Category: Focus

I’m passionate about the theme of aggressive focus in building startups. These are my various thoughts on this topic.

Google Wave – a few lessons for entrepreneurs

Yaron Galai12 Comments

Wave_logo Google killed Wave yesterday, and I think there are a few lessons we entrepreneurs can take away from it:

  1. Focus on doing one thing great (MVP) – Wave was a classic engineering-driven product, full of features and things it can do. One of the most dangerous, silent killers of many startups is developing product features just because you can, or just because it’s easy for the engineers (“lets do it – it will only take 1 day to develop”). Each specific feature seems benign on its own, but when cobbled together, cancer starts to spread in a few forms:
    • The product becomes less “crisp” – the biggest challenge you’re going to have as an entrepreneur is in selling a crisp product story to a very clear buyer. By layering more ‘just-because-we-can’ features onto your product, you are going to lose the crispiness of what’s that single thing that your product does better than anyone else in the world.
    • Maintenance becomes a nightmare – those little harmless features you add might cost very little now, but are going to cost you dearly in the future as you scale. They cost is customer support, in code complexity, in multiplying future QA efforts, etc, etc.So my tip would be to think about “just-because-we-can” features as if they were a cancer you should avoid developing at any cost. And if you slipped and developed one – don’t hesitate to kill it and reduce your feature set. Google Wave tried to do too many things, and lost its product crsipyness in the process.
  2. Don’t think of your product as an X-killer – When Wave was launched it was hyped to death as the email-killer. The Googlers who developed Wave kept saying how outdated email was, and how it was not designed for the current world we live in and how Wave would replace all that. Wave didn’t stand a chance as an email-killer. But I think it could have been a great team collaboration tool within companies. Problem is – that probably didn’t seem like an exciting, big enough goal to take on and so it was positioned as an email-killer.
    Focusing on being the killer of something is almost surely going to distract you and take down the wrong product roadmap. All the “Google killer” search engines, or “Facebook killer” social networks, are much more likely to be killed themselves than even scratch those they’re after.
  3. Avoid big bang, hyped launches – I might be wrong on this – just my personal 2c… please take with a grain of salt. I’m allergic to hyped up product launches – I think they are extremely dangerous for startups. A hyped launch usually has minimal long-term value — it’s like a Digg storm hitting your site and leaving immediately — yet it sets unrealistic expectations for users, employees and investors alike. A hyped launch is almost guaranteed to follow with a big disappointing drop to a more realistic attention level, which can be devastating for a startup. My personal 2c:
    • If you can void hype – avoid it like the plague. Just focus on, and celebrate, smaller wins – WoW or MoM growth on your core important metrics. It’s a longer road, but a much healthier and more sustainable one.
    • If hype hit you – get in the bunker and IGNORE it. Tell everyone involved in the company – employees, investors, etc – to enjoy the day of hype for 2 minutes, and then get back to work and ignore it. Ignore it in the reports. Ignore it in any way you can. If you start believing the hype – you are likely on route to being doomed.
  4. Lastly, and very importantly – You can beat Google at your game! -Google does a lot of things right but they’re not beyond competition or failure. As a startup it may seem like they have all the advantages over you – money, lots of smart engineers, brand, etc, etc. But believe me – if you apply some ‘Moneyball thinking‘ (highly recommend every entrepreneur read this book) – you’ll realize that as a startup you have so much unfair advantage against the BigCo’s of the world that it’s not even funny. Namely – you can afford to start working on much smaller, crisper bites which are too small for a BigCo to be interested in, but be the best at them in the world.

I wrote a while back about the disease of Featuritis. I’m afraid this was the #1 thing that plagued Google Wave from the start.

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The Lighthouse

Yaron Galai1 Comment

A key to a successful startup journey is to always know where you’re headed. The company has to always have a single lighthouse that it is pursuing. More importantly – everyone on your team has to know exactly what that lighthouse is. This might sound easy, but in reality most startups fail miserably on choosing a lighthouse, communicating it clearly to the team, and sticking to it obsessively.

Credit: Kevin Lau

A healthy lighthouse can usually be reduced to a chart. Curiously, the most trivial chart – the revenue chart – is hardly ever a good lighthouse to choose… I’ll explain why below. The lighthouse, if properly communicated to every single person in the company, should determine pretty much everything that gets done by by each team member. In a company with a clearly communicated lighthouse, everyone – junior or senior, engineer or biz dev, in NY HQ or in the Israel R&D – should prioritize tasks nearly identically. If your company is struggling often with priorities, your problem is extremely simple to diagnose – you are most likely missing a clear lighthouse.

