve:

Congrats, guys, for a great and public entrance into the startup scene. Your product is solid and grounded in some great user-insights; you are performing an excellent service. Keep it up!

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Marketing 101 from @getmetacos

So whut had happen wuz: Hour School was like, “Yo Scott, whut joo know bout marketing?” And Scott was all like, “Bring it.” And lemme tell ya, dat boy Scott dropped some dope wisdom on us.

If you want some framing and language and context and understanding to enhance your nuts and bolts and excel spreadsheets, read on. Because theory + practice = rainbows and unicorns!

Everything is marketing.

Marketing is not a 4-letter word. Everything you do is marketing: your name, your brand, your words, how you present yourself, your Twitter handle, your tone, your product, your customer support, everything. In the end, the culmination of how people perceive your company can be affected by any of those pieces (for better or for worse).

Marketing is about understanding how people see you, and how they hear you.

The 4 P’s

The 4 P’s are something you learn in school when you’re starting off as levers you can adjust. You end up internalizing them, and then no one ever explicitly talks about them in meetings.

  • Product: Creating value means understanding your product market fit and making sure you fit within a niche where your product and values align with your customers’. Just talk to people, and find out what their needs are. (Ahem, design research.) So much of typical marketing = broadcast. Don’t settle for that. Find the right people, and position it for them.
  • Price: Projecting your value and aligning it with other’s perceived value.
  • Place: How are people going to find you? How are they going to find out that you’re good? Where are they when that happens? Use customer journey maps and temporal zooms to understand those touchpoints.
  • Promotion: Quotes from your customers speak volumes. Transfer of trust is very real. Find a way to have a connection to the person/industry. Craft specific messages for specific audiences. “No one wears a sign on their head saying ‘I want your stuff.’”

The most important P

is of course patience. Do it right. You only get one shot with some customers. Listen to them.

Marketing vs. Sales

  • Marketing = demand generation: who you are, where you are, how do people get to you. Go to where the people already at (fish where the people are already at.) Don’t create new behaviors; discover existing behaviors. Make it so simple to work your product/service into their normal patterns, they can’t not use this next great thing.
  • Sales = conversion: how do you get them to do this action or to transact? Awareness is well and good, but to be sustainable, you need to generate revenue, so you can get a return on your investment.

Read startup-marketing.com

Great posts, for example this one on Lean Marketing Basics that take cues from Lean Start-Up values. Basically, be smart about your marketing: don’t just throw money at old broadcast mediums when you could be creating more personalized messages.

  1. Minimize waste via sophisticated metrics (Understand where your $ is going with stuff like google analytics, measure it, understand whether it’s good or bad, adjust as needed, so you’re not throwing money away.)
  2. Understand your customer’s values. (empathy)
  3. Optimize the funnel (typical funnel 1% transacting = good But if you find the right people to market to, you can make the funnel more of a cylinder. Don’t waste your money bringing in non-qualified leads at the top. No reason to market at people who aren’t your customer.)

Goals

Set marketing/sales goals, and make sure you achieve them. When things aren’t working, good marketers turn the magnifying glass back onto themselves; bad ones just throw more money at it.

Consistency

Be consistent in all of your messaging. If you’re consistent, your message will get across. Nuances may get seen by outside as something different. (e.g. if you’re selling your product to three different groups, you may be tempted to talk about it in a different way to each, but it’s still the same product; don’t confuse people)

Makes it easier for others to be able to describe it to other people, makes it easier for others to evangelize for you.

Competition

Someone else is probably already doing it; look at what they’re doing for free research. What’s working, what’s not?

Don’t forget the basics

  • Find out people’s intents and motivations
  • Get to where they’re at and other people like them
  • Visualize the experience. Think through every detail of your business as if it’s successful. Work through details such as: in an ideal world, how would they find you? what’s their first experience with you? when would they realize they’ve found something great? what would you be doing when they found that out? why would the user think it’s great or important?

Key questions

  • What would make you do this again?
  • What would make you want to tell someone else about this?
  • How do you make your customer kick-ass? How do you make them awesome?

Resources

Conclusion

Mad props to Hour School and Scott Magee for throwing down and helping a sista out with her humble start-up marketing plans.

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An Interaction Designer at 3-Day Startup

40 people.  3 Days.  5 startups.This weekend, I participated in 3-Day Startup with the goal of launching a technology company in three days, on no sleep, and with people I just met.

