It takes a lot of courage to acknowledge how screwed up you are, eBay. I applaud you. But one problem: the same way that AltaVista couldn’t be a search engine and a content portal and an everything-else, neither can eBay effectively be a collector’s site and an online store hoster and an average Joe’s auction source (amongst about 1000 other things that eBay currently “is”). Complexity is inherently part of their scope, and I’m not sure that adding a social networking layer and mobile apps is the solution to that.
If eBay is trying to figure out what happened to the wind in its sales (sic), they might want to take a look at the Etsy and edgeio traffic growth over the last year. Those several hundred percent growth rates are being reaped by sites that understand how to do one thing really well, rather than doing everything mostly OK.
I’ll be frank here that sometimes I wonder whether being in the same market as the Internet’s fourth-largest site was a good choice for my first true, large-scale business. I have to think that there are businesses out there that don’t have to constantly look over their shoulder at what is being done by the several-billion-dollar behemoth. But at the same time, we are jabbing a target so large that it takes years to swing back, if it even notices it was hit. For those that get to help build our alpha into a beta version starting next month, you will see a creative market opportunity that wedges between the cracks a giant can’t fit into.
I concluded my regularly scheduled meetings with Karrie Kohlhaas this evening. As always, there was much ado and many great questions raised for me to consider.
But my favorite question of the night goes to the imaginary businessman that Karrie impersonated, who asked, “Well, this looks like a good enough idea I suppose, but let’s be honest: you’re 27, you’ve never done this before, so what the hell do you know about anything?”
She got me. I think I’m cool no matter the line of questioning, but it was a little startling to pretend as though I were being asked that question in real time. In that sort of situation, even the smallest pause before your answer can be interpreted as doubt. If you do pause, the answer you give must answer the original question and reassert your confidence. I think the trick to answering “tough questions” like this is to know they are coming, and when they do, to give a straightforward answer that belies confidence.
When I think about how to go about answering tough questions with confidence, I think back to the first couple seasons of The Apprentice (before I re-learned to ignore Trump). With a few exceptions (ahem, “Street Smart” Chris), I was consistently impressed by how well each of those contestants could quickly and cooly respond to intense personal attacks by each other and Trump himself. As season 3 Alex said, in one of my all-time favorite interviews,
“People know how to argue more or less from their upbringing but the biggest thing being an attorney did was to prepare me to go into the boardroom and not take arguments personally.”
I thus engage the process of assimilating quick logic robot.
I went to see Sujal Patel give an intriguing talk on “Introducing Disruptive Technologies into Mature Markets” this Friday. Listed as starting at 6:30 (it actually started at 8, but that’s a different story), my expectations were high as I dragged myself out of bed at 5:30, after a mockingly short 5 hours rest. It didn’t disappoint.
In brief, his three keys to dethroning your gorilla:
1) Possessing a “disruptive technology.” According to Patel, for a new product to make a dent in an existing marketplace, it must be at least 10x better than similar existing offerings. Not twice as good, not five times as good. The logic behind this is that a product anything less than 10x better will not be able to cross the chasm into the early majority, because all breeds of majority adopters (early, middle and late stage) are compelled to adopt only when a product is so overwhelming better that it justifies the investment of time to learn it. This matches my intuitive perception of user adoption patterns — I’m certainly unlikely to adopt something new unless I can clearly see high benefit and low risk (i.e., of the new technology disappearing) to doing so.
2. Tenacity. Though this one is somewhat obvious, the depth to which it is necessary is something that new or non- entrepreneurs may not understand. Patel gave the example of spending literally three months in VC meetings for “all but two days. ” In many of those meetings, he was assured that his idea “was like so-and-so’s idea,” but worse. Other challenges in his case involved convincing VCs that two late 20-somethings, who knew almost nothing about storage, could build a successful storage company amongst a landscape of almost 100 competitors. An illuminating example that he didn’t give was that, as he lectured us, his company had dropped in value almost 22% in the last couple months on news of poor fourth-quarter earnings. Nevertheless, he had to show up, organize an hour-long show, and preach the perfection of his company’s execution. Guts.
3. Partners=results. If there is a single, overarching requirement for success, it is surrounding yourself with the absolute best people that exist. He specifically mentioned the need to find “high ceiling” people who have separated themselves from their peers. When asked in the Q&A session why he’d failed to mention “adaptability” as one of the core needs of a new business, Patel responded that “adaptability” is really a function of who you have. Do you have partners that hear the needs of the business and work together effectively to ensure those needs are met? If so, adaptability is already assured.
Overall, it was an extremely relevant topic for me. Thinking about the features of the site that are truly 10x better than their alternatives helps to focus on the core of the business model. And the need to partner was one that I had already understood, but Patel’s commitment to not compromising on a less-than-ideal partner certainly resonates, as my search for able accomplices extends into weeks from what I’d hoped would be days.
