Causes and cases of misalignment can often be subtle and insidious.
It happens slowly, with small compromises and misallocations of focus and time.
Like a frog in boiling water, you will be cooked before you even know it.
Pay close attention to the temperature!
Increasing velocity in the wrong direction does not accelerate your path to success. It delays it.
You can't execute effectively absent good strategy.
Ensure you have brilliant thought partners to help you to set strategy and avoid landmines and dead-ends or you will quickly find yourself running quickly - in circles.
#startupsnippets #startupsuccess #startups #scale #leadership #strategy
The line between a thin, agile product iteration and a bad compromise is hard to see and easy to screw up.
You want to avoid making compromises that set you off down the wrong path.
Equally important, avoid making compromises that actually and ultimately end up being just as hard/costly as doing it right. When measuring cost, be sure to factor in initial customer education, ongoing customer support, technical debt, and, perhaps most insidiously, future investments and cognitive drift going in the wrong direction to support the initial compromise.
Ship polished iterations that are along the correct vector towards your ideal - even if, at first, it feels like slightly more scope.
1. Know your value
If you have a real product that solves real problems for real users and it has growth and retention - you are already incredible.
Believe in yourself and the value of what you've created.
Even if you don't have the above, understand the value of what you've derisked in your startup and feel confident it's worth what it's worth at that given stage.
2. Know the value of other things
Remember, this is not a bank loan. It's not about how much you can afford. It's about how much your company needs to win its category. They are not lending you the money; they are BUYING part of your company.
Remember that the money you think is BIG money is NOT that big. There is basically infinite money in the world. It needs to find a home. Billionaires and millionaires spend millions in holding costs for their Yachts each year. They park money in fancy homes because they have nothing else to spend it on.
Many VC funds have 10s and 100s of millions of dollars under management. They need to deploy big cash to just a handful of companies. That's their JOB.
More than any of that - they want to fund companies to WIN. You need to ask for a credible amount to get to the next major milestone in your company. If you ask for too little, you are undermining your case - not helping it.
This is such a beautiful compilation of Johnny Ive's comments about Steve jobs.
This is my favorite part...
"This sounds really simplistic, but it still shocks me how few people actually practice this. And it’s a struggle to practice. It’s this issue of focus.
Steve was the most remarkably focused person I’ve ever met in my life.
The thing with focus is it’s not this thing you sort of aspire to, or you decide on Monday, 'You know what, on Monday, I’m going to be focused.'
It’s every minute. 'Why are we talking about this? THIS is what we’re working on'
You can achieve so much when you truly focus.
One of the things that Steve would say was, ‘How many things have you said NO to?’
What focus means is saying no to something that with every bone in your body that you think is a phenomenal idea, but you say no to it because you’re focusing on something else."
The next episode of The Startup Podcast is about exactly this topic. Watch the video below and check out the latest episode dropping soon titled "Saying NO!" at www.tsp.show
So many founders (and operators) get this so, so wrong.
What happens between customer requests and implementation?
EVERYTHING
Typically it goes like this...
Find a Customer -> Sales Process -> Customer request -> Design/Scoping -> Agreement in principle -> Contract -> Signature -> Build
That's a road to disaster for building a product-led Silicon Valley-style startup.
It should look like this...
Define your ideal customer -> Find ideal Customers -> Sales Process -> Customer Request -> Product Strategy Discussion -> Fork in the road
1. Path 1: If it's on the *near term* roadmap and on the *short-term* strategy then:
Generalization -> Design/Scoping -> Agreement in principle -> Contract -> Signature -> Build
2. Path 2: If it's NOT on the *near-term* roadmap and/or on the *short-term* strategy, then:
Develop a generalized, thoughtful, and complete formal pushback -> Push back on the customer -> Win or lose the deal, but don't distract your business.
This process should go down path 2 80% of the time (if not more).
No amount of planning, no amount of strategizing, no amount of consensus building, and no amount of discussion will eliminate thrash, indecision, and distraction until some group of people are also willing to say NO.
