How Many Clone Startups Do We Need?

Why is the world obsessed with building so many similar products and companies, is it that many VCs are just sheep and throw money at startups in a large and growing market? Or is it that the world needs variety? current solutions are not serving the market well? the market is big and more companies can co-exist and thrive?

For example, I don’t work in the Cloud, Data or Monitoring space and I don’t spend much time thinking about this space but I have seen many companies popping up that are all doing variations of Cloud Backups, Cloud Log Analyzers. I can only imagine how many companies actually exist in each of these areas, I am probably only aware of a small percentage of them.

I see this happening in many industries, not just cloud computing. I see this even in Transportation (Lyft, Uber, Didi, Ola and on and on), Hospitality (Airbnb, Sonder, Lyric, Vrbo, Vacasa, Holidu and on and on), Streaming (Disney+, Peacock, Netflix, Prime Video, Hulu and on and on). I understand variety is the spice of life but I also know the “paradox of choice”.

The fundamental question I’m intrigued by is “why do people spend so much money, time and effort on building things that are not unique”, that are not, in my humble opinion, zero to one companies.

Madhav's Book Notes, SWITCH by Dan Heath and Chip Heath

Recently I was introduced to this book by a friend. I had known about the book for a while as I have read Made to Stick by the same authors a few years ago and liked their lucid style of capturing complex concepts in simple metaphors. Here is some notes I made as I listened to the audiobook on Scribd –

Bigger popcorn bucket size makes people consume more popcorn and vice-versa. To reduce eating more, reduce the plate size. To reduce eating unhealthy, reduce buying unhealthy food, once they are in the pantry, chances of eating them goes up significantly.

Forcing the team to think about “Under One Roof”, people started thinking about making room for other critical departments under one roof, for example, Radiology in the same building, improving breast cancer diagnosis. A woman coming in for an exam in the morning might be able to leave that evening with the results.

We all have the Rider and the Elephant in each of us, to appeal to a person we need to think about both aspects.

Who is a Rider? Analytical self

Who is an Elephant? Emotional self. Elephant tries to paint the rosiest picture of things, creating positive illusions. “truth teller” can break these illusions to help the Elephant make progress.

Show the Rider where we are headed with charts, data analytics. Show the Elephant the big picture and vision. Both Elephant and Rider are part of the same person.

What is a B&W goal? Back and White goals are basically binary goals, the state can be either 0 or 1, like “I will not drink wine”, “I will not eat processed sugar”. Binary goals are easier to practice than trying to moderate, in other words, Analog goals 🙂

At the beginning, don’t look for the middle, look for a strong beginning and a strong ending and get going. Focus on what we can control, the next step and the next.

When parameters are well understood and things are static one can apply analysis, think and change something to improve results. However, in real life, parameters are not well understood, uncertainty reigns, not enough data is available. How can one make decisions in that situation?

See → feel → change OR 

Analyze → think → change

Problem of change is not one of lack of information but it’s one of identity and emotion. People don’t buy BMW because of the information in the Ad but the emotional appeal, identity to “this kind of person drives BMW”, same with Nike shoes, “this kind of person uses Nike shoe”

Elephant needs quick wins to get fired up.

If you want to change a behavior, give clear direction (Rider), boost motivation and determination (Elephant) alternatively remove friction, create a slope and nudge them (Path).

Shape the Path, build habits. (Atomic Habits by James Clear is a good book on this topic)

Fataki (an explosion in Swahili, someone to stay away from) – Eliminating sugar daddies in Tanzania by popularizing the term “Fataki” on radio station campaigns, like “that guy is such a Fataki”.

How do you make the Switch?

  1. Direct the Rider
    1. Find the bright spots
    2. Point to the destination (like B&W goals)
  1. Motivate the Elephant
    1. Have someone read the email and ask if any of them is worth replying to
    2. Build identity – “John you are such a controlled guy”
    3. Build the growth mindset
  1. Shape the Path
    1. Break the environment e.g. break the breakberry
    2. Tweak the environment (turn of the sound, silent mode, no buzz)

Good relationships with colleagues is not going to happen based on Myers-Briggs types, it’s built from reinforcing bright spots, look for little rays of sunshine.

The more you are exposed to something the more you like it e.g. Eiffel Tower, just an ugly metal structure.

Cognitive Dissonance – people don’t like to think in one way and act in another way. So once they start acting in one way, they will like to continue to act that way, it helps with good habits, inertia is a good thing here.

When change works, the Rider, the Elephant and the Path all are aligned. Change follows a pattern. Clear destination helps with the change.

What will you SWITCH?

