(#9)HAK podcast: Methodologies for prototyping and validating early stage ideas at a low cost: A conversation with Nick Martin, MISSION+ CEO
HAK Podcast

(#9)HAK podcast: Methodologies for prototyping and validating early stage ideas at a low cost: A conversation with Nick Martin, MISSION+ CEO

Narine Daneghyan

Nick Martin is the CEO of Mission.Plus, a digital innovation studio that combines engineering, design agility, expertise and commercialization to deliver market ready tech products.

In this episode we will deep dive specifically into methodologies for prototyping and validating early stage ideas at a very low cost.

Website URL: https://www.mission.plus/

Nick’s LinkedIn: https://sg.linkedin.com/in/nicholasrjmartin

EPISODE TRANSCRIPT

Andries De Vos: What was your founding vision for MISSION+, and what was the origin story behind this?

Nick Martin: Every journey has a starting point.

For us, one of the reasons we co-opted the word “mission” into our company name stems from the desire to understand our intrinsic motivations or purpose. At this point in our journey I would say it’s still evolving from the genesis stage.

If I go back to my personal story, I was struck by herd mentality and I went into a bank, and then I broke away. Then I fell into a startup that I really enjoyed working on. We were issuing Visa debit cards as a non-bank. There were a number of achievements, and there were a lot of mistakes, a lot of learning. We were lucky enough to get to a stage where we could sell it and move to the next chapter. I really started thinking a bit more deeply about what was going to drive and motivate me when I was offered a role to work in the Investment team of an early stage investor.

One of the reasons I joined was that I was interested in sharing but also increasing my learnings. An attraction point was the asymmetrical access to the number of different people that you meet as an investor, who are starting companies at different stages, with different business models, in different industries, with various strategies to grow, the pure volume of what comes across your desk is overwhelming but I was inspired to see if I could make sense of it.

It was actually during that period that the fund, which had invested in about 50 companies at the time, was keen to evolve into a venture builder. So, I was asked to work out what the model meant, and how the team could support it. Later on, I was also encouraged to start a new company, which is today MISSION+.

I think having a safe space to work on something while not taking too much personal risk actually allowed us to evolve MISSION+ differently. I admit to being more conservative with it, but not because I got scared by the risk that I see a lot of founders taking. I felt I had to start MISSION+ as a boring business model on day one, doing things like building technology for other people, using the skills that we had and what was around to generate value. In terms of what we offered to the client and delivered on software engineering, it was achievable. On the flip side, it gave us an opportunity to make sure that we generated the right cash flow so that we could develop operations experience. It gives us space and time to determine our own mission and work out what it is that we want to do.

Andries De Vos: So where are you landing with this? Did you figure out where you take this next? How is your vision evolving?

Nick Martin: One of my friends has recently said, “Look, I like the Ocean's 11 thing that you're doing.” I hadn't thought about it, apart from the fact that he made reference to a movie, that what we've been doing is assembling a lot of people that we've been inspired or interested to work with. It's not always the case of “can we afford them?” It’s about what motivates them to give up what they're doing and work with us.

Right now we're still in the stage of just ensuring delivery for client satisfaction. Have we got to that next stage yet of where we're taking bets outside of the professional services? We are slowly getting there. I'd say probably our first is in prototyping, but there's probably other areas where we're cautiously dipping toes in water as well.

Andries De Vos: Is there something that you guys think you understand that others haven't? Or is there an assumption behind the MISSION+ that is guiding how you're building your business model?

Nick Martin: The initial goal was just sustainability via earnings, making sure there’s the financial base. I think that P&L stability allows us to take small bets to test ideas, because right now we're not building IP as much as delivering IP for others. I think having a roadmap that allows us to look after clients while testing other strategies will be what defines us.

Andries De Vos: What is the economics behind this? How much retained earnings do you think you need to have in order to make how many bets? What does that ratio look like?

Nick Martin: Right now, we make sure we're comfortable with taking money out of retained earnings to test something and decide how long we want to test it. With prototyping in the last part of 2020, we knew we were going to hire people but we decided to not have full paying clients. Without full paying clients, we didn't have to offer any warranty on the output, because we're still learning in this example. We hired people in Singapore, which comes up sometimes at a higher rate of monthly expense than other countries, but we wanted them to be near.

We took risks on people at different stages in their career to see how they would deliver in a space that we were not really clear about.

This is possible if offset by areas where we're growing, making sure that if we've got $100 right now, for our next wave of clients to support that, the next contract value should be somewhere between 5% to 20% of that $100, this allows us to incrementally improve our run rate.

At the moment, we're just keeping an eye on the original business but making sure that through putting those numbers away, we can say where we want to make bets.

Andries De Vos: Have you conceptualized how big the bets need to be? It is 20,000 per bet, 60,000 per bet?

