One of the biggest lessons of my entrepreneurial life is that people don't either like or dislike a product. Instead, it all happens on a scale. On the left end of the scale, your product is absolutely disliked. On the right extreme of the scale, your product is so liked it passes the Dope Test.

What's the Dope Test? It's when your customers want your product soooooo badly that they are willing to do royally embarassing things to get access to your service.

I was selling a Dope product in my freshman year. I won't talk a lot about it. But basically, there were a bunch of people that really really wanted it but for one reason or another could not pay for it. So I thought to myself "what's the absolute most embarrassing thing I can get these people to do to prove they really want my product?". I picked a really embarassing Hindi song and if you wanted to get access to my product without paying, you'd have to sing this song, send me the audio, and give me rights to broadcast it. I got over a dozen submissions within an hour of making this offer. Pretty dope!

This model has now been perfected by businesses like Gambit and Peanut Labs. These companies work with partners who have a Dope product. Gambit and Peanut Labs bring in the "embarrassing"--such as filling out stupid offers. It's a win-win for everyone. Users get to experience the service for free. The owners of the service get paid by Gambit. Gambit gets paid by the parent company that hired Gambit to find the people to do the stupid stuff. 

There is so much buzz about Zynga's incredible revenue numbers. But if I am Zynga, I would be seriously concerned about the company's longterm sustainability given how much it relies on Facebook.

You cannot tell me that a company can be making hundreds of millions on my platform...and that I wouldn't envy them in some way. Yes, at first it is very flattering if I am facebook. In the longrun, when you have revenue and profits to worry about, you will not think that much about screwing some of your top earners like Zynga in order to get a slice of their $. If I am Zynga, I probably don't mind giving Facebook a slice of my earnings. In fact, I probably want to give Facebook a slice if that means my business gets some certainty and protection from the random nature of online platforms sans formal agreements.

A lot of people cite Microsoft Windows as an example that platform plays don't screw up the little guys. Very True. Except Zynga is no longer the little guy. And when Microsoft saw the potential of a word processor, they didn't sit back for another vendor to use their platform. Instead, they built Office.

What stops Facebook from setting up a hugeass lab to make games? And then deeply integrate the games into every Facebook account? I wonder if this would lead to any anticompetitive lawsuits like Windows shipping with IE? Regardless, it would definitely spice up a new genre of conspiracy theories if Facebook gets into gaming and random gaming apps on facebook have mysterious downtimes. 

Facebook will have an unfair advantage the day they get into gaming. That should worry every one of these super performing gaming networks, especially if Facebook fails to find another sustainable and promising revenue model. And remember, the bar for "sustainable" and "promising" is incredibly high for a company of Facebook's size.

When running a startup, you are making an INSANE number of decisions day in and day out. The source of most of these decisions is your experience. Experience failing, experience succeeding, experience reading about others in similar situations. You associate the x decision with y result because you come across it beyond a certain threshold. 

There are times where I literally make a judgement on my idea or another person's idea...and STOP myself to think for a minute or two. Problem is, if I did that about most decisions, I'd spend all day busy running analysis. If I don't do this, I fear turning into a pessimistic hag wayyyy before my time.

My most common reply when people pitch me their ideas is DON'T ASK ME! I can only be clueless. Go try it and find out for yourself! I am sure there are people with sounder judgement whose advice is worth seeking and taking. I'm not it. And 99% of folks giving out advice aren't it.

My advice is just a buncha biases formed over years of many losses and small victories. Next time I offer you advice, please consider me a fool. 

Recently I heard a speaker give a great talk. At the end, I asked him a question relating to his success. I followed it with a request for advice. His answer consisted of the most common cliche.

"Damn it." I told myself. I know that answer. If that is what I was looking for, I wouldn't come talk to you.

I was hoping we could cut through the cliche. Instead, that is all you have to offer me? 

Focus is a problem I have been wrestling with for years. My problem went beyond the pop infatuation of having a problem with focus. You know what I mean if you goto college. Every dude and his buddy has a problem focusing.

But what does it really mean for a startup and entrepreneur? I don't know. I just know what it means to me and how I've been adapting over the past few years to cope with this.

Simply put, I've become OCD about Focus.

After being burned time and again from a lack of focus, I think I've developed a paranoia about it. The way I have come to deal with it is by realizing that at any given time, there is one thing that will make or break my startup. Of course, there are many things that can do that. But in that given time there is only one thing. If that thing does not happen, your company WILL DIE. So you've to focus on it like crap. 

This does not mean you robotically only think about that one thing. But it does mean you ALWAYS keep perspective. And anytime you find yourself swaying too far into a new idea or area than the one that needs attention, you stop yourself. Of course the obvious question is how do you stop yourself. I don't know. The way I learned it is by failing. Again and again and again.

One very apparent consequence of this is how you deal with it when you are working with others who may not be on the same page as you. More and more I find people that have advice. They might have some elaborate ideas on marketing. This is when I step in and tell them "yo, we've marketing nailed. but if we dont nail blabla we are dead." Of course I am making a lot of assumptions in this post because well...it is about my circumstances. In most organizations, what you need to focus on is probably not what you need the rest of the organization to focus on.