No! To constantly changing priorities.
No! To constantly piling on more goals.
No! To focusing on the wrong KPIs.
No! To customer demands that are off-strategy.
No!
In these cases, your job (wherever you are in the org chart) is not to be congenial - but rather, it is to (respectfully, thoughtfully, but DEFINITVELY) put your foot down for the benefit of your colleagues and the overall company.
The most costly thing you can do as a startup founder is use your R&D team to hedge your bets.
Once you have product/market fit, your job is to hit the accelerator and execute as fast as possible toward escape velocity on your core product and business.
Figure out what your key performance indicators are, grow them (exponentially) and raise capital against your story.
Building products and features to support secondary businesses will just slow you down and reduce your chances of success.
1. Lack of product leadership
Without strong product leadership, sales, marketing, engineering, and even the CEO can’t do their job.
2. Lack of prioritization and slicing
If everything’s a priority, then nothing’s a priority. The question is how to make disciplined choices and thinly slice releases so that the right things get done in the right order.
3. Lack of bottom-up adoption
If the only way to use your product is to talk to the sales team, you’ve already lost. Companies are made up of many individual consumers. Do you know how to empower them to adopt and advocate for your product?
4. Helping instead of disrupting your customers
Are you selling to the wrong customer? Often young startups sell to the companies they should, in fact, be killing. How can you avoid propping up incumbents and win the market?
5. Lack of conviction and urgency
Is indecision, lack of focus, and/or poor accountability costing you speed and efficiency? Who’s job is it to fix it? Have you factored in opportunity cost?
6. Understanding the proper role of sales
Is the sales team selling what you’ve built - or just selling whatever they can sell? Do they understand how to expand self-adopt accounts? Do they know how to minimize thrash in the R&D team?
When figuring out a strategy, it’s easy to get caught up in externalities that confuse and derail the planning process.
What if we don’t raise capital? What if conditions change? What if that big deal doesn’t happen?
The trick is to develop a plan that makes reasonable (or even bullish) assumptions about the outcome of those externalities.
You WILL raise that capital. The conditions will ALWAYS change. The big deal WILL happen (or another one like it).
Worst case scenario, your assumptions prove to be wrong and you can recalculate.
But if you’re constantly compromising your strategy and getting hung up on externalities - you will never unblock your team and drive toward successful outcomes.
The other key trick: execute so well that your bullish assumptions come true. Make. Them. Happen.
Run an excellent fundraising progress that blows investors out of the water (your incredible plan will help!), monitor conditions closely and build in feedback loops, do everything you can to close that big deal (or, better, find a path that doesn’t rely on single big deals).
When thinking about support, remember that different users like to get support in different ways.
Some users like to do their own research, searching for and reading your knowledge-base articles for themselves.
Some users will go straight to the chat box and try to get an answer from the chatbot or from a human agent in real time.
Some users will insist on sending you an email and waiting for one of your support team to do the hard work for them.
In all 3 cases, be sure you have a knowledge base system that supports a single repository of help articles such that...
Users who like to research can search and read articles.
Users who like to chat can get answers (ideally Generative AI style) that are informed from your knowledge base articles.
Users who like to email are first presented with recommended knowledge base articles BEFORE they're allowed to submit their support email.
Three birds. One stone.
I recently wrote a post about how too many startups who dream of creating disruptive consumer products, instead, compromise on their vision and build B2B software because they see it as a path to short-term revenue.
Imagine if Uber and Netflix built software for their competitors (Taxi and Blockbuster, respectively) instead of DISRUPTING them.
The post went viral (See a link to the original post in the comments)
But HOW do some companies do this while so many others can't?
To build disruptive companies, it takes...
Clear vision with first-principles thinking
Effective, high-quality execution with a take-no-prisoners attitude (which includes building an incredible end-user-facing product for end-users)
Smart capital to fund Research & Development and Go-to-market
Smart capital liberates companies from having to focus on small-scale, short-term revenue. Instead, they get to focus on full-stack disruption and owning the end user.
