Josh Teng

1. You should never use leverage without first developing a high hit rate model unless you’re willing to gamble losing your entire portfolio.

2. Rather than going with a huge leverage to start off a position, go with something reasonable and rebalance daily. Eg. If you have a model that trades daily and the signal generated is to go long, start off with 2x. On the following day, if the signal is still to go long, rebalance your position size at the start of day such that your leverage remains at 2x. Through much experimentation, Ive found that such an approach could outperform a straight up one-off 20x at the start of a position while minimising liquidation risk. You could also test out a martingale or anti martingale style position sizing strategy https://corporatefinanceinstitute.com/resources/knowledge/trading-investing/martingale-strategy

Making money in financial markets is simple in theory. Buy low; Sell high. In reality though, it's tough, at least when there’s no unfair advantages to be exploited. What's the fair value of an asset? How do you calculate fair value? Is there really even such a thing as fair value in the macroeconomic landscape we're in? When’s the fed going to taper QE?

In this short post blurb, I want to differentiate predicting vs reacting and how you might benefit more from one over the other. It only really applies to trading as opposed to long term investing.

Majority of retail traders enter the market trying to predict bottoms or tops. And sometimes we get it right, we make money, we're happy. But the important fact about trading is not about making money once or twice, instead it's about the consistency of being in the right trend over thousands of cycles to compound as much returns as possible in order to outperform long term passive investing - especially true with highly volatile assets such as crypto currencies.

Here's where reacting, imo, is advantageous to predicting. Correct predictions may by a stroke of luck outperform reacting for one, two or even more cycles but the fact remains - prediction in itself is speculative and I’m sorry to say but you’re bound to get it wrong.

So what is reacting? In short, buying and selling late but not too late. Take the following long-only BTC strategy as example:

You’re not trying to buy absolute troughs and sell absolute peaks. You buy after the trough and sell after the peak. In other words, you are only really trying to capture 70-80% of each pump cycles. In yet other words, you’re trying to underperform the market in the short term in order to beat the market in the long term.

You might say isn’t capturing 100% of a move better? Of course it is! But in practise, no one gets it right majority of the time. It is far easier to react than to predict.

If you can do this 10 times, I assure you, you will outperform the market beyond your wildest imagination. Remember, the math is simple. Compounding 10 x 20% gains = 519% profits as opposed to trying to capture 100% of 2x 30% pumps but missing 8 of 10 cycles.

Finally, there are 2 other secret ingredients in making such an approach work:

1. Developing a split dataset tested model to generate reactionary signals without curve fitting to any particular period

2. Execution discipline

If you’re able to develop a high hit rate model (1), you can even consider using an odds driven leverage-liquidation ratio to further maximise profits potential.

My circle of friends tends to be entrepreneurs because of the events I go to, the struggles I face and the emotions I experience. I observe, get inspired by them and have also identified patterns on why they are who they are. My greatest respect belongs to those who failed and got back up.

These are the cold hard truth that people need to accept when embarking on the entrepreneurship journey. I hope it doesn't scare people away from entrepreneurship but to be better prepared for the journey. For now, I don't want to write an aspirational and encouraging piece. I'll leave that to someone else.

This list is far from exhaustive. There are probably hundreds, if not thousands, more important traits. If you want to defy all odds, if you want to have a shot at all, if you want it bad enough, you gotta stop aspiring and start doing and enduring.

Stop seeking validation

We've been taught to seek answers from authorities - whether a parent, a teacher, a manager, a respected role model or a friend that we so desperately want to have. While this may still be alright for a kid, most adults never grow out of it. The world is more clueless than most would expect and entrepreneurship is not something that has a recipe or formula for guaranteed success. Everyone's path is going to be unique. Most strong entrepreneurs don't make decisions for someone else's appraisal but for markets to decide. They don't need the constant 'good job, good effort' to relentlessly try, because if they do, they would give up even before the time is right. And at the end of the day, if you do become successful, people will only see your success and not the struggles you overcame. So, learn to celebrate even when no one's around.

