Marketing has become a dirty word in some startup circles, with the name of the day now being “growth hacking.” And frustrations over traditional marketing’s failures to adapt to a new hyper-connected, hyper-communicative world are valid. But demand generation is as important as ever. Stewart Butterfield, the co-founder of Flickr and founder of Slack, understands this and has made public a letter to his company that’s worth a read.

Even though I’ve rolled my eyes at some of the hyperbole coming out of Slack for what is essentially a nicely done chat system, I also completely get why they are doing it. Stewart understands a few things:

  • people rarely go looking for a technology (in this case a group chat system); instead they have goals and problems they want to solve
  • product market fit does not remove the need to educate your market
  • marketing and product are intertwined, and everyone on the team is responsible for creating something that a customer or prospect understands is valuable
  • Slack’s competition is not other chat vendors. His real competition, like most startups, is people not buying anything at all.

The last point is very important. We have used Hipchat for a while, but we’ve taken close looks at Flowdock and Slack over the last few years. The differences/benefits of the latter two haven’t been worth a switch, but Slack knows they aren’t in a battle over an existing market with those two players. That would be a distraction.

Instead, the hype and ambitious positioning of Slack, helped by Stewart’s history and the Silicon Valley buzz he has wrapped around his new company, is helping them break into new circles and expand the market. This should help both Hipchat and Flowdock too, but I’m not sure how much room there is for a healthy business beyond the top two players.

Give it a read.

How Not to Design a Mobile App

by Giff on August 18, 2014

Noah Lichtenstein of Cowboy Ventures recently posted an article to TechCrunch, “What Studying Students Teaches Us About Great Apps“. In their survey of 1,000 high school and college students, they asked about existing mobile usage, and then they asked the question, “if you had a magic wand to create an app that you would use every day, what would the app do?

I hate that question.

You won’t get meaningful data. People suck at speculation. You are far better off studying their behavior to derive your insights.

The low-hanging fruit in the mobile space is gone. If your approach is to ask “what would be neat to do on mobile?”, you are likely to either come up with something already done or not very worthwhile. I know of one talented team that’s been tinkering with phone technology for several years hoping to stumble upon something brilliant, and they’re still drifting. Unless your mission is either fun hacking or true long-term R&D, technology in search of a problem can be a dispiriting place to be.

You shouldn’t approach it as a “mobile app” at all, but instead have a need that you want to solve, and then think through how a portable, pervasive, connected, always-on device might contribute to solving it.

By the way, if you are going to ask the magic wand question, a better way to ask it is this: “If you could wave a magic wand and solve any problem, what would you want to solve?”

But even better, you have actually spotted a need that you are personally passionate about and think worth solving.

Be Suspicious of Metrics

by Giff on June 25, 2014

People love metrics. I love metrics. I love getting arguments out of opinion and into data. However, I’m also deeply suspicious of metrics, especially since I focus on new products and thus live in a world of constant change and evolution.

Some points of discussion:

New Employees

I have new employees join and ask “what targets do I need to hit to be successful?”

There are two sides to this. First, it is important to set outcome goals so that everyone is on the same page regarding expectations. Second, if you are doing anything entrepreneurial, chances are high that the performance metrics you set on Day N will be wrong at N+60, or even sooner.

I try to make a pact with the employee: if at any point, you or I realize that you’re working on the wrong thing, let’s agree to blow up the metrics and rethink. I also have a goal of reviewing the metrics, not just the results, every three months.

The same thing should go for any team. Set goals. Set checkpoints when you evaluate them. Be willing to blow them up at any point in time.

Choose wisely

You want to make sure you are paying attention to the right metrics. Obvious, right? But it’s easy to fall off the rails here. We recently launched a new business line for a client, and now have revenue coming through the door. Before the project was funded, we created a financial model that forecasted customer growth and how that might translate to revenue and profit. Once the product was live, some people started to fixate on hitting the “new acquired customer” target for each month from the original model.