Lessons From People No Smarter Than You

“I’m still young, I try to always look at what people significantly younger tan me are doing. What’s the next thing? I like to imagine the world five years from now Or imagine what I want the world yo look like five years from now”

Brain Chesky

“I have always followed my gut – and sometimes it’s been really lonely. When you look at the Forbes 400 list and take off everybody who inherited money, what’s left are people who went right when everyone else went left. Conventional wisdom leads to mediocrity.”

Sam Zell

“I’ve seen plenty of powerful women squander a chance at power simply because they waited for someone else to give them permission to have power. There is no permission slip — you just have to BE powerful.”

Shonda Rhimes

“Power is taking action in a moment that could make you feel powerless. Never let anyone define you. Only you define who you are.”

Ginni Romettey

“Politics is a powerful place, but it can and should be a place where power is used to build communities, and to model exactly the kinds of values we teach to our kids.”

Jacinda Ardern

“When the whole world is silent, even one voice becomes powerful.”

Malala Yousafzai

“Knowing what must be done does away with fear.”

Rosa Parks

“Power’s not given to you. You have to take it.”

Beyonce

“The way we talk to our children becomes their inner voice.”

Peggy O’Mara

0 to 1 Product Manager

“0 to 1 product management is simple but very hard to get right, billions of dollars and months of time and effort could be saved if PMs follow a few basic principles”

Does product management vary between before and after product-market-fit (PMF)? This is the fundamental question that led me to research this idea of 0 to 1 product manager and how his/her role differs from a PM that is trying to grow an established product.

What is the key objective for a pre-PMF product? It’s to find and solve a customer problem in a large market.

What is the key objective for a post-PMF product? It’s to grow the business. For example, you are an e-commerce company selling shoes online, you found your customers, you are able to serve them well (sales, marketing, support). Now, how can you grow this business? There are a few options –

  1. Sell other products augmenting the shoe product line e.g clothing, caps
  2. Sell shoes to more people (expand to other markets, e.g. international)
  3. Sell analytics to healthcare companies e.g. training data

Product management can focus on creating new products to increase ARPU or introduce existing products to new markets (other countries, segments etc). When you don’t know that “shoe” is your product or “lack of shoe” is the problem to solve, does the PM role change in that context? i.e. before product market fit.

On a typical day, a PM makes many decisions, tradeoffs and prioritizes product features while keeping ROI at the center of it all. ROI framework works very well for a post-PMF product. For a pre-PMF product, if we try to optimize ROI, we will end up building a local optima. Yet we cannot ignore ROI, I have made this mistake a few times, “build it and they will come” may work but the question is “will they just come or will they also buy?”. What do I mean by that? Would I be able to convert the users to paid users? Am I providing value? Do they perceive value in the product that is worth spending money on? My point is, for a product that has not found PMF, while ROI metric is important, it alone cannot be the metric that’s driving decisions to help us find product-market-fit.

For example, at Akamai we developed a product that can be integrated into streaming apps to enable downloads for offline consumption. This is a great product, has a good market fit and a positive ROI. However, there are other factors that needed to be weighed in, competitive offerings, business model, long term company strategy, margin, customer delight. If ROI is the only metric we cared about, we would have pushed the product ahead but we decided to not pursue that product even though we had 10 paying customers and close to one million dollars in annual recurring license revenue in the first year of launch.

So how exactly is product manager’s role different before PMF? PM’s main objectives before PMF are to –

  1. Identify a customer problem in a large market, and go solve that problem. This takes building, iterating, learning, listening to the customer, there is no overnight eureka moment here. The most crucial superpower any successful pre-PMF product team can posses is experimenting, learning from data (qualitative and quantitative) and quickly iterating to reach PMF.
  2. Ensure that the customer is willing to pay for your product.
  3. Be clear on who the user and customer are for your product, sometimes they are the same people and sometimes not.

When you are before PMF, focus obsessively on getting to product/market fit. Do whatever is required to get to product/market fit. Including changing out people, rewriting your product, moving into a different market, telling customers no when you don’t want to, telling customers yes when you don’t want to, raising that fourth round of highly dilutive venture capital — whatever is required. When you get right down to it, you can ignore almost everything else. I’m not suggesting that you do ignore everything else — just that judging from what I’ve seen in successful startups, you can.

Marc Andreessen – https://a16z.com/2017/02/18/12-things-about-product-market-fit/

Let’s unpack that to get a sense of what frameworks, metrics and tools a PM could use to get to PMF.

First, identify a customer problem in a large market, how to do that? Through build-measure-iterate loops. Running experiments, be willing to fail and learn what the market is telling us. What value we think we are creating and does the customer see the value as well? This is validating your value-hypothesis, I’m paraphrasing Andy Rachleff.