The weekend started out with everyone pitching their ideas and then voting with their feet which project to work on.   I chose Tripgather, a data aggregator for travelers because I liked the people on the team.  I am lucky to work with amazing, passionate people every day at AC4D and was happy to have a similar privilege at 3-Day Startup.

Our team:

  • Jonathan Spillman - UT MBA, awesome leader, idea man
  • David McCleary - UT Masters in Engineering, Mr.Make Things Happen in business and marketing
  • MacKenzie Seale - UT Finance undergrad, content guru, Miss “I’ve never talked to random people, but let’s do it.”
  • Garrett Eastham- Computer Science whiz from Stanford, who Jonathan rightly called the “Michael Jordan of programing”
  • Levi Lalla- Engineer from MIT who just happens to also front-end code with the best of ‘em
  • And me, AC4D interaction designer

What do you do with an interaction designer?

At our first team meeting when I announced my role, I got a few understanding nods from the programmers and understandably blank stares from the rest of the team.  What does an interaction designer do? More importantly, what do they do at 3-Day Startup?

My short answer – nothing and everything.  Here’s where I found myself:

  • Traditional Design:  An “agency” of three graphic designers worked with all the 3DS teams, and they were awesome.  I worked with them to help make our visual language matched our overall product message.

  • User Research: My heart leaped with joy when our whole team enthusiastically wanted to talk with customers.  I pushed for design research open-ended conversations rather than trying to collect quantitative data through surveys.    Steve Portigal’s got some great wisdom on the perils of bad surveys here and here.

  • User Flows:  What does a user expect to see?  What does a user want to see?  What user flow goes with our pitch story?

  • Pitch: Pull out the post-it notes.  Let’s craft a story that anyone can understand and that clearly tells the problem we’re trying to solve (Justin Petro would be proud of the post-its).

Looking back on the weekend, on the surface, it looks like I did nothing.

I didn’t present.

I didn’t code.

I didn’t do the financial model.

I didn’t do the graphic design.

Hell, everything I did was thrown away.

The home page I designed? Scratched.

The user flows and wireframes on the whiteboard?  Erased.

The post-it notes used to craft our pitch?  Trash.

But I couldn’t be more pleased. All that throw away meant that over the course of 3 days, we were iterating, reframing, and finding new and better ways to tell our story.  That’s what an interaction designer does and that’s what I brought to 3DS.

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Healthcare marketing AKA games AKA interaction design

When I started writing this post, it was about marketing trends in healthcare. Rereading the draft, I realized they were actually gaming trends, and that they apply to interaction design in general. But those are all just surface key words. The reason these ideas resonated with me is because of the opportunities they open up for forward-looking and people-focused designers.

Movement

The following caught my eye in this post about gamechanging trends in healthcare marketing (pun not intended, I’m sure):

Kinect SDK could open the door to the next big thing in UX: This is a fantastic one – Earlier this month, Microsoft released a software development kit for its motion-controlled gaming system Kinect. That means third parties (like us) will be able to develop games and experiences that work on Kinect. You can imagine how this could reinvent how we think about UX. Today, most of the experience revolution is happening on the touch screen (in the apps and tools we’re developing of iPads and other slates.) Kinect opens up the potential of creating motion-based interfaces that connect with real-world human behavior.

Many of the early announcements around the Kinect SDK include examples alluding to Minority Report and Wall-E, and paint pictures of its use in people’s homes or offices. But I’m much more intrigued by the idea of something like this in a hospital or a doctor’s office, where there is a lot of natural movement and interpersonal connection. Motion-based interfaces remove the middlemen screens that come between many of our existing people-to-people interactions, as we move further toward the internet of things.

Education

The first post led me to this one about what the Madden NFL Game can teach us about healthcare education/awareness campaigns. Instead of PSA’s, posters, and Facebook pages, let’s embed messages where they make the most sense and meet people where they are. That phrase gets tossed around a lot in my world because I value the idea, and this is a great example of that.

Instead of creating a PSA about concussions during football games and encouraging people to sit out after receiving one, NFL Madden from EA Sports started incorporating the scenario into their video game.

