by Paul Jarvis
Launching isn’t a onetime, singular event, but a continual process of launch, measure, adjust, repeat. The cofounder of LinkedIn, Reid Hoffman, has said that if you aren’t embarrassed by the first version of your product, you’ve launched too late. It’s ridiculous to believe that every company grows out of a founder’s fully formed and unchanging idea, especially since most wildly successful companies achieved their place only by course-correcting, changing entirely, or iterating their way to greatness.
Jim Collins, best-selling author of Good to Great, studied 1,435 companies over a forty-year span. He found that every great company that’s very profitable and successful started out as simply good enough to launch. These companies focused on one thing and let go of the rest. He likens it to foxes and hedgehogs. Foxes are very smart and wily and have many tricks for catching prey. In contrast, a hedgehog has only a single trick — curling up into a spike-laden ball. Regardless of how many tricks a fox deploys to catch a hedgehog, the hedgehog’s singular trick beats all of them, because a fox can’t eat a hedgehog. Many companies try to be foxes, doing everything for everyone or launching products full of bells and whistles, but successful companies that thrive over the long term work at a single task and master it. You still need a varied skill set to build a company of one, but your focus on serving customers needs to be singular.
This singular focus is made far easier with today’s technology. “Every company now is a technology company,” says Anil Dash. In the past it made sense to separate out tech companies from all others, but now every company, even a company of one, relies heavily on technology. From their use of email to ecommerce software to automation in manufacturing, every company is now a tech company, with technology at its disposal, not just to create the scalable systems we spoke about in Chapter 8, but to enable further focus. For example, a company doesn’t need to put its efforts into developing a new online payment system; it can use Stripe, Square, or PayPal instead. A company doesn’t need to invest time and resources in building a content management system for its website; it can use WordPress. Streaming video required? Just use YouTube. Looking for supply chain management? There are now hundreds of software solutions. By using existing technology to run as much of a business as possible, you can better focus on your core idea — the core solution — and find your core niche.
Because the first launch generally doesn’t yield amazing results, companies of one should try to get it out of the way as soon as they have something to launch. Then the focus can turn to making the product better, based on what was learned. By iterating and relaunching, greater results can be achieved. Companies of one need to continually iterate on their products to keep them useful and relevant to the market they’re intended to serve. So launch quickly, but immediately start to refine and improve your product.
Iterating is an ongoing process, by the way, and should never stop as long as you’re receiving feedback and data from the market, from other businesses in your niche, and even from within your organization (such as requests from the support person or team). Your strategy, then, shouldn’t be rigid and set in stone, but capable of being changed each time new information is collected. In this way, your strategy will never fall out of sync with the customers and market you’re serving.
Blockbuster failed to iterate to the changing market and Netflix slaughtered its profits. To quote Blockbuster’s CEO in an interview with Motley Fool: “Neither RedBox nor Netflix are even on the radar screen in terms of competition,” he said. Blockbuster ended up with hopelessly outdated retail stores, which led to huge overhead and debt and then bankruptcy. When Sears failed to change its practice of putting catalogs in every home, it lost out to Walmart and Amazon. In 2006, Ed Zander, CEO of Motorola, said this about the Apple iPod Nano: “Screw the Nano. What the hell does the Nano do? Who listens to 1,000 songs?” In 1946, Darryl Zanuck, the cofounder of 20th Century Fox, said, “Television won’t be able to hold onto any market it captures after the first six months. People will soon get tired of staring at a plywood box every night.” Without iteration and adjustment based on new data and insights, a company will stagnate and die.
But if you’ve launched, once or several times, and it hasn’t resulted in enough profit to sustain even a single person’s cost of living, how do you know when to stay resilient and push on — and how do you know when to pack it in and quit (that is, when to move on to a brand-new idea or business)?
That was the question that best-selling author Tim Ferriss, on his podcast, asked Scott Belsky, the cofounder of Behance, an online portfolio platform for creatives. Scott feels that whether we find that line between stubbornly proceeding when we shouldn’t and resiliently persevering when we should has to do with the truth of our initial assumption. In other words, if you’re at a place where you aren’t sure what to do because things haven’t worked out, do you still think that your initial assumption was correct? And in knowing all you know at this point, would you pursue the project all over again?
If the answer is yes, if you still think your original idea was valid, can be profitable in some way, and is worth pursuing, you should carry on. If not, if you’re continuing only because you’ve put so much of your time and energy and heart into the project, then it’s not logical to keep at it. If you’re overvaluing your plan because it’s your plan (known as the “endowment effect”), then you should probably quit.
The idea that winners never quit is both overly simplistic and completely false. Most successful founders of companies have quit several times. In fact, it’s their quitting that led them to the success they found after they failed. In his 1937 book Think and Grow Rich, Napoleon Hill said, “A quitter never wins and a winner never quits,” but that just doesn’t hold true. Sony’s founder, Akio Morita, first invented a rice cooker that burned rice (a fairly good reason to quit). Ev Williams founded, then quit, a podcasting platform named Odeo (which Apple made obsolete when it launched its own podcasting platform soon after). Williams then moved on to found Twitter and Medium.
