Rationalizing the Risk. Stop Worrying, Start Living. The $15k Deductible.

Act 1: Inception

Stop Worrying and Start Living

Dale Carnegie has two books that achieved outsized recognition. The one that everyone knows is “How to Win Friends and Influence People” and I think it’s still wildly relevant even today. The other, perhaps less well-known tome is “How to Stop Worrying and Start Living.” I bring it up here because it was directly influential in how I rationalized the risk of leaving my job to start a company.

The basic gist of the book is that most of our worry comes from the unknown. All of the bad stuff that could happen to us starts swirling around in our minds, and as the permutations multiply exponentially, we find ourselves in a panic, unable to control all of the many terrible things that could come to pass. Carnegie simply provides a routine to get that stuff organized and then rationalize the worst case scenario.

Roughly speaking, it goes like this:

First, name one of the things that you are worried about…. Then, ask if it’s the worst outcome. Usually, your frightened mind says “no” and takes it down another level. So you name that one. So on, and so forth, until you realize the actual worst case.

And then you do two things:

  1. Recognize that it’s pretty unlikely, and,
  2. Work out what you’d do in that situation.

For me, it went like this:

Irrational Me: OMG, I’m leaving a high paying job with a successful company. What if I wreck our family’s financial situation and we end up destitute?

Rational Me:Ok, that’s not realistic. I’m a well known VP of Sales in the area. I could easily get a job as a VP again. Laurie is a well connected MSW. She could easily get a job as a social worker again.

Irrational Me: Yeah, but what if we can’t find jobs!

Rational Me: Ok…. If needed, I could start a regional or national job search and open up the opportunities.

Irrational Me: Yea, but what if I still can’t find anything!

Rational Me: Ok… well, that’s pretty unrealistic, but I’m not afraid of hard work, and I could always step back into being an individual contributor, and a skilled sales person can make a lot of money.

Irrational Me: Yeah, but what if you are too old, or too experienced, or too whatever and you can’t even get that job?

Rational Me: Ok… now this is getting silly…. But on the very low chance that I can’t find any job related to sales whatsoever, I’ve never been afraid of hard work. I ran a lawn service in high school. I could easily do manual labor to make ends meet.

Irrational Me: Ok, but what if it’s not enough money!

Rational Me: I’ve saved a bunch of money in my 401k and in my kid’s college funds. In the ultra-low-chance that all of this terrible chain of events did actually somehow occur, we could liquidate that until we get on our feet again.

Irrational Me: Yeah, but what if that runs out!

Rational Me: Dammit! This is silly! Ok, well, I have very little debt, I could use credit cards for awhile to cover my bets and dig out of the hole.

Irrational Me: What if you don’t! What if you go bankrupt and lost the house!

Rational Me: OMG. Won’t happen, but ok. Let’s say that happened. I’m very close with my brother, my mom, my step mom, my wife’s family, and my step-sisters. I also feel very fortunate to have several close friends. If the absolute most catastrophic things came to pass, someone among these many close connections would allow my family to move in for awhile until we got back on our feet.

Rational Me: And if that didn’t happen, Laurie ran a homeless shelter. We would at least know the ropes.

Rational Me: And if that didn’t happen, I camped for two months in my early twenties on a bit of a road trip. I know how to camp and could do that for awhile with my family if this absolute most terrible financial situation played out for us.

This seems like an infinitely silly exercise, but it mattered to me. I really did reconcile myself to the fact that no matter how bad it got, I wasn’t going to die, and I was pretty sure I wouldn’t lose my family. I could figure it out, no matter how far down this ladder of increasingly unlikely events I fell.

Which led me to a very freeing conclusion:

As long as I had my wife, my kids and my dog, everything else was gravy.

Walking around everyday thinking that everything you have above and beyond your immediate family is icing on the cake is a wildly liberating sensation.