Don't ask what to do; Figure out what to do

Being clueless just won't cut it with entrepreneurship. There is zero formula for guaranteed success. You've got to find your path to wherever you want to go. And by finding I don't mean 'find', I mean to do it and learn from the experiences.

Why are we clueless sometimes? It's not uncommon to either be taught to just follow the books or follow instructions and as a result, never practiced any ingenuity. Many times, people just aren't passionate enough about what they do. You want to win? You got to learn to love what you do and figure out things even if you don't know where to start.

Know the objective

Where do you start? The 80-20 Pareto principle applies to our work. 80% of our work is of low impact. Only 20% delivers a significant result. The challenge is 20% just isn't enough. And the 80% is still important. Time waits for no man. And many times, it's easy to get into the motion and not really know what we're trying to accomplish with the tasks we're performing. Doing the following steps frequently helps re-prioritize effort and optimize the use of time.

Evaluate what is the most important objective for your idea/project/organization (not yourself) right now

Think of things you can do to meet the objective

Discipline yourself to act

Your first action may not yield result, learn from it repeat the cycle.

Stop talking, Take action

Many individuals pride themselves with ideas but never ever take the step. Even great salespeople take conscious effort to place themselves to be at the 'right place, right time' to talk to the 'right' people, and this definitely means being at the wrong place, wrong moment most of the time. Even if you don't know how to do it, you need to learn or find a way to get it done.

Emotionally mature. Embrace rejection and failures.

Managing emotions and being at your optimal psychological state is probably something hardest to do. You are only at the driver's seat of your thoughts, actions, and effort. Rejection and failures are things you can't avoid. If you don't learn how to deal with them properly, it will lead to exhaustion and depression which obviously affects performance. Remember, denial is not a strategy. Many people don't even realize they are denying the reality, so learn to retrospect, laugh off some of these negative experiences/emotions but still remember them and never belittle the damage they can do.

Be prepared for the long haul

Overnight success? There is no such thing. People are generally impatient for everything. We are impatient on the road, impatient with success, impatient with payday. Why have it later when we could have it now, right? Well, you can't have it now. That's the reality. So be prepared for the journey. It's probably going to be longer than you would expect. Decades is what we should be looking at, not months, not years.

The Competition is Yourself

You want to win. Who doesn't? But remember your competition isn't really who you are competing against. It's you. We are our own greatest enemy. Keep focusing on becoming better. Yes, celebrate when you beat a competitor but always remember, you can always be beaten if you don't focus on being the best of yourself. You gotta be better even when you feel like you are better than everyone else.

Excited beyond the money

Money is an important incentive for entrepreneurship but it's not sustainable.

One of the most important things to do as an entrepreneur is to disassociate effort and result for money. Have your parents offered you money to wash the car, mow the lawn or have you been offered money to get a certain job done? While not wrong, it cultivates an unhealthy idea of generating wealth. Most people fall into this trap and do things only if they are compensated. This leads to all sorts of missed opportunities.

The real reality of entrepreneurship is wondering why you're still so poor after doing so much and yet still capable of pushing 100% at the goal.

The best substitute for that monetary reward in the short-medium term is a sense of purpose. And this sense of purpose can come from various sources. For me, it tends to come from an urge to share something I love. In the long term, you may or may not reap the financial reward, but the satisfaction from the sense of purpose will always be greater than whatever money you will ever earn. I'm as happy as I am when I ate food of other people's leftover to when I'm able to afford more than just food because....

Don't make excuses, admit shortcomings and find solutions

Nobody cares about your excuses, in fact, highly effective people hate hearing them. Understand that your excuses won't suddenly propel you to success. So stop making them and start admitting shortcomings and overcome them or find ways to compensate for them as quickly as possible. 

Retrospective

We've talked about being retrospective. It's perhaps one of the most underrated traits. No one is born great at everything. Even great people suck at some things. Take time, put ego and pride away to truly reflect on what you did wrong and what you did right.

Relentless

Entrepreneurship isn't a journey of checklists. Getting things done just isn't enough. You gotta do, monitor, repeat even if you are still solving the same problem after 6 months of failing. The only thing that matters is the outcome, not your effort. You don't get an A for effort. You stay wherever you are for not having outcomes.

