By Frank Addante
(Part 2 of a 5 part series: "So, you need to develop a product?")
I've learned that more process doesn't necessarily equal higher quality and it definitely doesn't result in increased productivity. The level of "process" required also depends heavily on the product, industry, maturity of a company and the size of a development team. For example, a dot.com should require less process than an enterprise software product. A dot.com is centrally hosted and can be changed anytime. On the contrary, enterprise software needs to be fully tested before a release because it typically affects a customer's business process. (Consumers are certainly more resilient to bugs than businesses.)
I've seen a lot of companies try to apply a "one-size-fits-all" development process to a wide variety of products. I don't believe a one-size-fits-all process exists. It is important to look at the type of product that you are building and apply the appropriate level of process to it, and adapt it over time as your business evolves. Particularly for consumer web sites, things don't have to be perfect all of the time. Try to find a good balance between moving fast and producing quality. We have all seen small, scrappy startups outpace venture-backed or established companies. I believe it is because they make speed their mindset and process takes a back seat.
At Starting Point (Startup 1.0), we didn't have a QA team. We had millions of users visiting our site on a daily basis. We considered our users to be our QA team. We would quickly build a prototype of a feature, launch it on the site and instantly get feedback and make changes. This helped us develop better features, and it also created an extreme sense of urgency for our engineers. Once it was out there, there was no turning back and the priorities instantly became clear. There was never a question as to what we should be working on because our users made it very clear to us. Further, there were also a lot of half-baked features that we would introduce that wouldn't gain any traction. We killed them right away and ultimately didn't waste time on things that we normally would have if we had fully baked it before launch.
Sure, some of the features broke often. It required us to always be on our toes. But, we were always gaining 10X more users because of our innovation and losing a very small percentage because of quality. As long as our new user rate far outweighed our lost user rate, we were satisfied. We outpaced many of our competitors (including some that raised 10's of millions of dollars in venture capital, while we had raised $0) and our search site ultimately became the 7th most popular site on the Internet.
Don't let the methods get in the way of results...
Next... Virtual Location, Location, Location (Part 3 of a 5 part series: "So, you need to develop a product?")
By Frank Addante
Often times, companies get distracted by all the things that they -could- do, and don't focus enough on what they do best. This is especially true, and very tempting, for startup companies who can seemingly do "anything" because they are so flexible and agile. This is dangerous behavior. It results in a lack of focus and diluted brand equity.
You want to pick the #1 problem that you solve and be the absolute best at solving it. This way, when someone says "I have X problem" the default company everyone thinks of is yours.
Here are some examples:
"I have a database problem" = go to Oracle
"I have a networking problem" = go to Cisco
"I need to sell something on the Internet" = go to eBay
"My cell phone is dropping calls" = go to Verizon
"I need a portable music device" = iPod
"I need a photocopier" = Xerox (this worked for them years ago, then they started to dilute their core message and competitors quickly stepped in with a vengeance)
Sure, all of these companies do a lot of other things... But, each have positioned themselves as the "default" or "defacto" standard for solving a problem.
With startups, it is difficult to commit to just one thing that you are best at because:
a) You don't know if that one thing is always the right thing
b) You aren't confident that you truly are "best" at solving it yet
c) You try to cast a wide net so you don't miss out on any opportunities
Bottom line is that you have to do it. Pick something, stick to it and be best. Period.
My first company, Starting Point (Startup 1.0), was an Internet search engine and directory. We were simply the best metasearch engine on the Internet. When people wanted to "search the search engines", we were the place to come. At the time, finding stuff using search engines was difficult. You had to go to multiple sources before finding the results you were looking for. (It seems as though this trend is starting to repeat itself with today's search engine results). Starting Point was best at searching the search engines and, as a result, we quickly became the 7th most popular site on the Internet.
L90 (Startup 3.0), my third company, was the "premium advertising network". When companies wanted first class advertising placement and high-end marketing technology, we were the place to come. Sure, we lost out on some of the low end business, but in the end, that actually helped the business survive the dot-com bubble burst.