It was going to be ok. This wasn’t going to be a risk of survival…. This was going to be a risk of comfort. We might not get to go on expensive vacations for awhile (and we didn’t). We might not have fancy cars (I drove a used Honda Civic for several years). We might drink boxed wine and a lot of beans instead of fancy dinners (yep, did that too). But it was all gravy. And we were going to be fine. And I was free.

Setting Milestones and Trying to Fail Fast

Another part of the rationalization was setting milestones that were weeks or months away, and being committed to shutting down the effort if we didn’t hit those milestones (or have a reasonable path to hitting them). The very first milestone was getting a team to commit to the journey with me. The next milestone was getting a prototype built. The next milestone was getting a single paying client to commit.

In my mind, those first milestones of team formation, incorporation and prototype had to be wrapped up by April, or we’d hang it up and I’d go back and get a “real” job. (Spoiler alert: We hit those milestones).

The $15,000 Deductible on the Catastrophic Insurance Plan

If there was one thing that crystalized the risk the most for me, it was the catastrophic insurance plan that my kids and I were on in those first months. We were pretty healthy as a family, and I needed to just get several months of attempting RFMConnex under my belt. Extending my COBRA insurance from Bronto was a scary amount of money, and joining Laurie’s plan at United Way wasn’t much better. I had money saved in my 401k and my credit cards had high limits and low balances. So I chose a plan with a $15,000 family deductible for Jack, Cora and me, with the assumption that if we were all in a wreck together that I had the money to cover that bet, and that these next months of no salary was all about day to day cash management.

So, we rolled the dice and it worked out (but, yeah… scary!).

Committing to Risk. Stop Being a Coward. Just Jump.

Act 1: Inception

All You Do Is Talk. Stop Being a Coward.

At some level, I owe the entire entrepreneurial journey to friend and fellow entrepreneur Adam Covati. I’d worked with Adam and Eric Boggs at Bronto, and they’d decided to turn a URL shortener that Adam had built into a full fledged Social Media Management platform called Argyle Social (refer to #UNCArgyle… go Heels!), and they were living the dream. High growth, excited customers, venture capital, white-knuckled fear of the velocity they were traveling… the whole enchilada. I was so hungry to do what they were doing. (As an interesting aside, I said as much to them about joining their efforts, and they both thought I was kidding, so a follow up a conversation never happened. Ah, what might have been…).

At any rate, Scot Wingo had created a StartUp Showcase at the ChannelAdvisor Catalyst annual user conference, and Argyle Social was one of the young companies selected to showcase their solution. The conference was being hosted at the Washington Duke (pretty swanky, with a nice golf course), and Adam, Eric and I were enjoying a beer on the putting green just outside of the restaurant. I was headily discussing BuzzBox, RFMConnex and about six other ideas.

And then, Adam dropped a load of bricks on me. “Matt, you have a bunch of great ideas, but when are you going to actually quit your job and do something. Stop being a coward.” He actually used an unsavory word that I won’t repeat here, but man did it hit me hard. I laughed it off in the moment, but my head was reeling.

I’m Afraid That I’ll Wake Up One Day and Never Have Been More Than A VP for Someone Else

My wife Laurie will tell you that I’m one of the hardest and deepest sleepers around (don’t ask her about the snoring… sheesh). I’m out like a light the moment my head hits the pillow. But not this night. I tossed and turned, and finally she said “what’s going on?” I recounted the story for her, and then laying there in the darkness, said “I’m afraid I’m going to wake up one day when I’m 60, and never have done more than be a VP of Sales in someone else’s company.” There’s nothing wrong with that…. It’s just that I really, really wanted to be an entrepreneur, and unless I jumped in with both feet, I would always just be that guy with ideas.

Laurie, to her credit, whispered that if it was that important to me, that she’d go back to work so that I could quit my job and make a go at it. So that night, with Laurie’s support, I decided to leave the safety and security of Bronto and make a run at it.

