December 21st, 2009
Since our founding we have helped over 20 start-ups at different stages in their development and needless to say we have learned a lot from each of those experiences.
Important: You can find many if not all of essentials I am sharing around the web and in many books.
However the five that I have put together are based on my personal experience as a principal and strategist at The Groop. I can’t claim I am right, but it does genuinely pain me to see fellow entrepreneurs spend a lot of time and money to learn these same lessons.
If you are an entrepreneur, before you choose to work with The Groop please read this post. And read the books it recommends.
1. Build Less. Spend Less. Release More.
No matter how many features we have seen a start-up build into their software it has very little bearing on their success. For example in 2004-5 The Groop worked with Entrepreneur Zak Kahn to build TalentBoom. He spend a lot (a lot) of money to build then redesign and rebuild TalentBoom until it had enough features and he felt it was different enough from his competitors and had the right “design.”
Early on I told him to release (launch), release, release what he had so far and start monetizing it. He did not follow my advice.
Today the market leader is still Breakdown services and TalentBoom is still looking to gain traction.
Zak called me recently and let me know “You were right, I should have followed your advice.” More importantly he said that I could share my story with you.
I told him this before I had read Getting Real by 37signals the makers of the successful online project management tool BaseCamp. From Getting Real:
“If you want to build a company that follows, you might as well put down this book now.
So what to do then? The answer is less. Do less than your competitors to beat them. Solve the simple problems and leave the hairy, difficult, nasty problems to everyone else. Instead of oneupping, try one-downing. Instead of outdoing, try underdoing.”
From Getting Real
If you have not read the book you should read it now.
Is it the absolute truth in how to do an online start-up? I don’t know, but BaseCamp is an extremely successful subscription service. We use it and pay for it, you might too.
2. Design does not matter.
Yes, I said that. And yes by trade I am a very well trained Graphic Designer who paid a lot of money to attend Art Center College of Design, one of the top design schools in the world. And yes The Groop has designed and built many beautiful websites for great brands over the 9 years of its existence. And yes Apple is an amazing example of how Design (big D) matters.
“So dude, why are you saying such blasphemy?!” you might ask.
First let’s make some important distinctions that will help:
By “Design” I mean visual language such as your logo and what exact color your links are and the style of photography you might use.
By “Does Not Matter” I mean “matters less than the whole” in the context of adoption and monetization. (People using your online product or service and you making money from it.)
So what matters?
The next three principles outline what matters. And to illustrate each point I will use one of the most important client relationships in my 15-year web career. One who happens to be in a business that many might not deem as “sexy”, but that is executing very well. I am talking about the coupon and deal site Savings.com .
3. Execute your business evenly and in the right order.
Like a rotisserie chicken. Don’t let one side cook too long before tending the other side. Your customers won’t like a half crispy and half raw chicken.
You have heard me call this “Total Brand Execution.”
Though Savings.com monetized well the Savings.com team who designed it felt it could be better both from a user experience point of view and from a brand identity point of view.
Savings.com generated revenue well and was growing. What allowed for that? The mechanics of its business model. It’s design (little d) or more accurately it’s user experience supported the affiliate business model sufficiently well, regardless of how it looked.
Before:
After:
Ebay in its heyday, MySpace in its heyday, Craigslist today are not the best looking sites and all three have been or are very successful.
I won’t even talk about Microsoft Windows, (predating Vista and 7) and a slew of other software products that succeed not on looks but on their business model and an acceptable if less than ideal user experience.
4. Have a business model and work from there.
Preferably one that your customers want or need urgently enough.
For Savings.com, brands and merchants need to sell more online and customers want deals on products/brands they need or desire. A customer who already has the intent to buy and is at the beginning or the end of the purchase funnel will be readily inclined to use a coupon or deal.
In other examples, people want to sell the contents of their garage, find a job or find workers, Craigslist brings them together. In these cases it involves one or both of the parties making money; in the case of Savings.com it involves saving money.
What does your online product provide your user?
Have you defined why your customer should care about your product?
More importantly what business model are you starting with?
And before you say I need a product before giving it a business model let me warn you that putting in place the mechanics of an affiliate model is far easier and far cheaper than building a product that looks awesome but is looking for a business model.
You can succeed either way but the latter will take a lot more capital and a lot longer. The heavier the rocket you want to launch the more fuel you need, it’s basic physics.
5. Know your user (singular) well. Delight them. Repeat.
The more type of users (customers) you can please the better your product will do.
That does sound right. Because more is better. Wrong. This mistake is replicated over, and over and over and over and over and over. And it’s wrong in so many ways. Let me count them.
- The more users you want to please, the more features you will need to create. Which violates the first essential principle in this list. Just like Issac Asimov’s rules for robotics.
-The more users you want to please the more confused they will be as to what makes you unique.
- The more users you want to please the more confusing your product will be to use. How many features do you use in Microsoft Excel?
And on and on.
Savings.com first focused on getting their core users to use the product more often. That is the first goal we were given in our brief. It also happens to be the first rule in sales, sell to your existing customer base first.
Together we segmented their users into three user profiles and aggressively aimed to delight the SMALLEST number but most INFLUENCIAL segment of their customers. Using essential principle number three above they executed evenly across social media, PR, design, user experience, content (and etc.) including the one place that matters most. The real world. They flew 30 of the most influential of their customers to San Francisco for a one day “Save Up” conference.
I can’t begin to express how successful that was.
Finally, until now I have not had the courage to urge my start-up clients to think radically different from their urge to follow and make “me to” decisions. Marty Nuemeir in his book ZAG, The #1 Strategy of High-Performance Brands explains it well:
“If nobody’s doing it, you’d be crazy to do it yourself, right? Wrong. In fact, if you’re looking to become the leader in a new market space, the rule is just the opposite. If ANYBODY’S doing it, you’d be crazy to do it yourself…”
…radical differentiation doesn’t test well in focus groups. When you ask people what they want, they’ll invariably say they want more of the same, only with better features, a lower price or both.”
Next:
You can read the entire Getting Real book online here:
http://gettingreal.37signals.com/
And you can start reading Zag here:
http://www.zagbook.com/