For a web company, the trivial lighthouses are – page views, unique users, etc. Choosing trivial metrics as the company’s lighthouse is acceptable, but the problem is that it will likely be the same lighthouse used by many other companies. That means that that the faster/bigger boat, not necessarily the smarter one, will likely win. If you are the biggest baddest boat around (aka “Google”) – you should be fine. If you’re among the 99.9% other startups, you might want to dig deeper and find your unique lighthouse.

A good lighthouse is also clearly actionable. A lighthouse that implies action will help everyone focus on the biggest opportunities. For example – when all search engines were focused on ranking sites based on keyword counts, Google’s lighthouse was to perfect the ranking of results based on the site’s authority. Later when Google was a late entrant to the PPC search advertising market, their lighthouse was maximizing the yield of each ad shown while their main competition was focused on maximizing the bids.

Which brings me to another attribute of a good lighthouse. And this one isn’t always achievable, but it’s beautiful when it is –
A great lighthouse is fairly invisible outside the company. In Google’s example, it isn’t immediately clear to an outsider how search results are ranked, and is therefore very difficult to play the same game. A good lighthouse let’s you compete in a crowded market while playing a game that’s completely different from your competition.

Revenue is therefore almost never a good lighthouse. It is not actionable and it does inherently not let you play a different game in the same ball field. But unless you’re doing not-for-profit work, revenues is probably a primary goal for you and your shareholders. The right way to reconcile this gap is to ensure that your chosen lighthouse has a reasonable eventual linkage to revenues. For example, if your lighthouse is to maximize unique users, that can later (if successful!) be translated to advertising revenues.

The lighthouse cascade

Most importantly for startups – a lighthouse is *not* permanent. It should evolve as the company grows and develops its product. The important thing is to know when to transition lighthouses, how to do it, and most critically – how to communicate to everyone what the current lighthouse is.

Each lighthouse should have a logical connection to the next one. For example, your 1st lighthouse might be to focus on building a big user base, while your 2nd lighthouse might be to maximize the page-views (so the actionable parts are to grow both the user base, as well as page-views-per-user). Each metric should eventually be a supporter of those future metrics.

The lighthouse metrics should not only cascade logically from one to the next, but also eventually have a strong connection to revenues. Choosing a good lighthouse and planning how your metrics will eventually cascade into revenues does not ensure your company’s success, but it is nearly impossible to succeed if you (and your whole team) don’t know what your lighthouse is at all times.

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Moneyball – highly recommended

Yaron Galai4 Comments

moneyballLast week I participated in a roundtable organized by Carmel Ventures, with probably 20-30 entrepreneurs in the room. I recommended they all read Moneyball by Michael Lewis – a book I read a couple of years ago. I think most of the people in the room didn’t have a chance to take note of the recommendation, so I’m repeating it here.

Moneyball is a must-read for any entrepreneur. It has nothing to do with entrepreneurship (it’s about baseball), and it’s not a very good book (in the literal sense, I mean).

But if you read it with an entrepreneur state of mind, there are great lessons to be learned… 2 have been particularly useful for me:

  1. Look at the same game differently – Most startups compete with many other companies for the same market share. In the online world in particular you are likely to be competing with hugely successful companies like Google, Yahoo, Amazon, etc. You can’t win by playing their game. But you can absolutely win by playing a different game in the same space. An example that comes to mind is Yelp – while all other yellow pages and review sites are focused on getting readers and selling to advertisers, Yelp seems to be playing a completely different game. It looks like they are focused obsessively on their reviewers – giving them tools, recognition, community etc. Yelp is looking at the exact same market as all other yellow page companies are, but playing a totally different game.
  2. Understand what metrics really matter for your business – the metrics that *seem* to matter for your business might not be the ones that really determine your eventual success. Moneyball shows how the Oakland A’s found that most of the metrics that baseball teams have been using for decades (batting average, # of steals, etc) had little or nothing to do with how successful the teams were. Another example is a post I wrote recently about how PV’s and ad revenues might not be the best success metrics for publishers.

Bottom line – highly recommended. Get it here at Amazon or here at Audible.

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