Why Category Leaders Win

How Startups and VC are more similar than you might expect

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The CEO Balancing Act

Though I’m still a junior VC, I’ve had the privilege to meet with >100 entrepreneurs and learn more about their vision for the future. That 100+ isn’t a massive sample, but there’s an important commonality amongst those I’ve found really impressive – a mastery of some of the inherent tensions in being a startup entrepreneur. They manage to strike a balance between poles that, taken to their extremes, can endanger their business. They build paradoxes out of what could be contradictions. Here are a few examples of those paradoxical characteristics:

  • Insatiably curious, but biased towards action. Brad Feld referred to these kinds of CEOs as learning machines. They manage to learn something valuable from nearly every interaction – even if the person isn’t directly in their industry, or familiar with the challenges they’re trying to solve. During our diligence, which has perceived goal of allowing us to learn about their company and worldview, these CEOs were almost equally as inquisitive as we were – asking for our input, and trying to learn from what we’ve seen in the market. But that desire to continue learning didn’t manifest itself in ‘paralysis by analysis’; they understood how much knowledge was sufficient to inform their first actions, knowing that the most valuable lessons come from customers and the market.
  • Rational and honest, but with a clear point of view. More than any other CEOs, they were the first to admit what they didn’t have figured out and what risks kept them up the most at night. They approached their business rationally, had a clear sense for what questions an outsider would wonder about, and were open about the degree of certainty they had in their answers. This rational approach was mixed with a passion for the problem they were trying to solve and clearly thought through hypotheses about the answers they had selected and why. The combination of these traits creates a clarity that allows them to execute against the biggest risks, and seize the biggest opportunities.
  • Deeply understands all functions, but allows team members to have ultimate ownership. These CEOs showed a clear grasp of the major happenings in the business – the strategies for each function, the big experiments running and the important metrics. But, just as important – they recruited world class teams to build their visions (often including folks from previous ventures), and gave them the freedom to execute quickly. I’ve written previously about how transparency and decentralization can provide organizations with a speed advantage – and these CEOs demonstrate that daily. One interesting early indicator of this is how comfortable a CEO is letting their team field questions, without feeling the need to cut them off or correct them (if the substance of what they said is correct).

Would love to hear if there are some other tensions you think great CEOs must master – you can find me @ablordesays.

Startup strategy – as taught by the Marines

While in transit to Gambia last month (24+ hours each way), I got the chance to catch up on some reading – including Warfighting, the US Marines’ manual / manifesto for conducting and preparing for conflict (recommended by Keith Rabois, a veteran operator from Paypal & Square). Though not written with startups or personal development in mind, the book ends up being very relevant to both. Startup and war analogies are extremely common (e.g., competitive battles, fighting to survive), but the application of military strategy to startups is, if anything, undervalued.

One of the concepts I found highly applicable was how the Marines deal with uncertainty.  Like operating in an emerging market or disrupting an old one, nearly all decisions in battle must be made with incomplete information.  Teams (and especially their leaders) must be comfortable operating and executing effectively, knowing that their initial understanding of the situation is missing important detail.  The marines try to mitigate this lack of information through four strategies, all of which sound similar to what has become standard startup advice:
– Developing simple, flexible plans that allow for disorder and uncertainty
– Planning for likely contingencies
– Developing standard operating procedures that allow for trust to emerge between commanders and junior officers, without explicit, top-down orders
– Encouraging initiative amongst their subordinates. More specifically – they expect their junior officers to use the informational advantage on the ground to make quick decisions and exploit enemy weaknesses.  This doesn’t mean junior officers aren’t held accountable for their decisions; but the graver sin is unwillingness to take action.

This is only the tip of the iceberg; the book is littered with insightful takes with clear applicability to an early stage business. If you’re looking for a short, good read I’d definitely recommend Warfighting.