At Some Point, You Have to Decide: Just Jump

I started this series with the goal of just capturing the story, and not boiling it down to platitudes. I’ll keep faith with that mission, but here’s something I learned that is probably worth passing along. There is some very finite point in every entrepreneur’s journey where there’s a seminal, terrifying, and wildly freeing moment in which you decide that you’re just going to jump, damn the consequences.

This was my moment. Laying on my back, in the darkness of the early morning hours, with my mind racing and my heart thumping…. I decided to just jump. It was different than planning, or contemplating, or considering. It felt like the same thing that happens when you jump off a cliff into the lake below… you fret, and think, and shuffle, and then suddenly, the moment of abandon hits you and off you go.

Actually Jumping

I don’t remember the exact timing, but having made the decision, I started to set my affairs in order to make this happen. I reframed our budget (which Laurie and I later called the year of boxed wine and beans and rice). I did an assessment of all things that would potentially throw me off. I set up every medical, dental and eye appointment I could think of so that I could square it all away while I was still insured (and “ensured” so to speak…. That if I discovered something, I’d be able to ride it out while I was still employed at Bronto). I’ll spare you the gory details, but let’s just say that if it could be poked, prodded, cleaned, updated, or examined, I had it done. I was all clear and ready to rock and roll.

In about mid-November, 2010, Chaz Felix (Bronto co-founder) and I went for a walk and talk (something that we did often and which I enjoyed doing with him) and I shared my decision to leave Bronto and start a company. He respected my need to try because he’d felt that call too, years before. With that conversation, I was committed. I would enter January 2010, recklessly unemployed, with a catastrophic insurance plan, no salary and no full commitments from my team to follow me off the cliff.

And I was as excited and free as I’d ever been in my professional career.

In my next post, I’m going to briefly discuss the rationalization of the risk, because it was an important part of the decision.

Finding Our Founding Team. Sales Schmoes and Geeks.

Act 1: Inception

Finding the Founding Team

I wish that I could claim more than luck on this front, but ultimately, it was luck. Or divine providence. Or something. Here’s the story…

Brad and I were playing with the concept of RFMConnex (oof, what a bad name), but we were two business guys with coding skills roughly on par with our proficiency in ancient Sumarian… that is to say, that we couldn’t code a single line and needed help.

As it turned out, Scot Catlin was in the hunt for his next job, and was eyeing an open position at Bronto Software. Scot was connected to Brad McGinity through LinkedIn, and reached out for an informational interview and a possible reference. Brad was in UNC Kenan-Flagler’s Full Time MBA Program at the time, and while he couldn’t blindly refer someone he didn’t know, he was happy to get together for lunch and chat.

As they sat together, it became obvious that what Scot had done at LSSi was similar in concept. In that business, LSSi was aggregating directory information for the purpose of directory assistance and marketing. You know when you move and change addresses, how you get that little flood of mailers that says “welcome to the neighborhood, here’s 20% off of lawn care…” They were one of the leaders in maintaining that type of database.

So Brad shares the start up concept we’re working on with RFMConnex, and Scot says “wow, we should get my former boss Chris Humphres involved!” Excitedly, Brad and Scot set up a lunch for the meeting of the minds.

Ted’s Montana Grill – Sales Schmoes and Geeks

I’m not sure how we picked it, but it was decided that Ted’s Montana Grill at Southpoint Mall was where this epic meeting of the minds was to take place. As we all arrived, we assumed the positions… Sales Schmoes on one side, Geeks on the other. One side leaning forward and jabbering excitedly. The other side contemplating intently, with a subtle hint of cynical suspicion clouding their eyes.

It was the first time we’d met Chris. As anyone who knows Chris would attest, he’s a hard interviewer. Let’s just say that the collaborative, generous spirit that we know and love Chris for doesn’t shine through in a first meeting (unless you’re a rabid Crimson Tide fan, in which case you get fast tracked to pure love and devotion). Brad and I are both Tarheels, so we got pointed questions about RFMConnex that highlighted the inconsistencies in our logic, and clearly demonstrated our need for some engineering talent. In spite of the tough inspection, Chris said he liked the idea, but that he had something else brewing, and if it worked out that he’d be pursuing that with someone he already knew and trusted.