Second, ensure that customer is going to pay for the product otherwise it’s a nice hobby but not a business. Again test-measure-learn what pricing works, what business model works the best. Subscriptions? Transactional? Bundling with other services? Giving the product away for free in order to grow another north star metric?

Lastly, be clear on user and customer. Are you selling to the end user? Are you giving the product for free to users but charging your partners? Is your user the customer e.g. Netflix subscriber or is your user just a user and your customer is a small business e.g. EventBrite. Understanding this and setting the right priorities to delight both the customer and the user in different ways is important, ignore any one of them at your own peril.

Lessons From People No Smarter Than You

“If you do the right thing, the right thing will come to you”

Berry Gordy

“The reasonable man adapts himself to the world, the unreasonable man doesn’t do that; all progress comes from unreasonable people”

G.B. Shaw

“I have yet to meet a scientist who wants to maintain status quo”

Eli Broad

“That urgency, daily drive, that constant self-questioning integral in editing a paper, the ceaseless curiosity, are what I have stood upon every day of my career, taking me and our business further than my young self ever imagined”

Rupert Murdoch

“You seem to be spending a lot of energy on how to be successful. But that is the wrong question. The question is, how to be useful”

Peter Drucker as told to Jim Collins

“When hiring, if forced to choose between virtue and talent, choose virtue. Talented people who lack virtues will do far more damage than virtuous people with lesser talent”

Charles Koch

“I try my best to practice what is known as Shin Zen Bi, Truth, Goodness and Beauty.”

Tadashi Yanai

“The best way to stay ahead is to learn from the younger generation”

Dhanin Chearavanont

Lessons From People No Smarter Than You

“Don’t worry about reputation but about character. You should build character by practicing empathy, practicing moral courage, practicing determination.”

Jacqueline Novogratz

“The revolution is going to happen without us. We were sure that software was going to change the world, and we worried that if we didn’t join the digital revolution soon, it would pass us by.”

Bill Gates

“We sometimes fall flat on our face. But people don’t mind people who try things and fall.”

Richard Branson

“Nobody’s job was to say, ‘I think it’s wonderful.”. Instead, I insisted on everyone coming together to analyze potential problems that could lose investor money”

Stephen Schwarzman

“I was fired from Salomon Brothers in 1981 in part because no one at the firm thought much of my idea for computerizing financial data and analysis and presenting it in real time….Organizations resist innovation- and those that do inevitably fail -because people are more comfortable with what they know than with what they don’t….innovation requires hiring smart, creative and driven people, empowering them to take risks and standing behind them…”

Michael Bloomberg

“Don’t think of a specific job, so to speak, or a specific career, like “I’d like to be this” or “I’d like to be that”. You should find an area that interests you and just get on the highway, and it will lead you wherever you lead it.”

Barry Diller

“Making other people happy is a super-happiness….We believe all human beings are entrepreneurs. They are not born to work for somebody else. Their early history is about being hunters, gatherers and problem-solvers. It remained as an essential part of our DNA; we are not job-seekers, we are job creators. Job seeking is a wrong turn in our history.”

Muhammad Yunus

“In a world of unlimited choices and voices, those who can bring people together and tell a good story have power”

Shonda Rhimes

“First 20 years of my career I worked hard to make money. Second 20 years I worked for my ideals. Next 20 years I will work for issues that are my passion…to nurture the next generation so they can make their own contribution to building a better world”

Terry Gou

Bikeshedding

“Number of opinions on a topic is exponentially directly proportional to the triviality of the topic”

Source for this blog idea: http://bikeshed.com, I heard about this profound idea from Matt Mullenweg of WordPress fame.

Should we use technology X or Y to land the first spaceship carrying humans to Mars?

Opinion 1: Yes to X

Opinion 2: Yes to Y

Opinion 3: May be we should do a combination of X with a small variation on Y.

We are DONE, really no more opinions?

Should we paint this bike shed red or blue?

Opinion 1: Red would be great

Opinion 2: Red sucks

Opinion 3: Red might work but blue would be better

……

Opinion Million: Let’s not paint it

Opinion Million + 1: Do we need a bike shed?

Lessons From People No Smarter Than You

Listen to the audio of this blog.

“Don’t take ‘no’ when your gut tells you ‘yes'”

James Patterson

“Whatever drives us, we all derive happiness from finding purpose. We find joy in thinking, doing and discovering – in improving people’s lives and catalyzing positive change in the world.”

Robert Smith

“I should have done this a long time ago”

Lou Gerstner

“Truly great artists, they always get better”

Jeff Koons

“I read. I listen. I try to surround myself with smart people of all ages and backgrounds. Wednesday nights me and my wife host college students for dinner to share their world-views and work, they inspire me with their potential and passion to change the world.”

