...but how do you know that? The principal disadvantage of B2B is that the long sales cycle greatly increases the time until you get feedback that your product sucks, so you either succeed (in which case, of course, you say "it wasn't luck"), or you fail (in which case, it's attributed to bad luck). Also, even then, it takes a fairly self-aware set of founders to admit that the reason that the product isn't selling is because it sucks, and not because (say) the sales team is bad, or because BigCo isn't buying this quarter, etc.
Say what you will about consumer startups, but the ability to pivot quickly in the face of consumer feedback is a feature, not a bug. You can sort-of get around this by doing a direct-sale B2B service (i.e. what you're doing with justworks), but in that case, you're still a consumer startup -- you're just selling a "professional" product with a niche market.
I couldn't agree more, but I'm not sure you're right about the feedback cycle. We did a ton of "lean startup"-ish stuff including launching minimal products to trusted beta users and expanding based on customer feedback.
But there is exactly a 0% chance that Justworks will ever fundamentally "pivot" to being a different product. The concept that this is even preferable is kind of crazy. A pivot should be a last chance "we got it wrong but we've got some money left so let's try something else" - not a matter of course.
In terms of knowing whether or not the product sucks vs. the sales team sucks, this is, of course, an eternal question in SaaS. Luckily our product is selling, but I would say that regardless trust and high amounts of communication between sales and product development is absolutely key. At any sort of level of maturity this is your prime feedback loop with the customer and we take it very very seriously.
Waiting to sell until after you've built something is just as foolhardy in B2B as in B2C.
The equivalent winning strategy in B2B is to pitch the idea to the first customers before it's even built. If you can't convince them to commit, you pivot. If you find excited customers, they become your close feedback through the whole dev process.
Atypical early adopters may steer you wrong, but that can happen in the consumer space too.
It is nice though to move people from paper processes to mobile/SaaS/cloud and near-real time data collection and see the lightbulb go up. Feels decidedly light-side.
Possibly, but doesn't quite have the ring to it :)
This doesn't mean you don't iterate. A lot of the lean startup stuff is still useful to us (a/b testing for more focused UI etc.). But generally speaking, we know where the product is going, and our customers' needs, often better than them.
Way 2. Mix with people in the real world that work in the companies above. Listen to their problems, offer solutions, offer to pop in after work one day or on a weekend and look at their problems.
There are a ridiculous number of them out there.
The best entrepreneur IMO brings a combination of the technical expertise with understanding of the problem, preferably a personal/deep understanding. If you want to understand specific business problems for some specific businesses/industries you need to read about them, talk to people from the industry and/or work in the industry. Some problems are generic and cut across industries. Some b2b problems are the same problems individuals have in performing their work.
Some problems are easy, e.g. have easy solutions, everyone knows about them. Some problems are hard, a lot of work to solve. Some problems are very niche/specific, no one knows about them...
In a month you will know which problems stand out
Start marketing around that problem, build an audience, evangelise something valuable.
Take your own good advice :-)
While I believe this (the luck part), I'm not sure most startup folks do. Or, there is at least some severe cognitive dissonance going on when they begin to discover it.
Even "the pivot" itself was made popular by The Lean Startup–the book that many take as the formula for startup success (very much the antithesis of luck).
Yes, you have to hustle. Yes, you have to build something people want. Yes, you should have an awesome team. When you combine all those things and still fail, most people will blame something besides just luck. ("I couldn't get funding", "Google changed their algorithm", "I couldn't hire the right person for X")
Of course, when a 9-figure exit happens to someone who can't code as good as you and didn't go to as good a school as you–then it was most definitely luck.
A better way of understanding the startup world is that everything has a high degree of uncertainty (which you can call luck), and so the smart strategy is to remain as agile as possible, and continually learn from the market in order to refine your strategy and vision. I prefer to think of it as Newton's method of product/market discovery, and the most successful startups are those who are able to iterate the fastest.
Most start-ups try to solve right place by moving to the Silicon Valley and then iterate on ideas/timing.
Leaves a lot of room for those who go down the path of finding a customer with a problem they can solve first and building from there.
