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The Arrogant Entrepreneur

He is in his 20s, he is running a startup that is going to change the world, he has raised $$$s from the top venture capitalists. That is the image so often portrayed in the media of your average 20-something entrepreneur.

Some of this is accurate. Arrogance is almost inherent to entrepreneurs. But so is its polar opposite, supreme insecurity! 

The media may not like to talk about it much because it'll ruin the mushy narrative. Yet if you find yourself at any gathering of startup founders, most of the discussions lean towards "dude-we're-about-to-die-zooomggggggggg!" than "we're-soooo-taking-over-the-world".

Prior to ycombinator when I knew very few(if any) founders, I thought intense mood swings was a personal problem specific to me. Then I end up at YC and speaker after speaker, week after week, make the point that startup life = definition of bipolar.

It was a huge awakening for me.

Previously during a down swing, I would close my website and go home. I did plenty of that in high school and freshman year of school.

What's it like now? My down swings are still here and they still create a weird dynamic especially if I'm around people that don't know me. But what is new is an ever-present knowledge at the back of my mind that this feeling of hitting my head into a wall..is just a wave. It'll pass. And more importantly, it'll be replaced with euphoria. Unfortunately, that too will pass.

Being Stupid

Watch this incredible clip:

Back in high school, I did something really stupid. Few years later, it would come to bite. Another few years later, here I am offering advice to anyone who has done something stupid: don't go talking openly about it. Especially not on camera. This is way harder than it sounds nonetheless an important lesson, even for me.

I can't say that I support what Zynga CEO did. In fact, I doubt if even he supports what he did. This video really resonates with me in two ways:

• You can feel the hunger in Mark Pincus' words. he really needed revenue. guess what? he got it! lots of it!
• It tells me how if I was the ceo of Zynga, it would probably be broke. After my past experience, I swore never to do anything remotely stupid like that. Ever. At times this makes me pass on lucrative(yet somewhat fishy) oppurtunities. On the upside, I goto sleep a lot better. Way better.

Startups + Philosophical debates = disaster

I really love to debate. But I hate to debate much about my work. It didn't used to be this way. What I've learned is philosophical debates are a certain path to no where in most discussions. Moreover, these debates are often fueled more by emotion than facts.

So what to do?

Well, an interesting thing about these debates is the way they start. They usually start off something small. "Should we use a gray button or a red button?". You have never been a fan of the gray color. Your cofounder loves the gray. Moreover, you both consider this to be a big deal. You think gray is boring. Your partner thinks red is ugly. Upto this point it is okay because both you and your cofounder are clearly just expressing opinions. But this is where it'll take a twist: now your cofounder will introduce a study that says gray is better. Suddenly, you're defensive and you go on your own hunt to find the study that proves your color to be better. And before you know it, you are trying to hunt flaws in your partner's study. He does the same to yours. 

Where is all this heading? No where. At its worst, a rift between you and your cofounder.

Here's how I've started dealing with it: the moment I realize that the debate has turned emotional, I'll just shut up and put the decision on hold for the moment. At this point, neither me nor my partner can be objective about the decision. We both came in with preconceived ideas. The debate just reinforced our own ideas many times more tainting our ability to make a logical decision. Return to square one: what color should this button be? 

Before you can answer it, you should ask "does it matter what color this button is?". This will lead you to ask yourself what "matter" means. In our case, it often means "does the button impact sales?". If so, how can we objectively find out the best color for the button? Simple: a/b testing. If the button has little to no impact, toss a coin and go with a color.

The Great iPhone App Flaw

What if each iPhone app was a subscription? What if the first two weeks of every iPhone app was free?

I think Apple missed a big one by creating that initial friction of paying upfront without any sort of trial.

I also think Apple missed an even bigger oppurtunity by not letting app makers make money on a subscription-basis.

The current iPhone app model is based around the app makers "cunning" you into buying their app. The model I'm proposing is geared towards app makers that build apps which people fall in love with.

What happens if you don't fall in love with the app? Simple: delete it, don't get billed.

What happens if you fall in love with an app? Simple, pay a buck a month. Now how many people would mind that for something they love?

There's this competitor, right..

Yesterday I saw two friends join the fan page of one of Blinkness' competitors.

Minutes later, I get another two emails inviting me to the fan page.

Always up to collect some intelligence, I decided to click around. To my surprise, I see WAYYYYY more fans than I would expect. Now I'm really intrigued by my competitor.

After spending ~5minutes(!) signing up, I finally ended up on the money screen: invite your facebook friends to recieve a free tshirt. Ah! Very smart. This is how they have amassed their fans: by giving away tshirts. It seems as if the marketing has worked going by the fan page numbers.

But then I went to their facebook app and DAMN: it had fewer than 1% active users for their app.

Great marketing(getting so many fans) with bad ends(not getting people to use your product) equals wasting a buncha money.