So if you have refused to change anything because of your misaligned ownership of an idea and because of all that you’ve invested (time, money, resources), then yes, you may be continuing for the wrong reasons. But if your initial vision still seems objectively valid and progress and profit are just coming along slower than you’d like, by all means continue.
In the early days of Behance, Scott Belsky and his small team were just a few months away from completely running out of money. Understandably, they felt demotivated quite often, but their vision of organizing the creative world’s work never got less interesting or less valuable to their customers. So while they tired sometimes of soldiering on without enjoying massive success, they didn’t lose their original conviction. When things got really tough, they became even more resilient — they found ways to create scalable systems and repurposed work instead of spending money on new hires. They reduced costs to a minimum so they could achieve profit faster. Even today, when Behance is popular (more than 60 million views of projects per month) and owned by Adobe, the design team responsible for all of Behance’s visual creations and its publication 99U (print, digital, and a series of conferences) is a staggeringly tiny staff of just three people.
So, by working toward MVPr as quickly as possible with a simple solution and then iterating upon it after it’s launched, your company of one can build a resilient business that may change over time in its products or features, but still serves and is totally valuable to its customers.
BEGIN TO THINK ABOUT:
■ A new business or product you could start right now by executing the smallest version of your idea
■ How to determine your MVPr, the steps that could be taken to achieve it as quickly as possible, and what could be scaled back to reach it faster
■ A product or service that would be the simplest solution to a problem your customers are having
■ Whether you could start your company of one without capital and what that woul
d look like
12
The Hidden Value of Relationships
Chris Brogan, the New York Times best-selling author and CEO of Owner Media Group, doesn’t believe in hustling. Instead, he’d rather build long-term relationships with people based on mutually shared interests.
Chris believes that smaller business owners (and companies of one) are sometimes embarrassed about selling, and have an aversion to it, because they believe that selling means pushing your products on others. What he and many others have found, though, is that it’s much easier to sell to people with whom you’ve already built a relationship because they know that you actually care about them personally and their betterment. In this kind of relationship, selling doesn’t have to be pushy. It’s based entirely on a cultivated friendship.
On the flip side, if your business is constantly selling and constantly pushing its wares, people instinctively start to avoid your business or stop responding to your emails. But if you use your platform to teach, empower, and make customers’ lives or businesses better (as we saw in Chapter 9), you are seen as a trusted adviser, not a shady or slick salesperson. This is why Chris promotes friends and people he finds who are doing interesting work, without being asked to. He creates relationships by constantly thinking: Who do I know who could benefit from connecting with this person? Then he facilitates those connections, either one-on-one or by sharing with his entire audience. Over time this unique approach creates a lot of goodwill with others and with his audience, which helps when Chris himself has something to pitch or to sell.
Chris feels that these kinds of relationships can help companies of one because consumers innately trust smaller businesses over large corporations, deservedly or not. There’s a huge difference, Chris says, between “How are you, Cleveland, Ohio?” and “How are you, Paul Jarvis?” Companies of one can use this personalized approach to their advantage by calling out customers by name or speaking to them directly. For example, if you have a mailing list of 1,000 people and most of them reply to your newsletters, you’ll be able to read and personally reply to each one. Large corporations just aren’t set up to do that kind of personal outreach.
Smaller businesses tend to want to act like larger companies, which is curious, since many large businesses these days are trying to act like smaller ones. Chris has noticed a trend, especially in the realm of food and beverages: consumer demand for better-quality food (at a higher price) has driven large brands to either acquire or act like smaller artisanal companies. For example, Anheuser-Busch owns at least ten craft beer companies. The office supply store Staples, seeing that people have become less and less likely to visit its retail locations, launched a campaign called “Summon Your Inner Pro,” which focuses instead on cultivating business-to-business relationships. When customers say that they want more personal experiences from a brand, what they really want is a more personal connection or relationship with the company, so as to be understood better by them.
Chris believes that small businesses need to start embracing and acting like small businesses. Companies of one can be proud to be companies of one and can use their personality to stand out and their smaller focus to niche down to the specific groups of customers they want to serve. They can know customers by name, by need, and by motivation. Nurturing a relationship with customers ultimately reduces the likelihood of their going elsewhere and also strengthens their belief that smaller can be better.
Where some businesses (of any size) get relationships wrong, Chris says, is in laying claim to ownership of their audience, using phrases like “our audience.” While this might seem a trivial point, it’s an important one, because no audience or consumer group is solely one business’s property. You can’t own an audience, because they support, buy from, and enjoy many other products from companies besides your own. They rarely think 24/7 just about your business.
Implied in community ownership is a company’s assumption that it’s okay to use that relationship to sell them more. That kind of mentality can easily turn an audience or community against a company. This is why Chris uses his own mailing list mostly just to connect with his audience, through weekly articles; (very) occasionally, he pitches them products he’s created. For the most part, though, he uses his list to connect with the community he serves with news, information, and valuable content. Building relationships by being helpful first enables an audience to benefit from the relationship, and that experience will lead them to feel a sense of real reciprocity later when you try to sell them something.
