This is the second in a series of leadership posts brought on by my latest reading of Shogun. As a reminder, Blackthorne is an English ship navigator marooned in Japan (loosely based on the exploits of the historical figure William Adams, the first Englishman to reach Japan and the first western Samurai). Samurai had a fierce sense of honor and committed ritual suicide if they failed in their duty, hence the tongue in cheek image.
SOON TO BE AN FX LIMITED SERIES * A bold English adventurer. An invincible Japanese warlord. A beautiful woman torn between two ways of life. All brought together in an extraordinary saga aflame with passion, conflict, ambition, and the struggle for power.Here is the world-famous novel of Japan that is the earliest book in James Clavell’s masterly Asian saga.
There’s a natural tendency amongst first time CEOs (and first time managers) to blame subordinates when something goes wrong. After all, they probably did make a mistake. But, it’s always your fault. You are responsible. If not for doing the task correctly, then for ensuring that it is done correctly. That the mission is clear. That the right resources are available; that there’s no roadblocks; that the right person is leading the activity. If something big goes wrong, it’s your fault.
Shogun contains an interesting illustrative example. Blackthorne is in the process of becoming Samurai, via the Japanese daimyo (lord) Toranaga, his sponsor and protector. Blackthorne has been given possession of a household and servants, and raised to Samurai class. But he’s not quite made the jump to Japanese food, and so he is hanging a pheasant near the house for it to improve in flavor, and the bird is beginning to decompose and attract flies. An old gardener volunteers to remove the bird from the house during Blackthorne’s absence. Samurai have the power of life and death over their subjects and violating an order is punishable by death. So the gardener is put to death by Blackthorne’s Japanese wife, also Samurai. After raging at her for the unnecessary death,
He wept because a good man was dead unnecessary and because he now knew that he had murdered him. “Lord God forgive me. I’m responsible — not Fujiko. I killed him. I ordered that no one was to touch the pheasant but me. I asked her if everyone understood and she said yes. I ordered it with mock gravity but that doesn’t matter now. I gave the orders, knowing their law and knowing their customs. The old man broke my stupid order so what else could Fujiko-san do? I’m to blame.”
If you’re the CEO, it’s your fault. And sometimes you have to fall on your sword for it, metaphorically speaking. But embrace the responsibility and this way of thinking, and you’ll find that things don’t go wrong very often.
Fred Wilson recently posted a great article entitled Don’t Kick the Can Down the Road. It exhorts entrepreneurs to not avoid making hard decisions. Great advice — and yet, sometimes you need the patience to let things develop, or not make a decision before you need to. (Ironically, many VCs — not necessarily Fred — are past masters at not making a decision, happily telling entrepreneurs “come back when you have more data” vs. just telling them no and getting it over with).
I recently read Shogun, James Clavell’s enormously entertaining and informative novel about set in feudal Japan. It is a master class in how patience is necessary to achieve big goals.
SOON TO BE AN FX LIMITED SERIES * A bold English adventurer. An invincible Japanese warlord. A beautiful woman torn between two ways of life. All brought together in an extraordinary saga aflame with passion, conflict, ambition, and the struggle for power.Here is the world-famous novel of Japan that is the earliest book in James Clavell’s masterly Asian saga.
Blackthorne is an English ship navigator marooned in Japan (loosely based on the exploits of the real historical figure William Adams, the first Englishman to reach Japan and the first western Samurai). He is made Samurai by lord Toranaga (a fictionalized version of the historical figure Tokugawa Ieyasu). The novel is ostensibly focused on Blackthorne but the true central figure of the book is Toranaga. Toranaga secretly desires to become Shogun, the supreme military commander of Japan, and de facto ruler of the country. But against him are an array of other leaders, with a stronger political position and bigger armies. Toranaga is the master of not making a decision until he has to, or the time is right:
though in reality it was only a cover to gain time, continuing his lifelong pattern of negotiation, delay, and seeming retreat, always waiting patiently until a chink in the armor appeared over a jugular, then stabbing home viciously, without hesitation.
or
“Doesn’t this explain Toranaga? Doesn’t this intrigue fit him like a skin? Isn’t he doing what he’s always doing, just waiting like always, playing for time like always, a day here a day there and soon a month has passed and again he has an overwhelming force to sweep all opposition aside? He’s gained almost a month since Zataki brought the summons to Yokose.”