Do things that are uncomfortable and unnatural

Most people shy away from things they are uncomfortable doing. Be it public speaking, computer programming, math, mundane tasks etc+. It's natural. But it is not ok if you want to succeed. If you have to wash the toilet, you wash the toilet. If you have to get up on stage, you get up on stage. If you have to do math, you gotta do math. You don't need to love them but you need to do them until you can afford to hire someone better than you at it.

Don't be indecisive or flaky

People are flaky for many reasons. Uncertainty, disbelief, bla bla bla. The truth is, we go nowhere jumping from side-to-side. Average out your true distance, it's ZERO.

Once you set a course, go all in wholeheartedly and do it until data keeps proving otherwise.

Leadership

If you want to go fast, go alone or with a small effective cohesive team. If you want to go big, be prepared to be a great leader. Entrepreneurship is not a single phase. When you start, speed and ferocity is everything. When you grow, leadership is everything. Most people are not born leaders. Well, you will have to make the call if you want to pay the price to be good at it.

Conclusion

Most entrepreneurs are successful because they want it bad enough, would take action and repeatedly reflect and improve. No one is ever ready. Naivety helps with getting started. So take everything said here with a pinch of salt. Coz at the end of the day, you owe it to yourself to give it a shot at whatever you want to do.

Just remember, your decisions and actions every step along the way can make a massive difference for you, your family, your communities and your stakeholders. Don't procrastinate or fear the decisions and actions but make the best of them wherever you are at.

I fear for the future of Malaysia. I live on the cutting edge of technology and I take deep interest in global trade.

The truth of the matter is that we may not have competitive advantage in the future. Technology companies are changing the way the world works. People know it but don't fully internalize what it means for all of us 5, 10, 20 years down the road.

It simply means we become redundant. No jobs, but with bills to pay and lifestyle expectations to meet.

Believe it or not, we are at an extremely good standing in relation to many other parts of the world today.

Our nation's founding fathers, past and current leaders as well as the people have largely worked hard to build Malaysia to a point where we are easily enjoying a life that is better than half, if not three quarters, of the world.

The question is where will we be in the next decades to come?

Let's take an example. My ATM card expired a week back and I thought I had to go to Maybank during business hours to get it replaced. Guess what? Turns out, all I had to do was put in my old ATM card in a machine and a new one just came out within seconds. I spoke to no human beings and I could have gotten it done anytime of the day. It was cool. The geek in me was fascinated and excited. But I inevitably couldn't help thinking about the person who’d lost his/her job because of this.

The future is harsh for the millions of individuals who will be irrelevant. This is true not just for Malaysia but even for advanced countries like the United States.

And from a nationalistic point of view, it's hard to see Malaysia being competitive in manufacturing. It's hard to confidently say that oil will continue to be in demand with renewable energy becoming more affordable. It's hard to say that our agriculture will remain competitive with every other nation competing with better crops at cheaper prices because of agriculture technology.  It's hard to say that our service industry will continue to supply jobs because of automation. It's hard to say people will need rubber or wood because of 3D printing.

So where do we stand?

Technology companies are becoming bigger and bigger. Technology is not an industry that stands on its own. The very purpose of technology is to change how things work and that means changing how banks operate, how governments rule, how farmers harvest, how athletes train, how investment analysts pick stocks, how customer service is handled, how cars are driven or not driven. Every industry is and will be disrupted.

To continue to prosper as a nation, we need such companies to be based out of or have offices in Malaysia to create high paying jobs and propel us to becoming a high income nation. Whether it's a European company or a Chinese company or an American company or our very own local companies, we need them here to create jobs for the millions of parents who wants a good future for their kids, for the young ambitious individual to have hope of success and for all of us to repay our parents for their sacrifices.

The solution is simple. Look at China. They are a formidable superpower in the world not just because of their population but because of the talent that exists. Talent is the answer to a better future for all of us as a whole.

I'm speaking with hope. I've spent years in the U.S. and I recognize the brilliance that we all possess. The disparity may exist in Malaysia, but there is no reason for us to fail.