Probably because it's not exactly true. The whole point of all that data is to see which aspects of a business work and which parts don't. The author is describing pivots a bit hyperbolically for the sake of drama/artistic license, but it's not like the C-level executives pivot by rolling the dice and seeing what they come up with. A successful pivot works by observing which parts work, dropping the parts that don't work, and building up the parts that people like.
Think about the last SV product/service you purchased. Did you buy it because you had a random thought, or did you buy it because it actually solved a need of yours?
When you realize that you have this kind of a system, you want to put in place institutions which underwrite failures, to allow your talented people the ability to try out big ideas that might be the next big winner. Such systems are hard (but not impossible) to put in place: There's a good argument to be made that academia is at its core one huge such hedge, allowing talented people (good enough to get through the tenure process) a long-ish leash to try out new ideas in the hopes of developing something both novel and (every once in a while) exciting. The flip side is that you need a gatekeeper system of some sort to minimize parasites, and hopefully also to ensure diversity in your boys club.
Or maybe s/he had a better idea than you had? Doesn't look like luck to me.
"When you combine all those things and still fail, most people will blame something besides just luck. [...]"
Like "pivot."
because you must learn at every turn
I'm not sure we need more of that. Its like someone pretending to sell brushes wanting in your house, who keeps glancing around casing the joint while blathering some spiel.
As a model for qualifying internet product plans, its going to suffer from self-selection of the customers - you know, those lonely people who will talk to anybody, even a brush salesman, and will tell them anything they want to hear.
The entire product development process is a bit of a psychology experiment. Try to understand what your customers want, build it. Learn from it. Repeat.
You mean, like most of the startups nowdays?
All this to say, there are definitely a ton of bad startups out there, people who see an easy fundraising landscape, take advantage of connections or even make them. Or people that get to a certain point and don't really want to face reality. Instead of floating all the platitudes we float about there being lots of talented teams, it would be nice to see some honesty. That a lot of startups have a founder or two that isn't that dedicated but is there because he/she isn't sure what else to be doing. That a lot of startups are a vanity project of one of the founders and the founder doesn't have the modesty to actually sell to users/potential employees. That at a lot of startups there is friction between the founders that puts the product in danger because they have equal-ish power but between them lack a coherent vision for the future.
And a lot of these companies with bad foundations have brilliant founders. Just because companies are founded by smart people doesn't mean they have a strong foundation. That is something we should be honest about. This isn't to say that it doesn't take luck, but there is a lot that helps to get right that a lot of startups aren't getting right off the bat.
This goes against most of our intuition (at least, mine), because there's essentially no difference between the 10,000th and 10,020th most talented teams. But it becomes obvious when teams are put in repeated direct competition with each other. e.g.: how many people expect the US (ranked, I think, 13th in the world) to beat Germany (ranked 2nd) in the world cup?
It's a lot easier to say you will do anything to
succeed, and act the part and struggle, and listen
to your investors like they're bosses, and let your
startup die out, while going through the motions,
than it is to be relentlessly resourceful.
- platitudes about there being lots of talented teams
- a founder or two, not that dedicated but there because
he/she isn't sure what else to be doing
- startup vanity projects
- lack of modesty to actually sell
That's a double edged sword, though. Everyone knows that a shitty deal is always preceeded by a hard sell, or cold call, even though not all hard-sell sales pitches/cold calls necessarily package dog shit.
This is the MBA shit list though. There's also a version for developers which invloves being an aloof, detached, aimless, defensive coder constructing an opaque fortress of code out of a want for job security, or over-engineering out of a cryptic brand of obstinate vanity or morbid curiosity.
And then there's the ivory tower developer that sows the seeds of confusion into every meeting, phone call and conversation because more often than not, the developer possesses a keen awareness of the total technical ineptitude of the stakeholders, who may in fact suffer actual intellectual disabilities, or might just be completely out of their depth in a field far more complicated than they bargained for.
Coming up against evil developers is like fighting a lich king commanding a pack of tarrasques. You will be bled dry by them, and transmogrified into a ghoul.
