Some of the first narratives I encountered regarding Silicon Valley startup culture, and ones that have stuck with me: Build assets to capture market share. Do things that don’t scale. Tether your efforts to the most influential vectors of the network effect.
Time: October 16, 2016
Place: A month into moving to the Bay Area
Pointer from: Recommendation from a friend, as I moved into a very unfamiliar world of tech
Note type: Inspired
Goal of OS2: Execute & iteratively improve a plan which gets you to significant market share
- Everything you think you know about your product market fit is still up for debate)
- How do you make sure you get to market share before your competitors? Build assets
- e.g. at LinkedIn, 3 others entering the market at the time (all focused on enterprise customers, focused on advancing features to quickly monetize value). LinkedIn realized that needed to grow their user-base to advance value (e.g. have enough "inventory" to warrant benefits of search); knew had to lock in market share to ultimately be successful
- e.g. one of LinkedIn’s early competitors believed that the key lay INSIDE of companies; the problem was that they had to go into each company to get this info which made them too slow. Another competitor only focused on one vertical (e.g. just sales people) so alienated wider user base. Their approach prevented them from growing
- Focusing on user growth before getting the product right is just a way to burn through the money
- "there were so many times when someone told me, we can get all of Boeing if we add XYZ shitty features to it. Or Fidelity. Or the next company. But for me, the center of gravity is we need to build software that humans care a damn about, and enterprise will adapt despite all of these things."
- Give tools to enable your community to help so they can proselytize for you. (important when community very important for you— mozilla was open source)
- Very hard for you to say "we are super secure." Much easier for other people to have you do it for you (e.g. marketing). Full belief in strong consistent messaging
Product market fit
- Do things that wouldn’t scale to more fully understand; better to have 100 people who loved us vs. 1M people who liked us
- do as founding team
- but also try to build into organization / activities even as scale
- It’s what Google calls the toothbrush test — can you create a product that people use every day
- Another way you know a product is ready is when you and your team can’t stop using it.
- Category power. Best companies spend time to create a whole new category in the market for themselves; don’t let the existing market define who you are
- How does your company offer influence the way leading C-suite / CFO thinks?
- How take advantage of people who want it or need it? how to use them to promote your product to the "nice to have" people?
Scaling Enterprise products
- Decision maker growth hypothesis
- Beta customers
- beta customers to validate value hypothesis, identify needs
- will confirm or refute your sales decision maker hypothesis
- successful beta customers become "lighthouse" customers
- Build awareness at low cost
- trade marketing via Gartner Forrester
- pitch reporters & bloggers
- It’s confusing to figure out who your competition is at the start. Especially if operating in a new category.
- Competition in the early stage is typically the user not caring about your product or putting together their own solution without you; be more worried about capturing your users’ attention
- Against big companies
- Typically can discount what large companies are doing
- Try to approach ASSYMETRICALLY
- Against startups
- Should be aware of what other startups are doing
- You get judged on comps (comparables). To the extent that you don’t have competition that is direct, people will try to place you with similar categories
- So, more important that: are you beating your competitor right now, better question is: Are you selling product and are you hiring well enough? You typically shouldn’t overly focus on your competition anyway.
- Smart founders / executives / investors — will you own the market opportunity? Are you building out the foundation and moving fast enough to get to that point. So when thinking about "competition is not yet close to you"; how do you build on something that will compound over time. Especially when no one out there yet doing what you’re directly doing.
- Example: LinkedIn, wasn’t too focused on the competition, because knew that if focused in building the network of professionals (the base) then would have enough power soon in the future that competition wouldn’t matter. AKA knew that if could get to user base, would eventually have ownership over the market, rather than worrying about folks who were already monetizing on a small scale. "Most companies we were competing against don’t exist anymore, and that’s because they were focused on selling to corporations"
- Are you building something that will have the assets necessary to dominate the market farther down the line
- Hiring is key
- Be able to coach people, not do their job for them (this is difficult as move from operator to manager)
- Culture & Values
- Culture is not just who you are but who you want to be — it’s aspirational
- Shared / codified across the whole organization
- Should be walking the walk and actually practicing it; otherwise people will think it is BS
- Way to ensure that people are acting as you (CEO) would even when you’re not in the room
- Compassion management
- When someone struggles, part of manager’s responsibility… coach them to be better, or find a better place to use their skill set
- Importance of executive coaches
- Importance of knowing when need new CEO (e.g. each phase takes different skill sets, sometimes means different people)
- Develop ways for people to grow in the company
- Develop "internal consulting" arms for people to see what’s happening with fresh eyes
Strategy & Innovation
- Devote a chunk of time to devil’s advocacy; kill the company; kill the idea
- Do a "pre"-mortem… pretend started the idea and it failed already; forecast what went wrong and try to identify all the deadly risks early
- Whenever talking to start people, as them: what is wrong with your idea, what is broken?
- React WITH facts
- Constantly be able to innovate
- Simplicity and consistency is key
- All Hands every other week--
- highlight what is working, behavior want to reinforce
- identify things that are not working, have honest discussions about these
- Open / humble feedback
- Culture & Values
- at every order of magnitude (1, 10, 100, 1,000, etc) — expect every process to break. You would need to change the process each time at each level of scale