However… and this was a big moment…. If that didn’t work out, he might be interested in exploring further. Within a few weeks, the other thing didn’t work out, and RFMConnex suddenly became a real possibility for Chris and Scot.

Playing Company, Again

So, we were back to “playing company” again, but with a new idea and a new cast of characters. We met at my house a couple of Saturdays. We had a few other folks that had expressed interest engaged as well… so there was perhaps 5-7 of us poking around on this concept. Powerpoint slides started forming. Sketches of the first tech concepts started to come together.

But no one was on a payroll, no equity had been decided, no articles of incorporation formed. Just guys futzing around in their free time.

The next couple of posts will be important ones as they set up one of the most important early stage moments of commitment to “just jumping” and to defining the equity splits.

Moving Quickly to Next Idea: RFMConnex

Act 1: Inception

“Call Me Back, I’ve Got the Next Idea.”

While history will not commemorate these words in the same way that it did with “Mr. Watson, come here…”, it was a seminal moment in our trajectory. We’d just killed the BuzzBox idea, and I pinged Brad back 5 minutes later with “call me back, I’ve got the next idea.”

The idea was to platform integrations between eCommerce systems and email marketing systems so that it was super simple to transform data into targeted marketing. I’d been exposed to the concept of Recency, Frequency, Monetization while in business school, commonly known as RFM modeling.  I knew packaged integrations would make the hard work of integrating platforms much, much simpler.  I knew that this would work.

Good Idea, Terrible Name

My working name for the idea was RFMConnex, which I’m a little horrified of today (did I really come up with a name that sucky?). We’ve taken a lot of good natured ribbing over the name Windsor Circle (which I’ll explain in a later post) but oh, man, was it better than RFMConnex.

Moving Quickly to the Next Idea

All kidding aside, this moment was critical to the journey for a non-obvious reason. After several months of work on BuzzBox, it would have been easy to just roll over and be done with it when we killed the idea. The drive to build something, however, was stronger than the idea itself, so moving from one idea to the next was important.

This played out later in our journey as well, because as we kept steering towards Product-Market-Fit, we had to keep morphing the idea, dropping what wasn’t working, and shifting towards what was working.

We didn’t realize it at the time, but the ability to let go was critical to moving forward. (Come to think of it, the writing of these Green Pants Chronicles is probably an act of letting go of the idea that has consumed me for the last 8 years).

BuzzBox. Killed by Truck Rolls. No More Playing Start Up.

Act 1: Inception

BuzzBox – Our First Idea

The very first idea I played with had nothing to do with Windsor Circle. My thesis, in 2008-2009, was that smartphones were too expensive to gain wide adoption but that social media was taking over the world. I guess I was batting 500 on predictions. It was easier to believe then as the iPhone launched on June 29, 2007, and most of us considered ourselves lucky if we had a BlackBerry. WiFi was not ubiquitous, and 3G ruled the airwaves, and most of us had flip phones if we had anything more than a landline.

Simultaneously, pay phones were in steep decline and disappearing from the landscape, leaving in their wake millions (billions?) of dollars of hardwired infrastructure to every public place imaginable, from restaurants, to airports, to street corners. And no one was using that infrastructure!

So, the idea was to put an elegant touchscreen everywhere a payphone used to be. The user-friendly interface would be tied to social media sites, and allow users to post to Facebook or Twitter, or check email, or search for directions, in exchange for answering a few quick survey questions. This would allow brands and advertisers unparalleled first party research opportunities as demographic data based on location is well documented.