Consider it a situation not unlike being brought to a police station for questioning without a lawyer. Retain an expert, who is assuredly on your side and knows the law. Even if you are a lawyer, don't default to the idea of representing yourself (especially considering security concerns and crypto). A second pair of eyes, formal QA and testing, and sometimes an entire community is required to professionalize the fruits of many technical disciplines.
In that case, I think it is somewhat useful, but speaking as a software developer - it is very rarely the case that a software project goes as smoothly and reliably as a fancy pitch deck makes it out to be. It is easy to say things like "small iterations", "continuous delivery", "move fast", etc but much harder to, you know, do them. Any old team thrown together off the street is not going to have that skillset to achieve that.
I don't think it entirely discounts the ideas or concepts, but I certainly gives me pause.
There are, however, a small percentage of people that consistently succeed. I met a guy like this, and I came to find out he had eliminated a lot of the risk of his software ventures by having a ready-made market for his company among his friends in the venture/banking world. I saw him do it a few times and realized that it was cheating, in a sense. I could replicate the first N-1 steps he did, but that last one required an in with the right crowd, which I didn't have.
For B2B/SaaS you can lower the risk a lot, especially if a team member has domain knowledge and industry connections.
Basically a framework that already has Stripe/Paypal payment integration to charge a user's CC, a schema for a informational or subscription-based product that I can modify pricing and description for, and some front-end templates to modify the landing page and call to action and A/B testing analytics for me to optimize on conversion.
Kinda of like A/B testing but hedging my bets and executing all of my business ideas at once!
What Scott is trying to express is that, in a capitalist economy, money is the goal. The process of getting money, once technical innovation is subtracted, is called Marketing. The process of doing Marketing is to understand psychology -- given a set of craftable stimuli, how can you influence the ape to swipe her credit card.
Nokia was a paper mill (1865), Suzuki made looms (1910), Mannesmann produced steel tubes (1890), and Berkshire Hathaway did textile manufacturing (1839)
Security Engineering - http://www.amazon.co.uk/gp/aw/d/B004BDOZI0/ref=mp_s_a_1_2?qi...
From this blog post, it sounds like the ability to pivot smart and fast ( fast failing.. that rings a bell..) could enhance ones probability of success. And the ability to pivot away from your 'baby' into the scary unknown again takes a special kind of skill - Letting Go aka: know when to fold 'em.
Scott Adams comes in and discovers the idea of pivoting, paints it as a startup concept that he can see through and discover how it's being misused, and writes another pretentious blog post about it. Pivoting has been a business tool for centuries. Nintendo used to make playing cards, Nokia made rubber products and paper, Berkshire Hathaway was a textile mill, AmEx did mail. They all pivoted when the time called for it.
What these startups are doing is realizing they have an idea that for whatever reason, they can't pull off. Maybe it's a bad idea, maybe it's the wrong team for the job, whatever. So rather than break up the company, they SAVE THE COMPANY. Just like a human who changes jobs if the need arises, so do companies, which are run by people. They get together as a team, and figure out what they did wrong, and what they can do to fix it, and pivot. They come up with a new plan to save the company.
And now Scott Adams makes the realizations that some startups are based on bad ideas, that some react to the market to survive, and that others have taken this as a lesson to realize the objective is to find success rather than hold on to your core idea until you die. And he shares this with us as the benevolent braintrust he is. Scott, open a business textbook written anytime since 1900. This is not a unique nor new idea.
Oh, and the Internet IS a technology, it's one that enables many things, like psychological/market experiments, but it's still a technology. Don't think so hard next time, Scott. You'll hurt yourself.
He starts out the article rather casually: "You might be interested in some of the things I've discovered.".
If you don't generally care what he has to say, why did you bother to read it? He was only commenting on an interesting aspect of our industry.
You don't see too many car companies pivoting to motorcycles, for example. Learning about "the pivot" is interesting reading to a lot of people, just maybe not for you and I.
That sounds like marketing, not psychology. Of course, marketing is heavily relying on psychology, but still.
This feels like a meta-Dilbert joke about how business guys perceive technology & development.
As if the "product" is somehow separated from "getting people to understand. . . and use it"
But it does apply to a lot of startups. And that's why I work for a big company, because I'm here for long-term big change, not fashion and profit.
