Minimum Viable Product -- also known as MVP -- was one of the first new buzz words I heard when I moved to Silicon Valley in mid 2009. Two years on, its become one of most over-used terms in the industry along with "pivoting" and the rest of the lexicon branded under "lean startup methodology", due to the initial insight of Steve Blank and amplified by the work of Eric Ries.

We recently ran StartupBus (coverage here) and Anthony Broad-Crawford on reflection with me when debriefing helped coin terms that described what we were doing.

Something that we try to do with StartupBus is have people understand the most effective way to build a startup business. Not the most effective way to build a product or the most effective pitch -- but instead, the most effective way to start a business. Last year for example, I threw everyone off on the Santa Monica pier en route to Austin and had them record videos of people that they would pitch their ideas to. The conductors (alumni from last year running one of the buses this year) clearly liked that and this year, each of the six buses had the "buspreneurs" required to engage with strangers like people at bars or in the street -- getting immediate market validation of their concepts.

Minimum Viable Business is clearly a play (or is that "pivot") of the term MVP. But I think it's more important. Let's think about this: Why do you raise capital in a startup? Its so we can purchase resources and hire talent. And the reason why we have talent, is so that it will result in building and supporting a product. A product, that we hope will one day have paying customers that will sustain our operations.

So to repeat, why do we build products? So that customers will pay for value we create. But what if we could get customers paying us, without a product -- doesn't that make us no longer a startup business?

MVP is a term that has justifiably made the industry rethink about how we approach product development. But let's not forget, that a product is a way to gain customers. Just like with product development, we need business development -- and building a MVP does not guarantee you anything but a less-white elephant. If we are building a startup, let's focus on what really matters -- paying customers -- and work our way backwards to how we can create a Minimum Viable Business.

If you showed your MVB in the middle of a forest, would anyone care? The correct answer, is that they should be hunting you down to hand you cash. Who cares if you have a lean product, it's much better for you to have a phat one that generates passionate (paying) customers. Call me crazy, but that's just how business works.

What's Angel List? It's a service that my good friend Naval Ravikant launched in February 2010 with the Venture Hacks crew, which is dramatically improving the process that is the tech fundraising model. Need high quality investors for a startup? All you need to do now is pitch it via a form.

What's an Angel List scout? Someone that the Angels on Angel List can trust, who will help filter and provide social proof on startups.

Why am I an Angel List scout? I get a lot of people wanting to meet with me to discuss their startup and help them get introductions to people I know. This is partly due to my profile in building the Australian tech community, my involvement in the DataPortability Project, and my most recent initiative the StartupBus which I launched in 2010 as an entrepreneur development program and with its success I now hope to turn into a qualified community of entrepreneurs (more on that another time).

By being made a scout, I'm now going to be able to direct people to Angel List and formally provide social proof to the investors who want to know more about the startups applying. I won't be investing in the startups that apply, but I can provide recommendations to people who will.

I don't get paid for this. Actually, I don't get any benefit from doing it, other than the satisfaction of helping people like future entrepreneurs and my friends at Angel List. But hopefully, I can now make my interactions with people more valuable as I have a direct connection with what I believe could transform Silicon Valley and consequently the world one day.

So if you have a pitch, go ahead and fill out the form - add my name in the referred field and they will circle back with me for my opinion (currently free-form text, but it will soon be a drop down). Also, if you want to be visible to me when applying, you have to choose me from the "angel picker" when me apply. I'll try my best to make coffee time for as many entrepreneurs as possible who stop by San Francisco, as I have been in the last year and a half since moving to America.

Update January 2 2011: I just got told that "as a scout, you can see, vote, and comment on startups that have chosen to be visible to you. So you do have some real powers in influencing the investors on the site and crowdvoting up the good startups". So once again I can't *do* anything that will get you funded, but I can help

I actually think what's happening is that the market is now more resistent to bubbles. Contrary to a previous post of mine where I hypothesised the seed investment bubble (which I've since reconsidered and I'll explain later in this post), the Angel "bubble" is a externality of one simple fact: it's now a lot cheaper to build a startup. To understand this, watch the presentation Naval gave a few month's ago which is the best I've seen to date in this trend.

So as a consequence, angel investment has now becoming (and rightfully so) the dominant way for a company to fund a startup company, with the existing VC model being relegated to more of a latter stage role.

Why is this a good thing? Well first of all, a lot more startups are being funded -- but with the same amount of money in the economy. Statistical theory will claim that this alone will be good thing for the economy, as there is a higher probability of home runs. By spreading risk among more bases, there's a better opportunity to generate returns.

But something more important is happening. VC's now have a better qualification of a business to invest in. The huge amounts of capital they can invest into a business, are now going to be done after having seen a more advanced startup's potential future, pushed to that stage by the seed accelerators or angels that cover their startup cost.