Killed by Truck Rolls

The net of it was the marketers loved the idea and VCs hated it. But the VCs didn’t hate the idea because of the cost of the hardware… we assumed that was going to be the issue. What killed the idea was the infamous “Truck Roll.” The hardware was a fixed cost, and one whose unit cost would come down with scale. However, every time a device went offline, or some drunk in a bar put her or his fist through a screen, we’d have to send a contracted service provider out to fix it. That scary, unknown, largely variable cost killed the concept. I spoke to some pretty high level RedBox management team members for perspective, but their footprint was less extensive that what I was imagining, and their units could be “hardened” in ways that didn’t limit the attractiveness of the user experience.

No More Playing Start Up

At the time, one of my most dynamic classmates from UNC Kenan-Flagler’s 2005 Full Time MBA program, Allison Philips, had joined up with Brad McGinity and me to investigate the idea. We were taking real steps to validate the concept (or invalidate it, as it turned out), but there was a point where the weight of the truck roll was looming large and we needed to make a decision about how to proceed as we were consuming valuable evening and weekend time as we were trying to figure it all out.

At the time (summer 2010), Chris Heivley and Dave Neal were underway with the Startup Factory at the American Underground, an accelerator and early stage investment fund. The call went out for applications for the next class of program participants. It would require me to quit my job, Brad to configure his second year of business school in a way that allowed him full time participation in our efforts, and Allison to move from DC to NC for at least the 12-week accelerator program. As I saw it, it’d be a good vehicle for forcing the conversation about whether or not we were serious about BuzzBox, as it would require real (and scary) life decisions.

As we explored the idea of filling out the application, the conversation had the intended consequence. We decided as a team to kill the idea, thinking that it did not have the right long term prospects to be worth the amount of sacrifice we were going to have to make. We were not ready to go from “Playing Startup” to committing, which in hindsight was a good thing.

“Call Me Back… I’ve Got the Next Idea!”

5 minutes later, I pinged Brad and said, “call me back… I’ve got the next idea!”

(Insert dramatic cliffhanger here so that you’ll come back and read the next post about how the idea that became Windsor Circle came to be!)

Introducing “The Green Pants Chronicles”

False Bravado and Platitudes

The entrepreneurial journey is an exhilarating, terrifying, empowering, destructive and addictive experience. So often, what is written about these journeys falls into one of two categories… Platitudes and False Bravado.

The False Bravado is that annoying “we’re killing it” thing that many entrepreneurs feel trapped into saying anytime they are asked “how’s it going?” If 90% of startups fail, everyone is decidedly not “killing it.” The Platitudes are those distilled bits of wisdom that we all write to make it look like “we are killing it” or have already “killed it” and which tend to leave out situational variables, larger context, and dumb luck. I’m hoping to avoid these traps.

The Green Pants Chronicles

My hope in writing this series about my own entrepreneurial journey with Windsor Circle, which I’m dubbing “The Green Pants Chronicles” (after our team’s penchant for wearing said kelly green knickers) is to capture the experience in rough chronological order, and to do so with the Openness and Transparency that we valued so highly in our team. Some of the journey was amazing, and made us look like heroes. Some of it sucked, and at best showed that the stars don’t always align, and at worst, highlighted very human moments of not landing on the right strategy or execution soon enough to realize the rare air that Unicorns breathe. Above all things, I hope that these entries are real in their rendering of the 8 year journey.

My friend Christopher Gergen wisely counseled that I should capture the play in a series of acts (versus the time-based journal series I’d originally conceived). After some deep thought, I decided to frame it as such:

  1. Inception – How did the formation process happen?
  2. Launch – What did we do to actually get going?
  3. Validation + Early Growth – How did we set and pass through early milestones?
  4. High Growth – What did we do to pour fuel on the fire?
  5. Decision to Pivot – When did we start seeing issues and what did we do?
  6. Pivot – Once the decision was made, how did we push through this hard phase?
  7. Exit – As buyers looked at Windsor Circle, what did we do to exit?