In the end, it is all about patience, or as Toranaga says:
Patience means holding back your inclination to the seven emotions: hate, adoration, joy, anxiety, anger, grief, fear. If you don’t give way to the seven you are patient, then you’ll soon understand all manner of things…
If you’re building a business, you don’t have to raise venture capital. The tech press romanticize this path. You can bootstrap, but that requires patience (and resources or a very low burn rate). But if you are patient, passionate, and committed, you can build a very interesting company this way.
This strategy doesn’t lend itself well to fast-developing, winner-take-all markets. Competing with an Uber or a Groupon, you have to scale fast or get run over. In venture-backed companies, you are on the “shot clock” as soon as you take money — investors want a return. Conversely you become addicted to the funding and can’t survive without it, so you have to succeed quickly or you’ll run out of money.
In more slowly developing markets, or markets that are small enough that big money or big companies aren’t a threat, patience can be a virtue, or even a requirement. Books are an interesting example. The market develops slowly. The few major success stories, say Goodreads or Wattpad, were almost a decade in the making. Any number of innovative startups (e.g. discovery engine Small Demons, subscription reading platform Oyster) produced great products but were unable to fund operations long enough to achieve critical mass.
So, with my book discovery engine, The Hawaii Project, I’m playing the long game. I’m not raising funding and going for the big splash, because I know the market will take longer to develop than the shot clock will permit. I’m self funding. Cloud computing and open software have made it possible for a single person to build very interesting products, and let them run for long periods of time at very little cost. I can wait out the competition; most of them will run out of money.
When I meet with young entrepreneurs embarking on something, one of my first questions is, “Do you care enough about this problem to spend 5 or 10 years of your life on it?”. Because that is what it’s going to take.
AKA “events”, AKA “local discovery”, aka “help me find things to do in my free time”.
TL/DR. Just Don’t. Please, I’m begging you.
As one of the founders (and CEO) of goby, a local “recommendation engine for things to do”, I get approached fairly frequently (seems like every few weeks) by entrepreneurs who want to work on this problem. In the interests of saving both of us time, I decided to write down the high level reasons why this is a really bad idea. Read this first, then we can chat if you still want to try.
Before we get started, a few caveats. This advice assumes you’re trying to doa venture-backed unicorn, need to raise money to pay your salary, and hence need to scale. If you’re doing a bootstrapped personal project where you make a few bucks, much of this may not apply. Second, I don’t really even want to hear about your product. Even if your product is amazing, it doesn’t matter. You won’t make it. The problem in this market isn’t the product, it’s the market.
The challenge here is not to make a great product, it’s to get scale of users. If you’re doing a venture-backed startup, you need MILLIONS of users for this to work. Here’s why you won’t get them:
It’s not a daily use case
Most people don’t actually have free time
You need to scale geographically as well as topically
It’s hard to get good data
Competition (I have a Graveyard of ~200 companies who’ve tried).
No clear path to monetization
If you’re unconvinced, you can read a bit more detail below about these various factors. But trust me, I’m right.
Is this a real problem for people? Yes. Are experiences valuable? Yes. Is this problem worth solving? Yes. It just won’t be a startup.
In a previous generation, this problem was solved by Newspapers. They had a “metro” section that highlighted cool things going on. They already had an audience, they had local knowledge, they just delivered some extra value. The future version of this problem will be solved by a brand that already has an audience. Maybe a platform like Facebook (already the biggest events database on the planet), or a Yahoo/AOL/some other portal, or by a brand working in a bigger associated space (Foursquare? Twitter? AirBnB? Uber?).
OK, so you’re unconvinced. Keep reading.
It’s not a daily use case.
I’ve written about this at length elsewhere, but because of the way people discover, test, and re-use new apps, unless you have a near-daily use case, people just forget about you before they need you. A similar take from Ben Yoskowitz.
Most People don’t actually have free time
Who is your demographic for this? Young urban singles have free time, they like to go out at night. Married people with kids — their weekends are spoken for. Mow the grass. Go to the soccer game. Run errands. Get up Monday morning. It’s tempting to think there’s millions of people sitting around bored, because it happens to all of us at some point. But most of the time, most of the people don’t have this problem. It happens once a month if you’re lucky. And then, many people will just decide to stay in and watch Game of Thrones.
