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Default Alive or Default Dead?
A 10Thoughts example of the difference between default dead and default alive...
Jack Mara | Oct 31, 2015
Paul Graham wrote a blog this month called “Default Alive or Default Dead?” The premise is simple – if a startup maintains its current trajectory, will it live or die? The concept seems obvious, but few early stage startups actually know the answer. There is a point in a startup’s life cycle (Graham says 8 or 9 months in) when this question becomes critical. If you are default dead, you need to find a way to get off your current trajectory. Graham proposes that “instead of starting to ask too late whether you’re default alive or default dead, start asking too early.” I’ll take this one step further, if you claim to be default alive because of ‘x’ assumption you better test that assumption too early rather than too late.
Here is an example from 10Thoughts...
If I was asked in April if 10Thoughts was default dead or default alive, I’d say default alive, with zero doubt. I believed companies that recruit MBAs in bulk would pay to recommend content for a large MBA audience. I believed they would want to blog on 10Thoughts and share how their work/culture aligned with the top recommended content. Clearly my belief that we were default alive hinged on a very key assumption.
I waited to approach companies until I had the best possible value proposition. I wanted to show companies that 40% of students at their target schools were on 10Thoughts, 20% did not seem like enough when I knew the number would close to double in a couple of months.
When I finally approached companies in July, I learned the legal and compliance hurdles involved with companies recommending content that is accessible to the entire public. The company time required each week to clear these hurdles was not justifiable, particularly when there is no clear ROI. There were companies that said they wouldn’t even do it for free...
I assumed we were default alive, but learned we were default dead. Turns out we had been default dead for a while. What we learned in July should have been learned in April (if not sooner). If the success of your company depends on an assumption, test that assumption immediately – too soon is always better than too late. To return to default alive we needed to change our trajectory, and fast.
I believe the tendency to wait too long is partially psychological. Without testing my key assumption I believed it was true. I believed my business was default alive. As long as it is not tested there is hope that it will succeed – psychologically it feels good not to know. We are wired to wait until we produce our best work before we put it out there – this is best practice in school and most professions. That’s why we often put it out there too late rather than too soon, it is our natural tendency to keep improving our work/product before we are ready to “show.”
In my example there was no logical reason to wait until more students were using 10Thoughts to try and sell. It turned out the difference between 20% of students and 40% was irrelevant – there were different forces (that I never considered) at play preventing the viability of that business model. If we learned in the selling process that 40% versus 20% made all the difference we would confirm we were default alive and then simply return to the selling process when we achieved that benchmark.
There are core assumptions in every startup that because “x” will happen the company will succeed (default alive). Those core assumptions need to be tested immediately, startups need to learn fast to determine what the market will value – waiting is never an option.
Written by Jack Mara - Please submit all responses to jackmara@10Thoughts.com
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