10 Startup / Interactive Lessons ( which I learned the hard way )

Over the past 12 years, I learned these 10 things the hard way.

# 10 You and your team are not your core audience.
You’re a super user, which probably corresponds to a 5-10% demographic of product traffic, and where you want your users to one-day be. You’ve got great insights and direction, but you can’t make a product that is only “for you”. Remember about that other 90%. Unless your business model suggests you can ignore them all! Generally speaking, 20% of your users will account for 80% of your traffic – so try to remember that other 10-15%. You should also track metrics every few weeks — see how your users break down into usage patterns, and see where your team falls in there.

# 9 If your team isn’t using your product on a daily basis – you need a new team, a new product, or both.
You’ve got a huge issue if your team isn’t using your product on a daily basis. They’re going to have different usage patterns than your core demographic, but if you’re not building something that they want-to or can use on a daily basis… you’ve either got the wrong team, the wrong product, or both. Don’t accept excuses, don’t try to rationalize behavior. The bottom line is that if your team isn’t full of passionate and dedicated users of your product, and you can’t sell them on it… how can you expect your team to convince consumers and investors ? You can’t.

# 8 “If you build it they will come” == bullsh*t
You need a solid marketing plan, for your site or your new features. Just putting something out there won’t suffice — people need to learn that your product is awesome. If you don’t have the resources to drive people to your product, rethink your resource allocations *immediately* — maybe you can scale back your vision to save some resources for marketing. People need to know that your product exists, and they’ll learn how to use it by good example — those are two tasks that your team needs to lead on. Also remember that despite what you think and how hard you work, whatever you build won’t be the most amazing thing in the world — so make sure you have resources budgeted to be nimble and respond to users…

# 7 Jack be Nimble, Jack be Quick…
If you’re a consumer oriented product, you’ll often need to change direction , add features, etc many many times after launching. You need a technology platform and internal process that lets you do that. People love to talk about getting their startup going by outsourcing and offshoring the development. This is such an incredibly bad idea. To illustrate, try to count the number of startups you know of that outsourced their product development and had a successful exit. I can count them all on a single hand — and still have fingers left.
Why? If you go the outsource route, it means you’ve decided “This is what our product MUST be” — but when your users help you realize what your product SHOULD be… you’re facing change orders, new contracts, and even trying to reserve some other company’s time. Then you have to deal with the transfer of knowledge and technology when you eventually need to move in-house — figuring out how you can have your internal team support and extend a product that someone else built. If you’re going to contract something out, do a prototype or a microsite or a feature — but don’t have someone else build your core product you, it’s a proven recipe for failure.
In simpler terms, you can’t outsource your core business competency.

# 6 Listen to your lawyers, don’t obey them.
It’s easy to forget that lawyers give legal advice, not legal rules — and that at their very cores, lawyers mitigate risk while entrepreneurs take risks. I don’t mean to suggest that you should be doing anything specifically “risky” or illegal, but that you remember your lawyers will always push you towards solutions approaching 0% risk – which means you may miss many marketing, product, and business opportunities. Good marketing and successful products often push the limits of what is allowed; opening up your company to some amount of liability may be a risk that offers a far greater reward than any penalty you can incur.

# 5 Product Management is not Project Management
This confusion seems to inflict folks in the East Coast and Advertising / Interactive fields. ( if you’re from a West Coast software background, you’re probably immune ). A Project Manager handles resource allocation and making sure that deliverables and commitments keep to a schedule. A Product Manager makes sure that the deliverables actually make sense, and represent/understand the Business Goals, Market Opportunity, Competitive Advantage, and End Users. Product Management is a role — Project Management is a task. Whether you’re working on a startup, online product, or interactive campaign : you need to have a capable Product Manager who is part of the day-to-day checkin process. You also need to make sure to make sure that the people who handle resource allocation understand the roles, responsibilities, and workflow of each person they’re managing — otherwise you have some departments slacking off while others are completely overloaded trying to meet deadlines that were either unreasonably imposed on them, or that they agreed to without understanding the full scope.

# 4 If you have a good idea, it’ll probably get stolen.
This is just how things work – people are often inspired by someone else, or they’re ruthless and copy it verbatim. The exception is when someone else had the same good idea on their own — but then you’ll probably have people trying to steal that idea too, effectively doubling the rampant thievery going on. Arrgh! If you’ve been out in the market for a while and no one is competing with you, you may want to ask yourself why ? Competition doesn’t just validate your idea, it also gives you the chance to better measure the market opportunity and how the audience responds by looking at your competitors. If you stole your idea from someone else you know all this already, so there’s no need to address you too.

