From Messes To Successes
I was emailing with a top technology blogger yesterday and he said about one of his competitors in tech blogging, "they are such a mess". To which I replied, "yes, but our biggest messes have often turned into our biggest successes." And then I realized that I had made a rhyme and that I would have to blog it.
When I look back at my 20+ year history of venture investing, it’s certainly true that the biggest successes have been big messes at some point in their life. My most successful venture investment at Euclid, Multex, almost went bankrupt before the Internet came along and provided a cheap way to get it’s service to its customers. Geocities, which was our most successful investment at Flatiron, was a total mess in mid/late 1997, about a year after we first invested. And our most successful investment to date at Union Square Ventures, TACODA, was a mess multiple times including when the first build of its software totally failed on them. Delicious also had plenty of messy moments in its brief period in our portfolio. And there are a number of other companies in the Union Square Ventures portfolio that will go nameless in this post that are currently in various states of mess but doing incredibly well just the same.
I am not advocating messmaking with your startup. There have been plenty of buttoned up startups that I’ve been involved in that have been great successes. Companies like Gamesville and ComScore in the Flatiron portfolio and FeedBurner and Indeed in the Union Square Ventures portfolio come to mind when I think of organizations that have had their act together from start to finish.
But there is something about messes that lead to great successes. I think it often has to do with teams that focus almost exclusively on the product and the market to the exclusion of everything else. They don’t build the rest of the infrastructure that it takes to be a stable well executing business and they suffer a lot because of it. But in the process they get the one thing right that really matters. And the fact that they get the one thing right that really matters makes matters worse because the product takes off and they don’t have the resources in place to deal with their success. And mess ensues.
The prescription for turning these messes into successes is really pretty straightforward. You need to build the team and bring in people who excel at the blocking and tackling and the PLANNING that most startups don’t have the time or inclination to do. And you need to gradually change the culture of the business from one that is all about the product to one that is about the entire company. Sometimes, often times, that means changing the people around. And that’s never easy. And it’s even harder to change the people around when it was the initial team that made the product so popular in the first place. So you have to somehow find a way to add the "operational" people without drowning out the "product" people.
But I urge all of our companies not to overdo the "operational" thing too quickly. You need to get your act together for sure. But it can and should be a gradual process. You can’t go from mess to success overnight and even when you are a success, your company should still always be just a little bit of a mess.
Interesting, for my thesis I had to do research on European investor-attitudes towards high-tech start-ups and found out that a lot of VCs prefer to avoid technology- and market-risk (no working product / no customer-base). I guess that sort of relates to that no-mess attitude and it’s pretty understandable, considering the economic climate, the limited life-span of VC-funds, and the powerful nature and objectives of limited investors.Then again, the very idea of disruptive innovation is “messy” and can obviously reap some surprising results, but mostly in the long-term… outside the scope of the typical VC-fund and the general Anglo-Saxon attitude, which prefers short-term, and, I guess, “orderly” results.And no, I didn’t come up with an insightful answer to that problem, apart from working with a number of tech-incubators to see if they could overcome part of that problem. The team is obviously important, as is a staged survival-of-the-fittest approach towards venture development, and a little faith.
Tough times force good people to focus. Focus helps to enhance an already solid business model. You tend to do things incrementally when you hit hard times. Let’s just get this one thing done, then you move on to the next thing, then the next thing, etc. Stringing together a few solid moves/decisions can make a world of difference and can steady the ship.
Hi Fred:Nice post – and I like the ryhme. Feeling better right now about the board meeting we spent the other night hashing through five possible business models for our already successful startup! Some of the fun – and opportunity comes from being open to many possibilities.TO’B
Excellent point. Besides focusing on the product, I think another source of the messes in start ups comes from having to adjust on the fly. I know many startups start out with one business model, or a very clear vision of what their product is supposed to do, and it stays that way. Buy many start out with a product or a feature set and find out after it gets to market that it applies in completely different ways to markets that haven’t been considered.Inevitably, during the transition things get messy because things have to happen so fast. If the team can’t refocus quickly to new opportunities, it’s obviously difficult to take advantage of an opportunity, no matter what other advantages it has. Flexibility and agility, I think are underrated traits in startups.
Seems like you are talking about Twitter at the end no?
Everyone is going to read this and think ³he’s talking about twitter² buthonestly this is about 2/3 of our portfolio right now
It’s no fun being in the “mess” stage unless you have struck a chord in the markeplace. Your mess stage is then different then the development mess stages. A lot depends on what stage your mess is in. Looking back aftwerwords is a different matter.
The problem is, if you have a mess for too long even with a great product, you can lose all your market share if someone who is more organized delivers the same/similar product. Sometimes you may have to replace the team to get the product out there, and sometimes, the market replaces the company with another, in order to utilize the product. I blogged about Twitter vs. Friendfeed and this very problem just yesterday, actually!
Best post of the year by far.You captured the level of turning a creative enterprise into a sustainable business. The cultures are quite different and are very hard to exist together.Great job on this one Fred, should be required reading for all in the startup world.
Thanks. I love to hear that kind of feedback. A pat on the back from time totime is good for everyone.fred
Encouraging article, thanks.
Finding your way through the mess is the best part of starting a company. When you start there are numerous known and unknown stumbling blocks, business models, opportunities, threats, challenges, etc. Navigating your way through these uncharted waters is very difficult but also very fun. There is no greater challenge than taking a cool idea and figuring out the best way to proceed through the mess.
