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I'm going to share a story about the forest vs. the trees. But it's not the story you're expecting to hear.
My last blog post was about Doing Less, Better, which is my theme for 2015.
A big part of doing less, better is achieving focus. But that very word is often misunderstood. Focus means the elimination of distractions, not the mitigation of distractions. Let's dig into that more deeply:
The first hard thing in a startup is knowing what to focus on initially. When you first start, you don't have strong product/market fit in anything, so like any good LeanStartup you might start with a hypothesis and work through the build --> measure --> learn cycle as quickly and effectively as you can. The key is to find some early area of traction & demand that you can build off of.
Having a solid initial hypothesis is important, but I would argue that even more important is being close to customers and listening to them intently. You're probably not listening to your customers closely enough, even if you think you are. They will tell you where your hypothesis is wrong. They won't be able to tell you what they do want -- they won't know what they don't know -- but they will absolutely be able to react to what you put in front of them.
So far, so good. But here's what usually happens in startups: You start doing several experiements because you desperately want to find that traction. So instead of just iterating on one thing to make it better, you move on, saying "well that didn't work," except you don't really move on. You keep it around, kind of. Maybe you have a customer or two using it. Or you're generating some revenue from it. Or you've invested so much code, time and cost into it that you can't just bear to completely shut it down. This is where things get dangerous. It's absurdly hard to force yourself to either a) keep iterating on it until it gets better or b) to shut it down completely. In fact, in my experience, this is what separates the massively successful startups from the rest of them. Less successful startups do a lot of mitigation. More successful startups do a lot of elimination.
I've been trying to find a way to explain this simply, and in the shower the other morning, it hit me: Trees.
Let's say you're CEO of a startup that's not yet profitable. Just envision that each initiative in your business is represented by a small, young sapling.
Now here's the kicker: You only have a certain amount of water. That water is your funding. Water is precious and expensive to get. You have to make a choice: Do you concentrate your water on just one of the saplings, or do you water them all equally?
It sounds so obvious, right? You want to grow a tall, strong tree. But it's so very hard to let those other trees die. That's where startups make a false choice: They mitigate by watering the other trees, just enough so they don't die. But not enough for them to grow, either.
And a startup is just like a tree in another way, too: When the tree gets big enough, its root system will be able to capture its own water from the ground. And when a startup matures enough, it too can start to feed itself. It can become profitable. But this only happens when you focus your water on just one tree. If you try to water them all, none of them will reach the stage where their roots can really take hold.
And this is how, ironically, by cutting water off to all your trees but one, your tree will grow big, strong and tall. It will drop acorns around it and spawn other trees. It will create a forest.
But by spreading your water out to many trees, all of them will die, and you will be left with an empty field.
Focus means being ruthless about watering only one tree, so that you can successfully build your forest.
There's a great article in the NYTimes about Slack, a new startup that the Valley is buzzing about. Slack is a business messaging & collaboration app, and it's really, really good. The reporter in the article questions whether this year-old company is really worth $2.8 billion.
Slack is not good because it has a ton of features. In fact, it's missing the things that I would expect it to have.
It's good -- and worth its valuation-- because it does less, better.
The things Slack chooses to do, it does insanely well.
This new startup, Jet.com, is looking to be the Costco of the web, and to undercut Amazon's prices by an average of 10%. They won't focus on speedy 2 day "prime" delivery. Instead, by being a member and paying a $49 annual fee (like you do with Amazon or with Costco), you'll get access to discounts, but the products will take longer to ship to you. This is a great model for non-time-sensitive things, like re-ordering diapers.
But the best part of it is how they're building a pre-launch interest list: When you sign up, they give you a unique sharing code. For example, mine is https://jet.com/#/ji/cj2tx and I'm currently member 124,837 of 124,877 on their interest list. The more people sign up based on your code, the more rewards you unlock. That's not all that new or innovative -- but the part that's great is that they're offering lifetime memberships and even stock options to their top sharers. Which is a great marketing move, although the reality is that getting 100k options doesn't mean much unless you know how many total shares are issued, and what the strike price is. But it's marketing genius!
At a recent DFJ venture capital conference, I heard the story of Arash Bayatmakou.
He fell from a 3rd story balcony a few years ago and landed on his neck, paralyzing him from the chest down.
Incredibly, he's determined to walk again. We exchanged emails after the conference and he signed off with this:
A high five, coming from a guy who's facing incredible challenges every day just to get back to doing the things we take for granted. I loved it, and decided that from now on, I'm going to sign my emails with a high five as well, as a tribute to him and his positive attitude.
Time is our most precious asset, and none of us know how much of it we have left.
It's ironic, then, how easily we let it slip away. An hour for a meeting, an hour in traffic.