I urge the government to focus their efforts on developing talent for key areas such as software and data. I acknowledge and am proud that our government has the foresight to have already began investing in that. MDEC has become an agency I truly respect. However, for this to work, all ministries and departments will need to work more closely on this as the ultimate national agenda. The ministry of education should re-examine budget allocations to give key focus on updating curriculum, relevancy and teachers. The ministry of trade should attract tech companies from across the globe to Malaysia. The ministry of youth and sports should encourage youth to explore careers in technology and careers in modern companies, not just traditional MNCs where our youth ends up being the accountant that may be replaced. The ministry of human resource can allocate an even greater proportion of funding to human capital development in technology.

I may be stating what our ministries are already doing. This brings me to another point, majority of my generation don't watch budget speeches or read newspapers. Most people only care about the tax that they save. I happen to know some of the effort our government has already started. But how about everyone else? Being on social media alone isn't the answer. How can it be better? Or maybe, our government websites just simply needs to be of higher quality.

The second effort our government can do is to attract and incentivize our fellow accomplished Malaysians living abroad to come back to start profitable companies and mentor the young. We have engineers at Facebook, Google, Uber and more. You name it, there is a Malaysian there. How will we bring them back? Give them hope, show them a path and incentivize them. Malaysia is a land full of opportunities. That is why I left U.S. to be here. I'm a first class citizen here, primed, to pursue my ambitions with hope. How can we make TalentCorp an even greater success?

Thirdly, for this to work, the people of Malaysia need to recognize that we are in control of our own destiny. Regardless of political view, we need to work hard and to voice out (not merely complain) what we need to make things happen to our government. Participate in dialogues with the government and tweet the ministers with actionable ideas.

The past 2 weeks were full of congratulations for our recent fundraised. I'm thankful for the wishes! We had no champaign popping.

I know nobody likes downers. But behind all the glitz and glamour of being an entrepreneur:

I work in 8 different departments in my company, Management, Finance, Legal, HR, Program, Marketing, Engineering, Customer Support. The bigger the company grows, the more paychecks depend on the company. Each decision becomes more exciting but also more scary.

I need 8 hours of sleep to function but only managed 5 lately. I get ulcers, lose KGs, lose friends. 

I'm expected to remain calm in a sea of storm, to smile in the midst of a tragedy, to hustle even when I'm tired, to think big even when I’m paranoid.

Such is the reality of being a founder. 

This post isn't about ranting, though. It’s a reality check. Fighting challenges is becoming something I'm very good at. After all, there are bigger problems in the world.

At some point, entrepreneurs no longer do what they do for the money (at some point, most founders realize that there are way easier ways to make a lot of money at higher probabilities).

We do it because we want to do something big (the ambition), fix a problem (the passion), serve our customers well (the reason), and most importantly, give our team a fun, exciting, challenging and rewarding place to call work one of their hobbies (the commitment).

To everyone working in a startup, press on!

"Stop thinking too much and be willing to spend some money."

So here’s the problem. You have an idea but you keep wondering how to get the word out. You spend time brainstorming strategies and listing them out. That’s great but I say forget that. I tried that countless time and all I ended up with are lists of to-dos. I don’t know about you but nothing is least exciting than that. The are no quick recipes for growth. But I believe the fundamentals to attempting growth is the same. It’s not just about the strategies themselves but the willingness of swift experimentations that works. A great marketer isn’t how brilliant he/she is but rather how quickly he/she is willing to try something out. 

Ok. Screw the rhetorics, here’s how we did it.

We build a landing page that looks like this in one day

We best guess the message that will work for our demographic. (we tried our best to put ourselves in the shoes of our target demographic and read the messages and either said hell yeah or hell no to each). Put any of the hell yeahs as your message. (if you are more diligent, A/B test that shit out of your messages to see which converts best. We didn’t do that. We should have.)