…the folks that developed the game recognized an issue with their sport and the well-being of its athletes and they chose their game as a means to address that. The reasons why this will probably be the most effective way to educate kids about concussions are simple. First, you’ll reach a huge proportion of them where they are (opposite signs in a doctor’s office) and likely disproportionately reach actual football players too. You put the injury in context of something they can understand. That is, if a concussion happens to your player in the game, you see the effects in real-time. You see the impact and the announcers reinforce it. As a player, you can’t help but absorb this, as the game stops for a moment while a replacement comes into the game. What will eventually happen is that players of the game will alter how they play the game to reduce the chances that their key players end up with a concussion (Madden NFL developers plan to make certain hits in the game result more often in concussions). Consciously and subconsciously this changes the way you think about the real game of football as a player too.

This will work to educate the people that matter: football players, coaches, and parents of football players (who also will be playing the game). It will work because it will reach this audience where they are, with a message that is very much in context of what they are doing at that moment, at a time when they are receptive (whether they know it or not) to receiving this message, and in a form that’s simple to understand with clear cause and effect.

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Why now is the time to be in #IxD and #SocEnt

We are interaction designers. We are social entrepreneurs. We want to work toward social change. We want to make an impact. And we want our lives to have meaning. The moment is more than ripe. The possibilities are breathtaking if you think about where we are now as…
  1. As designers and the general public start to embrace that design is a verb, is a liberal art, is a collaborative effort, and is about the WHY. (Questions designers were asking during ‘one day for design,’ curated by Frank Chimero.)
  2. As technology makes the boundaries between the internet and life “so porous as to be meaningless.” (Beautiful and thought-provoking presentation on what’s Beyond the Mobile Web.)
  3. As we infuse ethics, commitment, values, and creativity into all of our work, no matter the channel or platform or means. (What nuns, yes nuns, can teach you about social media)

Yowza.

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Theory of Social Entrepreneurship

AC4D is a different kind of school. We quickly realized on day 1 of student orientation that we were all here to work toward social impact. There weren’t going to be endless discussions about whether or not we should be “doing good” because it was pre-defined and a given in all of us as AC4D students. As Steve Portigal observed after guest lecturing:

The school is focusing on applying design to social change, but the discussion is about the problem solving power of design – to understand, reframe, and innovate, rather than an excess of earnestness or worrying. I suspect their point of view is maybe what you could call post-worldchanging…of course you want to address homelessness, let’s use the tools we’ve got to look at it.

We can’t just talk the talk; we have to walk the walk.

The great thing about the mix of method and theory classes we’ve been getting in Interaction Design is that we can both walk the walk while being able to talk the talk. We are able to frame our work within the larger context of the design community while understanding the history of what’s come before us.

We are missing the same kind of framing in the world of social entrepreneurship. We need a “Theory of Social Entrepreneurship” class to support our real work in the social enterprise space.

  • If the history of Xerox Park and Lisa and desktop publishing enrich our understanding of what is possible in our interaction designs today, the history of philanthropy and social finance and the sustainability movement give us a frame of what social entrepreneurship means in today’s world.
  • If we must read and engage in critical class debates about John Dewey and Richard Buchanan and Emily Pilloton to be able to attend IxD11 and not feel like a noob, we must also read and engage in critical class debates about Muhammad Yunus and Jacqueline Novogratz and Jeff Skoll to start to find our place in the SocEnt space as well.
  • Our stimulating discussions about the hot questions in design today (design with vs. design for; the role of technology in our lives) should be partnered with stimulating discussions about the hot questions in social entrepreneurship today (measuring impact; how does scale affect impact; passion vs. burn-out; legal structures and not getting sued by shareholders).

A couple of our classmates have been living in this stuff for the past couple of years and know how to talk in the language of social entrepreneurship. And while they were sometimes frustrated with the all talk and no walk of their previous SocEnt communities, we are now in danger of the opposite. I’m lucky enough to be able to pick their brains.

I’m starting to understand that SocEnt in the U.S. is different than its movement in Canada or the UK, and I’m starting to see why I’m still struggling to fit in. In other countries, SocEnt is tackling urban planning and local community issues. In the U.S., the SocEnt projects that get the most buzz and the most traction are targeting developing countries and the bottom of the pyramid. In other countries, SocEnt is tied to universities, research grants, and government money. In the U.S., our funding comes from VCs and philanthropic investment funds—and I’m not sure how funding of research (not just tech R&D) plays into it all yet. (Hope Lab is an interesting model: non-profit org that funds research and development, eventually spinning off social enterprises such as Zamzee.)