But while new customers was an interesting metric, it was not the true goal. Our true goal wasn’t to have a certain number of new customers, but rather to hit certain revenue targets. We could hit our revenue goals in a myriad of ways — acquiring new customers, raising prices, reducing churn, and more. Fixating on a metric that fed into our goal, rather than our true goal, could handcuff our thinking. A young business needs flexiblity not handcuffs.

Locking Metrics in Stone

One of my current management headaches is tied to the M&A (merger and acquisition) activity that preceded my taking the helm. The company wanted to pay for performance, and so it created earnout structures and locked this into the acquisition legal agreements.

Unfortunately, this only works if you can reasonably predict how operations will unfold.

Our company, even though it is a services business and not completely re-inventing the wheel, is trying to push the edges of how consulting companies operate. We are testing out new models. Rather than improving performance, the earnout structures have turned out to really constrain us in all sorts of ways because M&A legal agreements are much harder to rip up and rethink compared to a set of employee goals.

Interpretation

Metrics are only as good as how you intepret them. Some are clear cut, but in the early days of a product, you often don’t know what “good” vs “bad” performance really is.

The Internet is awash with information, but it is not awash with comparables. Take conversion rates, for example. In one project, we are closely looking at our new customer conversion rates. We know if we are making progress, which is powerful, but how do we know if something is good? What do we have to compare it to, other than our previous numbers, our experiences on other projects, and perhaps some whispered shared metrics from peers at other companies.

The intepretation challenge doesn’t stop just with lack of comparables. People can also slice up data in ways to confirm or deny their own opinions. Once upon a time, I did M&A and IPO investment banking for tech companies. We always laughed that every single bank was “#1 in tech”. Everyone just sliced the numbers in a way that made them come up as number one. Every claim was true — everyone was number one at SOMETHING.

Final Thoughts

I like that the startup world is trying to rely on metrics more than pure gut alone. I just think that some people are a bit too caught up with the idea that we need to measure everything, and let metrics rule all.

There needs to be room for judgement and flexibility.

Does Occulus Mean That VR Is Finally Here?

March 29, 2014

Occulus Rift and better immersion rigs have allowed the promise of virtual worlds to rear its head again. Raph wrote a great post the other night, and I feel compelled to weigh in as well. Once upon a time, I was a near-expert in the space, obsessing about it from 2004 to 2008. I was [...]

Read the full article →

Lean startup is like a sine wave

March 27, 2014

There are a lot of people trying to do “lean startup” or “lean UX” and fretting about whether they are doing pure lean (there are even more who talk about lean but don’t actually do anything close, but that’s a different story). There is no such thing as pure lean. The right balance takes into [...]

Read the full article →

What Pixar Got Right

March 27, 2014

Pixar is an inspiring place. In addition to prioritizing storytelling, they got a lot right when it came to process and human interactions.  Fast Company has a nice piece interviewing Pixar alumni, and I pulled out my favorite bits: “There’s still a back and forth between creative and the audience, and you can’t be like [...]

Read the full article →

What Lurks Beneath the Surface

March 23, 2014

I’ll believe it with my own two eyes Humans have a tendency to focus on what they can see to the exclusive of other things. Many years ago, my wife and I lived in a shoebox in Manhattan. We couldn’t afford to buy a place in the city, but ironically we could afford to rent [...]

Read the full article →

You Are Spending 3x-5x More Than You Should

March 12, 2014

In carpentry, the rule is “measure twice, cut once” because once you cut, you can’t go back. If you get it wrong, you end up wasting a lot time, money, and materials. Somehow, that concept has not made it into the vast majority of software projects. Even though “lean startup” has become a popularized term, [...]

Read the full article →

What Is A Product?

February 23, 2014

The title is a question we have been kicking around at Neo for the last few weeks. I often refer to us as a product agency, as opposed to digital agencies that do marketing websites and campaign work. But what is a product? Here’s an initial stab. A product is a repeatable capability that delivers [...]

Read the full article →

Creating, Improving… Managing?

February 15, 2014

I bet most of you have listened to Ira Glass on being creative. If not, ignore this post and go watch that video. His comments resonate with me deeply. Frustration with not being able to always produce work to the level of your taste. Demanding more. Overcoming that frustration through perseverance and relentless creating, making, [...]

Read the full article →