Startup general interest

Extolling the virtues of the slow road

By April 24, 2013 2 Comments

This morning I read a good post from YC Alumn Vibhu Norby who describes the dangers of a big product launch. He had everything set up for success – 25k people signed up to be notified about the launch, forthcoming Techcrunch and AllThingsD articles, a great social media plan, etc etc but his initial bang was quieter than anticipated, they didn’t get top of the app store charts and then new user sign ups trended down over the next few days not up. The lesson that Vibhu took away is that it’s best not to have a launch at all. At Origami, his new startup, they simply put the service live and are focused on making their small number of users happy, and letting the user base grow by word of mouth.

Big launches are fantastic if they go well, and if you are hell bent on taking the quickest path to wealth and fame then the lure of the big launch will probably be irresistable, but most big launches fail, and that failure comes with a cost. Big launches come with high expectations and disappointment is hard to recover from – employee morale will suffer, investors may lose faith, you may pick up a hard to shake bad reputation with the press, and possibly worst of all, you may lose confidence yourself.

Why do most big launches fail? Because very few companies are clever enough, or lucky enough, to have a good product market fit on launch day. For most it takes a period of iteration as customers use the product before they find the sweet spot.

You could say that choosing to have a big launch for a startup is adopting a strategy of ‘be lucky’, and as we know, luck isn’t a strategy.

Next a caveat. If you are operating in a known market then the dynamics are different. In this case you have a much better chance of good product market fit out of the gate and a big launch might make sense. The new Samsung S4 is a good example here.  Also, companies operating in very crowded markets may not be able to think of another way to rise above the noise (although that raises the question of whether they should find another market….).

Wrapping up – the ‘big launch’ vs ‘build slowly from a passionate user base’ is one of many areas where startups can choose between being aggressive about getting as big as they can as quickly as they can or focusing on sustainability first and fast growth second. I’m all for shooting for the stars, but for me the second path is the better one. It locks down value more quickly and relies less on luck. It’s absolutely right to keep open the option of being lucky, and if a lucky break comes to double down, and double down hard, but going to early and relying on being lucky just isnt sensible.

Clayton Christensen has similar advice when he talks about going for profitability first, and scale second, whilst the likes of Steve Blank and Eric Ries have a similar message when they say that finding product market fit is a startup’s first job. These are wise words from wise men, but it can be hard to know exactly when product market fit has been reached (how sure should you be?) and profitability turns out to quite complex too, as many startups reach the point when their inheret profitability is apparent before their management accounts are showing month on month profits. For me the time to invest hard to scale fast is when scaling doesn’t require any great leaps of faith, i.e. demand and marketing channels are proven at a small scale and there are no obvious barriers to growth.