I’m wary of VC funds because I can’t guarantee 10x return if I’m operating a double- or triple-bottom-line business. My solution is to simply bypass it altogether (without much critical thought into the matter). I’m sure some debate and discussion would at least help me see my options more clearly.

I also believe that social enterprises and typical business ventures are different and require different types of incubation. Yes, they share the same backbones of business, and yes, fiscal sustainability is tantamount to success. But there are some new core questions that social entrepreneurs have to weave into their start-ups. How do you get your business off the ground while fueling your mission at the same time? How do you define success, and how to you measure that? How do you position yourself in the current marketplace? Cliché but: where is the line between you and your business, your passion and your investment?

Then throw in the questions that design brings to the picture of enterprise…let alone social enterprise. For most entrepreneurs, proof-of-concept and market validation typically come after you have a working beta, whereas designers create their products out of user research and synthesis and have to prove fiscal traction in addition to market validation.

Typically, we find MBAs with a business know-how searching for their passions; in SocEnt, we get reluctant innovators pursuing business know-how. Where do we interaction designer social entrepreneurs fit into these frameworks? We come at it from multiple sides, trying to make things meet in the middle. We’re making it up as we go along, as all adults do. Out of the frying pan into the fire.

Here are some examples of social enterprises that might provide some clues:

  • Tom’s Shoes
  • Catch a Fire (channel corporate employees to do pro bono consulting)
  • Ecojot (recycled paper notebooks)
  • Seventh Generation
  • Para Vida (coffee)
  • Better World Books
  • Good Capital (investment firm that invests in social)
  • Ben and Jerry’s business
  • Brand Aid Project
  • Root Capital
  • O Liberte (shoes)
  • Acumen Fund
  • Grameen Bank

Web sites where the debates are happening:

Books to whet your appetite:

  • David Borenstein: Social Enrepreneurship – What Everyone Needs to Know
  • Jacqueline Novogratz: The Blue Sweater

Conferences:

  • SOCAP
  • A Better World for Design
  • Harvard Social Enterprise Conference
  • re:Vision 2011
  • RISE

Incubators focused on social enterprises:

  • Unreasonable Institute
  • Good Company Ventures
  • Echoing Green Fellows

[Thanks to Hour School co-founder Ruby Ku for a lot of the above links and resources. In the spirit of Hour School's mission to transform learners into teachers, I believe either she or Ryan Hubbard is fully capable of teaching a kick-ass course in IDSE 402: Theory of Social Entrepreneurship.]

Posted in Classes, Social Innovation, Theory | 1 Comment

On Design Education

Scott, Ruby, and Chap making things happen

The biggest takeaway from AC4D, and more generally design education, is the learned discipline of making.   Design exists not in thoughts and ideas, but in the practical implementation of ideas in the digital and physical realm. It’s really easy to live in idea land, talking about the possible.  Often times, conversations provide a false sense of accomplishment and progression toward an end goal without any actual movement. Design teaches that if there is no artifact during or after a conversation, the conversation might as well not have happened.  If nothing is made, nothing is accomplished.

Why is this?  The truth is that the best thinking takes place in the process of externalization.  Most non-design disciplines tacitly recognize this, which is one reason why there is such an emphasis on reports and documentation.  Synthesis happens in taking an idea out of the air and communicating it on paper. To communicate anything requires clarity of thought.  Design, however, distinguishes itself from other disciplines by stressing the importance of the visual vocabulary in addition to the written one. Based on the ubiquity of post-its, for a designer, even words are better understood when represented visually.  These visual artifacts help a designer process an idea but also give team members and clients something concrete to react to and evaluate.

Even once a project gets past the initial idea phase, it’s easy to get sidetracked by tangential ideas, the “wouldn’t it be great if…” conversations.  It’s easy to fantasize about how good or cool or useful an idea might be, but it’s quite another thing to actually solidify an idea and evaluate it.  In the former, nothing is proven or tested, and therefore nothing is learned, produced or accomplished.  In a way, this mentality protects the ego and requires little work.  The latter, requires a willingness to be proven wrong, to throw away code, or realize that a cool idea is not so cool after all.  However, none of that could have been learned just by talking about an idea.

Over an over again at AC4D, Justin Petro repeated the mantra, “Less talking, more making.”  It’s great practice in design, and it’s great practice in all of life.  Stop talking about what you are going to do, and do it already.