The relationship between excellence and simplicity

Earlier this week I listened to Alon Cohen, the co-founder of Houzz (via the Entrepreneurial Leaders Podcast I mentioned here), talk about his career experiences and lessons learned.  A core theme, as well as the title of his talk, was “Making Complicated Things Simple” – which I think is a characteristic of many great products (like Houzz), and also of mastery more generally.  Simplicity can be borne from ignorance or misunderstanding, of course, but the simplicity that results from putting in long hours wrestling with a problem is powerful.

Some of the major blessings and curses of this technological era are the explosions of data, information sources, and options.  Never before have we had access to so many resources to solve problems and learn.  The costs of this abundance are the ever increasing demands on our time – more choices and more noise to filter through.  Now, more than ever, simplicity is an important component of excellence.  Products and experts that help us focus on what matters create significant value – whether it be through interaction design (e.g., Uber’s two taps to book a ride), simplifying workflows (e.g., Mark43‘s tools for police departments), or creating frameworks to help us understand the world and make otherwise ambiguous decisions.

On the product front in Chicago, SMS Assist reduces the complexity of facilities maintenance for companies with a national presence, and Sprout Social helps companies manage social media presences at scale.  On the expert front, Warren Buffett’s annual letters lay out the frameworks through which he simplifies the world.  Clay Christensen’s Innovators’ Dilemma gives us a way to understand the complex topic of why incumbents often struggle to fend off disruptive startups.

As we build products and careers, I think the question implied by Alon’s talk is a good one to ask ourselves – how am I helping to create the right kind of simplicity? Would love to hear your thoughts – reach out here.

H/T to Heinz Marketing for the image.

Questions about Quora

Quora is one of my favorite products on the internet.  So many times, learning new things is the product of asking the right questions – and Quora is a crowdsourced repository of really interesting questions and answers, from the tactical (e.g., what is a cool / useful skill that only takes five minutes to learn?), to the philosophical (e.g., “How can one make the most of one’s youth?“). The vast majority of the times I visit the site, I emerge 30+ minutes later, having clicked through so many related questions that I’m multiple degrees of separation from the initial topic (very much like Youtube’s related videos).  Most other people I talk to who have used Quora are also similarly impressed by how addicting and high quality the content is.

However, one common observation I’ve heard (and experienced) is that, despite really enjoying the product, people don’t find themselves headed to the site of their own accord very often (note: based off my own small sample size) .  I typically visit Quora only when I receive their weekly digest email (which, by the way, is incredibly well targeted).  I’ve done a bit of thinking as to why, and the answer I’ve arrived at dovetails well with two questions we commonly ask startups:

  1. What “job” is your product helping a consumer complete?
  2. What alternatives will your product displace and why?

I think Quora struggles to answer these two questions, largely because there are so many alternative ways to acquire knowledge and wisdom (from in person conversations, books, articles, podcasts, etc.).  For the first question, while Quora might answer with “Getting smarter”, this is such a diffuse need, with so many alternatives that it’s hard to create a strong association in a user’s mind for a particular goal.  Without that association, building and retaining a network of users that come back regularly of their own accord is a challenging task (part of the reason why focus is so valuable for a company).

These challenges are not unique to Quora – on the surface, Facebook had a very similar set of difficulties to overcome.  However, Facebook was an incredibly low-friction, reliable way to complete an emotional “job” – feeling connected to your friends and community.  Going to the site was much easier than texting, calling, or arranging time to meet up with that broad circle of people, and required significantly less commitment (and cognitive load, vs. Myspace) than the alternatives. In Quora’s case, it’s not clear that going to the product is much easier than cracking open a book (nowadays, opening your Kindle app), reading an article on Pocket, Feedly, or clicking on link from your timeline. Quora finds itself competing for time and mindshare with all of these alternatives, without an immediately clear advantage. And so, even for Quora-lovers like myself, I don’t think to use the product, even in cases where it might be relevant.

Though the questions seem basic, I think companies should devote the time to developing a clear answer to each – it’s often the simple things that are deadly.

Reach out with your thoughts – would love to hear other perspectives on Quora and the framework above.