“The attributes that make great entrepreneurs, the experts say, are common in certain manias, though in milder forms and harnessed in ways that are hugely productive. Instead of recklessness, the entrepreneur loves risk. Instead of delusions, the entrepreneur imagines a product that sounds so compelling that it inspires people to bet their careers, or a lot of money, on something that doesn’t exist and may never sell.”—Just Manic Enough - Seeking Perfect Entrepreneurs - NYTimes.com
“Entrepreneurs make fast decisions and move forward knowing that at best 70% of their decisions are going to be right. They move the ball forward every day. They are quick to spot their mistakes and correct. Good entrepreneurs can admit when their course of action was wrong and learn from it. Good entrepreneurs are wrong often. If you’re not then you’re not trying hard enough. Good entrepreneurs have a penchant for doing vs. over-analyzing.”—What Makes an Entrepreneur? Four Letters: JFDI | Both Sides of the Table
“Accept that failure is a natural part of doing business.
In “hyperentrepreneurial” countries such as Israel, Taiwan, and Iceland, early business failures are common. And the famous J-curve of returns is ideology among venture capitalists everywhere: Failures come early; successes take time. Early failures are important because they generate systemic learning about where opportunities are (and are not) and how to address them, and they quickly free up people, capital, and ideas for more-promising projects. Rapid failure functions like the draft of a chimney: The fast exit of failures sucks in new entrants.”—Column: Entrepreneurs and the Cult of Failure - Harvard Business Review
I’m the CEO referenced at the bottom of Eric’s post. Eric joined the Jobster team as a founder, long before we wrote any code. He was actually something like employee #4 or 5 or something like that. He was also our first technical program manager / product manager. I’ll always remember when I was researching Eric’s background how I stumbled upon his senior project at Yale, and how for more than a few hours I seriously considered scrapping the entire Jobster social recruiting idea and just turning Eric’s personal-cloud-storage idea into our company’s “one thing” instead. Ooops! We could have been DropBox if we had played those cards right. (DropBox eventually took a similar approach to solving a complex problem as Eric had defined 5 years prior, in 2002. Oh, and DropBox has done fairly well with that…to the tune of $100M in revenue.)
You’ve heard of DropBox, right? Well, this was 2002, and DropBox was founded 5 years later.
I’ve previously written several blog posts (like this one) about the myriad of lessons I’ve learned from building technology startups.
This most recent experience has taught me one huge lesson that I wish I would have learned (or paid more attention to) earlier in my career:
There’s only one question your startup needs to answer:
What’s your one thing?
What’s the one thing your product will do?
What’s the one thing that your startup will do and do better than everyone else?
What’s the one thing your brand will represent?
What’s the one thing you will do day-in and day-out, to the exclusion of all other things?
The answer to all 4 of those questions should be exactly the same. And that’s your one thing.
Here’s what I mean by all this. It is critical that you determine from the very beginning what’s the one thing you want to focus on. That one thing has to be a specific use-case, a specific problem, a specific function. But there can only be one thing. Startups need to be laser focused on solving one particular problem, not many problems. The more things you are trying to do as a startup, the more things you will fuck up at the expense of getting your one thing done right.
And, importantly, your users/customers need to be able to easily recognize and grasp what your one thing is, without you having to even tell them. They need to get your one thing from using your product. They need to experience your one thing and internalize it for themselves such that you achieve their associating your product and your brand with your one thing.
Warning: Your one thing cannot be a market, rather it must be a product. It’s not enough to say, “we’re going to build something in the xyz market and we’ll iterate our way to figuring out the right product.” That’s not one thing. That’s many things in one area, which is very, very hard to get right.