I’m giving the decision and act of pivoting their own “chapters” because getting to the decision, and then making that decision and living with it, are very different things.

Two Caveats and An Admission

I’m going to write as openly as possible, with two caveats and an admission… First, I care about the people that were involved on the journey, and I’ll craft my entries in a way that respects everyone that was involved to the best of my ability. Secondly, there are things that require my continued confidentiality, and where those obligations exist, I’ll observe them.

As for an admission: Humans remember things based on perception, and those perceptions are obscured by time. I’m all too human. I’ll actively and openly incorporate feedback from the many people involved in the journey. In some places, that might be to modify my writing if I’ve just gotten something plain wrong. In others, it might be to capture and offer a differing perspective directly in the post so that numerous views and vantage points can be considered by the reader. Either way, I’m open to feedback and will incorporate it to the best of my ability.

I’m looking forward to capturing the journey on “paper” and reliving the wildest professional experience of my life… See you out there.

And, that’s a wrap!  Off to my next adventure…

What an amazing ride.

When Chris Humphres, Brad McGinity, Scot Catlin and I started Windsor Circle in 2011, we had a vision of democratizing data for online retailers.  We rocketed out of the gates with a pre-product, pre-revenue round, and scaled to 70+ people over the next several years, with fun team wins such as winning the prestigious Google Demo Day award, SxSW Pitch Competition, Best Place to Work in the Triangle, and an Inc. 500 Fastest Growing Company.

We took some punches, too, when we pivoted in 2017 to focus on the enterprise market, a hard strategic move that reduced our team by half, but ultimately proved successful as it led to a 2018 exit to OSG and a merger with its’ email marketing subsidiary, WhatCounts.

We were a hard-working, values-oriented, smart crew, with a penchant for Green Pants and funny mascots, and I am so proud of what this unique group of people achieved together.

All journeys eventually come to an end, and for me, it’s time for my next adventure.

Starting in September, I will join SalesPad, which is on a mission to radically transform distribution operations worldwide.  In my role as Chief Revenue Officer, I’ll be working with the team to strategically and tactically scale new and existing revenue streams for the business.  In doing so, I’ll be opening and staffing an RDU office, primarily in sales, account management and business development roles (so get those resumes ready… we’re looking for adventurers and buccaneers who are ready to get into the fight and have a blast as we grow the business together!).

To my beloved family, my fellow founders and cherished team, our investors and advisors, our customers and partners, to my new friends at OSG and WhatCounts, thank you.  It was an amazing journey that I am immensely proud of, and I feel privileged to have been on the quest with each of you.

ps – We are going to hold a Friday Sales Meeting Grand Finale in the near future, and name the next and final not-so-very-sacred order.  If you know what either of these things are, I look forward to seeing you there!  Stay tuned for more info!

Top Lesson #1: Product Market Fit

A few weeks ago, Windsor Circle was acquired by OSG.

There’s a tremendous amount of validation in this moment.  My band of warriors started a journey seven years ago at great risk and peril.  No incomes for a year or two.  An idea on a napkin, that turned into a team, that turned into a beta product, that morphed into Windsor Circle, a leader in Predictive Marketing Platforms that raised $15MM in Venture Financing and won Google Demo Day to national acclaim.

We’ve been working on a fascinating problem…  reducing data and data science to push button simplicity for the marketer.  Over our 7 year journey, we’ve made a ton of progress and have learned a lot of lessons, the two most important of which are Product Marketing Fit, and Leverage.  I’ll tackle these two subjects separately.

Product Market Fit

I often get asked about product market fit.  What is it?  How do you know you have it?  Once you have “it” then what?

My current working definition for product market fit is “virality.”  We spent a lot of time at Windsor Circle doing client satisfaction surveys, and polling for NPS scores, etc, (FWIW, NPS scores turned out to be one of the strongest correlated measurements to renewal/churn).  But I think at some level the notion of product market fit is simpler.  The real question is “have you built an offering (product/service/whatever) that your customers can’t wait to talk about?”  I stumbled into this realization a year or two ago with two different product offerings.

