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The Entrepreneurial Concepts I Now 100% Believe In
Entrepreneurial concepts I always heard that I now believe are facts...
Jack Mara | Sep 12, 2015
There is so much advice out there for entrepreneurs. All these ideologies that are gospel for different successful founders. With so much theory it is tough to figure out what to believe. Before I started a company I didn’t know the entrepreneurial thinking to take as “fact.” Now that I am in the thick of it there are 7 things I always hear about entrepreneurship that I 100% believe:
Test and Experiment Relentlessly
I use to believe more in the power of a great idea to drive the success and failure of a company. I now realize the idea is essentially meaningless. Success or failure is based on your ability to learn how to make your idea work and continue to increase the value of your offering.
To figure out what works you need to experiment constantly. In the early days of 10Thoughts I was too hesitant to run experiments on users. I worried too much about damaging the user experience by testing features before I knew if they added value. I worried about messing with certain habits we built in our user base. I found reasons not to experiment.
Established companies experiment every second of every day. They use fancy algorithms to automate their experiments to prune branches that are not working and split and re-split branches that work.
I do not really think of companies as failing anymore, I think of companies as running out of the time, money or desire to experiment. With enough experiments any company can eventually figure out how to succeed.
Determine the monetize-able problem your company solves in the early days Before starting a company if you asked me what Facebook does I’d say “it provides a platform where I can share content with my friends and connections around the world.” Now I’d say, “Facebook provides eyeballs for advertising – eyeballs that they basically know everything about.” Your product is what people will pay for, not what people will use.
There is a hotly debated issue in entrepreneurship – can you build a user base then figure out how to monetize later? The “west coast” mentality is yes, the “east coast” mentality is no, figure out how to monetize early. I originally believed in the west coast mantra, I assumed that if I built a user base the monetization would come.
One of my mentors told me at the start of the summer to go out and figure out if I can monetize, see if all the ideas I had held water. I tried, they didn’t. I realized I needed to figure out how to monetize, I couldn’t wait. There may be (there are) a handful of companies that can grow users so fast that monetization can wait. But I now believe this is the exception. I believe most start-ups need to figure out how they will monetization in the early stages.
Describe your company in one line
If someone asked me in an elevator what Google is I can easily answer in one line “It’s a search engine that allows me to find anything on the internet in seconds.” Of course Google does so many other things, but I can describe the essence of the company in one line. Google has a market valuation of over $400BN and it can be described in one line! Many startups make the mistake of needing these long winded explanations of that they do and why they add value.
You need to be able to describe your product in one line. It needs to be simple and the value needs to be clear. When someone hears it, they need to be able to accurately tell it to someone else. Founders are amazed how many people do not get their product. Founders are amazed when people explain their product incorrectly. This means the founder is not clearly articulating the value of the product. I always used to hear people describe 10Thoughts as a news aggregator – I hated that. 10Thoughts is not news, we want to avoid that space. But until we figured out how to clearly articulate that value we heard our users describe us as news.
Figure out your most important metric
At some point Facebook (sorry another Facebook example) figured out that if they can get a new user to 10 friends in 2 weeks there was a 95% chance they would have that user “for life.” This was there magic metric – everything was geared around determining the best way to get a person to at least 10 friends in their first two weeks.
Figuring this out is so important for two reasons 1) everything is so interconnected that every lever you pull has consequences somewhere else in your system. There are constant trade-offs. Adding value in one place takes away value in other place. If you know your most important metric it is easy to determine where you fall on these trade-offs. 2) There is limited time, you need to prioritize in the universe of what you “theoretically can do.” If you know what you need to optimize around you know how to spend your time more productively.
Find the right business partner
If you try to start a company alone you are basically setting yourself up for failure day 1. The odds are already stacked against you, there is so much you can’t control – don’t make the mistake of thinking you can do it alone. Find a partner either at the start or early in the process.
The right partner can make all the difference. I know an entrepreneur that after months and months of grinding said to me, I would trade all the progress I made and start over on day 1 for the right partner. It is that important.
You will constantly pivot, be willing
You will constantly make pivots, big and small. You will learn things be accident. Follow the learnings, do not be stubborn and try to force what is not adding value because you think it is a good idea. For example, when I started 10Thoughts, the whole concept was that people want to read articles recommended by friends they trust. I went around Darden asking who wanted to sign up and who they wanted article recommendations from. People kept telling me, I don’t have anyone in mind but just send me the best articles recommended by Darden students each week. This was much easier! I looked at the data once to see if Darden students were more likely to read an article recommended by a Darden student than by someone not at Darden – it made no difference.
It is okay to do things that are not scalable at first
Airbnb is the most famous example of this lesson. In the early days of the startup figure out what adds value, do not worry about if it is scalable. If it adds value you can find a clever way to scale it. Maybe you can’t replicate it perfectly in a scalable way, but you can figure out a 90 to 95% solution. In the early days do not shy away from trying something because you are not sure how it will scale.
Written by Jack Mara - Please submit all responses to jackmara@10Thoughts.com
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