At Zondigo (Startup 4.0), my fourth company, we never really answered the question "what do we do best?". So, what we became best at was changing our business plan. As a result, we ended up doing a lot of one-off custom work for clients and never really gained traction in any particular area. The company eventually failed.
At my current company, StrongMail (Startup 5.0), we struggled with trying to stick to only one core message. We can solve so many different problems with email delivery ranging from performance to reliable email delivery to dynamic content. As a result, we weren't the default answer for companies when they said "we have X problem". So, we put a stake in the ground. We focused on proving that StrongMail is the best way to get email reliably delivered to the Inbox. We went out with the message that we are like "FedEx for email delivery" and now, when people have email delivery problems, we are their first call.
It takes confidence and discipline, but it is very important to be best at something. It will help your company stay focused, it will build confidence in your entire organization (especially your sales/marketing team) and most importantly, your customers/users will think to go to you first.
By Frank Addante
No, this posting is not intended for your IT department.
I'm not a big fan of secrets, NDAs or the term "stealth mode". I've noticed that a lot of people are afraid of getting their ideas out into the public. They are afraid of their competition finding out about the idea, a bigger company trying to steal it or some other entrepreneur doing it first. So, as a way to protect themselves, they keep it a secret.
Well, my philosophy is that if you keep it from your competition, you're also keeping it from potential users or customers. In trying to hide it from the 5-10 would-be competitors you're also hiding it from thousands or millions of users and customers.
Sure, you need to take the proper precautions to protect your idea first (patents, copyrights, etc.), particularly with international patent laws. However, I say throw away the NDAs and get your ideas out there! Solicit feedback, see what users think... Maybe you'll attract partners you never thought of or maybe you'll learn that no one cares about it and you won't waste your time.
If you are so concerned that someone is going to move faster than you, then that is the first problem you need to solve. Whether it be now or later, it's an issue you'll need to address before someone else comes along to crush you. Why not figure it out early before you invest a lot of time, money and energy into a new product or business idea?
Up until my current company, StrongMail (Startup 5.0), I never had people sign NDAs. At L90 (Startup 3.0), we threw our new ideas out into the public while they were still in the planning phases. We saved a ton of time in development because we allowed our customers, prospects and even our competition to provide us feedback before we built anything. Yes, I did say competition. We were able to see how they were going to react, far in advance, and we were always able to one-up them in the end.
At Starting Point (Startup 1.0), an Internet search engine, I would put links up on the site to announce new ideas. They would go to pages that said "Coming Soon..." with a "Feedback/Comments" button. I tracked the pages to see how many people clicked on it and would read all of the feedback. That is how I decided how popular an idea would be. If it was popular, I got a lot of good user feedback. If it wasn't, I didn't waste any time planning or building it. Funny thing, though, is that I found our competitors running out and building features that were never used (likely because they saw it on our site). While they were wasting time building unpopular features, I was able to develop and grow faster with far less resources. This ultimately lead to Starting Point being the 7th most popular site on the Internet with zero outside venture investment and a tiny staff.
At my current company, StrongMail (Startup 5.0), we started off signing NDAs with everyone we talked to. I thought we needed to do things differently because we were an enterprise software company. Well, the result was that we just made it more difficult for people to learn about our products and it slowed everything down. We spent a lot of time shoving paperwork back and forth and negotiating NDAs with lawyers. All this before we even got to talk about our value proposition. Well, one day, I decided to push everything to the opposite side of the spectrum. We took our software and put it on the Internet free to everyone for viewing and download. It was a dramatic shift in philosophy internally. Within weeks, we shortened our sales cycle. In fact, we had deals closed in less than 48 hours (which formerly could have taken weeks) because we had prospects that were able to find and evaluate our product while our sales reps were asleep. Intangibly, I think it also exuded a sense of confidence and also gave prospects the perception that our product is easy to use. Even further, a former competitor evaluated our software online and was so impressed that they contacted us to strike an OEM deal, leading to a very successful partnership. Probably would have never happened, had all of our information been behind our "information firewall".
So, I say, tear down your firewalls and let the world know what you're doing! You'll be able to move faster, increase agility, reach more people and, if you're smart, stay a step ahead of your competition. If not for any other reason, but because once you put your idea out there it will force you to run like hell to stay ahead of the pack.
