Sales pitches, hockey sticks and lies
At this point, I think I’ve seen enough to talk about this -- and full disclosure, your mileage
may will vary. I’ve worked for 3 startups now as a full time hire, 5+ as a mentor/coach, and 2 as a paid consultant. I’ve seen flashy keynotes, a pitch with “disrupt the market” at least 3 times and more cliches than I thought were possible. They’ll be like Apple, Amazon, Google, Facebook and others. They’ve got a misspelled name or a play on phonetics -- and it’s a sure shot.
You hear about incubators, accelerators, hockey stick growth, high growth CEOs, 10X, hyper scale, self made, it’s their 17th startup, serial entrepreneur, intrapreneur, startup junky and so on. How about ...
Shut. up. and actually build something
Benjamin Franklin is quoted saying "Well done is better than well said" and more people need to see that. So many haven't built anything but will insist they have. They talk and make presentations, pitches, proposals ...but not build the product -- and worse, they "don't understand that tech stuff" (yes, I'm dead serious). They're part of it, but never contributed more than words and "ideas". It's a thing, it's exciting but no one pays for it. There's applause at the end of the pitch ... but no investors laying out their money or networks. They're disrupting the market right?
What no one talks about is that “market disruption” is half of what they thought it was. Sometimes it’s just a slight miss in what problem they’re solving, other times is the law of unintended consequences. Ask Uber (NYC taxi driver suicide rate), ask AirBNB (house damages, raising house prices), Tesla (factory workers, cash burning, profit concerns) and so on. These are the darlings of the startup world -- the great companies people aspire to be like. WHHHYYYYY!?
I see most of them as failures and not something to model after. But how, they’re doing great things, look at what they’re doing, we should be more like them! How do you define a winner? Is Tesla a winner or a cash burner? How about Uber? All these “unicorns” or whatever they’re called -- they don't exist, it isn't a thing but this thing did exist. I also don’t hear about the 1000s of others that are on that same level of breakout, or total collapse. Of course, no one wants to talk about those. They get reasoned away as to what made them failures.
What a lot of people see are the winners and only the winners. What about the countless closed companies that either failed, collapsed, didn't get it right ...and had all the same intention, drive, focus and passion? Most of the winners seen ...aren't and have not made money. Sometimes that's ok for a short while (Amazon) but I think there's a big surprise from those watching what's happening with WeWork coming undone and I think it'll be great for startups -- and it's the rare exception that we're getting to see it happen. I wish it would be public more often so the romantic idea of it gets a sobering reassessment.
I’ve recently found a word for : Silent Evidence. The concept is rather involved, but the short version is a combination of survivor bias, confirmation bias and optimism bias. So here, I'll write about my experiences and how they haven't been so rosey. It's a long, hard, unrelenting road of self doubt, vindication, burnout, raw energy, catastrophic failure and euphoric success. In other words, tuesday.
Passion, Obsession and Rejection
I watched one tech company that wanted to succeed so badly, they were the definition of obsessed with the problem and asking questions that bended what I thought obsession was. It was painful for even me, I wanted them to succeed. Their heart and soul was in the right place for the right reasons. I got them in contact with everyone I could. They made contacts at huge companies that agreed it fixed their problem and wanted to do a pilot ...and they did. They proved it had promise, a niche, an angle ...and they could. not. get funding. They worked on a bare minimum budget for about a year before they closed up. People, aka the market, didn’t find it valuable enough to take it to the next level. Come to find out, people wanted comfort more than objectivity. Investors, and customers are included in this example.
Another company I worked with said over and over “people want this”, “they’re excited”, “they want it”, "investors want in on this!" -- but they didn’t have a single customer, not one person paying them for this thing “everyone wanted”. With zero customers it’s nothing more than a presentation and sales pitch. I asked they prove it -- go out to the last 10 they talked to and take their money. To my astonishment they did! Of those last 10, four of them shelled out the money, immediately. 40% conversion rate? Not. Bad. What was bigger was the software wasn’t done so it was a completely manual transaction. This became the template of what they needed to build. With zero code, they had
- a conversion rate
- a price point
- a process to automate
It made their next 4 weeks simple and gave them a place to focus and a place to evaluate again. Their next round of learnings and testing yielded even more interesting results... people were ok with a much higher price point.
Focused on the wrong thing
Yet another had a good sized user base (no one was paying, so I don’t use customer, I don’t think it’s accurate) and had an easy in for getting actual revenue, recurring revenue. Bonus, the existing implementation was so poorly implemented, it was the definition of a fine opportunity to “revamp” it and delight our customers. Instead, “experts” were hired in to take over, they focused on a single potential customer. Shoot for the moon! It didn't work and now it's turned into a zombie company at best. That revenue stream I mentioned is still unaddressed, money left on the table. Now the competition has caught up, big players are in and that window is closed. Shoot for the moon without good code and you’ll end up floating in deep space.
Others cry “our product isn’t ready”, “we can’t ship an incomplete product!”. If, IF it’s the right thing, it’ll never ready, and it’ll never end. Never. It’ll be a step in the right direction or not, and the movement of the market needs to be relentlessly tracked. It will change, customers get forgotten, new ones come in. Where some entrench themselves, others start looking for something else.
What about big companies? What about them? They have all the resources (and I mean MONEY, infrastructure, not people) in the world, they’ve been around for 100 years and can’t seem to get out of their own way. Sure they’ve upgraded and automated, some even understand they won’t be the same company in 50 or even 10 years. They don’t have that kind of time. They just don’t know it yet.
One example that gives me a lot of hope is the one I want to leave you with. If you haven’t read The hard thing about hard things, you should, because this is a great echo of that entire book without the happy ending.
I got a call from a long time customer, and there was quite the problem. Fighting founders, outsourcing, bad infrastructure, angry customers, misspellings in the app, name it -- except these were paying customers. Grown organically, one call at a time. They had a good number of them too, enough to pay for itself and more.
Talking with the founder, it was all unknowns that a lot of what was being done ...was right on. She wasn’t in over her head, but it was successful enough that it was all a surprise. She’d been working so hard with her head down and did not know what she had and how so many others miss the point of building something people want. I got her connected with a great group to fix and continue her product and get on stable ground -- and to date, only two out of all the companies I’ve seen that I’d call a “good example”.
I guess I'll find out in 10 years when it's an overnight success.