Find that one thing which you MUST nail otherwise you'll die.

I feel like I am comitting a crime when I say this. But what the hell, I'll say it anyway: I fear failing. Wayyyy more than couple years ago. May be it's part of growing up. Here's the thing though: I love this fear of failing! Because so far, it hasn't failed me...at reaching my goals. 

Wolfram's selling their iPhone app for 50 bucks--a huge amount of money. Here's how they justify it:

A note on price — it is listed at $49.99, which is basically less than 1/2 the price of a graphing calculator with inferior functionality in comparison, which is how the company came to that number. Or, as we’ve been saying, the price of 12 lattes from Starbucks…

See, you can't launch a service positioned as a SEARCH ENGINE and then launch an iPhone app with the same name and position it as a TI-83 replacement. This is probably a textbook no-no in the product positioning world.

Even worse, if you wanted to position this app as a calculator, you have to LEAD with that message. That this app is a calculator replacement should not be a point of clarification...it should be THE point.

There is a common notion that when a kid does something bad, he will...one day..."grow up."

Yet, there is no such notion when an adult does something stupid that he will...one day..."grow down".

Looking at the Balloon Boy story, may be there should be. Watch this and tell me who needs to do the growing up. 

Over the past year, I have met many people who make money for a living(unbelievable, no?). 

Each time, I try to interrogate them on how they are able to achieve such a feat.I ask them what they sell. I ask them where they get what they sell. I ask them how much it costs to produce what they sell. I ask them how they find customers. I ask them how they convince their customers.

Yes, it's pretty intense. But within minutes, I can get a pretty good sense of their parent business. Most of these businesses are making millions in rev.

Here's my pet peeve: people that make money online seem pretty clueless about it. "Yea I get tonnes of traffic." Well, how? "Oh, I did some SEO and it seemed to have worked." Really? Can you tell me what you did? "I am not sure. Just messing around." Well, tomorrow if it stops working, what do you plan to do? "Uh, mess around some more."

Where as folks that make money more traditionally seem more definite in their answers. How do you get your product? "Oh, I buy it from blabla for 32 dollars each." Cool, and how much can you sell it for? "For 50 bucks." Nice. So you make a 18 dollar margin. How do you find customers? "I knock doors." Really? How many? "Say 10-20 a day." Cool. In how many hours? "Two to three." What about the rest of the day? "I am busy with referrals." 

You see what I mean? I dislike the unpredictable nature of the Internet in making money. I am not saying there isn't a predictable way to make money on the Internet. It just isn't one that a lot of people practice. I am definitely on my way to changing that!

$16.5M in funding, 33 developers, half dozen executives, four different products. And ZERO customer feedback.

Our first big round of venture capital (our A round) was a whopping $16.5 million which closed the first week of March 2000 ...
The expectations of our company having raised $16.5 million were enormous.  We had to ramp up our team quickly and ramp we did.  I hired a senior exec from the building materials industry (we were a document collaboration company for the engineering & construction industry) who was also ex McKinsey.  He was to head up UK operations.  We hired people to run the UK and Germany.  We hired a head of technology, a head of customer service, a head of marketing, a head of strategy (which no startup should ever hire) a CFO and, ugh, 33 developers.  We built 4 products simultaneously with no market feedback.  But that’s a story for another day.

Original post

As I write this, I am wearing my ycominator tshirt that reads "Make something people want."

I have been thinking a lot recently about seeing "want" as more than just black and white. It is pretty easy to think of something as you either want it or you don't. But one lesson I am learning from folks that are making money online is that not all wants are created equal.

Munjal Shah in his presentation talks about how not all traffic is the same. Easiest example is Facebook versus Google. People goto facebook to chill out. It's like going to a bar: you are in the mood of getting drunk and not in the mood to learn about a new car brand. Then you have Google, where people go not to have fun but to get an answer to a pressing question. In both cases, people want the site. Yet one is superior than the other in terms of the value of the customer.

Eric Ries/Sean Ellis have long been talking about gauging how badly your customers want your product. Sean Ellis has a great survey at http://www.survey.io. One of the questions asks the user how disappointed they would be if they could no longer use your website. According to Sean Ellis, if over 40% of your users won't be very disappointed, you probably don't have a product you can charge for. Again, it may be that a tonne of your users somewhat want it. But to really make money, you have to get your users to really want your service.

At the Hulu.com CEO's talk earlier in the day, he too emphasized this point of customer want not being black and white. For him, he feared Hulu being an average video website. Yeah, people would still use Hulu if it was average, but not as many nor for as long. Jason, Hulu's CEO, set on a mission to make a product that had a "brain-spraying" effect on users as well as content-owners and advertisers. He pointed out that viewers on Hulu are much more likely to recall an ad than the recall rate of the same ad on televison.

I'm arguing that it is time to up the ante. It's no longer enough to just make something people want. It may be time to make something people pay for. Because generally people pay for stuff they really love.