Another on-target post, Fred, nice one! As someone who is involved in startups from the “blocking and tackling” and planning and anti-mess side of things, I think a point you slightly missed was this: the more the CEO and other strategic/product/vision folks in the company have to DEAL with the messes internally, the less they can focus on the strategy, the product, the customer, etc. So the value of the operational people comes from freeing up the outward-facing execs to do their thing.
Being one of those “operations” guys that comes in to right the ship I completely agree. I have seen a few too many companies that have built great infrastructure but not a great product. Too much conflict in the early stages occurs between the “JFDI” product team and the “we need to scale” ops team. Product first, market second, company third…always.
Really great post. Insightful stuff from long-term portfolio experience that you don’t get in a lot of places.
Define “mess”… not all messes are created equal, I suspect.
Two thoughts come to mind:Firstly sometime on some VC blog over the past year it was suggested the last thing a start-up needs is a business plan. Gannt charts are fine for construction projects and even then you cintend with the weather or the rogue supplier. You need a solid concept, a good compass, and frequent reality checks because there will be storms – and straight courses are unlikely.The second point related to post 18 – Europe VC. Draw a quadrant chart with dimensions low/high cost investment and low/high risk dimensions Guess which square decision takers have least experience in. If you have a disruptive technology which comes with its own business and yet to be proven market– it is by definition high risk. At the moment my early stage needs the heading to be set – but to stretch the yachting metaphor a bit – we are going to have to tack.
Amen brother!Pithy corollaries:- fail fast- always make new mistakes- perfect is the enemy of the good- inexact does not mean unusableThe transition you describe between the hyperfocus on product to the broader focus on company is the most painful in my experience, but also the most critical to building a big business
Something that I do is to watch the clip Wear Sunscreen. It was completely created with excerpts of commercials, however in the clip the purpose of the excerpts is to make you happier, instead of to try to sell something to you, as in the original commercials.<object width=”425″ height=”355″><param name=”movie” value=”http://www.youtube.com/v/xf…”></param><param name=”wmode” value=”transparent”></param><embed src=”http://www.youtube.com/v/xf…” type=”application/x-shockwave-flash” wmode=”transparent” width=”425″ height=”355″></embed></object>
Wrong post! It should be in the “Hit the reset button”
Do you think that the transition between “cool product with traction” (the hardest part) to “real company that scales” has often required a significant change in staff? Not pointing at Twitter which I still think is awesome, even with the stability issues.
Very timely post. I woke up today feeling overwhelmed with the “messiness” of my company. We’ve focused on growth to the exclusion of building infrastructure. And while we tripled our revenues last year, now we find ourselves undercapitalized and understaffed, without the proper sales staff and processes to handle all our incoming leads, without enough technical people to handle all our support requests, and releasing buggy products to drive growth and meet customer demand. It’s only working because we’re solving a real unmet need, so our customers are willing to give us some slack. But that won’t last for long. I can already hear the rubber bands holding everything together snapping.I get the need to hire some operational people to put infrastructure in place. But hiring people requires money. And money requires talking to VCs. And talking to VCs takes time away from the business, causing more of a mess. And it seems VCs want you to have solved all your messes before they invest in you.So, while I agree great messes can become great successes, when you’re in the morass, how do you raise the money needed to get out without scaring away the only people who can help?
You need to find the VCs who want to invest in what you’ve built. I blog about the things I want to invest in and the things we have invested in and I hope it helps entrepreneurs figure out if I am the one to talk to or not. many other VCs are blogging now too. If you do a little work to figure out who is going to like what you’ve creatd, you can shorten the fundraising cycle.fred
Fred,The part that chews on me about this whole discussion is that there is an implicit assumption that you can’t have people who are both creative product-wise and smart operationally. I think VCs short change this potential and I don’t know why that is. My devil tells me that VCs know they can extract more equity from creative product-types as smart organizers are going to be more savvy negotiators. My angle tells me that some VCs are just as dippy as the dot-coms and they don’t even know that you can have both. I would be worried if I were you that you’ve skewed a little too much to the mess side of the equation, but maybe you like the adrenaline that comes from careening to and fro based on…oh, I don’t know…the uptime of a fantastically popular communication application?Wouldn’t it have been nice to spend a little more and pay some money to have some professionals who know how to run global-scale consumer applications?I’m just sayin’!
thank you for the flattering shout but you are far too kindgamesville was a bloody mess often, and for any number of reasonswe met you/jerry/flatiron after four years of work (and mess), when we did have some of our act together.but even then, we were always designing and building the bridge while we were also running across it.woot! if you don’t love that, don’t get near startup businessesside bar:actually, i’ve never experienced a truly buttoned-up situation, business or personal life.what’s it like?for me, maturing and education and all, is about somehow learning — slowly, day by day, bit by bit — to try to enjoy the messiness and chaos of life and the cosmos, to somehow thrive and find joy and rewards amidst the entropy
Terrific article Fred. You hit it on the head. Focus on the product. Make it great. Build the team, the processes and the operations around that great product. This is the recipe for success. Without a great product, you will throw a lot of money at building the company, but with little hope of a great success. Again, nice article. I wrote about your post at http://blog.swoda.com/2008/….
The post was inspired by all of our current messes. Like my kids, I lovethem equally.fred