Give people 2 choices and they will choose 1

Notice the buttons. We made our visitors feel like an idiot if they chose to not carry on with our sign up funnel. Humans are psychological creatures. Back when I did sales, my mentor gave me some great advice. He said “Don’t ask your lukewarm prospect when is she free to meet. Instead, give her 2 timeslots and ask her which works better for her.” There’s no shame in selling your vision. That golden piece of advice opened doors for me and increased my prospect conversion rate by more than 10 folds. So, I decided let’s bring that online. Give them 2 choices and they are more likely to choose at least 1. But there’s more, we decided to make the second choice a really dumb choice. (Not everyone will bite it, but dude, it’s good enough if most will). There are counter arguments (what doesn’t?) against this like giving your users an option to opt-out is a bad idea. I don’t know about that. We never got to test it. Important to remember. Different strategies work differently for different people. Do your homework. Implement metrics!

Invite-only, Queue, Referrals

After our visitors signed up, we created a queue (OMG! is this an incrementing random number generator? or did we actually got to 13k sign ups?) and made the early version of our product an invite only thing. It’s one of those jedi tricks that kinda works. Well, not always. It depends on your product and demographic. But it worked for us. We got some referrals though just a handful (I’m embarrassed to share the number). But hey free traffic is very much appreciated. I love that. Thank you very much.

Ads to drive some traffic

Building a product doesn’t automagically gets users. Once we got the landing page up within a day, we started doing Facebook ads. Here’s the tricky bit. Facebook ads are easy to put up. It’s easy to get likes and clicks that won’t convert. Our lesson learned, be as specific as we can be. Don’t be sloppy. Don’t just target the entire country or city. Do some research. Find out what your ideal demographic likes. What kinda pages they like or companies they are associated with. Target towns not cities. Target languages if applicable and not to mention a smaller age group. Don’t be greedy, it’s only counter-effective. A whole blog post can be written on Facebook ad targeting. But here’s a gist of it. Try it out for yourself. Don’t be stingy and expect users. We spent SGD300 on our campaigns. That puts as at SGD0.30 user acquisition cost. We can do better. But guess what! At least we got initial traction without breaking the bank! Or better still, we launched our product with users ready.

Takeaway

So here’s what you need to do. Build your landing page. And market it while you get back to building your product. Check back on metrics to see if you’re throwing money blindly.

Now, BE NICE and DOWNLOAD our app! http://wobb.my

GO is a fantastic language. It's less resource intensive and has a pretty interesting concurrency model that makes scaling less expensive.

Over the weekend, we had Audrey, from Singapore come over to Kuala Lumpur to be a lightning talk speaker at our inaugural RailsGirls KL event. On Sunday, however, we decided to exchange knowledge in Ruby (me) and GO (Audrey). We decided to compare the languages in a very naive, unscientific way by counting the number of lines of code to do the same thing in both languages and here's what we came up with (Ruby on the left, GO on the right):

Conclusion:

In this case, Ruby clearly wins in terms of being a concise language to get our defined job done.

"You are the collective of every experience you have had in your life"

Corollary, you will be the person based on the experience you are having. Think about it.

Ask yourself what you are doing at this point in your life? Don't discount the things you're doing as unimportant or pointless. I've gone through a shitload of meaningless even detrimental experiences that has only made me wiser and better.

Don't misinterpret and think that you have to be studious or serious to be a great person. I'm saying, have fun. Explore your sense of humor, engage with your passion, stop giving excuses, stop chasing security. Not that being plain old boring is wrong. If you are happy that way, that's great. I just hope you're not fooling yourself or have an ego too big to admit your inadequacy.

We are all not very different from one another. We feel the same emotions, we live breathe and die. That's the beauty of creation. It's a leveled playing field. But why are some people more successful in what they do than others? (Yes I agree that there are certain groups of people who are discriminated against. I irk every time I hear people hating on one another. Yet despite all the hogwash, we have heard of at least one success story from every group of people from all walks of life. That shows possibility.)

The answer is simple.

People who are primed for success are often passionate, humble, influential and easygoing.

Passion.

Passion is an often used word. But most people have no clue what passion really means or what they are passionate about. Just like every emotion, passion cannot be fully understood until you have experienced it for yourself. For me, passion translates into work ethic. It makes my heart rate faster, it makes me feel warm, it makes me want to scream, jump and punch a wall. It translates into excitement and hope. It's a delightful moment. When I get a surge of passion, I want to meet someone or jump on the phone with a friend. It gives me an adrenaline rush so strong I can barely contain it. Ask yourself, when was the last time you felt that way? If you haven't, stop losing your soul in what you're doing. Make the jump. You are playing it too safe.

What are you passionate about?

You can be passionate about anything. Your dog. Your cat. Your lover. Your job. Your new car. Your looks (selfie). Your hobby. Your game. Your music. Your skills.

There is only one way to know your passion. Don't be rigid. Don't be afraid to fail or feel pain. Don't give lame or even legit excuses. Try new things and give it a fair shot. Don't try and learn Spanish in one day and say you hate it. Everything new has a steep learning curve.

At some point, you will find your euphoric moment of being passionate at something.

Humble.

Your ego is good for no one. We all have egos (ladies too). Be willing to learn from and listen to others. If you feel superior to others all the time, examine yourself. Ask yourself why. There's no need to differentiate yourself or justify in your mind why you are better. Be empathetic. Encourage one another.

On the contrary, it's good to have healthy pride. No need to be Mother Teresa here. Take pride in your accomplishment. Boast about it healthily with the right people who knows you well. Find supportive friends who will cheer with you and recognize you for your hard work and accomplishment. Feel sorry for the rest.

Influential.

Some people are seemingly charming from birth. For the sake of this discussion, let's forget about them. Most of us are not born inspirational leaders. We can't charm or persuade as well as we could wish for. Trust me, I've tried. My rejection list could fill the entire continent of Asia. Everyone has to find their own holy grail to be influential. Influence can stem from many things including power, money, or skill/domain expertise.

Beyond the tangible things you can have that helps with influence, how you carry yourself makes a big difference. If you have neither power, money nor skill, it's almost an art of deception. There are a ton of self-help on this. Your inert confidence is reflected in your body language, tone of voice, speech pattern and more. The magic lies in the recognition that confidence is not about success. Though success helps in being confident. You can be confident of who you are despite where you are. There are 8 billion people in this planet why care about the moron who makes you feel lousy and insecure.

Easygoing.

I've pretty much been finding and building solutions for problems through technology the past 3+ years as a freelancer then founder.

The past 3+ years has been an absolute delight. Never would I trade one day for another path I could have taken in life. But despite all the satisfaction I derived from being able to build solutions that solve problems for other people, my emotional life has certainly taken a toll.

Don't get me wrong, it's still completely possible to have great friends and loved ones through the journey as a tech entrepreneur. I certainly had lotsa great people that I could hang out with and have a good time.

But one problem I have is my ability to connect with my emotional self. I'm constantly getting things done, coding, going for meetings and traveling. It's great. I wake up feeling supercharged and motivated, every single day. But I've never had the chance to feel anything deeper. For instance, I've never missed anyone for a long time. I've been single (discounting flings) for over a year which was great to help me mature and create a solid identity for myself after a long term relationship throughout my late teens and early twenties.

This past week, I had the chance to meet a few new people. I took a couple of days off work and forgot completely about work (plus I lost my phone which helped me focus on the things that were happening around me).

I had lotsa fun and felt like I really connected with these new friends. Unfortunately, our crossed-path was a rather short one. They had to go back to where they belong and so did I. But it just reminded me that sometimes it's important to take a step back as founders to stop and smell the roses - to enjoy your surroundings and to appreciate the companionship of the people around you.

If you want to keep your development environment:

as similar to production

the same as your fellow team members

Consider using Vagrant!

Vagrant helps you manage your VM.

I painstakingly documented down each step I took to get Vagrant working. I documented every bug I faced and the solution I used to solve it. Took me well over 10 hours to get it set up.

I still have some issues with the speed of my VM using VirtualBox on my Mac. Apart from that, Vagrant is awesome!

Here you go:

Go to gist https://gist.github.com/joshteng/9901155

As I shift more and more of my focus towards growth hacking. I've become obsessed with marketing experiments. At work, we run a tight 1 week schedule where we would implement a growth hack and measure last week's result. We try out a bunch of different strategies until one clicks well with our product and our market. Marketing and product metrics are core to our business. Note. I mentioned product metrics and not just marketing metrics. Why? What's the use of getting a lot of traffic that don't ultimately turn into paying customers or engaged users? That's why. Online marketers often use UTM links to track their marketing efforts. And so do we. But there are huge inefficiencies involved. We have, in the past, primarily used a combination of Google URL builder and Bitly (link shortener) to set up tracking links. It's just a pain. There are 2 different services to navigate, causing us to waste at least 30 seconds unnecessarily for every link we create. Screw that! (30 seconds doesn't sound like much? Yeah it isn't until you start creating a whole bunch of links to optimize your ad title, ad network, ad text, ad picture etc+ etc+.)

Anyway, over the weekend, my hands got itchy. I built our own UTM link creator and shortener (all-in-one) with node.js (using sails.js framework). It's open sourced for anyone to use. Forgive me, I did not write any test. It's the first time I've used sails.js and I was interested in learning/exploring the framework. But I do have test and a bunch of other functionalities on my to do list (so little time, so much to do!). Feel free to fork and help me out if you find this useful. Or else, some instructions are on the readme if you want to use it. The stack includes node.js, mongodb and redis.

This is an opinionated post on the pain of starting a novel b2b startup at the very beginning stages (problem/product market fit). I'm writing this based on my limited 3 full years in business. And my recent b2b startup, Televate.io, that helps businesses convert more internet leads and close more sales through faster enquiry response time.

Starting a startup with the lean startup methodology is great. Not every idea can operate on its principles. A lot of great inventions would not have existed otherwise. Some ideas require a visionary with great persistence. But I'm a fan of lean startup. Until I have a war-chest to fund bigger ideas, I'd try to avoid overly ambitious visions. Everyone is different and at different stages in life. It's ok if you're like that. I'm just saying, I'm not like that. The longer I'm a full-time entrepreneur, the more I realize that entrepreneurship is about taking smarter risk and minimizing them if possible. A certain level of naivety and delusion is still necessary.

To set the context, imagine that you just finish coding up your novel b2b product idea. What's next? Based on lean startup, you want to have a few early adopters as quickly as possible to test your product and validate that your product delivers them value and they are willing to pay for it - measured quantitatively*. I have the opinion that spending on online advertising to get your early adopters to be one of the best approaches. It's fast, it's not discriminative, it's representative of, possibly, the real world. [If any of you guys have other suggestions of effective ways to get early adopters for a new product fast, please leave it in the comment.]

*I believe qualitative is necessary to confirm or discover quantitative findings.

So speaking about getting early adopters, I think the issue with a novel b2b idea is that it’s hard to get the message across because businesses are not readily searching for it. Businesses will have to stumble on it either through broadly targeted ads (which will be costly and have lower conversion rates) or wherever you’re exposing the idea at - QA sites, forums, news, press, domain expert endorsements (which requires a lot more effort and time to implement) - not very lean at problem/product market fit stage.

Outbound strategies might seem better. Unsurprisingly so, since you're finding specific businesses whom you think is suitable to talk to. But this leads to the problem that searching for the right businesses and its right point of contact is a time consuming affair. On top of that, outbound strategies like cold calling/emailing has low success rate. Cold calling is time consuming and painful. These are all damaging unless your customer lifetime value is high. And importantly, you probably need to be a good sales person or to be learning very fast (perceptive) to use these strategies.

As you can see, it's difficult if you don't have the kind of resources to run a startup like this. It's harder to operate on the lean startup methodology. But like I said these could be big ideas that visionaries can successfully execute.