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Minimal Viable Product and Design Research

Recently, the phrase MVP – Minimal Viable Product – has come into vogue in circles of startups and bootstrapped entrepreneurs. It refers to the bare minimum functionality necessary to bring a new product to market in order to attract early adopters. Eric Ries – who is credited with coining the phrase and the methodology of a lean, measurable startup – states that early adopters are “the most forgiving. They will fill in, in their mind, the features that aren’t quite there… The minimum viable product is one that allows you to ship a product that early adopters see, and at least some of them pay you money for, and start to give you feedback on.” The intent is to launch something quickly, position it directly to people that can see beyond (and are willing to put up with) a broken and incomplete product, track metrics aggressively, and capitalize on the learning from this subset of individuals.

In circles of innovation, ethnographic research and design synthesis are considered pivotal for arriving at a new, novel, useful, and powerful design solution to a given problem. Known as design research, or DR, this is a form of provocative and exploratory applied anthropology; the intent is to rapidly gain an understanding of a novel space, but more importantly, gain some degree of empathy with a target audience to better understand desires, aspirations, and mental models.

I’ve had success combining the approaches. But I’ve also identified something that bugs me about the “MVP” approach.

DR and MVP give us data. MVP is about gaining detailed metrics that can be used to understand the way a product is working. Design Research is different; it’s about establishing a basis for design synthesis. Through synthesis come formative pillars or themes that can be used as rallying points for the preliminary product design that is created. These become the foundation of the “minimal viable product”. And these are explicitly _not_ features or optimizations; they are thematic design principles that point to the major user goals that a given design will support. DR requires a design team that’s skilled in translation; an utterance from a user isn’t a design solution. Neither is a click trail. Someone needs to interpret the data and make meaning out of it.

DR and MVP share a goal of provocation. Using design research to guide synthesis, and alpha-testing incomplete software with early adopters, are both intended to provoke a reaction. They aren’t intended to offer statistically significant views of how the market might behave, and they don’t act as predictors for mass-consumption or mass-behavior. Instead, they provide product designers with a platform for abductive thinking – for informed decision making. The focus on metrics in many lean startup conversations is used as an unfortunate abdication of point-of-view; it’s easier to say “let’s A-B test this” then offer an informed opinion based on experience and information intuition. But when metrics are combined with qualitative findings from design research, a design team can move beyond an A-B answer; they can answer the elusive question of “why”, arriving at a rationalization of why one decision is a better decision than another.

DR and MVP drive towards reduction. As a designer begins to realize the value of research and synthesis, a curious thing happens – they begin to arrive at the same high level design principles in extremely diverse contexts. Typically, these focus on issues of simplicity, a “hero-path” through an interface, a reduction of linguistic complexity, and so on. MVP arrives, explicitly, at the same conclusions. A minimum level of viability implies that a product offer value – just enough value – to attract or hold someone’s attention (or entice them to pay for a given product). This drive towards reduction is also supported by mobile computing, which forces a level of simplicity due to small screen size, a lack of explicit focus from most users, and a constrained series of inputs. And it falls nicely in line with the ubiquitous trend towards “app stores”, as this implies a modal focus on Doing One Thing At a Time.

But while there are a lot of similarities between DR and MVP, there’s seems to be a subtle difference. The focus of an MVP is on early adopters – those at the front-end of the bell curve, savvy with technology and forgiving with complexity. The emphasis is on features, functions, and advancement; color is a wonderful example of technology-driven product design, or even venture-driven product design, in the same way that boo.com was successful in pioneering massive technology advances on the web. But a DR approach emphasizes and embraces mid or late adopters, or ignores the adoption curve altogether. The focus is on people, humanity, and culture, and the goal is empathy-driven design. Value is created by providing products and services that resonate in new, exciting, useful, subtle or magical ways. It really is a subtle distinction, but one that can be found through intent. As Ries describes, “Why do we build products in the first place? In the end, we hope to be able to launch a product for a lot of customers and have them give us money, so we build a great business.” Many who embrace a DR approach have a passion not for piles of money, but for changing the world, driving a particular value system by shifting behavior, or improving the quality of life.

I wonder if a subtle shifting of MVP focus – from early adopters, to appropriate audiences – can be introduced into the conversation of lean startups?