Slack

The first product is Slack, the messaging app. Honestly, I’m still not 100% certain that it made our lives better at Windsor Circle.  In essence, it moved internal email communications out of gmail and into a new instant messaging paradigm.  While it fit our frenetic societal mentality of instantaneous and omnipresent communication, it blew away some long standing cultural adaptations around email (for example, using the email inbox as a to-do list).  It created yet another place to have to look for institutional knowledge.  But the fire-and-forget format of chat is alluring, and both our sales team and our engineering team had spun up instances and were absolutely in love.  They professed this fascination far and wide…  and people throughout our organization jumped in.  As leader, I finally had to declare that our value of “Single Source of Truth” was being threatened and that we needed to go all in or get all of the way out.  Fearing a complete mutiny, we switched to Slack and made clear corporate guidelines about communicating wholly in Slack for internal discourse and wholly in email for external conversations.  The lesson here, despite my obvious reservations, is that Slack was on fire.  Everyone was talking about it.  Everyone was recommending it.  And their adoption (and valuation) has gone through the roof.

slack-dau-paid-oct16

Source: TechCrunch

Scott’s Cheap Flights

The second is Scott’s Cheap Flights.

The power of this product is its simplicity and the value it creates.  In a nutshell, you sign up to be notified of when an airline drops its prices on certain routes.  It’s as simple as that.  There are no sponsored deals…  no gimmicks…  No clickbait.  He (Scott, presumably) finds when routes go on sale, and emails it to the list when they do.

And I’ve told everybody I know about it.

We saved $2,000 when eight of us (two families of four each) to Spain last year.  We’re saving similarly on a trip to Montreal this summer for 11 of us.

What’s interesting about this offering is it’s simplicity.  You can’t go to the site and search for deals.  It doesn’t have gizmos and widgets and data science thingys.  It’s just an email a day.  It shows you where the deals are.  It characterizes some insights like “we think this deal will last for 24 hours”.  It has a button that preloads a google flights search with that deal in it.  Super, super simple.  And super, super valuable.

scotts

Lessons About Product Market Fit (PMF)

First things first…  if you’re creating exceptional value in any form, people will be excited about it and share the good news.  If you’re not seeing that virality, you need to work on the product and how your target audience consumes it.  We definitely had a phase at Windsor Circle where we scaled the sales effort on the back of an initial product market fit, and it lead to churn.  We had PMF for innovators but not for the mass market and it caused us a ton of pain because we scaled into the mass market before we’d truly achieved PMF for that segment.  Simply put, the innovators solved for some product deficiencies through creativity and hard work.  The Mass Market wants the “easy button.”  That’s not a knock on the mass market.  It’s a reality check that you have to solve for PMF in phases.

What could we have interpreted better about these early signals?  We were good at asking for referrals and getting quotes.  We took that as the signal that we had PMF.  A much better indicator would have been a high flow of inbound, unsolicited referrals.  In another way of saying that, our strength in sales and marketing masked a product market fit problem that really only expressed itself once we were in the mass market and started seeing churn due to non-usage.  We’ve corrected a lot of those deficiencies, but only after some harrowing times (a strategic pivot upmarket, a restructuring that cut into a team that I loved dearly, etc).

There’s a completely separate issue here, and that is having enough dollars to innovate against a hard problem long enough to get PMF.  That doesn’t meant that we (I) should be let off the hook for making good strategic decisions…  but there is a reality that if you’re tackling a really hard problem, it may take more time and dollars than you realized when you took that first angel round.

I’ve got a few more posts worth of thoughts about this…  to be continued.

Growth in Digital Users in US

I was doing some research for a client and assembled some data about the prevalence and growth of various forms of digital usage that could be easily quantified.

Sharing some basic data here, but I found a couple of items notable.

