(Had an amazing birthday, which included a cool walking tour of some NYC art. This is Yoko Ono’s Wish Tree in Chelsea.)
Not all startup failures are epic stories. Take Everpix for example, and this post-mortem about “the world’s best photo startup”. In many similar pieces, I’ve seen stunted user growth portrayed as the biggest factor in the company’s demise. Or maybe it was the “Series A crunch” (expect a blog post on that in the next week or so – get hollered at when a new post comes out here). But when you dig a bit deeper, as Neil Banks at Inc. did, you might find a less sexy explanation: a lack of fundamental business acumen. Banks runs the numbers (albeit, from an outsider’s POV) and comes to the conclusion that this easily could have been a relatively basic biz operations and accounting problem. That’s probably a bit assumptive and short-sighted, but still relevant. Wiser distribution of funds may have helped extend the runway for Everpix to shift focus from product development to marketing and customer engagement.
A killer product isn’t enough. Staying on the Everpix topic, I felt this observation from Andrew Chen (which was unfortunately buried in his post) was of utmost importance for all startups to meditate upon. The problem with hyper product-oriented entrepreneurs is that they often have one tool in their pocket: Making a great product. That’s both admirable, and dangerous. Once the initial product is working, the team has to quickly transition into marketing and user growth, which requires a different set of skills. It has to be more about metrics rather than product design: running experiments, optimizing signup flows, arbitraging LTVs and CACs, etc. It’s best when this is built on the firm foundation of user engagement that’s already been set up. In contrast, an entrepreneur that’s too product oriented will just continue polishing features or possibly introducing “big new ideas” that ultimately screw the product up. Or keep doing the same thing unaware of the milestone cliff in front of them. Scary. It’s funny that people take the lesson away from Apple that you should just focus on product. That’s only half the story, I think, because when you dig into why Apple is so secretive, it’s because the company is really focused on advertising and product launches. The secrecy that’s so deeply embedded in the organization facilitates their distribution strategy- can you imagine building your company culture around your marketing strategy? That’s what Apple’s done, though it’s not often talked about.
Community is taking on a whole new role. It used to be neighborhoods and local church groups. Then chat forums. Now the idea of community – or rather, the reliance on a group of connected people to define success – is being built into the very fabric of products. Take the Cricket, for example, which is built on the concept of a vast, connected customer base that will spread its bluetooth-enabled security capabilities. Exciting stuff, using individual smartphones to create a singular network. But it’s also scary for entrepreneurs. In the comments left by Reid Hoffman about his LinkedIn Series B pitch deck (awesome read, btw), he notes that, “During LinkedIn’s Series A, when we pitched the importance of building the network, the classic objection was that the network wouldn’t be valuable to the first members, so why would it grow? For the first 500,000 or so members, the value of the network is zero.“