Here are a couple of examples from my own recent history. In 2008 I founded a company called socialmedian. We knew our one thing from the beginning: We wanted to build a product that would help people discover what news to read based on what their social networking contacts were reading. We iterated like crazy towards that one thing, launching new features weekly as we learned from our users and tried all sorts of stuff, but we always stuck to our one thing. socialmedian was very successful very quickly and we had a nice outcome with the company. Fabulis, on the other hand, was founded on the idea that we wanted to build something interesting in the highly attractive gay market, but we didn’t go into it with one thing in mind. As such, we did too many things, iterating and iterating in search of one thing that might stick, and in the end we never found our one thing. I painfully recall the news stories that described fabulis as gay yelp + gay facebook + gay groupon + gay foursquare. Warning!!! That’s not one thing!
With the new Fab.com, we have a clear one thing. We will deliver daily design inspirations. Sure, we’ll try all sorts of stuff to make it work, but we have just one problem we want to solve.
Think about some of the other great companies that have “made it” recently. They all have one thing they do really really well:
Twitter: Share short updates
Instagram: Share pretty photos
Dropbox: Easy cloud storage
YouTube: Upload a video
Groupon: One great local deal per day
The original Google: Algorithmic search
Linkedin: professional networking
Facebook is one of the only examples that come to mind of a really successful startup that does more than one thing really well. Although you could argue that their one thing has always been, “share stuff with the people you know” and they are just iterating on more and better ways to achieve that one thing.
So, as you sit there pondering whether your startup is going to make it or not, I encourage you to think carefully about this one question. What’s your one thing? Recognizing it early on is critical. Write it on the wall. Repeat it every day. ”
Our one thing is _____. We will only do this one thing. We will not do anything else except this one thing until we have proven that we can do this one thing.
p.s. A bit of irony here. Last year I actually was also an investor and board member of a company called OneThing.com. The idea was to create a simple website where people could identify the one thing they are the best at and then meet other people who share the same one thing. Unfortunately, the one thing team was never able to agree on their one thing. They floated around to a lot of one things, such as a digg-style voting system for people you’ve worked with (ala honestly.com) and a system where people could identify one thing they wanted to accomplish and meet other people who shared the same one thing ambition. I think they had about 10 other “one things” they iterated around. Each on their own could have been interesting businesses but the company ended up failing because they never chose one thing to stick with and focus on at the exclusion of all other things. Irony of irony for a company called onething.com.
“These days, when someone says “You are doing it all wrong”, “That is not how it works” or “You can’t do that”, I immediately start paying attention. Not because I think they might be right but because more often than not it just means you are challenging the status quo and are becoming a threat to those running things.”—The best thing you can hear as an entrepreneur: you’ve got it all wrong
I have run this particular gauntlet three different times:
At employment website Jobster, which was founded in 2004, raised $48 million in VC funds, employed 150 at its peak, and sold a song in pieces in 2009 and 2010.
At social news service socialmedian, a shoestring operation with just me, a few developers, and $800,000 in angel money that was acquired only 11 months after launch for $7.5 million.
And currently at Fab.com, which spent 11 months as a mashup of Facebook, Yelp, Trip Advisor, Eventful and Foursquare services for the gay community as we iterated in search of some traction – now being reinvented as a private sales community for design lovers.
Be warned startup guys and gals, pivoting isn’t easy. It is a huge decision to stop doing what you’re doing, throw away tons of code, risk fragile user and customer relationships, and essentially start over. And the word “pivot” itself is a leading candidate for overused term of the year. Pivoting is not a strategy unto itself. You need to really know where you want to go, why you want to go there, and have a plan for how you are going to get there.
But how do you know when it’s time to take the plunge and change your game? In our case, which may be instructive to others in our shoes, there were three compelling reasons to change the game.
Fab’s Pivot Decision
First, we couldn’t do the math. Even though Fab attracted 50,000 members in our first three months, we only doubled in size over the next five, and our updated projections showed that we would never pass the $10 million revenue mark with our business model. We had raised $1.25 million in angel financing and an additional $1.75 million from VCs with the expectation that we would be building a $50-$100 million business, and we clearly couldn’t deliver. Our team signed up for building a big business, we are passionate about building a big business, but the math no longer added up.