Nick Martin: I'd say we haven't had enough bets to conceptualize the range. It was commented on by someone whose opinion I value, who said ”Oh, look, your sample sizes are too small.” That's probably where we are. I think what we'd probably do instead is not constrain ourselves but do what makes sense for the risk that we're taking. Obviously, at some point we have to be critical about looking back and reflecting on the evidence of what we've achieved. In one case we were pitched a partnership opportunity, someone had come to us and said, “Look, we like what you're doing. If you can invest time and resources with someone that we think has some promise, would you be open?” It's an area where we think the business model has an option to scale but we're not really sure if that's the case just yet.

Andries De Vos: Do you have things that you're not doing in your model?

Nick Martin: One thing that we don't touch is non technology delivery such as customer validation. This may be a bias that I have from when I was working as an investor. You could continue providing an offering of services and then at some point, you are doing the job of the person that you're being paid to support. We highlight the many tools around. “Now that you've got this product, this is what you should think about - how you go out and get it in front of your customer”.

We believe the client has to develop the ability to talk to their own customers, solicit feedback so we can improve collectively. It's a line that we don't cross at this time.

Andries De Vos: That's a great point, because we have a similar philosophy but a slightly different take on the asset that we're building at Slash. For every single capability, we're building a specialist in such a way that we can externalize the capability - a bit like Amazon did with AWS. If we build a growth team for our own company, it can provide service to our portfolio. I take your point that at some point, you have to draw a line, which is what the entrepreneur is expected to do. We've taken a fairly ambitious view, an empire building view that we can build more and more capabilities that we can offer, in whichever format. That's a commercial negotiation whether it's a fee or equity, or something else based on our own ideas. It's a big part of the package, if we factor it all in from a financial standpoint in order to de-risk our equity portfolio, but indeed, there has to be an expectation setting with the founder. That's essentially the direction we've been taking so far. It's quite interesting to see we're now in the early stage of that process. I think pre-typing and prototyping is fascinating. I see you're positioning more in the prototyping phase space, but help me understand how you came up with it. When was your “Aha!” moment when you started prototyping?

Nick Martin: I would say it actually came from two different angles. One was our technical adviser Ned's, and one was mine. We weren't even looking at it as an “Aha!” when I was at the investor but a lot of people were coming to us asking for a lot of money to build something that they hadn't yet gone out and validated. It could be a $300,000 raise with $50,000 of that going to building this two-sided marketplace MVP as one example. We thought, before you go and build a two sided marketplace, shouldn't we get some guarantees or commitments that the two-sided marketplace is what the customers want? I kept going back and forth with a lot of founders on this same topic.

Unfortunately, the market was quite frothy, and a lot of people were getting offers or interest to go build things elsewhere because the two sided marketplace business model was going to scale the investment if it worked, whereas we were being a bit more practical and prudent about growing the business idea a little more sustainably. I think we were a bit of an outlier. We thought, “what if we just validate this so that the person either gets the guarantee or we get the guarantee together?”

The first time I ran a design workshop, I really hadn't spent a lot of time with the process, but it was just reading the book and saying, “Okay, well how can we do this with three different founders, just to see if we've got enough certainty on whether we want to work with them and what they want to do?” The problem/solution and decision steps that you see in the design thinking process were relatively well-run with the band that we pulled together.

However the prototyping step was terrible. There was actually limited to no prototyping capability amongst us. If you've read the stories about how the example of the robot gets built overnight in the hotel, these prototyping steps evolve very quickly. You either need someone who can do something very fast or, in our case, you have to rely on smoke and mirrors.

We finally got the person with the marketplace idea around to the idea of testing before building. She couldn't co-opt her technical founder to spend any time on it, so we ended up looking at an equivalent website that existed in the U.S. and getting her to just cover the name of that website, go to five customers to present it as something she had built, and ask for feedback.

In that case, it was really important because the assumptions that she had actually developed, which were true in some cases were generally dispelled. If anything came out of that exercise, it was just an “Aha!” moment when we realized $50,000 was not needed to build an MVP at that stage. We continued a few more design thinking sprints with limited to no effort on prototype, just because again, we didn't have the capability. As MISSION+ was evolving and I was telling these stories to Ned, he thought that it was actually more achievable, not just with our team, but with the low code tools. That's when we started first, taking prototyping to low code.

Andries De Vos: Do you want to tell me a bit more about those tools and how they have matured over the years? I’d say five years ago those tools were on very few people's radar. Now it seems that the market is evolving so rapidly that they're becoming more and more solid, mature, ready both for budget startup-type projects and enterprise-type of projects. You now have almost a segmentation of tools for different purposes. What's your philosophy on that? What's your take on how that will evolve?

Nick Martin: I'd say that probably 10 years ago, there was a period when I couldn't build a website, and I'd have to hire someone. I'd have to describe my needs and have that whole process of coming back in a few weeks with comments. There were a bunch of cycles, and the project would ultimately land somewhere close to what I need. Then, a website would be there to sell whatever it is, for instance.