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The Changing Game of Funding

At some point, a startup needs money. That’s pretty obvious; what’s less obvious is that the landscape of venture has changed – and not all capital is equal. While the giant VCs are still doing what they do best, a vast array of smaller players have emerged. These incubators and accelerators realize that an early-stage company needs more than just money; they need things like physical resources, design and strategy resources, camaraderie, and a creative environment. In fact, in a landscape where there are as many as 500 open recs for various “UX” talent, design talent may be the most persuasive facet an accelerator can provide.

Austin Center for Design students are four weeks from graduation. Teams have working prototypes and sound business plans; they are now looking for the next step in order to successfully move from a proof-of-concept stage to a live alpha stage. The following are some of the funding sources they are considering; note the unique qualities and competitive landscape that’s emerging in the VC world. The various data in the chart is simply aggregated from each website.

Company In more detail Differentiators Principals
500 Startups
Blowing up startups with design, data and distribution
Successful startups don’t just need great coders and designers, they require scalable and cost-effective customer acquisition. At 500 Startups we specialize in online distribution techniques for search, social, mobile, and email platforms to help our startups get eyeballs and new customers. In particular we focus on solutions for Facebook, Twitter, Google, YouTube, Android, and Apple iOS, and by day many of our super mentors work as mild-mannered reporters at these very same companies.
  • Design. Great products start with a great user experience—one that makes customers happy and brings them back for more. We help startups design functional solutions, not just pretty pictures.
  • Data. Successful startups can make informed product and marketing decisions, know how much customers are willing to pay, and what it costs to acquire them. We help startups learn how to define and measure customer-driven metrics.
  • Distribution. Startups need scalable, cost-effective customer acquisition. We specialize in distribution for search, social, and mobile platforms such as Google, Facebook, Twitter, YouTube, Apple, and Android.
Dave McClure
Christine Tsai
Enrique Allen
Capital Factory
Roll up your sleeves and get to work
Capital Factory is an early stage accelerator program for tech startups that provides a small amount of seed capital and weekly mentoring sessions by entrepreneurs who have founded successful companies. Startup companies apply to participate in our 10 week summer program intended to get a startup pointed in the right direction with a clear path to profitability and growth. In 2011 the program runs from May 25th to August 11th. On September 7th, we will host more than 250 investors and entrepreneurs for Demo Day and stream it live over the Internet.
  • Free basic IT infrastructure for email, website set up and hosted on Google Apps
  • Free office space with the other companies
  • $1,500 in free hosting from Rackspace, Slicehost, and JungleDisk
  • Free company formation and legal documents by Wilson Sonsini
  • Free brand development and logo (if needed) by Clutch Creative
  • Free help with your financial plan from vcfo and The Accounting Group
  • Free banking from Square One Bank
  • Free press support Free software from Balsamiq Studios
  • Free software from UserVoice
  • Free software from Microsoft BizSpark
Josh Baer
Floodgate
offering a unique fundraising model that bridges the gap between initial seed money raised from traditional “Angel” investors and the much larger investments that characterize traditional Venture Capitalists
We’ve developed a new approach to investing in world-changing ideas. Looking at the world through the eyes of the entrepreneur, we’ve filled a widening gap between Angel investors and venture capital firms. But we help companies with more than just fundraising: we help them discover, refine, evolve, and master the core elements of their businesses so they will be in the best possible position to one day “open the floodgates” to market disruption and dominance. We help start-ups accelerate their growth, supporting their efforts in the following areas:
  • Identifying key opportunities to generate profitable revenues
  • Determining what not to do, in addition to pursuing the most important opportunities
  • Attracting and hiring the most qualified people
  • Finding like-minded partners who can help you achieve your goals faster
  • Avoiding unnecessary competition by focusing on the areas that create the most value for your customers
  • Generating enthusiasm inside and outside the company
  • Linking you to the best, mostreadily available financing
Mike Maples Jr
Ann Miura-Ko
Founder Collective
A new (old) model for venture investing
As venture capital funds get increasingly large, we have created a small fund (~$40M) that is dedicated to investing in seed stage deals. Unlike big venture capital firms, we expect to generate returns almost exclusively from seed stage investments. Hence, we have the same incentives as founders to increase the value of the company in future financings. We are also comfortable with smaller exits if that’s what the founders want.   David Frankel
Eric Paley
Lowercase Capital
Venture Capital Is Broken