Second, our market had shifted. Gay rights progress over the past year had a positive impact on the gay community but a negative impact on the demand for our services. With developments like the repeal of Don’t Ask Don’t Tell, the court victories over California’s Proposition 8 gay marriage ban, the Obama administration’s tacit rejection of the Defense of Marriage Act, and the anti-bullying It Gets Better Project continuing to integrate gays into the mainstream, we saw a diminished need for a gay Facebook or a gay Yelp or a gay Foursquare or a gay Groupon.
Third, our maniacal focus on customer input drove us to a new opportunity. From selling daily deals we discovered that the idea of a design site had legs. We found that out when we introduced a Gay Deal of the Day program that sold more than $40,000 of goods in the first 20 days alone. The biggest sellers weren’t gay-focused, nearly half of the buyers were straight, and the response showed that there was a demand for good design available online at affordable prices – sexual orientation notwithstanding.
Suddenly we heard the siren call of a new and better business idea loud and clear. The market for good Design is a $100 billion industry that cuts across multiple product categories. Our team has a collective passion for design. There is no web-native e-commerce brand today for design products, particularly at discount pricing, so we could fill that void. We get social and we get great UX, and there’s a legit opportunity to replace consumer online shopping experiences that are uninspiring and overwhelming with experiences that are curated, social, exciting and addictive. We had already proved we had the skill and taste to find merchandise that people wanted. Better yet, we still had the vast majority of the funds we had raised in the bank.
So we moved fast. We decided to change our business on February 23, got our board of directors’ approval on March 1, and are starting to roll out the new Fab.com today - just two weeks later. I want to emphasize the importance of speed in such a decision. In our case, we didn’t want to spend $1 more, let alone $millions more pursuing an idea that we were no longer convinced could succeed, especially when we saw a much bigger and better opportunity in front of us.
Stay? Go? Pivot?
All of the steps that lay behind our decision to transform Fab were rooted in the lessons learned over seven years in the startup world. Here, based on our experience, are the top 10 reasons to alter course.
If you can’t get traction after one year, switch gears and work on something different. Particularly if you’re building a consumer e-business, you can tell pretty quickly if it’s going to fly or flunk.
Don’t get bogged down in something just because you’ve been doing it. There are plenty of other fish in the entrepreneurial sea. Go catch the one that looks like it’s swimming faster than the turtle you’ve been riding.
Be willing to go in a completely different direction. Remember, YouTube started as a video dating site. No one is going to shoot you for abandoning an idea that didn’t work.
Consider your options well before you’re down to your last dollar. That will give you the time and resources to make a mid-course correction if necessary. It’s better to change when you’ve still got over $1million in the bank like we do.
Do the math at least once a month. You can’t fix it if you don’t know it’s broken.
Don’t get seduced by your own ‘brilliant’ idea. It may have sounded good on paper, but you need to be objective in evaluating the results.
Change courses because you want to, not because you have to. If you’ve done your homework in a timely manner and you see the writing on the wall (see #5), you’ll have time to figure out where to go next.
Get your board on board. They invested in you. They’ll want you to do whatever you’re convinced can give them the greatest return.
Think like an investor. What can you do that has the greatest chance of delivering 10 times the investment you (or they) make in your business?
Ask yourself the following six questions to determine whether to regroup:
If we could do anything for the next year, what would it be?
What are we most passionate about?
What are our customers telling us?
What can we (realistically) be the best at?
If we were to use our limited resources for anything, what would we spend them on?
What will create the most value for our shareholders?
Some people say great entrepreneurs just make it happen. I can tell you from experience with my own companies and in serving as an advisor to other startups: that is rarely true. Good businesses need inspiration as well as perspiration. If at first you don’t succeed, try again. The next time, you might get it right.
“You have to make a choice in life. You can avoid the things that make you uncomfortable, follow the pack and lead a very comfortable, normal existence. Or you can refuse to be limited by the things that challenge you and keep facing them until you crush them”—If you’re not failing you’re not trying - dan shipper