John Doerr

“Be a voice that is respected and abreast of developments”

Ratan Tata

“By the end of the day, I’ve learned something that shows how dumb I was yesterday”

Bernard Marcus

“I believe in telling like it is and not worrying about it”

Vinod Khosla

“I believe in work and being connected to the world we live in”

Miuccia Prada

Most Important Thing Is To Be Customer Obsessed

“Don’t satisfy the customer, delight the customer” __Jeff Bezos

Listen to the blog.

Samantha at https://ttsreader.com
Heather at https://www.naturalreaders.com/online/
Zoe at nuance.com

What does it mean to be customer obsessed?

Give customers what they love and strive to delight them at every touchpoint. It’s that simple, harder in practice. For example, Amazon knew that customers love free delivery, no one likes to pay for shipping. Amazon came up with the idea of Prime to address that customer want, to make shipping free. Apparently, Prime customers spend $1300+ per year, nearly twice the amount spent by non-prime members.

“The missionary is building the product and building the service because they love the customer, because they love the product, because they love the service, the mercenary is building the product or service so that they can flip the company and make money. Paradoxically, it’s usually the missionaries who make the most money.”

Jeff Bezos

Strategies and tools to be customer obsessed?

How can one delight their customers, by giving them what they love. How can we give them what they love? Understand what they love. How to understand what someone loves, get closer to them, go through a day in the life of your customer, shadow them, really, genuinely try to be useful to them. Create routines, rituals that will assist you to be in constant touch with the customer, not automatic emails or text messages that spam them but personalized messages, meet-ups, calls.

What about the money?

Amazon’s prime service drew ire for being “too good to be true” and helped underline the idea that Amazon is too inexpensive to be profitable. Jeff Bezos’s mantra was to delight the customers and not bumping short-term gains on the bottomline. As Bezos puts it, “paradoxically, it’s usually the missionaries who make the most money.” when you work to delight the customer, in the long run, money comes naturally. The lesson is to delight the customer and money will take care of itself.

WTF is PMF?

MAKE SOMETHING PEOPLE WANT

Jessica Livingston

“Identifying a compelling value hypothesis is what I call finding product/market fit. A value hypothesis identifies the features you need to build, the audience that’s likely to care, and the business model required to entice a customer to buy your product.” __Andy Rachleff

“When a great team meets a lousy market, market wins. When a lousy team meets a great market, market wins. When a great team meets a great market, something special happens. If you address a market that really wants your product — if the dogs are eating the dog food — then you can screw up almost everything in the company and you will succeed”

Andy Rachleff

“The term product/market fit describes ‘the moment when a startup finally finds a widespread set of customers that resonate with its product’.”

Eric Ries

“You can always feel when product/market fit isn’t happening. The customers aren’t quite getting value out of the product, word of mouth isn’t spreading, usage isn’t growing that fast, press reviews are kind of ‘blah’, the sales cycle takes too long, and lots of deals never close. And you can always feel product/market fit when it’s happening. The customers are buying the product just as fast as you can make it — or usage is growing just as fast as you can add more servers. Money from customers is piling up in your company checking account. You’re hiring sales and customer support staff as fast as you can. Reporters are calling because they’ve heard about your hot new thing and they want to talk to you about it. You start getting entrepreneur of the year awards from Harvard Business School. Investment bankers are staking out your house. You could eat free for a year at Buck’s.”

Marc Andreessen

“Product/market fit means being in a good market with a product that can satisfy that market.” 

Marc Andreessen

“You know you have fit if your product grows exponentially with no marketing. That is only possible if you have huge word of mouth. Word of mouth is only possible if you have delighted your customer.”

Andy Rachleff

3 Key Metrics for PMF

1. Returning usage – how many users return to use the product/service

2. Net Promote Score (NPS) – would you recommend this to others

3. Paying customer renewal rates

David Rusenko (Weebly)

Product Market Fit is like a Tango dance between product and market.

Mike Maples Jr.

‘WTF’ level features

“It also involves taking the most powerful and compelling aspects of the product and delivering them in the form of ‘WTF’ level features that are not merely compelling – they rise to the level of changing people’s points of view about what’s even possible and create intense delight in customers.”

a16z.com

“Getting product right means finding product/market fit. It does not mean launching the product. It means getting to the point where the market accepts your product and wants more of it.”

Fred Wilson

build-measure-learn iteration

Finding PMF is simple but not easy, build something, test it out in the real world, gather data and feedback and iterate on the product. If it’s that simple why do so many companies build products that no one wants? The process is simple but it takes speed, flexibility and a discipline of relying on data and not on opinions. I know this very well because I was a product owner of a few such products that were built in vacuum or built on very long cycles (iteration cycle was weeks or months and not fast enough).