By Frank Addante
"Inventing things is a two-stage process. Stage one: Everyone says it's impossible. Stage two: They say the solution was obvious all along." -- Robert Fischell, Inventor (Holder of 200 medical device patents)
It is easy to come up with ideas. Convincing others to believe in your idea is hard.
I've found that a lot of people are interested in hearing about new ideas... they listen, they smile and nod, they say nice things and tell you it's a great idea. However, when you ask them to buy it or invest in it, the music stops and the number of interested parties decreases dramatically, fast.
Two things I have learned:
1. There are a lot of people out there that are happy to waste your time
2. New ideas that are obvious to you are not obvious to others
It makes sense. If it was obvious and easy, then everyone would be doing it.
My first company, Starting Point (Startup 1.0), was an Internet search engine. I spent a lot of time and energy trying to convince people (advertisers, prospective employees, investors, potential acquirers) that there was a market for search engines. Of course, a lot of that time was spent convincing people that the Internet was going to grow, and therefore there was going to be a need to make it easy for people to find content and sites on the Internet. Fortunately for me, I don't think I was the only one evangelizing the part of the story about the Internet growing. There were those who said the Internet wouldn't grow, others who said that there was no way to make money on the Internet, some who said it would be too expensive for the computer hardware and bandwidth required to operate such a site and others who said I was too young and inexperienced to make it work. Even as Starting Point grew to be the 7th most popular site on the Internet (passing up Microsoft at #8), there were still a large number of skeptics. I was 19 years old, full of blind-faith and was unphased by the naysayers. Today, I don't think I need to convince anyone that the search engine seems like an obvious idea. However, if I said that today's search engine is obsolete, I'm sure many would tell me that's impossible.
Even with my current company, StrongMail Systems (Startup 5.0), an email infrastructure company, there were a number of skeptics. You would think that the importance of email would be obvious to everyone. Not the case. I've had MANY people tell me that there are no improvements needed in email, others have told me that there isn't a big enough market for email technology, some have said that we wouldn't be able to displace the 20+ year-old freeware architectures that exist in over 90% of the world and I've even had some people tell me that email is going to go away. Personally, I thought that this was one of my more obvious ideas. Email is ubiquitous, email is ridden with spam, 25% of legitimate email goes undelivered (e-statements, e-commerce transactions, customer service emails, legitimate marketing e-mail), email usage is growing 30%+ per year and the world has been going paperless. It boggled my mind that it wasn't obvious to everyone that had an e-mail address that this is an enormous market.
At the end of the day, I think most people are momentum-driven. Once they saw us gaining traction, signing big Fortune 500 customers, signing smaller startup customers and providing technology to other e-mail companies (that many thought would be competitors), many of the naysayers jumped on the bandwagon... I can't tell you how many of the former skeptics call me saying "I knew that StrongMail would be successful." Now, lucky for us, it's becoming obvious.
No matter how obvious your idea may be to you, it will be obviously impossible to many others. So, if you've got an idea, whether it be for a new product or service, a new marketing message or new company -- be sure to invest in a good helmet and a rubber rejection suit...
By Frank Addante
- Background – The S:C (Simplicity to Complexity) Ratio
- 80/20 Rule for Products
- Less is More; More is Difficult
- Don't Think Too Much. Stop Chain-Thinking!
Background – S:C (Simplicity to Complexity) Ratio
Complexity drives me crazy. My philosophy has always been to move as quickly as possible and the only way to do that is to practice the art of keeping things simple.
I have found that if an idea is incredibly complex, it inherently requires more time to develop and is harder to explain to customers, users, partners, employees, etc. And if customers, users, partners and employees have a hard time understanding or explaining the idea, then it will eventually fail. So, don’t kill your idea with complexity.
This “keep it simple” discipline was easy to practice when I was younger. Because I was not tainted by previous experience, everything naturally started out simple. For example, Starting Point’s (Startup 1.0) user interface was very similar to Google’s user interface in the sense that it was a very simple, plain web page that had one search box and a button to search.