When I started speaking with Ned about this he said that rather than asking what low code is, we should think about what the problem with this is. The problem that he came across from all of his time as a career systems architect and engineer was that the requirements for those ideas had always been based on interpretation. The gap that he talked about a lot was either he or his team didn't understand the domain, the business user, or the business unit had poorly articulated the requirements. In total, there was just generally a poor comprehension of requirements. While agile methodologies tighten the loop, there was always this wastage that he used to live with.

When we were looking at his experiences and at low code tools, we just became a bit bullish on the idea that this could usher in a world where a business user could build their own applications. We just realized this couldn’t happen today. We looked at low code tools such as  bubble.io and they have a very sharp learning curve, even I stopped and said, “Look, I'm not going to jump into this as a non-technical participant, but in time that will eventually improve.”

There is a transition period now, where it's worth it for us to have people at MISSION+ who can become familiar with those tools and then shorten the validation cycle to develop prototypes for our clients to get enough signals from internal stakeholders, customers, investor - whoever it is that you're trying to get feedback from, to get the confidence before you go to full development.

Andries De Vos: Oh, that's brilliant. I agree. Do you offer this primarily as a service towards new ideas of young startups or do you also offer this for large enterprises? And when you do, how is that different as an engagement?  What are the challenges of each?

Nick Martin: Yeah, we've offered it successfully to one large enterprise and worked with about five startups. We chose the startups because they had time and no money. We said, “Look, if you want to test this with us, we're not going to charge you,” or we just priced it to the point where we got their participation and commitment because they felt like they were getting something that was worth the value.

During those experiments, we were testing if the output was going to meet the user requirement for clickable prototype. From our business side, we were asking, can we make this a viable business? If not, what's the cost structure for this in the future? We tested the cycle of what we could do and how much time it would take to deliver a prototype.

So what actually evolved? We decided on the first day, whether it's with the institution or the startup to just to absorb as much information around the idea and the problem solution as we could. Unless the client was really unsure themselves, we would remove the debate and the noise around the problem/solution and just make quick decisions.

We felt that if we could remove a lot of the interpretation or the need to get to an answer in a short period and just start building, the output would actually get to developing some wireframes where we'd have a better conversation. Now, invariably, day two or three (or one rapid cycle of wireframing and prototyping) didn't yield a lot of positive response, but on day five and day seven, a path was starting to evolve. And we found that clients by two weeks got to a point where they were comfortable with an output, which in most cases was just a low-code, clickable prototype.

In some cases, it was built withbubble.io or figma and in some cases, we had to develop a hack together with some basic code. We didn't define the point of how we produced, we were making decisions in each case. It gave us a point of stop-and-handover as in you can now go and talk to someone about this and come back with better feedback.

Andries De Vos: What's the learning curve on these types of tools? Is it something that's in the process of a two-week process the business user can then take it for the next iteration, if they are committed to it and invested in that methodology? Or, do you think it's still too early and they will always need external support?

Nick Martin: At this stage, we find that they still need external support. Only one out of five said they would go and get their hands dirty and use the tools. For others, there is still a gap. It's not like me jumping into Squarespace to build a website by the time we finish this conversation, it's not there yet.

What we were really trying to do is also evolve the mindset of spending as little as possible to get to a point where you validate, test, and come back with confirmation before you commit resources.

Now, I would caveat all of this by saying that it is not viable for us to continue doing this with a parallel business, which is professional services. In some cases, we were stopping ourselves from doing the next round of launch. But it’s the right thing to do. We had one person who was quite committed to deploying their own capital towards building an idea before the two week cycle. At the end of the prototype delivery two weeks later, we felt the client disappointment that washed over the room. Our team was quite dejected at the lack of response from the client. In the end, that person said, “Look, thank you, this is really good, because in this case, I spent $2,000 instead of $50,000,the idea was not as it's not as contagious as I thought it was going to be”. We were thankful there were clear takeaways for this founder around how to make it more creative, more interactive, more gamified, but also an awareness that it was going to come from someone else, and they shouldn't proceed further until they'd solved that part of the problem. If we did this every day, and then we only relied on the one in five to go through, it would change the business model. How do we then put this in a place where we're happy for it to operate, so we can do better by the world but then still work on full service projects that people have certainty about? That is the aspect we're still working out.

Andries De Vos: What venture building models and MISSION+ like models do you find interesting out there and why?

Nick Martin: Where all the buzz is usually around startups, I realized that there's a lot of venture builders out there now, who are taking all of their skills and learning and applying it to corporates.

If we think about it, these corporates still maintain and dominate a big percentage of the global GDP, the Fortune 500 probably owns a majority percentage of it. I think the efforts in the future will come from companies that refine their approach with corporates.

There are some venture builders that we are watching and working with who seem to be getting in and around corporations and saying, “Look, it's not going to be one business that gives birth to the next.” And then there's going to have to be a process for us looking at the value chain and deciding what the segments are, realizing that there's going to be some capital spent even if we don’t find them, but maybe only one of them at best will get you to that next business that generates a new line.

I find that whole area interesting. We see a lot of people out there that are starting to walk that path and for me, that's a really interesting area. We want to spend more time getting to learn more about it.