At Lowercase Capital, we invest in startups, acquire later stage companies, and advise businesses and funds of all sizes on strategy and execution. We take you seriously, and ourselves not so seriously. We wear our hearts on our oft-wrinkled sleeves. We are grateful for the companies who have chosen us, feel lucky for the chance to collaborate with such brilliant and happy people, and we are proud of how hard they work to bring smiles to their users and customers. Our approach isn’t exactly customary, and our founder doesn’t act like a traditional VC/private equity guy.   Chris Sacca
Tech Stars
Do more faster by joining forces with the #1 startup accelerator in the world
TechStars fills the experience gap by bringing together the best and the brightest in one place and surrounding you with incredible proven mentors for the three months. With this much talent in one place you’ll get great advice on your product and strategy, thereby ensuring the best possible start for your new business. We provide working and meeting spaces, as well as a nice lounge all with super fast and reliable wireless Internet access. Media Temple is a sponsor of TechStars, and they provide our companies with free top-notch hosting during the program. Cooley Godward Kronish and Kendall, Koenig, and Oelsner are two outstanding legal firms who provide free legal council and services for our companies. Metzger and Associates is a premier new media public relations agency who is also a sponsor providing free services. Basically, we’ll help you get everything covered with minimal expense. We just want you to focus on creating a great product while you’re here, and not have to worry about all this other stuff. David Cohen
Brad Feld
David Brow
Jared Polis
Thinktiv
Thinktiventures invests expert human capital in the best venture acceleration opportunities
In early-stage investing, expertise is the new currency. In competitive marketsmoving at warp speed, investment capital alone isn’t enough to win. Your investors need to be actively removing the obstacles to your success, or they are simply slowing you down. This trend is evident in the rise of value-added incubators and “super angel” investment funds, whose investment dollars are often far less valuable than the mentorship and exposure they provide. Expert human capital creates leverage for startups – the ability to acquire and grow tremendous equity positions without paying full price up front. When a startup invests $100,000 of capital to forcefully apply the right kind of expertise at the optimal time, that $100,000 can create $1 million or more in asset value. That’s what we call “venture acceleration” – focused investments in expert human capital that create non-linear outcomes. For startups, it makes the best things happen faster, reduces overall capital requirements, and maximizes equity upside potential for management teams and early investors. That is the essence of Thinktiventures. Jonathan Berkowitz
Steve Waters
Union Square Ventures
We invest in information technology
Union Square Ventures is a venture capital firm based in New York City. We are a small collegial partnership that manages $450,000,000 across three funds. Our portfolio companies create services that have the potential to fundamentally transform important markets. We can work with you whether you need $250,000 to test an idea, or $25,000,000 to buy an undervalued asset. We can invest in New York, San Francisco, London, or Berlin and most places in between. We evolve our investment thesis in an ongoing and open dialogue with the market. For entrepreneurs, this means that if you are leveraging the economics of Internet-based networks to transform some aspect of the global economy, Union Square Ventures can be a partner, whether you are just launching your service, funding rapid growth, or spinning your business out of a larger entity. We can work with you if you need $250,000 or $25,000,000. We can invest in New York, San Francisco, London, or Berlin, and most places in between. We hope you’ll think of USV as stage-agnostic, highly-focused investors who can add value to your company. That’s how we see ourselves. With the Opportunity Fund, we are better equipped to deliver that offering to you. Brad Burnham
Fred Wilson
Albert Wenger
John Buttrick
Y Combinator
Y Combinator does seed funding for startups.
In 2005, Y Combinator developed a new model of startup funding. Twice a year we invest a small amount of money (average $18k) in a large number of startups (currently 43). The startups move to Silicon Valley for 3 months, during which we work intensively with them to get the company into the best possible shape and refine their pitch to investors. Each cycle culminates in Demo Day, when the startups present to a large audience of investors. But YC doesn’t end on Demo Day. We and the YC alumni network continue to help founders for the life of their company, and beyond. We think hackers are most productive when they can spend most of their time hacking. Our goal is to create an environment where you can focus exclusively on getting an initial version built. In any startup, the first couple months tend to be the most productive of all. Those first months define the company. So anything you can do to maximize their effects is probably a good idea. We seem to have succeeded in creating a good environment, because many founders have told us that the first ten weeks of Y Combinator were the most productive period of their lives. Trevor Blackwell
Paul Buchheit
Paul Graham
Jessica Livingston
Robert Morris
Harj Taggar
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