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Get Lucky and Keep Hoping are Not Strategies to Grow Your Startup

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Grow Your Startup

I was given a book a few years ago by my ex CEO Warren Weiss that was titled “Hope is not a strategy”. Got a good reminder of the same when I read this post by Robert. Summary of his post is he prefers not to get PR folks not to get him to cover a company, instead get users of the product / service to tell him about why something is relevant.

We should all be so lucky. Of course he’s probably advocating you dont need Venture Capital for your startup also and everyone can be as wildly successful as HotOrNot – “just build the right product and users will come and make the rest of the magic happen”.

Shows a basic lack of understanding of the PR world, but he did say that’s the way “he” prefers to cover startups. PR creates awareness. Its difficult to measure, not easily accountable, but its “yet another” avenue to get your name out in front of potential customers and users in a “mass medium” way than doing it one customer at a time in the trenches.

He’s right about customers (or users) telling your story than either you or a PR person. That’s what good PR folks do – they help you create situations where your customers are telling the story to the press, reporters etc.

So what are issues? Why cant every startup be like the one he’s profiling?

1. Over 90% of customers (regardless of how passionate they are) are indifferent. Yes, you solved a problem. Yes they like your product, but they hate telling other people.

There are lots of reasons why – they are shy, or they dont like talking about new products or they will tell everyone – AFTER they are sure it really, really works (which is a really long time) or the worst (in the enterprise side) – they view your product as a competitive advantage so they wont tell anyone else.

In reality if you look at the pyramid of customers, less than 1% of any customer (early adopter or otherwise) is so passionate about the problem your specific startup is trying to solve. They have to tell the story. If you find such customers, hang on to them for dear life. Realize you’ll make mistakes, since choosing the first few customers is an art. More on that in a later post.

2. Time: If you had to wait for your users to love the product, tell the world and then generate press, you’ve got to have either time, money or both on your side. Why? It just takes longer. User have to be given your product, it has to work, it has to give them tangible benefits (which is not easy in enterprise software quickly) in a short enough time frame for them to say good things about you. Dont think that’s the same for a consumer startup?

Ask LinkedIn. It takes time to create value. You have to get more users (people that try it) so you can have a bigger base of users who are passionate about your company and your product to tell others.

3. The credibility factor: Its a lot easier if you are Max or Joel to have the street credibility of having created something of value before for the press and users to immediately cover something. Reality – most software startup entrepreneurs are “first time”.

They dont have that credibility. I noticed on YCombinator yesterday another user posted a new site he had created that does say 40% of the same thing as another well known site does. The user was hardly known and a first timer. Reaction – none. Good PR folks I know bring their credibility and value to your startup. Even if you are unknown to the rest of the world.

4. The lack of a story: Its very important for startups to “tell a story”. Not a fake one, and not a fairy tale either. But a simple, coherent and compelling story. Most engineering entrepreneurs I know are not good at that.

They would call eBay a 3 tier web technology that has implemented the Boyer-Moore matching algorithm. I exaggerate, but to make a point. Good PR folks help you create and then tell the story.

5. Creating opportunities. If you have a startup, you dont have a dozen people (especially if your product is just being released). You are either spending time building product or selling (either to customers or investors).

Nurturing new users and customers is hard but a very required aspect of your business. PR folks help nurture them to be press ready. They also create opportunities for your customers to be in the press more for the benefit of the company than for the personal benefit of the customer. Its a subtle art and nuance, but very important.

Oh, and Robert, as you say “I’m tired of seeing crap after crap after crap. If someone pitches me another social media aggregator I’m going to scream. Even when you bring me stuff I check out reactions of real users who don’t have some vested interest to see what they think“.

Stop getting pitched. Oh! I forgot that’s your new job right?

Disclaimer: I know Robert, like his writing and think he’s awesome. But I also think he’s wrong on this one.

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Creating Artificial Constraints as a Means to Innovation

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Artificial Constraints

Many of the entrepreneurs I know have created new innovative startups thanks to real constraints they had. For example, I was hearing AirBnB’s Brian Chesky, on the Corner Office podcast and he mentioned that when he and his cofounder were trying to get some money to get started and the only way to keep afloat was to “rent” their air bed they had in their room. That, then led to Air Bed and Breakfast, which is now AirBnB.

This was a real constraint they had – no money to “eat” so they had to make it happen somehow.

I have heard of many stories of innovation where in the protagonists had real constraints of either financial, technology, supply, demand, economic, social or any number of other characteristics.

The interesting story that I have also recently heard of how Facebook has “pivoted” from being a desktop offering to getting a significant part of their revenue from mobile is how they were given the arbitrary constraint of only accessing Facebook via the mobile phone.