You need to scale geographically as well as topically.
In order to get millions of users, you can’t just do one city. Not enough audience. So, that means you need data for New York, Boston, LA, Raleigh-Durham, Atlanta, Moab, …. and you need to cover different topics for different demographics (nightclubs vs family-friendly events)…unless you have some serious tech (we had semantic web crawling from MIT @ goby and still struggled), you won’t be able to get this data easily. Which leads to:
It’s hard to get good data.
Unfortunately the data is distributed — Facebook events, Wine tastings on location restaurant websites, concerts on Ticketmaster,….it’s all really spread around. There’s no centralized place to get it. Not only do you have to cover lots of geographies, you have to cover lots of topics. Jazz, Hiking Trails, beaches, Comedy, Family Friendly book readings, the list goes on and on and on. If all you do is aggregate some events from Ticketmaster, nobody needs you — they already have Ticketmaster! Which leads to….
Competition
You started work on this because you think it’s a problem nobody’s working on or solved. Guess what: I keep a list. I call it The Graveyard. There’s HUNDREDS of startups who’ve tried and failed to solve this problem. Some really great services: goby, Sosh, SCVNGR, Diddit, Hotlist, Banjo, Sonar, Whrrl, Spindle, Schemer by Google, Eventful, Zvents, Upcoming (now returning, believe it or not!!). This runs everything from one person in his/her basement to apps from biggies like Google. Nobody lasts more than a few years. When that happens, it means something’s wrong with the market, not the companies. Can you explain why you’ll succeed when all these other good folks failed?
Now, in some specific big areas there’s players: Ticketmaster for music, EventBrite for professional events, and some others. But they are the exception, and worse, if your app is great at music, then you have to swim upstream against a brand like Ticketmaster.
(and, you’d better have a web site, an IOS app, an Android App, and soon, a chat bot interface 🙂
Monetization
Finally, it’s very unclear how to monetize this space. Ads? Forget it. Until you have 2 or 3 million monthly uniques, you’re not getting anywhere with ads. Affiliate revenue? Most of the things that are purchasable are being sold by the Ticketmasters of the world — and people would rather buy from them than you.
A lot of big problems you have to solve.
Here’s some required reading of some post mortems and other folks’ thoughts on this:
There are many articles about growth hacking out there, but they tend to focus on startups that already have some level of traction. But what about those really early days when you have no idea where your users are going to come from? How do you get to your first 500 or 1000 users?
Paul Graham famously said you have to “do things that don’t scale” in the early days. Rather than adopt a strategy that works for tens of thousands or millions of people, do something that works for tens or hundreds of people.
My site, The Hawaii Project, is a personalized book discovery engine, created because existing solutions simply don’t work for finding great books to read and keeping track of your favorite authors. However, it violates one of my basic rules for B2C startups — it doesn’t have a daily use case. (Most people don’t look for new books to read every day ). I’m knowingly violating one of my rules because this project is near to my heart, but it makes for tricky customer acquisition!
I built my positioning hypothesis for the product early on, following the sage advice of Michael Troiano. (which goes something like, “For avid readers looking for great books to read, The Hawaii Project recommends high quality, personally relevant books you’d never find on your own because we track hundreds of hand-selected sources of great books and match our findings to your interests.”). Which is too long. But that’s where I started.
Because the books space is interesting and complicated, I build a stakeholder map — everyone who might be interested in what I’m up to. That includes Readers, Book Bloggers, Book Clubs, Authors, Publicists, Publishers, Bookstores, Libraries and Librarians, Literacy non-profits (we donate 10% to them), Journalists and the startup community. I crafted pitches for each of these communities.
I highly recommend Traction, which provides a well-thought out framework for thinking about customer acquisition channels.
The Hawaii Project – personalized book recommendations
With that in mind, here’s my path to 500 users — what tactics worked and what tactics didn’t. By users I mean people who signed up for an account on THP — I don’t count simple site visitors (of which there are many more).
First, let’s look at the chart of user acquisition by date, with the key milestones. As you can see, much of it is “slow and steady” growth — with some occasional spikes.