What I mean, is that by the time a company gets to VC, they will no longer be a startup -- which is a business searching for a business model -- but instead a high-growth business that's now executing on their newly discovered and high potential business model. The VC firms are no longer needed in the business of starting something in information technology; they are instead now purely in the business of growing a business (where already some of the larger funds exclusively focus on). And the capital they are putting at risk on behalf of the endowments and pension funds that gave them that money, now have a lower risk of achieving higher returns.

Better still, the VC's funds can focus on the future of technology like clean energy, biotechnology, and nano  technology -- industries that were what information technology was in the 1970s: high startup cost, low chance of return.

And while that's all well and good for the VC's, this new funding lifecyle actually opens up opportunities for returns for everyone (which is why this isn't a bubble). The seed accelerators and angels have the ability to pass the baton and exit their investments to better capitalised groups like the VC's, allowing them to focus on the earlier stage of the market. With the IPO market dead since the introduction of the Sarbanes-Oxley legislation, tech has relied on acquisitions as the sole form of return. But with earlier stage investors like the Angels getting exits to VC's, and the VC's having better qualified businesses that they can grow to a large IPO, this is actually going to see the IPO market reopen due to this focus.

All in all, that's not a bubble: that's called efficiency and a rejuvenation. The Angel bubble isn't a bubble but a maturity and evolution of the technology ecosystem. This is actually the missing link in efficient information technology being built -- the link which now connects the super-highways of the economy to sustainable growth and value, not bubble.

Angel list is a special thing that I believe will transform Silicon Valley. Much like how Michael Arrington exploited the market dynamic to make TechCrunch the success it was, Ravikant and Nivi is doing the same thing by connecting entrepreneurs with investors. And not just any investors: the early stage investors that startups really need. Simply put, it's reducing the costs of innovation in Silicon Valley - the 'thing' that has changed the world.

I really hope the industry rallies around this and collaboration opportunities with other high profile angels continue. Jason Calacanis for example is doing something equally impressive with the Open Angel forum, and I sense they both have equal motivations due to their annoyance at how other investor groups have abused their position in the industry. Even though I see them adding different value to the startup scene (they're similar but different - and should stay different for maximum value creation), all I can say is "awesome - I want more".

Pollenizer is an agency that helps startup's grow, run by my good friend Mick Liubinskas and his superstar business partner Phil Morle. They sponsored the bus, with the request an important lesson be shared, which was related to failure.

Below is a short video of Brandon Leonardo - a superstar that I think is going to go very far in his career. He however, had a very unfortunate incident that nearly threw off the entire operation of the bus. The incident revealed an important lesson for Brandon about how you deal with failure. Watch the video the find out what.

This blog post was done in honour of our proud sponsor Pollenizer. This post is part of a series on the Startup Bus, an event that occurred in March 2010 that was powered by Alassian, mentored by the eStrategy Group and supported by several other very generous sponsors.

Hewlett Packard was the company that started Silicon Valley, and Phil is one of the three divisional CTO's at the company, focused on personal systems (meaning a lot of the innovative things that we will see come out are under his watch). So it was a no-brainer to start our experience there. He shared secrets of innovation, including some insight into yet-to-be released products by HP, like it's electronic-ink paper that kills anything else in its class and the proposed Slate device itself (an iPad competitor soon to be released).

You can watch the entire presentation as part of this playlist. Or, click on the videos below which are in ten minute blocks.

Part one: Introduction
Part two: The Rules of the Bus
Part three: The Challenge of Innovation
Part four: The Secret Sauce - FIRE
Part five: The Secret Sauce - PO
Part six: Show and Tell
Part seven: Q & A
Part eight: Q & A (continued)
Part nine: (continued)

This blog post is a series on the Startup Bus, an event that occurred in March 2010 that was powered by Alassian, mentored by the eStrategy Group and supported by several other very generous sponsors.

I'm going to write a blog series that will answer the following questions:
* What worked?
* What didn't work?
* What were all the ideas?
* What ideas got rejected?
* Who was on all the teams and what were there roles?
* Did people flake out before/during/after (and if so how did that get addressed)?
* What are the state of the projects now?
* Are we planning to do something like this again?
* Did anything crazy happen during the trip?

Below you'll find links to posts I will write on the event (as I write them). Above the links, you will find a video of me explaining to the "buspreneurs" why I think this experiment is valuable, regardless of the outcome.

Relate blog posts:
Phil McKinney talks innovation to the Startup Bus/

This blog post is a series on the Startup Bus, an event that occurred in March 2010 that was powered by Alassian, mentored by the eStrategy Group and supported by several other very generous sponsors.

The concept is to put a remarkable amount of constraints (moving bus, strangers, 48 hours, crappy connectivity, sleep deprivation) among a group of smart people (and the people so far asking to join, include people who have built million dollar businesses). In my experience with these things, real startups can emerge from these efforts (like OpenOnDemand.com/ or BinaryPlex.com, which is where the founders met), but the real motivation is to give a learning experience - and so I am structuring the program so that it maximises that as the experience. I guess you could say it's like training, or as my friends Bart Jellema and Kim Chen coined for the Australian startup camps, "excercise for entrepreneurs".