However, this can often feel like a Catch-22.
How do you get the smart VC money so you can be liberated to think about your end-user-facing business vision?
As a result, many founders give up before they even start. They compromise and pivot straight to a B2B business right out of the gate.
But it's not a Catch-22.
As a founder, you must have a clear vision rooted in first-principles thinking and demonstrate high-quality execution to THEN attract smart money.
If you pitch a compromised B2B strategy, you will raise money from compromised B2B minded VCs.
This is your reminder:
Craft a compelling narrative that fires the imagination - believe it!
Recruit a "coalition of the willing" - investors and advisors who believe in your disruptive idea
Build the product and business you want to see in the world
Knock on hundreds or thousands of doors until you get enough "Yes"s to unlock your dream and change the world
Don't be the one to compromise and kill your dream before you even get started.
Believe in it - and find others who believe in it too.
#startups #fundraising #startupsnippets #venturecapital #founders
Just starting out and prioritizing growth? Pack your free tier with value.
Looking to prove early revenue? Start placing oft-asked-for features in a pro tier and seduce users to upgrade.
One of the cliches of startup life is “fall in love with the problem, not the solution”.
One of the implications of this philosophy - if followed to its logical conclusion - is to understand that the problem likely starts further upstream than you imagine; and goes further down stream than you imagine.
Consider that, once your initial wedge in the world begins to gain traction, you have an opportunity to expand into logical agencies up and down (and across) the value chain.
I’ve been doing startup advisory for a long while now. Over that time, I’ve noticed a lot of common founder behaviors that really hurt their companies. Here are just a few…
1. Lack of quality, consistent action over time
Some combination of: They jump from idea to idea. They burn out quickly. They waste time on stuff that doesn’t matter. They don’t follow up. They don’t finish what they start. They don’t adjust and adapt quickly enough.
2. Small business syndrome
They say they’re running a startup; but they are actually making decisions like it’s a small business. Race to revenue. Not raising capital. Not raising enough capital. Partnering with incumbents. Etc
3. Lack of experience
They don’t know what they don’t know. They don’t know what the right steps are or what great work product and outcomes look like. They are lost on the next steps or the best way to execute but they’re not asking for help from the right people.
4. Too focused on strategy
They spend too much time on strategy. They keep re-writing it and imagining a huge future. But they don’t pay attention to the details or understand how important the day-to-day details are. They think once the strategy is done then the rest is just busy work that doesn’t require constant strategic oversight and high-quality management.
5. Too focused on tactics
They spend too much time on tactics. They get uncomfortable when asked to take a step back and figure out the big picture. They don’t understand the value of saying no. They don’t take responsibility for providing a strategy that creates clarity and context for their team.
6. Not focused enough
They change their mind all the time. Every new customer, opportunity or thought can derail their strategy and even the tactic they’re in the middle of executing. They fail to create a stable space inside which their team can do high-quality work.
Sometimes this comes from too much conviction about the cleverness of their own ideas. Sometimes it comes from bad advice they’re getting from scared/small minded people around them.
You have a “good will budget” with your users.
If you play too many tricks to force certain behaviors, the resentment will damage your brand. As a result. Users will only choose your product as a necessary evil and drop you as soon as possible. This ultimately limits the innovation and monetization you can deliver.
Focus on delivering delightful value over the long term and users will choose you more often and follow you on any journey you put in front of them - including to new products and revenue opportunities. For companies with great brands and user-centrality - the sky’s the limit.
Good: Go get conviction on your sources of capital so you can get conviction on your disruptive growth business.
Bad: Use your lack of conviction to hedge and build a business that compromises on growth and disruption.
“Community” is such an interesting term.
It’s a little like the word “partnership”. People use it to mean all manner of sins.
Many of these meanings are very good for your young product-led startup.
Some are a dangerous waste of time. Read to the bottom to find out which one is unproductive.
✅ Support Community
Group of people who use your product & help each other be more successful.