In the last blog, I discussed the first half of the pivotal question for the great idea: How is your thing different and better? This time I’ll discuss the second half of that question.
To be sure, there are a lot of ways to be different than the competition. An eBay-like site that exclusively sold variously-aged Cheetos would pass the “different” test. Etsy would also pass the “different” test. So the question is, how can one tell if their idea is more like selling variously-aged Cheetos or artist-created handiworks?
The answer: ask around. This is a more difficult task than it sounds like for many entrepreneurs, because many of us introspective, visionary-types are used to listening to ourselves when an important question needs to be answered. It doesn’t help that other common qualities in entrepreneurs include the need for control and willingness to buck the norm. Simply put, most entrepreneurs at some point get used to living in a world of doubters and the short-sighted. So when it comes down to the most pivotal question of an idea’s existence, why would we turn to the same choir that has so regularly tried to stomp our initiatives… until around the point that said initiatives become unfathomably successful?
The first reason is that while people may not be able to imagine something better, they can often spot something they don’t like. Even if they can not absolutely determine why they don’t like an existing offering, asking people questions about their past experiences is instrumental in determining the relative degree to which certain opportunities exist in an established competitive landscape.
The second reason is that, if you’re asking your target audience, you are talking to the people that will ultimately determine your idea’s success. While human nature is naturally skeptical of all things “new” and purportedly “better,” ultimately it is the entrepreneur’s mission to dispel that skepticisim by creating a tangible product that resoundingly fills a need its competitors don’t. Without asking your target market about their needs and desires, what will guide you toward creating that tangible product that manifests your idea?
The third reason is that maybe you’re wrong. Yeah, you. Maybe your idea is variously-aged Cheetos. And if you spend thousands of dollars creating the perfect site for selling these, you will succeed only in becoming thousands of dollars poorer. Gaining feedback about your idea from the people that will ultimately use it is the ideal means by which to determine to what extent your idea needs to be adapted before it hits the bullseye.
Entrepreneurs are ultimately big dreamers and big dreamers are often very protective of their dreams. As such, I have found it difficult as a relative youngster in this game to take the first steps toward exposing my idea to the potential of Valid, Important criticism.
But that’s what this game is founded upon: having an idea, being wrong, and productively responding to that reality.
If all continues according to schedule, I should be able to report in the next week or two how being wrong feels.
It’s the three-inch titanium wall between you and the loot. It’s the ghost you feel on your ceiling in the middle of the night. It’s the $64,000 question challenging your otherwise-grand business idea: How is your thing different and better?
This question has been dancing through my head for weeks. It’s one thing to have an idea that could make people’s lives better. I have those every day, and you probably do too. In fact, talk of “how to do things better” has graced watercooler after watercooler since some business wunderkind had the idea that our lives would be improved if we didn’t drink from the tap. However, barfing out some idea of how things could hypothetically be better is not unique. If only the ideas heard by the watercooler were judged in a void where “degree of improvement” was the sole arbiter of success, then the world might properly appreciate the value of a good idea.
But they aren’t and it doesn’t. My idea kicks eBay where it counts, while providing a service that person after person has agreed they could utilize. But the $64,000 question remains, because the 800 lbs gorilla is often only of peripheral concern to the new business. Big businesses tend to lumber along with scattered focus, and as a result, are easy to be negatively contrasted with a nimble startup if one focuses on the idealistic: “Could I do a certain thing better?”
The crucial gauge of the great idea, then, is no more how it compares to the gorilla than how it compares to everything else. Once I find a site that seems to be trying to do something similar, I ask: How do I compare to what these people are doing? How will I compare to them once they see my idea and start trying to copy it? And of course, how well is this business doing? Quite frankly, this final question is an annoying one to ask, because if they are doing well it means more competition, and if they’re doing poorly it means the need we’re trying to meet might not be as great as anticipated.
From what I can gather, it would seem that there are a lot of “entrepreneurs” who don’t have the tenacity or wherewithal to ask this question, and their site ends up missing the key point of differentiation. For example, Powersellers Unite provides a list of the 20 most successful eBay copycats, er, Internet auction marketplaces. You visit these sites, and you see very little to distinguish them from eBay, save that they re willing to make less money with lower or no fees.
It takes tremendous courage, tenacity, and perseverence to honestly evaluate a competing idea and confront the question of why that idea won t work and yours will. But it alone is what charges a great idea with the power to become a great, successful idea. Over the course of refining my great idea, I’ve focused on learning to be honest about the similarities, and persevere through them with an even greater understanding of where are the cracks in the fortress of competition. There is no second option for businesses that want a realistic chance to succeed.