Leena Rao from TechCrunch makes an argument that these efforts can stir up emotions and controversy. But that's exactly the point - in building a startup, you face obstacles. And if don't deal with them - which include infighting, things breaking, and crazy pressure - then chances are, you're not made for the startup world. Which is why these experiences are so valuable - you give people practice and exposure to these issues, and you end up developing better entrepreneurs.

As they say: good judgment comes from experience, but to get experience, you need to have made bad judgment. Here's to developing entrepreneurs, so that they have better judgment with their real startups one day.

Huge opportunities for exposure for sponsors, which will fund this experience. Contact me for more.

I just don't care any more
I started writing this post sitting in my parents living room last week in Sydney, where I visited for the Christmas break to spend time with family. Chatting away with my parents, my father said something very startling but also very relevant. He was talking about his 73 years of life and the 47 years he's had as a lawyer. Once a fiery dragon in the courts and of life, he's now an aged playboy winding himself down. He said he's thinking of giving it up and going into retirement, as he has been working these last few years purely for the passion. Why quit now, I asked: "I just don't care anymore".

I've got countless anecdotal examples (but none I can share specifically here, sorry). People I thought that were pushing to create global businesses, are now giving way to other priorities and looking to sell their very valuable company. People who have been involved with a startup for over four years, that's only now exploding in growth, but feeling fatigued and ready to move on.

It's not just entrepreneurs
A good friend of mine who has worked for five years at a big bank, is now looking for a change in employer. Several other friends, who have been in long-term romantic relationships for around 3-5 years, are now feeling the pressure of making a decision: get married or stop wasting her time. And sometimes it's not them making the decision - but it's what she's probably thinking.

Passion, fire and ambition is needed to start something - whether it be a new job at a big brand company, a new company that disrupts the industry, or a partner that reinvigorates your life. But like life itself, there is a predictable pattern that follows. What gets born will also mature - and will die, one day. It's just how life is; what goes up, will go down as well.

Build to flip: it's a good thing
Bringing this back to the point of this post, I want to highlight that the obsession to build a sustainable business is actually not a normal thing. And I said obsession, because a few years ago I made a naive plea that that was the only way. Now that I've seen more, I've realised it's a way but not the common way.

People that create businesses are creative. The same reason that makes them creative, is also the same reason that has them get bored when a process gets repeatable. The types of personality that start a company and battle during its pre-revenue days, are vastly different from the ones that help grow and manage a profitable business.

So the next time people criticise a company that doesn't stay the course towards an IPO, and let's itself get bought out - just remember, that sometimes, it's because the people behind them just don't care anymore. And that's perfectly alright. Don't fight it - it's how it is.

Vanish is designed to give people control over the lifetime of personal data stored on the web or in the cloud. All copies of Vanish encrypted data — even archived or cached copies — will become permanently unreadable at a specific time, without any action on the part of a person, third party or centralised service.

As the New York Times notes, the technology of being able to destruct digital data is nothing new. However this particular implementation uses a novel way that combines a time limit and more uniquely, peer-to-peer file sharing that degrades a "key" over time. Its been made available as open source on the Mozilla Firefox browser. Details of the technical implementation can be found on the team's press release, which includes a demo video.

Implications
Advances like this could have a huge impact on the world, from controlling unauthorised assess to information to reinforcing content-creators copyright. Scenario's where this technology could benefit

• Content. As I've argued in the past, news derives its value from how quickly it can be accessed. However, legacy news items can also have value as an archive. By controlling the distribution of unique content like news, publishers have a way of controlling usage of their product - so that they can subsequently monetise the news if used for a different purpose (ie, companies researching the past for information as opposed to being informed by the latest news for day to day decision making)
• Identity. Over at the DataPortability Project, we are in the finishing touches of creating our conceptial overview for a standard set of EULA and ToS that companies can adopt. This means, having companies respect your rights to your personal information in a standardised way - think how the Creative Commons has done for your content creations. An important conceptual decision we made, is that a person should have the right to delete their personal information and content - as true portability of your data is more than just reusing it in a different content. Technologies like this allow consumers to control their personal information, despite the fact they may not have possession, as their data resides in the cloud.
• Security. Communications between people is so that we can inform each other in the 'now'. This new world with the Internet capturing all of our conversations (such as chat logs and emails threads) is having us lose control of our privacy. The ability to have chat transcripts and email discussions automatically expire is a big step forward. Better still, if a company's internal documents are leaked (as was the case with Twitter recently), it can rely on more avenues to limit damage beyond using the court system that would issue injunctions.

There's a lot more work to be performed on technologies like this. Implementation issues aside, the inline encryption of the information doesn't make this look sexy. But with a few user interface tweaks, it gives us a strong insight into real solutions for present day problems with the digital age. Even if we simply get companies like Facebook, Google, Microsoft ad Yahoo to agree on a common standard, it will transform the online world dramatically.