I started acquiring users before I launched, by running a private beta program. Most of those were people I knew — friends & family. For better or worse, from there I moved to doing a Kickstarter, pre-launch. The Kickstarter did not reach its goal so I didn’t get money, but it did generate a fair bit of early press and additional users.
In broad strokes, 15% of my first 500 users are friends and family. 5% are identifiable as “friends of friends” where the product spread without my involvement. 5% are people I didn’t know but networked to for business reasons, and who subsequently signed up. The remaining 75% are people I don’t know, who came in through various activities discussed below. About half of them came in as part of the broader Kickstarter initiative — press, social media posts and the like. Many of the people who signed up at launch were queued up from the Kickstarter campaign and waiting for entrance.
Some pre-launch, early tactics that worked:
Friends and Family. No secret sauce here. These are the people who want you to succeed — all you need to do is ask.
Your professional network. I shamelessly spammed my LinkedIn connections (about 1000 of them).
Kickstarter & related Press outreach
Social Media. A particular success for me was live-blogging my Kickstarter campaign on LinkedIn, which generated a large number of Kickstarter pledges and email list signups, who converted to registered users when we launched, and garnered me ~1500 followers on LinkedIn. I used LinkedIn because that’s where my biggest network was. Choose your biggest / best platform, but keep in mind you can’t just spam them — you have to produce content on a frequent basis, so consider what kind of content you’ll be making and where it most naturally resides. A bunch of posts about startup marketing don’t seem to fit on Facebook.
Those are classic jump-start techniques. Even though the Kickstarter was a lot of work, and didn’t raise funds, it provided a reason for press outreach and a framework for launch that people could embrace.
Since the Kickstarter, there’s been three major “events” that generated significant upticks in users:
The Launch — having done a lot of work with press and email-list gathering, when I took The Hawaii Project out of private beta, and opened it up, I had a good email list I could blast to — many of those people signed up.
I invested a lot in LinkedIn, where my network is strongest. As a result of live-blogging my Kickstarter on LinkedIn, a series of posts I wrote (mostly not directly about The Hawaii Project) got featured by LinkedIn editors. One post garnered 25,000 views, another 5,000 views — some of those readers turned into THP subscribers.
HackerNews. I posted a “Show HN” post on HackerNews. I got some friends to bump it, it picked up steam and snowballed into 100+ users — 20% of my first 500! I don’t know what caused it to catch fire, but the community was really helpful and engaged— I got some great feedback in addition to signups. I am sure many of that community were “tire kickers” rather than just average book readers, but it was very helpful! (A similar attempt at Product Hunt sank without a trace — YMMV).
More along the lines of “doing things that don’t scale”, some other activities that yielded early results:
Email “Spam” — I found mailing lists of librarians online, web-scraped them for the email addresses, and sent every librarian in Massachusetts an email about the campaign.
Book Clubs — I visited a number of book club meetings and signed people up. One of them is using THP to source all their reading choices. While it doesn’t scale, it did generate users — I also realized my product wasn’t a complete solution for book clubs, a topic I plan to return to in future.
Bookmarks — I printed up Bookmarks with attractive “book on a beach” imagery and THP website and contact details, and hand them out at a drop of a hat. (After the first version, I put a trackable URL on them so I can see visits if people type it in). Decent (not high end) bookmarks cost about $0.50 from VistaPrint, so after factoring in conversion rates, the Customer Acquisition Cost is high — but it’s great branding for events, and doubles as a unique business card.
Partnerships. I partnered with the Nahant Library to embed The Hawaii Project in a frame in their website, which generated ~500 visits and a number of subscribers (plus some revenue!).
A side project. As part of the CODEX hackathon, I built BookPlaylist (a bastardized THP where you can build Spotify music playlists to go with your favorite books) and cross-linked it to THP, which generated customers.
Quora. Recently I have started answering books-related questions on Quora, and including links to The Hawaii Project for books I mention. So far, when I answer 2 or 3 questions a day for a week, I pick up 2 or 3 people a day for that time, pretty much a 1:1 ratio of answers to subscribers. Not super scalable but it seems to be reliable and repeatable. It’s now part of my day.