So there are ways that you can create “artificial” constraints to force innovation to happen.

Most larger companies and some smaller ones as well, have to constantly find ways to create artificial constraints – to find a way to innovate and be more be a pioneer.

While some constraints are good – lack of funds at the early stage for example and lack of resources, there are entrepreneurs that are stymied by these constraints and those that will find  a way to seek a path to go forward.

I think this is a great way for you to think about innovating in a new space. If you have constraints, find a way to use it to your advantage.

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The Great Mobile App Migration of March 2020

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Mobile App Migration

Over the last few weeks as many in the world have been in lockdown, there has been a temporary “mobile app migration” happening. There are new apps downloaded and they replaced existing apps on the “home screen”.

While some of these apps are likely temporary use, for e.g. I have 6 “conferencing apps” – Zoom, Uber Conference, Webex, Google Hangouts, Blue Jeans and Goto Meeting. That is because of the many people I have conference calls with – each company seems to have chosen a different web conference solution.

Other apps seem like they will have staying power – Houseparty, for e.g. which has games, networking and video conferencing all built into one app to keep in touch with friends and relatives.

Houseparty

The apps that have moved away from my “home” screen, which I expect will come back once the crisis will be behind us include – Uber, Lyft and all the airline apps from Delta, Alaska and United.

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Perseverance with the Ability to Pivot on Data: 21 Traits We Look for in Entrepreneurs

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Perseverance with the Ability to Pivot

There are 5 key inflection points I have noticed which makes founders question their startup, to either make a call to continue working on their startup, pivot to a new problem or quit their startup altogether.

It is at these points that you really get to know the startup founder and their hunger and drive to be successful. I don’t think I can characterize those that choose to quit as “losers” or “quitters” because of many extraneous circumstances, but there is a lot of value that most investors see in entrepreneurs who face an uphill part of their journey to come out on the other side more confident and stronger.

These five inflection points are:

  1. When you have to get the first customers to use and pay for the product you have built after you have “shipped” an alpha / beta / first version. Entrepreneurs quit because they have not found the product-market-fit – because the customer don’t care about the product, there is no market need, or the product is really poorly built, or a host of other reasons.
  2. When you have to start to raise the first external round of financing from people you are not familiar with at all. Entrepreneurs quit because while it is hard to get customers and hire people, it is much more harder to get a smaller set of investors to part with their money, if you do not have “traction”, or “the right management team” or a “killer product”.
  3. When you have to push to break even (financially) and sustain the company to path of being self sufficient. Entrepreneurs quit at this stage because they have now the ability to do multiple things at the same time – grow revenues and manage costs, and many of them like to do one but realize it is hard to do that without affecting the other. So, rather than feel stuck they decide to quit.
  4. When you have to scale and grow faster that the competition – which might mean to hire faster, to get more customers, to drive more sales, or to completely rethink their problem statement and devise new ways to grow faster. Entrepreneurs quit at this point because they are consumed by the magnitude of the problem. They overassess the impact the competition will have on their company, give them too much credit or focus way too much on the competitors, thereby driving their company to the ground.
  5. At any point in the journey, when the founders lose the passion, vision or the drive to succeed. Entrepreneurs quit a these points because they have challenges with their co founder, they don’t agree with the direction they have to take, or encounter the “grass is greener on the other side” syndrome.

While I have observed many entrepreneurs at these stages at  discrete points in time, I have also had the opportunity to observe some entrepreneurs in the continuum, and I am going to give you my observations on 3 of the many folks I have known, who, have quit.

Perseverance separates great entrepreneurs from good ones
Perseverance separates great entrepreneurs from good ones

One went back to college to finish his MBA after getting a running business to a point of near breakeven, another found the business much harder than he originally thought he would and got a job at a larger company and the third was just unable to have the drive to go past 11 “no’s”‘ from angel investors.

Over the last 8 years, if I look at my deeper interactions with over 90 entrepreneurs, who I would have spent at least 100+ hours each, I would say that of the 24 people that are not longer in their startup, the one thing that stands out among the ones that persevere is that it is not “passion” or “vision” at all.

It is the inherent belief that they are solving a problem that they believe is their “calling”. They also don’t believe that there is any other problem that’s worth solving as much, even though there may be easier ways to make money.

So most of my questions of entrepreneurs to test whether they will pivot or quit are around why they want to solve this problem (which I am looking to see if they know enough about in the first place) versus any other one.

The answer to that question is the best indicator I have found to be the difference between the pivots, the leavers and the rest.

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