Built To Fail: Everyone assumes you’re stupid. The reality of VC-backed companies.

As seen on Jason Njoku’e blog

 

Every day, Dick Costolo gets hundreds of emails from well meaning (and some really horrid folk) regarding the strategy, misdirection or lack of specific feature sets at Twitter. I thought it was just me.

Almost daily, I too get given advice from well meaning people, speculators, bloggers or social media experts on how to operate my business. The assumption is that I haven’t thought of these things or perhaps just missed them. A successful company requires Herculean effort to create and nurture, usually at the expense of time with friends, family and hobbies. So most of the time, it is difficult to think of anything else. Thinking of something and actually doing it are very different things, yet when you operate a high profile, high velocity internet startup, you make mistakes. You prioritise or sequence what makes sense today vs tomorrow, based on what your team can or can’t do. Is your engineering up to scratch? Do you have the right capital to support this content spend? Are analytics ready to support this marketing spend? From the outside in, it looks like you haven’t got a clue, whereas internally everyone knows the organisational limitations and that, in fact, you’re working through all of the above. To be honest. Most of what we do is fancy data analytics distilled into ballsy guesswork. As a company grows beyond its startup roots, the friction to doing things increases.

This constant questioning of my business always used to annoy me. To my mind I always used to think ‘do these people think I am stupid or something?’ But I guess that was my ego working overtime. In reality those on the outside only see in one dimension. Outside in. 

Information Arbitrage – The practice of discovering data and then extracting previously unavailable information from it to create market opportunities

Founders have a natural information advantage. Its their job to. It would be pretty scary if they didn’t. VCs and industry experts can help, but a founder needs to have their own perspective.  It’s their job to look and understand their business in all its dimensions. For today. And more importantly, for tomorrow. You might not have all the data points, but you need to see in 3D and know what’s coming round the corner.

When I discuss strategy with Spark company founders, it always feels a little shallow. I always simply question their strategy as opposed to trying to help them shape or create an alternative one. And I always remind them that it is their business. I spend <2% on Spark activities and feel the long term success of startups are determined by the quality and courage of the founders’ decision making. I literally don’t have the time to work closely with them on building their business, and we are largely operating from the same building. VC’s have given me $24m. But If I was to chalk up the amount of actual time we have spent discussing strategy and business dynamics over the last 3 years, it wouldn’t amount to more than 200 hours (there are 168 hours in a week).

I just assume they know more than me and just need someone to sound out there strategy and slow them down from making fatal mistakes [it’s impossible to stop the mistakes, one can only try to slow them down]

We recently entertained some ad agencies for our offline Africa marketing plan due later this year. The groups would come in and try to spend the first 45 mins trying to reshape my strategy. On a good day I am curt so I shut them down pretty quickly. They felt confident in their assertions without a single data point. The most classic example was the lack of internet penetration in Nigeria

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Arbitrage time

Nigerian internet is too slow and cannot support Internet TV. That is the consensus.

The Reality. Outside of YouTube and the ISP’s I can’t think of many people who have any data to back that assertion up. We do. Without spending or focusing on Nigeria as a market, we were able to attract ~100,000 free viewers per month for only Nollywood content in 2013. They watched on average ~17.3mins per video play they started. So the consumption, without a doubt, is there. How they are doing? We know. When are they doing it? We know. Why they are doing? We have asked. Can we encourage more of it? We will find out. We spent 6 months asking and prodding them to help guide us to a version of reality which gets us hundreds of thousands of subscribers in Africa. Now if over the next 18 months (with millions of dollars spent on customer acquisition) I could attract 100k paying subs at $2.5/mth in Nigeria, that would be $3m/revenue. That would be totally awesome and take us from 11th largest African PayTV operator to 7th.

Founders. Don’t listen to the noise. Tune out. Find your own signal. Those who only see in one dimension will never truly grasp your movements. Whether it works or not, they need to be your successes or failures. No one else can own them for you. So don’t allow them to overly influence you

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