Longer term investments that may or may not pay off:
Social Media Platforms and Content Marketing. I’ve been running a twitter account since I started work on the project, long before I even had a private beta (come follow us!). I tweet out interesting books every day, and have about 700 followers. Probably 50% of my followers appear to be authors, which is an interesting dynamic I hope to make use of some day. I run a Medium account which doesn’t seem to help much. I have a Facebook page which I don’t have time to manage — it gets views but I don’t think generates users. Most every blog post I write gets posted to LinkedIn, my personal blog, my personal Medium account, The Hawaii Project on Medium, and Twitter. The jury is still out on whether my Twitter time investment is really going to pay off.
SEO. I saw the power of SEO with goby, where at peak we were pulling 1M+ monthly visitors from SEO. But SEO takes a LONG time to develop and so far my SEO traffic is a trickle, not a flood. But I’m a firm believer in getting this right and have invested a fair bit in SEO (probably worthy of a separate post).
I also tried some tactics that I thought would work very well. And they didn’t:
Book Bloggers — I hypothesized that Book Bloggers, because they need things to write about, and love books and reading, would naturally want to write about The Hawaii Project. I wrote to about 20 of them, and heard absolutely nothing back. I believe there’s something there but early experiments weren’t encouraging — I haven’t found the right angle yet.
Startup Events — I have a rule that I will talk to anyone who wants to listen, about THP, and I’ve been fortunate to speak at a number of startup pitch events. They’ve all been useful for various reasons, but none have led directly to significant signups.
Author outreach — I hypothesized that Authors would want to help promote their books and would write about THP. Many of my twitter followers are authors. I’ve written to many (authors are surprisingly approachable, even famous ones). I’ve had many good conversations but it’s not turned into much in the way of users.
Bookstore outreach — while it’s more of a stretch, I got in touch with a number of bookstores, in hopes of cross-promotion. Had a few interesting conversations, but in the end, we couldn’t connect the wires on their offline experience and my online experience. And most of them view themselves as being in the book recommendation business, interestingly, especially the “Indie” bookstores.
I also ran a variety of tests on paid acquisition, primarily Google and Facebook ads, so that I had data on cost of acquisition on those channels — they are scalable, if expensive. So far cost of acquisition significantly outpaces customer lifetime value, so I can’t just “arbitrage” my way to success, unless I find a way to reduce the ad costs.
In summary, there was no “one thing” that did it for me. I invested hard in “friends and family” and my personal network, and I tried many things, looking for things that showed promise. And kept at it. I invested hard in LinkedIn, because that is where my network was the largest, and it paid dividends. I followed my mantra of “Everything is Practice”, online and offline, kept trying things, and found a few hits and even more misses.
You should not wait for lightning to strike — invest in getting new customers every day, and plan for the long haul. I haven’t found the repeatable, reliable, scalable customer acquisition strategy, yet. Rome wasn’t built in a day.
I’ve talked to so many early stage startups who are worried about the competition or people “stealing” their ideas, or even (god help us) want VCs to sign a nondisclosure agreement.
Rule #1. Nobody gives a crap about your stupid idea. Even if it’s not a stupid idea.
Y0u should be so lucky that somebody cares enough about your idea to try to steal it. They can steal your idea, but they can’t steal your brain. Ideas are worthless. Execution and commitment are everything. They can’t steal your execution, and they will undoubtedly lack your commitment — after all, it’s not their idea — it’s yours.
Here’s the truth.
Rule #2. Your competition is the “back” button. The total indifference of the world to what you are doing. When I hit that page, or start that app, and have the slightest doubts about the quality of what I’m seeing, I’m outta here and not coming back. I’m busy and I have too many choices.
If you’re doing something new, other players in your space help you, not hurt you when you’re young — because they’re helping socialize the idea that something like this might be something somebody wants. And people might use both products. Goodreads and LibraryThing are book review and cataloging services. I use them both, I like them both. Even though I’m building a semi-competitive book recommendation engine called The Hawaii Project. As you get bigger, and your category more established, thencompetition becomes more of an issue. In the early days, just stop worrying about.
Get over the cleverness of your idea, get out there and tell people about it.
And build it so well people don’t hit the back button.
This is the second in a series of leadership posts brought on by my latest reading of Shogun. As a reminder, Blackthorne is an English ship navigator marooned in Japan (loosely based on the exploits of the historical figure William Adams, the first Englishman to reach Japan and the first western Samurai). Samurai had a fierce sense of honor and committed ritual suicide if they failed in their duty, hence the tongue in cheek image.