Back to inbound strategy through online advertising for a novel b2b idea, it's not all gloom and doom. There is the possibility to target people who are searching for something else and you propose yourself as a better alternative. For example loyalty programs, the businesses searching for them probably want it because they want customer retention. If your product helps with customer retention then voila eg. email newsletter software etc. This allows targeting to be a bit more specific possibly saving some ad dollars but still requires significant effort to convince ppl that u’re a good alternative. There is still a challenge to convert them because you have to sell them that ur product solves their original problem n you have to convince them that they need ur product over the other products designed to solve the same problem (most ppl hv limited budget - you have to fight for that dollar against something they thought they wanted). This will take effort, bare in mind your objective at the problem/product stage is to quickly sign up early adopters, not spending weeks and weeks setting up distribution channels. (Well, at least you don’t hv to convince them that the problem exists in da first place like u would if u targeted broader terms).

As a result, it’s going to be (1) more costly and (2) time consuming (slower) to get the message across, you will have to put in more effort to say why they need ur product or worse, that the problem exists, n then u hv to spend money on ad campaigns that are more broadly targeted (as opposed to targeting cheaper long tail keywords or a very specific demographic) which is more expensive and less effective. On top of that you will need to (3) work ur effort to blog, get endorsement or influential author in da domain to feature, cover, talk about you - not very lean. Lastly, I must say that b2b products are hardly inherently viral simply because businesses hardly share what works for them.

So still building a novel b2b idea? Well, It’s not impossible. It’s just a lot more involved and you've to be prepared for the long haul with massively delayed satisfaction and give up more of your own resources - time n money (not someone else's).

There are, however, 2 exceptions of novel b2b ideas that I can think of that are potentially ripen enough to thrive.

1. Novel b2b ideas that can be viral. These sort of products usually interface consumers and the businesses themselves (for eg. live chat). This lies on the premise that businesses are consumers too. When a consumer (also a business owner) uses someone else's live chat, they learn about the product and the brand. There is no need for the live chat company to spend huge amount of marketing dollar to sell the idea.

I'm not a paid advertising expert. I have minimal idea of the right words to use, the right strategy to apply, the CPC/CPM bid amount to optimize. I've always been a fan of other strategies such as social media marketing and other distribution hacks (just cause I'm poor) ;)

Anyway, my friend and I started a Facebook campaign to promote a landing page we have to give away some free stuff. We're paying for the ads via CPM. And we were using Facebook's Conversion Pixel to optimize the CPM (I think).

So what caught my attention was the fact that our conversion rate was higher than our click-throughs. As shown below:

This was mind boggling to me. How can people convert without clicking on the ad in the first place. It turns out that Facebook and many of the other ad networks has something called View-Through-Conversion. Basically, the conversion number includes every user who converts after viewing your ad on the display network even if he/she did not click through the link.

This poses a problem. The question would be "did the user you actually convert because of the ad that they 'saw'?" Highly unlikely. I'm thinking of a practical example: Facebook sidebar ads. People barely notices them and when these people who didn't see them signs up, they are considered a conversion attributed to the ad that they supposedly 'saw'. That's ridiculous!

If you did not understand what I was saying, I found a blog post on this. My understanding is credited to this article: http://www.ppchero.com/3-view-through-conversion-attribution-problems/

On top of that, there are plenty of cool stuff about Facebook conversion pixels. For example, I can track the immediate value of a lead from the Facebook campaign by passing a conversion value through the conversion pixel. A practical example would be ecommerce. If let's say I was advertising my ecommerce store on Facebook, and someone came to my store because of that ad and makes a purchase, I can actually tell Facebook the total checkout amount of his/her purchase. This allows me to track the average real value of all conversions. This helps us to know the real value of the ad campaign. Kudos to Facebook for this! I'm sure the are third party analytics tool for this. But meh; that's only important when you have a multi-ad network campaign.

The other thing that tricked me was, I initially thought we were paying per conversion instead of CPC/CPM. That would have been a great deal. Although anyone with a basic understanding of pixel tracking would know how to hack that and underpay (or not pay) for the ad results. Anyway yeah, just to confirm, regardless of your goals on Facebook campaigns (page likes, offer redemption, clickthrough, conversion etc), there are only 2 ways of paying Facebook - CPC or CPM. One final thing, doesn't it boggle you that Facebook helps you optimize the amount you bid for CPM/CPC?