There's a thing about college students: they will take trash if it's FREE. It doens't mean they'll consume the trash upon finding out. 

Let's keep going further and do some number crunching. Let's say these guys got these tshirts printed for the absolute bottom price of a dollar a piece. Couple bucks for shipping comes out to $3.00 per delivered tshirt. How can you test if this is a good investment?

For one, you acknowledge that you don't know. I don't know if it is a good or bad investment. Then you design the experiment...

Independant Variable: Two campuses with 500 tshirts each distributed, one campus with no kinda marketing
Dependant Variable: Sales on three sample campuses over a defined time period

You get a 1,000 tshirts. Give out 500 tshirts each on two campuses. Don't do any other marketing on those two campuses. Monitor the sales figures...almost every sales coming in will be a result of the tshirt. And every sale that doesn't come in...will be a result of the ineffectiveness of the tshirt marketing.

 

Oh look..."Facebook announces new app policies"

Money quote:

One source we’ve spoken with estimates that the changes may drop usage on their apps by 70% or more (more on that below, some developers may use the changes to their advantage).

Tell me I didn't predict this. Full article.

'nuff said.

"Your startup won't make you wealthy. Your corporation will."

Spam is targeting gone super wrong

What is spam? Getting inundated with ads you don't really care about. But what if you suddenly cared about the ad or the product? It's no longer spam!

Spam is not whether you have permission to talk. Spam is not whether you are on solid legal footing. All of those are business procedures. 

For example, say you have permission to email Betty. Betty is 18. She goes to high school. She cares about buying cool clothes. But you, the dumbass marketer, thinking that because you have permission to email her, decide to email her a pitch for life insurance. Why the hell will Betty care about life insurance? Forget that you had permission to email Betty, your email is pure spam to her.

On the other hand, let's talk about Viagra spammers. They email millions of people everyday. A super vast majority consider their email to be spam. But for every million emails they send out, they find a couple guys that buy their product. Think about those couple guys. Do they consider the mail about Viagra a scam? The customers of Viagra spammers do not consider the emails as spam!

So who is better off between the viagra spammer and the so-called permission marketer? Tough to tell. But probably neither. The permission marketer is pitching products that Betty does not care about. The spammer is pissing off 99,999 people to find his one customer. Again, bad idea.

What you want to do is email 99 people who are all very likely to care about. It can bring you more business and fans than emailing the whole world.

Brand-building on a Campus

I'd like to argue that most of the marketing spend by startups on items like tshirts, hats, flyers are an utter waste of money.

So how do you build a brand on a single campus? Then do it consistently on other campuses? By anally focusing on the bottomline: getting students to use your damn product. 

Now, go back to my original argument about tshirts, flyers etc. There is nothing inherently wrong with them. In fact, they can all work. But the tshirt is not the strategy. Doing the leg work to calculate the # of tshirts it takes to get x number of users on average is the strategy. Most startups that go the whole give-stuff-away route are really copping out from their real duty of meticulously creating a marketing plan which at its backbone is focused on quantitative measurable results.

For college campuses, the best example is RedBull. How many times have you see some random dude on campus with a redbull tshirt on? Very few. How often do I see RedBull chicks giving out free RedBull? Very often! RedBull is not leaving it up to luck and randomness that you might end up trying and liking their product. No, they have it down to a formula that if x number of their reps on y number of campuses give out z number of cans, over the longterm they can make _____ dollars of profit.

The exception....

Here's what tshirts and other free goodies pushing your brand are really good for: making you and your team feel good. Wearing my brand's tshirt does not really make me more passionate(probably because I've hit a ceiling) but the idea of seeing your team, wearing the same t-shirt, can be uplifting. This goes back to psychology 101.

Another thing...if you have money and you can give away TONNES of tshirts, it may help you SOLIDIFY your branding. But here's the deal: branding does not equal business. Just because tonnes of people have heard of Redbull does not mean tonnes or even a fraction will try it out.

So if you are doing a tshirt campaign or a flier campaign, you have to do it at almost a massive level. You cannot have lazy ass people passing out 50 flyers in a marketsize of 20,000 students. It will hardly register. You can pass out 50 flyers every single day for a year and people will barely know your brand. Instead, you may need to pass out 50,000 flyers over the whole year to get ____% brand recognition. And don't be surprised if you have to pass out many many times more to get product use. 

Bottomline: (a) know why you are giving stuff away for free on campus (b) don't do it if you cannot answer A or if you don't have a lot of money to throw.

The Crap Test

I've talked about the Dope Test. It's only appropriate to talk about the Crap Test.

Actually, this one is a lot simpler: you build something for free, get a tonne of people to your site only to see them leave and never come back.

Really, that's it. Your product is crap. Go back to the whiteboard and get back to work. No worries, you're not alone. Almost every successful dude in the industry has done that.