Saying there's probabilistic uncertainty in something doesn't mean the distributions are uniform. It just means given all the inputs you can't always predict all the outputs. No matter what you do, no matter what happens, the result can be one of many things. 1 or 0. Success or failure.
This doesn't mean you can't DO SOMETHING about it though, and that's precisely what people are doing. Figure out the patterns, cut through the uncertainty, and try to find your way to the promised land.
What the author's describing using the language of social science and valley speak is the same thing that the machine learning/AI/robotics community learned in the past few decades. They started out with formal logics and rigid rules, and they learned that to succeed in a random world, you have to embrace the randomness. Build it deeply into your systems and processes and all of a sudden you start performing better than your wildest expectations.
Model, measure, evaluate, pivot, repeat. That's pretty damn familiar. What's it describing? A closed loop control system. Change the terminology a bit and you're talking about a Kalman filter with a feedback controller. What's a learning algorithm but a way to fit patterns to noisy, partially random data?
And that's what this is all about. Luck doesn't mean it's all random, just that you can't control everything. And being good doesn't mean you eliminate the randomness, it means finding the patterns and making randomness work for you.
Is there randomness in poker? Sure. Of course. But there's a shit ton of skill too (I know, because I don't have any of it). Don't confuse a poker game for a game of dice.
Except he mostly used that concept to describe how companies decide which individual products or strategies to focus on, while the idea of a pivot is that you shift your entire company to do something else. (Reminds me of another Collins metaphor - it's important to get the right people on the bus first, and then you can decide together where to drive.)
Oh no! it was my secret business plan which i have for several years been working on in my mind during all these hard-to-stay-awake afternoon hours in my cubicle ... opsss... at my desk at highly collaborative (ie. noisy) and innovative (no sane person would do such a space for him/herself) open space at BigCo-s
Before the word pivot was being bandied about, Microsoft had Hotmail and Hotmail had something like 200 million users (over decade ago).
Microsoft released a Hotmail notifier that got prime real estate in your system tray (next to the clock). Most companies knew that the the system tray and the desktop were both prime real estate. The Hotmail Notifier tray icon solved a genuine problem: users knew right away if new mail had arrived.
In a future release the Hotmail notifier got extended to a chat application: MSN Messenger. Since Hotmail had lots of users, it managed to take over ICQ and AOL fairly quickly. MSN Messenger tried hard to market other services and products via a constantly displaying ad unit.
Messenger then assigned a blog to every user that could be activated within a few clicks. A new blog post by a user would be indicated by a star (internally they were referred to as "gleams"). I recall Microsoft claimed to have become the largest blogging network shortly thereafter though this was probably a numbers game because very few were active bloggers. Microsoft also had other ambitions such as Passport, Shopping, etc but they failed to translate/convert users from the chat window to the browser window.
I am not sure if either of those scenarios qualify as pivots in the classical sense. MSN outlived Hotmail though not for long. Passport got mixed reception. MSN shopping didn't take off but Microsoft threw a lot of things out there, hoping something would stick. This is also what Scott's post seems to suggest though I am not sure if this is such a great idea as its costly. MSN has made a loss in nearly every quarter.
One observation I drew from this is that if you have passive users, you can do a lot more with them. Social browsing is passive (chat, FB and even email back when chain mails and mail groups didn't face competition from Orkut or Facebook walls). You can throw games, videos, pictures and interest-based activities like restaurants and reviews at passive users. Mail is not a passive medium anymore. That's why Google Drive seems to make sense only some of the time, when I need to collaborate on Google Docs. At other times, it gets in the way, for example, when I want to download certain attachments.
Active users rarely deviate from their goal. This would be mostly Google Search users who want to complete the goal of finding something as quickly as possible. These users are definitely much harder to funnel into other services.
To capitalise on active users it seems that innovation is key. Google search added the calculator, conversions, weather, scoreboards, etc. I suppose the pivot here is using the search box as user-friendly command line sans the strict syntax. However, forcing these users down a different funnel such as Google+ didn't work well.
So, we're producing crap ... but it's really quick crap quickly crapped.
> Internet is no longer a technology. The Internet is a psychology experiment.