# 3 Nothing is confidential. Trust is an arbitrary term. Respect is earned.
The only people that you can trust to keep a secret are your lawyers, because they’ll be disbarred and lose their career. Proving that someone leaked a secret, shared a “confidential” presentation, violated an NDA, etc is not only hard to do, but very costly — which is why people do that all time. If you’re honest and forthcoming in all your dealings, word will spread and you’ll increasingly meet more people who are similar. You shouldn’t expect that anyone will keep a secret just because you asked them to — and you should always be prepared for the worst and expect the opposite.
This isn’t to say that you shouldn’t bother with privacy contracts, but that you should be smart about what you share. The vast majority of potential partners and investors will scoff at an NDA in preliminary meetings, but as your relationship progresses and they need access to more proprietary information — your internal numbers, market research, bookkeeping, etc — negotiating for an NDA is commonplace. You should always ask yourself if you really think this group is serious about working with you, or trying to do market research of their own for another project or investment with a competitor.

# 2 When it comes to a market opportunity, you can trust your gut – the experts aren’t always right.
Two charming examples about how “I was right” and “they were wrong” involved music and net experts telling me that “there will only be MySpace, and no other sites will ever be relevant for music”, and internet experts mandating that social network walls will never come down so portable identity / users will never happen. I’m not trying to flatter myself with this — neither of those companies had a successful exits, just a series of patent applications and legal headaches on one of them trying to keep the products afloat. I do mean to suggest that this is a very common situation — and Bessemer Venture Partners has a quirky take on this, they maintain an “anti-portfolio” of successful projects they turned down. As a word of caution – while the experts may be wrong about your market opportunity… they may be right about the monetization / business viability. Any time someone shoots down your ideas, you should use their arguments to both try and build a better/stronger product, and also to disprove the viability — because they could be right and may have just saved you from a lot of headaches, grief and capital losses.

# 1 Listen to your users — but be smart about how you proceed.
These days everyone says “Listen to your users” — and you should, its a good mantra. However, please remember that you need to analyze what your users say , not just take it at face value. One of my companies makes a lot of product decisions based on user feedback, and we do extensive “User Acceptance Testing” and Focus Groups whenever we want to test out an idea, or launch something new. We always profile / qualify the users who give us feedback to determine what kind of user they are ( ie: super user, industry insider, mass market, etc ) , and make note of both what they say and what they do. It never ceases to amaze me how many people think that they’re a super-user — when they’re barely a casual/incidental user; or how many users say that they really love a particular feature, that it is the most important, and they want more things like it — while their usage patterns and other interview questions show a strong preference and reliance on another feature. Listening to your users isn’t just keeping track of what they say — it encompasses understanding what they mean, discovering what they forgot to say, and working with them to enrich their experience.

# Note

I didn’t learn these all at once, and I didn’t make all the mistakes myself. I did make some myself; others were imposed on my by management or partners. In every situation my life was complicated by these issues – and I can only hope others don’t repeat these mistakes.

If NewsCorp really were to recuse itself from Search Engines…

I see a week playing out like this:

NewsCorp Publisher sites block search engines. Their traffic plummets.

Search Engines drop MySpace, IGN, Beliefnet… because they can and need to humble NewsCorp. Their traffic plummets too.

Analysts give bleak outlook for NewsCorp strategy, scream outrage, lower rating of stock.

Rumors circulate that Rupert Murdoch is begging to get re-indexed. His peons start making phone calls.

No one can be bothered to answer the phone or email. Seeing as its Friday, everyone decides to just make NewsCorp sweat it out. The web properties are officially operating at a loss, Advertisers are not happy, and the traffic is jeopardizing Advertiser and Ad network relations.

People are damn glad its not a trading day.

On the 7th day, he rested. He was not an employee of NewsCorp, who are going batshit crazy trying to up their traffic.

News Corp gets reindexed. But not until a few hours /after/ the start of trading… because that’s what people like to do.

It turns out that Murdoch bought most of the devalued NewsCorp stock the previous day, upping his ownership to 50+%. Analysts raise the rating back to previous levels, and the value rises.

And perhaps…
Police find the mangled carcass of a newborn baby in a dumpster close to the NewsCorp offices. It’s heart has been clawed and chewed out, and it looks as if someone had been drinking tears straight from its eyes.