As I grow older, I find that it is more difficult to adhere to this discipline. The more I learn, the more I feel compelled to apply ALL of my learning to new projects. Whether it be product development, marketing, sales, negotiating or raising capital, I find myself trying harder to not get bogged down with unnecessary details. Instead, I try to forget everything I know, wipe the slate clean and take a fresh, clear approach to improving the S:C ratio (Simplicity to Complexity). Finding simple solutions for solving complex problems is increasingly more difficult as the complexity increases, but if you achieve a high S:C ratio, it will be exponentially rewarding.
"80/20 Rule for Products"
I believe that 80% of the market will only learn, understand and adopt 20% of the features and functionality in your offering. The remaining 80% of the functionality will address very specific needs for the remaining 20% of the market.
For example, how much of the total functionality of Microsoft Office do you know how to use? What about your friends? Your kids? Your parents?
In general, startup companies that are in emerging markets should be focused on the former -- and should worry about the advanced parts of their offering later, when the market matures. At L90 (Startup 3.0), we developed an online advertising product (called adMonitor) that delivered emails and digital advertisements for blue-chip customers such as Microsoft, Visa and AT&T. We developed the product, took it to market and acquired 3,000+ customers in less than 3 years. While our competitors had hundreds of engineers focused on developing more complex bells and whistles, we had a fast-moving, killer team of 12 engineers focused on simplifying our product. We were successful because our product had, by far, the highest S:C ratio. It was quick and easy to set up, had an extremely simple-looking user interface and was very easy to use. Our “keep it simple” strategy enabled us to move faster than our competition, and more importantly, enabled our customers to move faster than their competition.
"Less is More; More is Difficult"
Think about successful products and services such as the iPod, eBay or Google. Their strategy was to provide very minimalist, easy to use products and services. Many of their competitors tried to beat them by developing more feature-rich offerings. Apple, eBay and Google focused on perfecting the core functionality that 80% of the market experiences during every use, while their competitors simply confused their users with more clutter. More complex clutter can also be thought of as "more rope to hang yourself with."
At StrongMail (my current company, Startup 5.0), using those same principles, we recently launched a product called Message Studio which takes very manual, complex email integrations and workflows and simplifies them with an easy, point and click graphical user interface. The first thing people say when they see it is “wow, that looks so easy.” The reason being is because we took user interface styles that people are generally familiar with already (concepts similar to Microsoft or Apple products) and applied them to what used to be very complex email workflows. As a result, this kind of customer reaction has stimulated rapid growth for our company.
In today’s complex world of technology and buzzwords, simplicity puts the user's mind at ease, gives it a rest and makes them feel refreshed.
"Don't Think Too Much. Stop Chain-Thinking!"
Spending too much time over-thinking things will lead to complication. People often spend too much time on the methods and lose site of the results. If you find yourself saying things like "and, we can also..." or "but, what if..." -- these are common phrases involved in what I call "chain-thinking" -- just stop!
I found the perfect video illustration of what I am talking about. It is a video spoof on what the iPod packaging would look like if Microsoft designed it.
CLICK HERE TO WATCH THE VIDEO
(The video is less than 3 minutes long, I definitely encourage you to watch it.)
Get your offering in your customers' and users' hands as quickly as possible.
Try this:
1. Listen to yourself explain your offering to your user (pay attention to how you describe it – does it sound simple to you?)
2. Watch them use it (do they struggle without your help?)
3. When finished, ask them to explain it to you (does it sound simple when they describe it?)
In general, make sure that your offering is:
- Simple to Understand:
If they can’t understand it, they won’t use or buy it.
- Simple to Use:
The quicker they figure out how to use it, the quicker they'll buy it and the quicker they'll be able to show it to others.
- Simple to Promote:
It needs to be easy for other people to explain. You need other people talking about your offering to generate buzz, awareness and scale.
- Simple Looking:
Perception is everything -- if it looks easy, then it is. The marketing and the product itself should look simple. You should make it easy for your customers to buy (i.e. no complex contracts or pricing schemes) or adopt (i.e. no complex sign-up processes.)
For more information on this topic, a friend and colleague of mine, Peter Sealey, wrote a book called "Simplicity Marketing." Peter is an adjunct-professor at Berkeley and Stanford, was the former Chief Marketing Officer of Coca-Cola, President of Columbia Pictures and has been either on the board or has served as an advisor to my past three companies. Peter and I share very similar philosophies on "simplicity" and I believe that his book says it well.