This can reduce support costs & give users/customers confidence that your tool is well adopted and supported.
✅ Ecosystem
Community of entities (typicsllly other companies and products) that plug into your product & make it more valuable.
This can be a powerful (if not unstoppable) moat around your business
✅ Marketplace Participants
Typically individuals who are either providing services (supply side) or buying services (demand side) inside your own explicitly designed matching environment.
This is core business. You typically monetize the transactions by clipping the ticket.
✅ 3rd Party Community
People already discussing the problem your product solves.
Finding a way to organically & authentically engage this community can be a great way to learn. It’s also a great way to promote your product.
✅ Testing Community
People who have opted in to using early versions of your product & provide detailed feedback.
This can be valuable if you’re quickly & consistently shipping versions of your product with an intent to distribute it more widely in the short or medium term.
✅ Social Network
If your product is designed to facilitate the connection of people (typically around a social object like a photo or video or a topic like sport or cycling) then engaging communities of people to migrate or spend some of their time on your product is essential.
This is core for your product & business. You monetize through ads or premium experiences.
❌ 1st Party Conversational Community
People that you invest in growing and nurturing outside of the context of a real and usable product.
Their primary interactions are to talk to each other (and you) but they are unable (because it doesn’t exist) or unwilling (because they just like talking) to use your product.
This might work for more mature companies that have time to plan and execute over the long term.
For startups, however, building a conversational community that is only tangentially related to their business - particularly when they don’t have a product and are not focused/resourced enough to have one in the short term - can be a giant distraction.
As a founder, it’s seductive to spend a lot of your time creating a conversational community. There are many tools and there’s a lot of opportunity for instant gratification.
But if you are operating a young product-led startup, you are not a typically not a community builder. You are a product and business builder. Your interest is in users - not “community members”.
Stay focused
As a C-Suite (CEO, CPO, CTO, CMO etc) you have two key levers with your R&D team.
Priorities and budget.
You can either
1. Deprioritize a business goal in favor of another one.
Or
2. Fund the expansion of a squad (or, often, the creation of a new squad) to work on a new priority/mission.
You cannot, however, just keep adding priorities and missions, expecting it all to fit into the same overworked squads and expect stuff to just happen “faster”.
In fact, everything will happen slower because the thrash and contention will bog everything down. Not to mention the tech and org debt that will be incurred.
Oftentimes, the companies you think are your customers or go-to-market partners can often be the companies you're supposed to be disrupting.
It's very common to find young startups attempting to create new user experiences and business models that change how an industry works - while also choosing a go-to-market or sales strategy that relies on legacy players in an industry.
In these cases, here's what's likely to happen when dealing with these players...
They are unlikely to understand your innovation.
If you are lucky enough to find some stakeholders to understand and champion your innovation, the people they work with are likely to slowwalk or kill their initiative.
If the initiative gains some momentum, it's highly likely to be killed due to priority changes (due to changes in KPIs, market conditions, management whims, etc.)
Even if you squeeze through the eye of the needle to get *something* out to market, they are unlikely to implement it the way you want.
Even if they implement it the way you want, it will take *forever* to ship it.
Even if they ship it, they're unlikely to market and/or sell it how you want/need it.
Even if they were to do all of the above, you would be unable to rapidly test/iterate on the implementation details and marketing messages (essential for disruptive new products) - which can cause your product to suffer or fail.
They will likely change their mind when market conditions change or the intial rollout “fails” to live up to its potential - particularly because you have been unable to iterate and experiment.
Even if it finally ships and starts to get marketed correctly, making any changes will be painful if not impossible (see: all of the above).
If you are implementing a white-label solution (often the case): Even after all that, you won't own the user. Which is the most important thing
Instead...
Go straight to the end-user.
Disrupt legacy players - don't partner with or sell to them.
Later: Maybe give them a little SDK or API to adopt some of your incredible innovation.
See: Youtube vs. Media companies, Instagram vs. Brands, Twitter vs. News, Uber vs Taxi, Netflix vs Blockbuster, etc etc