THE TRUE NORTH OF AUDIENCE-BUILDING
You can’t buy your way into real relationships any more than you can force people to buy your products. To create an audience of people who are keen to support your business by purchasing from you, a real relationship is required first — one that includes trust, humanity, and empathy.
Building a genuine audience around your business, product, or brand is not the same as growth-hacking. In fact, the overall concept of this entire book is antithetical to that practice.
Companies of one don’t growth-hack, because the true north of growth-hacking is, of course, growth. Growth to growth-hacking companies is the single metric used to gauge validity or success, and thinking of it as always beneficial (which, as we’ve learned from the countless stories and research studies reported in previous chapters, is untrue), they consider it not only useful but entirely necessary. Relationships for growth-hackers mostly revolve around offsetting churn, in that their goal is to build an audience as quickly as possible, then sell as much as possible to them until they relent, buy, or give up and leave. This “churn and burn” mentality can lead to faster short-term profits (or at least short-term audience growth), but it has nothing to do with relationship building — and it mostly involves paid acquisition. “Churn and burn” doesn’t create or foster personal connections, and it isn’t based on trust or shared interests. It’s simply a way to work toward a scale at which profit can happen for a growth-focused business.
Glide, a video chat app, launched at number one in the social networking section of Apple’s app store, mostly owing to the viral nature of its invitation system. By default, the app scrapes a user’s address book and spamvites via text message everyone in your contacts. (A spamvite is like an invitation, but one you didn’t knowingly send.) This happens by default when you start using Glide’s app; to keep the app from texting your entire contact list, you have to find the right setting to turn it off. After a lot of negative press and pushback, Glide said that it had changed its “growth strategy” away from spamviting customers’ entire address books, but in reality, it was still happening years later. Glide has since dropped hundreds of spots in the social networking section of Apple’s app store.
The Circle, another app that focused on growth-hacking, spam-blasted its customers’ contact lists in hopes of gaining faster growth. CEO Evan Reas later changed his view on growth-hacking after it repeatedly backfired for his company; he came to believe that a business should grow as the result of great customer experience, not just grow for the sake of growing while taking away from great customer experience. Andy Johns, head of Product at Wealthfront (formerly at Facebook, Twitter, and Quora), found that startups that focus aggressively on exponential growth above all else will expedite their path to failure, exponentially.
Des Traynor, founder of Intercom, a messaging platform for websites, says that the Faustian bargain of the internet is that you can swap credibility with an audience for attention at any time. And while this “bargain” can lead to a meteoric rise in popularity for your business, your brand, or your product, it can also lead to measuring the wrong metrics (those that don’t lead to profit) and, even worse, tricking customers — like accessing their address book to spamvite their friends and colleagues. This kind of growth, however exponential, at best doesn’t last and at worst backfires. Metrics produced only by growth aren’t always good indicators of a healthy, sustainable, profitable business, and they certainly ca
n’t compete over the long haul with customer satisfaction from an empathetic company and a well-developed product.
On the flip side of vapid and ephemeral growth-hack relationship-building is a company like Kiva, a microlending service whose entire business plan is about fostering relationships, not to grow their audience overnight but to build connections between microlenders and microloan receivers. Kiva is in the business of inserting human relationships into our financial system by helping people in impoverished countries who require a bit of money to start or run a business. People like Lindiwe, a store owner in rural Zimbabwe, tell their story on the Kiva website, providing some information about themselves, where they are from, and what they’re trying to accomplish with the loan. Individuals who want to fund projects like Lindiwe’s can lend a portion of the money needed, or all of it, after reading their stories.
Over time, as Lindiwe makes a profit, she repays the loan. The current rate of repayment on Kiva is 97 percent. Their network of 1.6 million lenders and 2.5 million borrowers brings together hundreds of thousands of people who would probably never meet in real life. Connecting them on the Kiva platform has generated more than $1 billion in loans so far. The magic of Kiva is that it helps build relationships and connections that lead to these microloans by showcasing the stories and lives of people who need tiny loans to build something for themselves in a place that wouldn’t typically offer them loans to do so. Kiva is a relationship business whose outcome is microloans. Instead of churning and burning customer acquisition, they focus on the relationships between lenders and lendees.
A company of one finds its true north by working toward being better, not bigger, and the way to do that is to build long-term relationships with its audience and customers. Part of being better is better serving an audience who, if served well, will become customers and, if served well as customers, will become advocates. The difference between relationship companies and companies that focus solely on growth is that the former recognize that real relationships are built more slowly, in more meaningful ways, and without massive turnover. Sales aren’t asked for immediately; they’re brought up after relationships have developed a bit of trust. The idea is that in rewarding an audience who’s giving you their attention by giving your attention back to them, through listening and empathy, you’ll be rewarded with a sale (and most of the time several sales over the long term). Measuring profit or customer retention can lead to more sustainability because, as the adage goes, “What gets measured gets done.” So if you’re focusing on growth, growth is what will happen. But if you focus instead on relationships that turn into long-term customers and sales, that’s what will happen instead.