“Keep it Simple” has been my #1 golden rule. I believe it has been the single greatest contributor to the success of all of my companies and their respective products. My next posting will be about the second greatest contributor: “The Kool-Aid Test.”
Next on Deck: The Kool-Aid Test: “Why do I need anything? Why do I need yours? Why do I need it now?”
By Frank Addante
My first lesson in entrepreneurship:
I got bit by the entrepreneurial bug early at the age of 18, while in college, when I started working for myself installing car alarms under a company that I named "CyberCircuit Security Systems". I made my first $400 (to pay for books) in the freezing cold Chicago weather by ripping apart people’s fancy luxury cars and re-wiring them with security systems. I got paid $75 for the security system and $325 for the feature that would remotely (from inside someone’s warm house) turn on the car and the heater. (Lesson learned: people paid more for convenience than they did for security). I connected a market (very cold people) with a solution (very warm cars) and after that, there was no turning back...
[Startup 1.0] Starting Point – Internet Search Engine and Directory
Age: 19-21
Time Period: 1995-1998
My Role: Webmaster and Owner
High Point: 7th most popular website on the Internet (Microsoft was #8)
A year later, at the age of 19, working from my fraternity dorm room… I jumped into my first official startup company; Starting Point. It was an Internet search engine and directory "dot-com" (competitor to Yahoo!, we didn't even know Yahoo! existed at the time). We were a handful of people with the mission of "organizing the Internet." I dropped out of college, and eventually, we grew the site to be the 7th most popular website on the Internet (Microsoft was #8 at the time). We were not venture-funded (in fact, at the time, I didn't even know what venture capital was). Eventually, the site was acquired by CMGI/YesMail.com and later sold to another public company named TechLabs.
Starting Point would also serve as the "starting point" and foundation for my entrepreneurial career (as a substitute for completing my college degree). It seems as though all five of the companies that I have been involved in, to date, somehow have roots reaching back to my first company. As a matter of fact, part of the inspiration behind my current company, StrongMail Systems (Startup 5.0), an email infrastructure company, dates back 10 years ago to Starting Point. At Starting Point, 100% of the interaction with our users/customers was via email. We had millions of interactions with users each month: no paper, no telephone, no face to face meetings, just email. We took email correspondence very seriously and used it to attract new users and keep existing users happy and loyal. Email was the primary vehicle that drove Starting Point to quickly become the 7th most popular site on the Internet.
There is no cure for the entrepreneurial "bug bite", however, it is contagious... Many entrepreneurs start multiple companies and many people who go to work at a startup (becoming entrepreneurs themselves) go on to work for multiple startups in their careers.
Do serial entrepreneurs look at each individual company as a journey in itself? Or is each company a better version of the previous... part of a bigger roadmap?
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SNAPSHOT:
Venture Capital Funding: $0 (profitable)
Exit: acquired by CMGI/YesMail.com
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LESSON(S) LEARNED:
Keep it simple: While everyone was developing very complex websites with the latest bells and whistles… Our simple, clean user-interface prevailed (a strategy later adopted by companies such as Google) You can take a look using the WayBackMachine: Starting Point Website (1996) (however, it doesn't look so impressive these days!)
Take care of the customer: Good ‘ole fashion customer service works. We had millions of users and a link on every page that said “Questions, comments? Contact the Webmaster.” We had one (yes, only one) person answer thousands of emails a day. ROI: extreme user loyalty (cost of acquiring a new customer is much higher than keeping existing ones)
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BIGGEST…
…reason for success: Right timing.
…mistake: Now finding ways to grow the site more aggressively.
…challenge: Competing with Yahoo!, Microsoft/MSN, AltaVista, AOL.
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IF I WERE…
…smarter: We could have been Yahoo!
…dumber: I would have learned even more. It was my first company - everything I did was dumb.
…to do it all over again: I would have raised venture capital to much more aggressively grow the business.
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Next on deck: Startup 2.0… “The Internet is Coming! How will we make money?”