1) Email usage is the largest, and still growing – This surprised me.  I was under the impression that email was stalling out and that all of the other platforms would overtake it.  This data would suggest differently.  Email is still very much alive.  This would confirm the feeling that a lot of us have that we’re not replacing, but augmenting the number of places where we can (or have to?) access data and interact with people.

Quantity of US-Based User Accounts (US, in Millions)

Digital Users

Digital Users Growth Chart

2) Instagram is growing much more rapidly than other platforms – Everyone knows that Instagram is growing rapidly, but the rate of sustained user growth is notable.  Check out YoY growth here….  Instagram is projected still be at 10%+ growth as it ends 2017.

YoY Growth Rates of US-Based Accounts

Digital Users Growth Rate Chart

Digital Users Growth Rate

 

I’m not going to wax philosophic here and try to interpret the trends.  I just found the data interesting and thought I’d document and share.

Sources

Here are the two articles I pulled the US-based user data from:

And here’s my Google Spreadsheet where I compiled the simple data.  Feel free to poke around, make a copy, etc.

Statistically, Teams Survive Longer Than Individuals

We have a core set of values that we are pretty rabid about.  We talk about our values all of the time.  They’re painted on the doors.  We give people awards in our Team Meetings for being the best at exemplifying the values.  It’s a big deal for us.

One of the top values is about teamwork, and we spend a lot of time on it:

“Teams Survive Longer Than Individuals.”

Quarterly Team Day

To reinforce our tight company culture, we hold a quarterly Team Day, in which we do three things:

  1. Volunteer in Childhood Education in Durham – We have made long term commitments to Crayons2Calculators, Book Harvest, and Healthy Start Academy, and every quarter we send the entire team out to humbly serve these organizations as they strive to help at risk youth in Durham.
  2. Science of the Team – Human relationships take work, so we spend several hours on each Team Day working on a specific item, like “How to Have Difficult Conversations” or studying our Myers Briggs profiles together.
  3. Funishment – Oh, and we like to drink beer and arm wrestle.  That definitely tends to bond people together. I should know better than to challenge Henry, who is 20 years younger than me and has some pretty big guns.  Look at those things.  Just sayin’.

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Statistical Evidence That Teams Survive Longer Than Individuals

(Credit: Gabi Huiber for the work, the text below and the graph)

 

During Science of the Team yesterday, as a group we did the “Lost at Sea” Survival Simulation and collected the results.

Basically, you’re lost at sea and have to rank 15 items in order of importance to helping you survive the ordeal.  You do it first as an individual, then in small groups of 4 people, and then you compare your individual rankings and your team rankings to the rankings of experts from the Coast Guard who theoretically would know best how to survive.

There were 61 participants grouped into 16 teams. We found that teams, even if assembled on the spot without regard to individual preferences, improved expected individual survival as measured in two ways:

  1. Team scores — achieved by deliberation among members, according to the rules of the game — were better than the average of individual member scores for 15 of the 16 teams; the exception also had the worst team score of all.
  2. The mean team score was better than the mean individual score and its standard deviation was also lower. This means that teams both improve the rate of survival and reduce the risk.

A summary table of scores is below. The score is the sum of the absolute difference between an individual or a team’s ranking of the 15 items and that of the experts at the US Coast Guard. Lower is better (meaning your rankings were less different from that of the experts).

Count Mean Median Standard deviation
Individuals 61 54.8 54 14.2
Teams 16 44.4 44 12.8

 

A density plot of the observed scores is below.  Again, lower scores are better, and note how the team scores are significantly lower than the individual scores.  The “curvy” lines are the standard deviations.  Basically, you are more likely to conform to a good score if you are in a group.  As an individual, you are more likely to be all over the map.

In essence, working in teams both increases your performance, and your likelihood of a good performance.  If you can reduce risk and increase return…  man…  that’s a ringer.  Do more of that.

Go Team.

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