Next time you get asked to spend an hour doing something, just hold it up to this filter before you decide:
I'm going to share one of my most powerful negotiating techniques. The funny thing is that up until a year ago, I didn't even realize this was a technique -- I thought everyone did this. But apparently not -- here's the backstory:
But before we get started, remember what Spiderman was told: "With Great Power Comes Great Responsibility." The technique I'm going to share with you can be abused, and when it is, you'll come off as a total jerk. That might be fine if that's what you're going for. But make sure you focus on using it responsibly. More on that at the end.
I absolutely love this video of Zuck talking about Facebook back in 2005. If I had been in that room, I wouldn't have been able to guess that Facebook would become a $180+ billion company.
The best part: Zuck describes Facebook in minute 1 as an "online directory for colleges." Not only does that not like a billion dollar business, but it also sounds like a terrible startup idea.
The lesson: The key nugget is "I launched it in Harvard in early Feb 2004, and within a couple of weeks, 2/3 of the school had signed up". That is an incredibly strong signal that there's a really good initial product/market fit. This is a recurring theme that also permeated Y Combinator's recent Startup School, which talks about the importance of finding product/market fit above all else.
The kicker: I love how, in minute 3:55 Zuck is asked "And where are you taking Facebook?" He responds with "I mean, there doesn't necessarily have to be more."
The richest 1% of Americans have access to great financial tools and advice: Firms like Goldman Sachs provide them with (legal) tricks like Tax Loss Harvesting (TLH). Never heard of TLH? Neither had I until my buddy Andrew Dumas, after reading my post titled "Show Me The Money: Six Strategies to Put Your Cash to Work," mentioned a new startup called Weathfront that was on the cutting edge of ETF fund-based portfolio management. This opened a whole new world of investing up to me, which I'd like to share with you.
But first some background: In my past blog post I talked about ETFs, or Exchange Traded Funds, which are a class of funds that create a basket of stocks based on a particular segment of the market. For example, in the past if you wanted to invest in technology companies you basically had two options: You could pick the companies you thought would be the winners, like Google and Yahoo and buy stock in those directly, or you could invest in a mutual fund that has an expert who picks the companies, and you'd pay a management fee for his or her expertise. But ETFs offer a third choice, and it's worth really understanding how they work. Here's a description from Wikipedia:
"ETFs generally provide the easy diversification, low expense ratios, and tax efficiency of index funds, while still maintaining all the features of ordinary stock, such as limit orders, short selling, and options. Because ETFs can be economically acquired, held, and disposed of, some investors invest in ETF shares as a long-term investment for asset allocation purposes, while other investors trade ETF shares frequently to implement market timing investment strategies. Among the advantages of ETFs are the following:
I'm the SVP of Strategic Partnerships at ShareThis. It's my job to find the right strategic partners for us to work with. This morning, in the shower, I thought "I'd like to have a simple combo slide deck + narrated screencast to show to prospective partners."
So, I just finished hacking together a simple site that explains our business. It's something I did in just under an hour using a combination of HTML, Google App Engine, Google Slides, HelloBar, Vimeo, iShowU, Google Labs' ShortLinks and AdRoll. It was fun to make it and I expect it'll prove useful.
That activity, of taking an idea I had in the shower this morning and hacking it together in an hour today, got me thinking about the difference between makers and managers, and about how few managers really appreciate (or are able to participate in) the creation process -- especially when it involves some amount of hacking.
I find that managers who are also makers have an ability to key in on opportunities that non-maker managers miss. They have a better ability to connect with their teams. They can go a level deeper into projects than non-maker managers. They can ask more intelligent questions. They can conceptualize and create efficient processes much more quickly and easily. Or to put it another way, they can be much better managers by also being makers.
Startups feel like a race against the clock, because they are. The trick is to extend a startup's runway (or as one of my investors put it, "oxygen in the the scuba tank") long enough to become successful. This means creating the right team, finding product/market fit, executing flawlessly, and either becoming profitable or raising enough money to keep oxygen in the tank until you do (or until you get acquired trying).
One thing I've firmly come to believe after doing several startups is that a startup doesn't die until its founder(s) give up. By that I mean, there's always one more thing that the founding team can do to eek a bit more oxygen from the tank, even when things look hopeless. But when a founder gives up, there can still be money in the bank and it won't matter; the startup is done. It kind of feels like the tail wagging the dog, in a way -- startups succeed from pure, raw determination of the founders as they race against time.
What got me thinking about writing this post, though, is an awesome blog post I read about putting time in perspective. So often in startups it can feel like time's running out that it's refreshing to think about time on a grander scale. Here's an infographic from that article that really does put things into perspective. A great quote from that article is: