Put a plan in place for thinking before you actually start thinking.
Big decisions in life are gut-wrenching. Who to marry, where to work, who to hire, how to fire, which subject to major in, how to make a career change, which car to buy, where to invest, et cetera. We stall and brood over those because all such decisions represent major forks in our life. Usually (but not always) these are one-way roads. After all, you don’t buy a house or choose a company to work for every other day.
Given the importance of big decisions in our lives, it’s a surprise that nobody teaches us how to handle them. We’re taught solving for lever and pulley problems (something we’d never encounter in real life) but we’re not taught how to choose a career.
Imagine the damage this big miss in our education has caused. If we had Decision Making 101, we could have reduced regrets, moved faster in life, saved money and got psychological peace and comfort from making confident, thoughtful decisions.
Our brains didn’t evolve to make the ‘right’ decisions
We need to first admit that thinking is hard, and deep thinking is even harder. This is because our brains never evolved to be certain, they evolved to ensure we survive and reproduce. While we want to optimize (take the best possible decision), our brains want to satisfice (take a good enough decision).
This difference in what we want (choosing the best career) and what our brain gravitates towards (choosing a “good enough” career) results in that familiar gut-wrenching confusion. Once we take a gut-backed decision, we keep asking ourselves: “what if I negotiated a little bit more”, “what if I had chosen a different major in college” and our brain happily remains undecided because even it doesn’t know! (How would it know if you haven’t done proper thinking?)
The default method of deciding for most people is really sloppy. If there’s a big decision hanging up in the air, we immediately start considering options that occur to us. Then we do a Google search or ask our friends and family. In most cases, this decision making process relies on luck (availability bias): whatever comes to mind or whatever Google search turns up influences not just the decision but what we value.
We’re forgetting how to think
Thinking is hard enough already, but even that ability is slowly getting lost. Reflect on this: when was the last time you closed your eyes and really thought hard about something for more than 5 minutes? If you do that regularly, fantastic! But with Google just a few keystrokes away, our default method of thinking is becoming web search. We’re delegating our thinking to Google.
Internet is great at giving us pre-thought ideas and knowledge but it is taking away our ability to think in return. This loss of thinking happens in two ways:
Social media makes us react, rather than act. Our opinions and preferences are constantly getting shaped by what we see and read around us. Do we really know what we want anymore?
Google lulls us into a feeling of “thinking” without actually doing any thinking. Reading a Quora answer or Medium article is not thinking, but it feels like that because our brain gets an expanded perspective (one that it didn’t have before).
I do not have an issue with research on Google or reading articles on Facebook or Twitter. What I have an issue with is this path dependence nature of consuming information when you don’t know what you’re looking for.
Thinking v/s Metathinking
Metathinking is a process of thinking about thinking.
Everyone, obviously, thinks through big decisions. No matter how deep or shallow it is but there’s always some amount of thinking that goes through before making a decision. But, as I wrote in my previous article on avoiding cognitive biases when you’re paid to think, all sorts of chance events impact the outcome of thinking. The sequence of information we consume becomes the primary influence on our thinking process and decisions. And, when you do a Google search, that sequence of information is totally determined by the first few results.
There are SO MANY BIASES in our usual ways of thinking. Consider just a few examples.
Your current mood could end up kick in confirmation bias. Are you feeling happy on the day of interview? Seeing a foos ball table could end up convincing you that the company is a good fit for you.
What you read about in the morning newspaper could end up kicking in availability bias. A terrorist attack in the country you were thinking of visiting ends up striking it off from your holiday shortlist.
The article that’s #1 on Google could make up your entire decision criteria. Inc.com says education degrees are unimportant during hiring, so that goes off the list.
Whatever a nicely dressed and perfumed sales person emphasizes becomes a big decision criteria. Oh, it comes in four colors? I like red, and colors are obviously important for me, so let me pick this one.
The list of biases could go on, but hopefully, you get the idea of how much chance plays a role in deciding things for you.
Rather than going randomly about “thinking”, a much better approach is to “metathink”. That is, before thinking, decide what process you’re going to use for thinking, list down how you’d ensure you prevent common biases, enumerate the criteria that’s most important for you and depending on importance of decision to you, how much time and effort you’re willing to put into “thinking”. Only once you’ve clarity on all these aspects of your thinking should you go ahead and do the thinking.
Metathink with me
OK, time for a small exercise. Just reflect on your last big decision. It could be about career, life, purchase you made, trip you took. Think of a decision that involved substantial time, effort, reputation or monetary investment from your side.
Now recall what was your process of taking that decision? Reflect on it from start to end. I recommend writing it on a piece of paper to be able to contrast it with my suggested approach later.
Don’t proceed until you’re done.
Now, imagine that the decision and event never happened, and you have to take the same decision today. How would you go about it?
With experience and hindsight, you’d think that you would take a better decision this time but you’re wrong. Hindsight and experience remove certain biases but they add their own. For example, these factors could significantly influence what you decide (again): your today’s mood, highlights that you remember about the decision, an off-hand comment about your decision by a friend, what you’ve read up recently, etc. Unfortunately, you’ll make similar errors in your decision making even when you do it the second time (ever heard people divorcing more than once? or people changing jobs in quick succession?).
Experience is useless and expensive unless (deeply) reflected upon.
My recommendation is to metathink your decisions. When it comes to thinking, instead of diving straight into thinking, dive into your thinking about thinking. It’s extremely important to start with thinking about how you will decide rather than deciding because any bit of information that comes to your mind during deciding changes your criteria. And that makes your decisions path dependent and open to influence by chance.
Metathinking sounds trivial but isn’t
Chances are that you may be underwhelmed by my advice because decision making criteria is common knowledge. You may have drafted criteria for few of your decisions before, so let me emphasize what you probably didn’t do:
How often do you make a decision criteria for decisions? Like brushing your teeth, metathinking is a habit. The point is not if you have ever brushed your teeth, but if you do it daily. Similarly, the point isn’t if you’ve ever made decision criteria for your decision, but if you make it each time you need to make a decision.
Do you make a decision criteria before or after doing research or thinking on a decision? If you make your decision criteria after initial phase of exploration, you defeat the entire point of decision criteria. Metathinking needs to be the absolute first step for any thinking process, otherwise it’ll be biased.
As an example of metathinking, when it came to choosing a city to establish the second Wingify office (a city where my wife and I would have to shift to), here’s the criteria we came up with before talking to anyone or doing any research (in descending order of importance):
Closeness of city to the airport
All year moderate and pleasant climate
Traffic on roads
Culture (beer, music, plays)
With this criteria, we ended up choosing Pune. Everyone advised us to choose Bangalore, the so-called Silicon Valley of India, but it scored really bad on traffic and closeness of city to the airport. Had I started talking to people without clearly laid out decision criteria, I may have chosen Bangalore (a city that’s infamous for its traffic jams and city being 2 hours away from the airport).
Similarly, as an example, before thinking and writing this blog post, I laid out why this article was needed and what was important to be conveyed.
Another example. Last year, I decided to talk to founders who have scaled their companies to $50mn and beyond. One approach could have been to get on a call and “wing it”: ask them whatever comes to my mind. But these calls were more or less one shot for me: I couldn’t just keep going back if something “occurred to me later”. So, I clearly laid out what I wanted to cover in these calls before going on my first call.
Summing it up
To sum up my advice in one tweet: metathinking is a plan for thinking. Imagine making a building without a plan: going to a construction site and “winging it”. You wouldn’t do it, right? Then why would you not plan when it comes to making big life decisions?
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Understanding a success story in all its nuances is similar to understanding how the world works, and doing that takes effort. Half-understanding success is dangerous as you’ll waste time and energy looking at only a few sides of the multi-sided dice of success.
We thrive on stories. We want to know who did what to whom and what happened after that. People watch the news for hours and binge on Netflix because we’re evolutionarily wired to seek stories. Our ancestors who told and listened to stories had a higher survival rate because stories bound them together. Stories helped form groups that killed Mammoths and take over the world.
Stories bind people together because they provide a natural boundary between us-and-them. Those who share similar stories are ultimately similar people — Christians bound together by Biblical stories, USA bound together by stories of freedom and independence. When friends gossip, what they’re really saying to each other is: we belong together.
Because stories are compelling, they can animate listeners to act. Crusades, Jihad, Putting Man on the Moon, Nazis — all human action is a result of someone telling a good story. A good story is manipulative. It can make you do things that otherwise you’d never think of doing, make you regret time and effort wasted chasing a fictional goose, make you adopt someone else’s values. Of course, if you are lucky — depending on the story and your circumstances, it can also do a lot of good to you.
Actually, the dangerous thing about stories isn’t just that they’re manipulative. It’s that when you’re immersed in a story, you can’t tell if it’ll do you good or bad. There’s no way to only listen to the ‘good’ stories. All stories are ‘good’ from the perspective of the storyteller. Whether it improves your life or makes it worse is impossible to tell because good storytellers can convince you of anything.
All this sounds ominous but there’s no doing away with stories. Being human is to tell and listen to stories. But you can arm yourself with a perspective that’ll help you not get swayed away by a story right away. Of course, even this essay is a story. So I encourage you to read critically and intently.
I’ll focus on success stories but similar ideas apply to failure stories.
Biases in success stories
Successful people rarely admit that it was luck
– They, like everyone else, desire status, so they want you to respect and like them – They’re less likely to mention about luck or chance, or foolish things they did. You’ll always hear how smart they are – It’s called the narrative fallacy
Media shapes the story to make it seem like anyone can do it (otherwise who’d pay attention?)
– Journalists gobble up rags-to-riches and against-all-odds stories because they appeal to a wider audience. Otherwise, no one would read their detailed, nuanced and likely boring account of someone’s success
You pay extra attention to the parts of success stories that seem within your grasp
– Subconsciously, you do not analyze the totality of a story but direct your attention to the parts that are within your reach – You cherrypick factors accessible to you from all the factors that contributed to the success
Because the story is so compelling, you (implicitly) assume that striving for success is a good choice in life
– What if a success story makes you quit your job even when you’re perfectly happy with it? – To pay attention to a story is to buy into its author’s value system. Your value system could be different and unless you’re aware of what you want in life, a good story can make life choices for you without your deliberate choice
Success is complicated and multidimensional, stories are simple and unidimensional
Success isn’t like flipping a switch. Success builds up over time — little by little, one decision at a time.
Think of success as a sequence of coin tosses that have to come up in an exactly right. So if millions of people are engaged in tossing coins, you’ll see someone that gets it right and start rationalizing how s/he was motivated, worked hard and made all the right choices while tossing.
We can acknowledge when successful people tell their story as humans are wired to self-promote. But we have to be skeptical when we listen to them because self-promotion is always a necessarily biased account.
This narrative fallacy happens because the longer it takes for someone to be successful (say win an Olympics Gold medal, take a company public, win a Nobel Prize), the more is the number of events and decisions that have to go right and more is the number of situations in life that are required to not derail the success trajectory.
Think of it this way: the more the number of events in a sequence that have to go right, the less likely that a successful person can take credit for all those events. Some decisions or actions may have been deliberate but many events may have happened by chance (or unknowingly to the person). But, nobody tells such balanced stories because they’re long, boring and take away the shine from the successful person. So all you hear about is how successful people did something special that lead them to their success.
What you also don’t hear is that success stories contain a thousand little details that had to go exactly right. You don’t hear about that because even successful people aren’t aware of all the reasons that contributed to their success. Imagine that you’ve got good athletic genes and you’re unaware of that, if you win a sports content, you’ll end up attributing your success to your practice or your coach. Or, if as an entrepreneur a key customer promoted you at a conference without you being aware of it, you’ll attribute your success to all the marketing you’ve been doing.
The world is complex, success stories are simple.
Beware of simplified success stories
When you come across a success story, ALWAYS think about:
What is the story teller’s motivation?
Is it to sell you something? Get your vote? Make you like him/her? Make you share the story widely?
Has the storyteller shown evidence (previously) of being a nuanced and deep thinker?
It isn’t necessary for someone to be a deep thinker to be a successful person. Other attributes — perseverance, networking ability, luck, etc. — can play a role in success. But, to know the full set of reasons behind success, the storyteller needs to be a critical thinker.
What is the storyteller not telling you?
What s/he chooses to leave out is as important as what s/he chooses to tell. For example, if the storyteller doesn’t mention that his brother-in-law is a politician, you’ll end up concluding that hard work is all that matters. Or, if the storyteller just talks about luck, you’ll wait around doing nothing and not put in the hard work necessary to actualize that luck.
What happened to the other people who did things similar to the storyteller?
If someone says they worked really hard to become successful, think about the people who worked hard but went nowhere.
Would you trade all aspects of your life with the storyteller?
The multidimensional aspect of success means that you need to be ready to re-live the story teller’s life in order to achieve the same sort of success. This is why when you, for example, get inspired by Elon Musk’s genius, you have to be mentally ready to be criticized and hated for all the things that Elon Musk is disliked for (divorced three times, rude to employees, disdain towards government). You cannot cherry pick factors that you like or are convenient to you. They’re all connected.
All this sounds like a lot of work for each success story you listen to but that’s what’s required for you to not get swayed. Listening to stories critically is difficult because stories contain all sorts of cognitive biases, so if you aren’t willing or do not have the mental bandwidth, disbelieve the story entirely. (Storytelling by customers is also a major type of cognitive bias for product managers and designers).
Whenever you’re listening to or reading a success story, it’s better to assume that success was a result of chance events and then derive generic principles and understanding of how the world works (i.e., things that even the storyteller wouldn’t be aware of).
Understanding a success story in all its nuances is similar to understanding how the world works, and doing that takes effort. Half-understanding success is dangerous as you’ll waste time and energy looking at only a few sides of the multi-sided dice of success.
Is success worth it?
If success is so hard to stumble upon, is it worth it? Well, that totally depends on how you define success. Remember: just because someone is able to tell a good story about their success, it doesn’t mean it’s your success too.
My advice is to define success as a process over which you have control over vs. an outcome where chance plays a big role. By process, I mean your values and how you choose to behave daily at work and home. All these things you have control over: being honest, working hard towards goals, learning, creating, speaking the truth, spending time with family, persevering. What you don’t have control over: winning the Nobel Prize, making a million dollars, becoming a famous actor.
If you’re honest and put in good effort, that’s success to me.
Understand that there’s a bias for billionaires to do chest-thumping, media to cover their chest-thumping while convincing you that anyone can be a billionaire, and you to give up things you like for an unlikely, but possible outcome of making a billion dollars.
If you want to be a martyr, chase outcomes. If you want to feel fulfilled, chase being the best you can be. Maybe your chances of success are higher when you’re not trying too hard?
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Identify compensatory behaviors, understand underlying motivations and design a solution for supporting those motivations.
Most entrepreneurs are aware of product-market fit. It’s a good advice but I have an issue with the term “product-market fit”. It makes an entrepreneur focus on product first, market second. The words we choose to describe the world end up shaping the world for us. This means not all “social networks” are the same and the words you choose to describe an innovation have a significant influence on how much customers value it.
Repeated usage of the term product-market fit develops a mental model where the entrepreneur’s inclination is to make a product (or get an idea) first and then go out in the market to test it. In fact, that’s what Lean Startup and other methodologies suggest. Perform quick experiments and fail fast.
The issue with this mental model is that it doesn’t work most of the time. I’ve been involved with tens of product failures and have seen many other startups struggle because they’re trying to find a product-market fit where there is none. Starting with product or an idea also leads an entrepreneur vulnerable to confirmation and overconfidence bias. Because an entrepreneur starts with an idea, she starts latching on to even the slightest of positive news while explaining away (or ignoring) all non-usage with various reasons. Evidence of absence is not absence of evidence. According to my experience, confirmation bias is the number 1 reason for startup failures that not many talk about. (However, there are hacks to avoid cognitive biases).
Market-product fit, not product-market fit
I came across the term “market-product fit” here and since then I’ve come to appreciate it. The key implication of this swapping of words is that an entrepreneur searching for market-product fit starts with the market first and then derives a product from it. It’s a subtle shift but one that makes all the difference.
A classical example of market-product fit is how Sony’s founder Akio Morita created Walkman. He observed teenagers lug heavy boomboxes with them to beaches and realized many places where music is needed are not convenient for a heavy music device. So he asked his engineers to create a version of the boombox that can be carried along. (Sony was able to execute on the idea because they had a prior experience in miniaturizing electronics and they were able to market it because they had existing distribution and brand; remember, we’re talking about ideas here, and not capability or economic profitability of executing and marketing those ideas).
My initial startup attempts were all idea-driven. Kroomsa was my idea of putting college-band indie music online. Wingify’s first platform was an all-in-one marketing software. None of them succeeded. What worked for me was trawling through online marketing forums and observing people describe their struggle with Google Website Optimizer. The result was my first successful product: Visual Website Optimizer. Of course, I know this only in hindsight but it makes sense from first principles: any evidence of a pre-existing consumer behavior is an experiment already done for you. The data point that teens want to listen to music on the go was one experiment less for Sony. Similarly, the data point that well-paid marketers were doing A/B tests and struggling with them was one experiment less for me.
Compensatory behavior is compensatory to what?
All this may suggest to you that I’m recommending looking for compensatory behavior by customers. Innovative customers in any market are already hacking together solutions that an entrepreneur can improve upon and standardize for the rest of the market. But the trick here is to ask yourself: what’s a compensatory behavior and how would you identify it?
Compensatory behavior implies that users know their existing behavior is compensatory (and suboptimal) to a better solution out there. But that isn’t the case. If users were aware that their behavior is compensatory to something else, they’d go and get something else. This is why you can’t simply survey people and ask “what are your compensatory behaviors?”. I know this doesn’t work because at Wingify, we tried it and got no useful results. Customers do what seems natural to them. Finding out whether there’s a better way of doing things is the job of an entrepreneur, not customers.
So what works?
Look for surprises, study anomalies
If people aren’t aware of their compensatory behavior, the job of the entrepreneur becomes that of an observer. Look around you and ask yourself: What seems odd? What shouldn’t be happening but is happening? What’s happening but shouldn’t be happening? Entrepreneurs are explorers first, inventors second. Once you find these anomalies, look for the “why” behind such behaviors. Why are people doing this? If it was easier/legal/cheaper/faster, will others do it too? You don’t have to copy customers’ behaviors and offer that as a solution. Rather, understand underlying motivations and design a solution for supporting those motivations. Remember, nobody likes using technology.
The anomalies and surprises will give you a starting point, but it’s important to probe deeper into understanding what’s happening and whether it represents a valid business opportunity. I’ve made the mistake of jumping right into the first idea that seems even half-good. The positive signal is usually an indication of confirmation bias at play. Remain skeptical but optimistic.
There are many ways you can still go wrong in business: maybe what you observe is a quirk, maybe it isn’t applicable to a wider market, maybe you can’t design a better solution than the current one, maybe you can’t market it profitably, maybe once you make it, an established competitor copies it. Discovering and executing a profitable business is hard and all these failure possibilities are real. But you have at least reduced one point of failure, and that is: someone already is in the market for what you’ve observed.
Some examples to make you think about market-product fit:
What are people doing in spite of governments not allowing it? Avoiding taxes, buying drugs, speaking freely. What are the motivations for those behaviors? How would you address those motivations in a legal manner?
What is everyone annoyed by but people still do it anyway? Talking on the phone at movies, long queues at the grocery, not getting enough likes. Why are they doing that? Is there a better way?
What do your neighbors do that you find surprising? Early morning running, multiple locks in-house, not paying enough to maids. Why is it surprising? Are you, not them, an anomaly?
What are your friends or cousins obsessed about (that you don’t understand)? Trying new bars, sharing photos of their kids, posting good wishes on Facebook. Why are they doing it? Is there a better way of accomplishing the same desire?
What anomalies have YOU spotted in the wild?
What are some of the anomalies around you that surprise you? What shouldn't be happening but people are doing anyway? Can these be good startup ideas? #startups #products #innovation
Expose yourself to understanding the “why” of your profession
Most self-made professionals get attracted to the methods and tools because they get immediate results. Want to do content marketing? Sign up on Medium, write an article and spread it. Want to write your first app? Use Bootstrap in the frontend and Mongo/NodeJS on the backend, and you’re up and ready in a couple of hours. Tools enable immediate gratification and that’s what makes them so attractive.
However, this over-reliance on immediate gratification comes in the way of actually understanding what they are really doing. You ask any self-made marketer, programmer or designer what they do, they’re likely to respond with a tautology. Marketers market, programmers program, and designers design. It’ll be hard for them to answer what they really do because their knowledge of the profession is limited by what their respective tools allow them to do. Most have not exposed themselves to understanding the why of their professions.
To really understand a job, you have to strip away all the tools, methodologies, frameworks and best practices and then look at the core of what’s remaining.
Not understanding the why of a job limits how well you’re able to do it. Why do marketers exist? They exist because consumers are happy leading their lives, with or without your products. Why do designers exist? They exist because finding what arrangement of things is desirable is not trivial. Why do programmers exist? They exist to reduce human effort.
This understanding of the core of a job gives lasting power to professionals. Marketing channels, design styles, programming languages, all these come and go. But what remains relevant for a long time is the reason such professions are needed.
For you, what professional or personal skills from previous 2–3 years are outdated now? Tweet your response to me as a reply to this thread and I’ll retweet the most interesting examples. In the same thread, you can also check out and comment on what others proposed.
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Few B2C products dominate the market, hence the largest tech companies in the world are predominantly B2C. But for startups, B2B proves to be a better option after failure in B2C.
In my conversations with other entrepreneurs, I’ve come across tens of startups that started with a B2C angle but eventually succeeded as a B2B company. Outside of my experience, famous examples include Slack that started as a gaming company. VWO’s competitor, Optimizely, started as a company that made math teaching apps for children. In my experience, it’s far more common to pivot from B2C to B2B than the reverse. Why does that happen?
I love getting into details of the structure of success and analyzing things beyond surface level impressions. So here are all the reasons why B2B proves to be a better option after failure in B2C.
Consumers want to conform, companies want to differentiate
Most consumers at any given moment are satisficed with what they have. Since we’re creatures of habit, we tend to go to the same restaurants that we like, buy the same stuff as we’ve always done and live our days without significant deviations. We’re less exploratory than we’d like to think. This is because there’s a cost of change. Whenever we are trying a new product, we’re incurring a cost (of effort, time or money). And, we go to great lengths to avoid these costs (even to the extent of jumping red lights when that’s clearly life threatening).
As social animals, we usually want to conform to what others around us are doing. We do not want to be left out of social phenomena of favorite movies, fashion trends, and what’s new. This makes it hard for a new B2C startup to gain traction because it faces a chicken and egg problem: nobody uses their product because nobody else is using it already.
Companies, on the other hand, are usually on a lookout to differentiate. Instead of conforming, companies want to gain an edge by doing something nobody else is doing. That’s why they’re willing to give startups a shot. New products will make them faster, cheaper or better than the competition. (Of course, there are consumers who want to differentiate from each other. But the greater tendency for humans is to avoid being a sore thumb.)
Consumers hate getting sold to, companies love it
Many failed B2C products might have been beneficial for consumers if they had the patience to understand what the product might do for them. But consumers are impatient and if the value is not delivered immediately and continuously, they might stop engaging further and abandon the product for what could have been later valuable.
In B2B products, the customer is habitual to getting sold. In fact, they prefer a sales process where a human explains them the benefits and costs of the product. This preference to being sold allows an entrepreneur to communicate the total benefit of his product in a way that’s impossible to do in a consumer scenario. Imagine if you go to sign up for Facebook, and they start a video telling all the small and big features of the platform. As a consumer, you’ll immediately hit the back button. But for a B2B product, if you get their initial interest, prospects will want to watch videos, discuss and request presentations to understand what they will get for the price.
This means that there are a lot more ways for a B2C product to go wrong: bland marketing messages, confusing first few seconds of on-boarding, boring look and feel, lack of habit building, etc.
Consumers want stuff for free, companies want to pay
Winners usually dominate in B2C, while B2B is long tail
There are hundreds of CRMs but only one major social network because consumer markets are prone to winner-take-all effects. This is because the network effects for millions and billions of consumers aggregate and make existing consumer products an obvious choice for the remainder of consumers left in the market. If you have Uber that all your friends are using and it has all the drivers in your city, why would you try something else?
For B2B, since the number of businesses is far less than the number of consumers, whatever network effects there are, they are weaker than B2C. There are network effects in B2B for sure: partner network and communities emerge from successful B2B products but their impact is weaker. These network-effect driven benefits in B2B can be overcome via better service. As a B2B startup, if you understand that nobody really likes using technology and all they want is to get their work done, you can offer consulting services and customized solutions to help them do that.
That’s why there are hundreds of CRMs out there that businesses buy in spite of Salesforce because these non-Salesforce CRMs are able to offer a better service, customized implementation or that tiny feature that some companies want (which Salesforce doesn’t have).
Most products fail not because they’re bad, but because nobody pays attention to them. Entrepreneurs can deal with negative feedback by improving the product, but they don’t know what to do when there’s no feedback (good or bad). This non-usage leaves an entrepreneur uncertain of the direction to take from there.
In contrast, every sale conversation an entrepreneur has for a B2B product is feedback on how to improve it. What matters for new products is conversations; feedback gives energy and inspiration to an entrepreneur. In B2B, it’s easier to get hold of someone and have them give honest, rational reasons for disinterest (or interest).
Consumers, on the other hand, mostly decide from their emotions and gut-feeling. That makes the analysis of feedback for consumer products much harder than that of B2B products.
Entrepreneurs are not prototypical consumers
It’s rare for an entrepreneur to be a prototype of an average consumer. Even though they shouldn’t, most entrepreneurs end up designing products that they’d love to use themselves. This means that they end up confusing their behavior with the behavior of an average consumer. But an entrepreneur has a very different personality than an average human — only the very crazy leave the comfort of a job and start a company. So entrepreneurs who design consumer products for themselves are at risk of designing for a market that doesn’t exist.
But when it comes to companies, most companies are entrepreneurial because they want to differentiate and be ahead of the competition. So an entrepreneur’s mindset in B2B works in favor of designing and selling a product that puts an organization ahead of others in the market. This is why the chances of an entrepreneur making a B2B product more successful in relating to actual needs in the market are higher.
Do you have examples contrary to what is described in this article? Share your thoughts with us using the thread below.
Do you know of B2B startups who pivoted to B2C and have been successful? Is the reverse a relatively easier/better option? #startups #success #failure #lessons
When only selling your SaaS product isn’t enough, you need to ensure that your customers are successful using it.
If you’re selling a bar of chocolate, you don’t need customer success. Not only is the product self-explanatory, the value expected out of it by the customer is well-known to all. If you’re selling a dishwasher, a user manual and a customer service number will be all that you need. When it comes to SaaS products, however, you need to ensure that customers get full value of the product, in the manner perceived by them, and that this leads to the customers’ success. To achieve this, a customer success team becomes a must-have for your company.
The birth of Customer Success dates prior to the popular SalesForce story. It came with the primal recognition that the burden of being successful in using products would have to be shared between product makers and customers. Today it is a fast evolving discipline focused on the customer’s business outcomes and their overall experience with the software they purchase.
Paras Chopra, founder of Wingify, admits to not being a follower of assembling a customer success team in the early days of the company.
In the initial days, the belief at Wingify was that if you build a good product, you do not need to talk to customers. And if you have to talk to customers, your product is not doing the job it needs to do. Wingify always had a customer-centric approach and customer support was very important. However, Customer Success as a function was only established in the 5th year of Wingify’s 8 years of existence!
As Paras puts it, “A perfect radio would be no radio at all, just a room with music.”
The customer success function at Wingify evolved from the realisation that clients were simply interested in getting value out of products, and not in any sort of bulky technology. Selling products without a customer success team was like giving clients a new piece of technology and asking them to do some extra work that would take away from time that they could spend doing something else.
Customer Success is an important function at Wingify today. Recently, we teamed up with Strikedeck, a customer success software company, to organise Pune’s first Customer Success Meet up. The agenda of the meet up was to debate mainly on two topics currently raging in the world of customer success:
Is Customer Success different from Customer Support?
Should Customer Success Managers be engaged in selling?
This post talks about the key learnings derived from this meet up, which included a key note from Paras along with the panel discussion between founders and CSM professionals of the SaaS industry.
How is Customer Success a different function than Customer Support1) To help shift the conversation from product adoption to customer success
A lot of talk goes on in Customer Success about on-boarding and product usage, but what actually matters is whether the customer is able to achieve their business objectives with your product. This is the conversation that Customer Success Managers (CSMs) should be having with their customers. It impacts what they are being held responsible for — whether its product usage or a success metric for the customer. A lot of companies do not know what the success metric for their customer is. It’s okay if the product adoption is low, but if your customer is able to achieve their business objective with you as a vendor, it’s a big win.
One way to do that is to always be on the customer’s team. CSMs need to behave like the client sitting in the company’s office. Secondly, they need to be proactive. If you are there for your customers when they are having issues with the product or when they need help, you are a good CSM. If you reach out when your customer needs you the least, you’re a great CSM. A great CSM also asks for introduction to the client’s colleagues, understands other products that the customer uses, and has in-depth knowledge of the customer’s KRAs and business goals. A great CSM is the customer’s partner in success.
With more and more competition in SaaS, the relationships you cultivate become an asset and a strategic advantage. If you can grow and nurture these, you can continue to sell more to the customers, whereas if you do not, a competitor can swoop in and give them a better price to leave your product.
2) Customer Success evolves with the growth of the company
Abhijit Joshi, Director — Service Delivery at IDeaS Revenue Solutions, shares how customer support was a starting point for IDeaS to build skills and understand client queries. But as the company scaled, having just client support was not enough. Clients often do not ask valid questions. Customer Success is needed to build a strategic connect with clients and to gauge from their questions whether a client needs education or the product needs modification.
As IDeaS scaled further, the Customer Support and Customer Success functions were each divided into two separate divisions.
Customer Support is a vertical dimension requiring deep domain expertise. At IDeaS, this team is divided into Technical Support and Analytical Support. Customer Success is a horizontal dimension which requires broader skills like understanding the business domain, having clarity of thought and communication, business skills and strategic thinking. Customer Success functions have been divided into Pre Sales and Post Sales. The Pre Sales team analyses the prospect and sometimes even tells them that they are not ready for their solution or offering yet. Post Sales plays the role of Customer Success for their customers.
Despite the difference in expertise needed for each role, IDeaS does not hire anyone in Customer Success directly. They only hire people in Customer Support. 20% of the hires are above their Customer Support benchmarks. These employees are given better compensation, accelerated training programmes, exposure to strategic opportunities with existing clients, and thus groomed into a Success role. It serves as a growth path for the employees and also gives great returns to the company.
3) Customer Success bridges the gap between ground teams and decision makers
According to Vishwa Malhotra, Co Founder & CTO of MangoApps, a CSM is the customer’s advocate and needs to be present whenever someone else from the organization is interacting with the client. The Success Metric for your customer should be built into the product so that the CSM can inform both the ground team using the product as well as the decision makers about it. This will empower the CSM and make renewals easier.
Deepti Khutal, Senior Customer Success Manager at Ooyala, agrees with this philosophy and shares her own experience as testimony.
While working with a large media company, I found that their ground team that used the product primarily was constantly unhappy with it. However, the decision makers in the company realized that even though there were a lot of technical issues raised, the product was still bringing in revenue for them! To drive this realization home, the CSM had to be constantly in touch with both teams and show them the bigger picture.
4) Customer Success is proactive, involves keeping the end user in mind, and can evolve into a Product role.
Customer Support is reactive whereas Customer Success is proactive. Customer Support teams have to be thorough in their understanding of the product and its functionality. They also have to ensure support is provided in an omni-channel way and within a quick turnaround time. A Customer Success Manager, on the other hand, has to be a design thinker and has to not only think about his/her customer but also about the customer’s customer. In B2B and B2C, the end consumer is where everything starts, believes Saurav Mitra, Practice Head — Digital Platforms & Consulting at Tech Mahindra.
I cannot just ask my customer, “Hey, is the functionality really working for you?” It is more important to see if it has the required impact on the end user. When a product is being designed, you cannot leave the end consumer out of it. Making the end customer a part of these decisions will by itself give your organization a better Customer Success rate.
The metrics on which the performance of Customer Support and Success Managers is judged also need to be decided bearing in mind these differences in profile.
Usually, the main metrics for Support revolve around tickets including First Response Time, Overall Resolution Time and so on, whereas for Success, the metrics are reach outs, retention, CSAT and the like. But in this lies the risk of support teams closing tickets very quickly to reach their goals, leading to escalations. IDeaS tackles this problem with a clear process.
We’ve made a process of sending a survey to the customer every time a ticket is closed in which they can say if they are happy or not. If the customer says they are not happy, it gets escalated to the CSM and they are then responsible for ensuring the customers view changes. From there, it is escalated to the Account Manager too if required. This helps create a very clear distinction between escalations across functions.
Eventually, the experience of talking to customers on a regular basis and gaining insights into the product can help CSMs move into Product Management or Sales, believes Milind Katti, Co founder and CEO at Demand Farm.
You cannot build a product without talking to customers, unless you’re Steve Jobs. CSMs should evolve into product and vice versa too. For a product to grow, it is also necessary for a Product Manager to get into Customer Success at least for sometime.
Customer Success Managers — To Sell or Not to Sell
Customer Success Managers sell the value of the product and lead customers through a process that helps achieve the clients’ business objectives. This is different from helping customers make a buying decision. The question is therefore whether CSMs should be involved in the purchasing, renewals and negotiation process with clients.
1) Whether its about closing deals or negotiating renewals, CSMs should act as facilitators
Vivek Mehta, Director — Product Consulting and Customer Success at MindTickle, does not agree with breaking CSMs teams into renewals or consulting. This is because CSMs put in a lot of effort, time and energy to build relationships with customers. While they can take it forward in terms of renewals, they shouldn’t, because these require negotiations. CSMs have to work with customers day in and day out, so it’s best to pull in resources from sales to handle negotiations.
Closing the deal is also something best left to Sales, as per Neil Unadkat, CTO, Intangles.
Convincing someone that they need a product is difficult. A Sales Manager may be able to sell a comb to a bald person; they have the skill set to do so. You need the CSM to work with the customer to show them the creative use cases of the product.
Neha Verma, Head of Customer Success at Cutshort.io believes that there is a supporting role to be played by CSMs in negotiation and sales.
Being a CSM, you will have a better idea in terms of whether your product will be able to fulfil the requirements of the customer. So CSMs can get into Sales, but when it comes to Enterprise Sales, they should involve the Sales Manager since the sales cycle in these cases is of longer duration. So the CSM should play a supporting role and the ownership should be taken by the Sales Manager.
When subscribing for expensive products, customers prefer to do a proof of concept before paying the company. Sujit Karpe, Co-founder & CTO, Interview Mocha, suggests having a CSM present with the Sales Manager to convince all the decision makers about the purchase.
2) Cross-selling or up-selling should not be at the cost of losing trust
Would a CSM still be a trusted advisor if they started selling?
There are counter opinions to this. If the CSM works closely with their customer and delivers results, the customer would be prone to listening to the CSM as opposed to the Sales Manager. So the CSM doesn’t run the risk of losing trust with clients. Nilesh Gohil, SVP & Head — Customer Success and Business Operations, Merkle Sokrati counters this view.
When there are different service lines, CSMs are in a weaker position to upsell and cross sell. Sokrati did try to make CSMs sell, but found that being a service company, it did not work well for us.
Being trustworthy also entails identifying if the upsell or cross sell is suitable for the customer. CSMs should ideally advise against it if there are required features lacking in the product. Neha advises that a good way would be to buy time to build in the features and put the renewal or upsell on hold till then.
From the time when SalesForce made it popular as a function, to the present day scenario where it’s being well accepted by companies of all sizes, Customer Success has definitely come a long way. And for good reason too! As the SaaS industry gets increasingly competitive, retaining a customer for long term trumps winning a new deal every single day. This can be made possible when Customer Success teams work seamlessly across various internal functions and with the customer to achieve the business’s desired outcomes.
If there are other topics around the role of CSMs in startups and mid-size organisations that you’d like to know more about, please write to us.
You can watch the full video of this meet up below.
There is immense pressure on CEOs for toiling long and hard in the same role even when it is no longer enjoyable or suited to their skills. Resisting this pressure is no easy feat, especially when the aim is to strike a balance between individual priorities and working in the interest of the company. ‘The answer to what a CEO “ought” to do is very personal’, believes Paras Chopra — the successful CEO-turned-Chairman who refuses to be defined by expectations of the media, VCs or society in general.
Paras founded Wingify in 2010 and aimed to earn INR 50K in the first month. He was able to hit four times that amount at the completion of the month. In 18 months’ time, Wingify made its first $1Mn. With Paras as CEO, Wingify amassed 6000 clients for its two flagship products, VWO and PushCrew, and achieved an ARR of $18Mn by 2017.
Yet, in February 2018 Paras announced his decision to step away from this position, and assume the role of Chairman. Why did a successful CEO decide to handover the reins of the company he founded?
As a company grows larger, the skills and interests of an entrepreneur come at odds with what’s required to manage its operations.
It all begins with CEOs asking themselves a fundamental question — which part of this journey have I enjoyed the most? For Paras, who is by nature a tinkerer and an explorer, it has always been the creation part that has been intriguing, challenging and enjoyable. He has always found himself inclined towards creating value, looking forward, and discovering what’s new. It is also an area where he has proven to be extremely skilled. So the decision to move away from the CEO role was a natural shift for him. Once he answered this question honestly, it really boiled down to aligning titles with the job he was willing to perform at Wingify.
However the need for this shift is not specific to an individual founder/CEO. Most entrepreneurs, he believes, are different than the kind required to run a large company, and have to deal with this evolution at some point.
I do think the skills required to start a company and grow it to a certain level, and grow it to a very large company, are different skills. To a great extent, it is inevitable for founders to step away from an operational role. The timing matters, and the threshold that an individual has. But ultimately evenBill Gates stepped out as a Chairman.
When a CEO starts increasingly feeling that many parts of the role come across as forced and not enjoyable, it is time to deeply reflect if s/he is fit for the job. If not, is there someone who can do it better? Paras admits he’s lucky he didn’t have to go around searching for a CEO. He had Sparsh (current CEO, former COO of Wingify) as a great business partner and someone who had always supported him in the areas of growing the company, while he himself specialised in value creation. Some founders end up selling their companies because they don’t have anyone to run it from an operational and executional point of view. Either ways, there is no escaping the crossroads.
Managing expectations is part of this deal. Succumbing to pressure is not.
There are ups and downs in every job, including that of the CEO’s, and people are usually expected to stick it out if they are doing well. This expectation looms large particularly in front of entrepreneurs.
It’s assumed that if you have started something you are stuck in that role forever. But you have to realise that people and companies evolve, so assuming that the same role has to be played all the time is a very high ask. The way I thought about it when I was taking this decision was that even the US President doesn’t run for the same role for more than 8 years. If large democracies think that a President cannot be fit for more than X no. of years; a CEO’s job in comparison is much more tamed.
Entrepreneurshave tremendous pressure from the media all over, VCs and society. We read about CEOs like Steve Jobs, Jeff Bezos, and others who have raised billions, and can think 100 years ahead. But looking at them closely will reveal that they’re outliers.
If there are a million companies, you might get one Jeff Bezos in them. And it could be the case that he enjoys what he’s doing. But there’s tremendous self-created pressure for entrepreneurs to work really hard and long. Sometimes their personal interests get de-prioritised because they have this pressure to achieve something specific. But if that conflict ends up making one feel miserable, it’s a bad thing. The only way out from that is to know oneself really deeply by asking what the happiest moments in the entire journey were. If the happiest moments were coding, or writing a blog post, maybe the founder should do that. So knowing one’s strength and interests is extremely important.
It helped Paras to work with an executive coach who helped him identify the high points of his journey. This included the act of creation; going from 0 to 1, and being guided by his curiosity. Running a large corporation, whether or not he had the skills to do so, was not as enjoyable to him.
The reflection on skills and interests, and the realisation of having to move on are one part of the CEO’s decision. The other, and possibly more difficult part, is the preparation.
A CEO needs to prepare the company and the people for this change, and this happens very gradually. For Paras, it began with moving to Pune from the main office in Delhi. The fact that things continued to grow in the head office despite him being away was a positive sign. In 2017, Paras took his first sabbatical — a month away from both offices — as a trial run. In 2018, he took a two-month long sabbatical as an extended trial to check on how things progressed in his absence. Each trial made him more confident that he was not taking a binary decision.
A clear business strategy, a strong leadership team, and effective processes are the pillars on which the success of this decision lies.
Stepping away from the CEO position also means handing over decisions and processes surrounding appraisals, compensation of leaders, goal-setting, and the like, to others. For this, building an effective leadership team is the first step — unless CEOs have one they’re confident in, it is not possible to assume a different role. Even when they have a team, the business strategy needs to be crystal clear to everyone involved.
For Paras, this entailed 2 years of preparation where the leadership team traveled between the Delhi and Pune offices, thinking and discussing extensively about what Wingify is, where it should be, and taking more ownership each day. It paid off when Paras achieved the green signal he desired — an empty calendar!
When your day finally seems devoid of operational work, that’s when you know you’re ready to let it go. That’s when you can start focusing on long term strategy and not on firefighting. If you don’t see enough free time on your calendar, you need to create it by automating stuff, and putting the right process in your culture.
Putting together a communication plan that involves preempting questions and being on the same page with the upcoming CEO is crucial.
If you’re a founder who’s hiring a CEO, it is imperative that both parties are aligned with what’s happening, why it’s happening, and what will happen next. Paras admits to spending long hours with Sparsh to ensure they were both on the same page when it came to the decision and its nuances.
You have to anticipate what sort of information will be expected out of your organisation when a big event like this occurs. You definitely don’t want to be thinking on your feet. When someone asks a question, you should have preempted that question, and thought about it quite clearly.
In terms of communicating the decision to the company, Paras spoke first to the leadership team. By discussing things out with the smaller forum of leaders, he prepared himself for questions that would likely arise from the larger teams. He then broke the news to the rest of the company via email. But the communication did not end there.
The message that this decision is more of an alignment of titles to roles, and not anything else, has to be repeated again and again — that’s what I intend to and am doing. Founders hiring CEOs can mean many different things in different contexts. Teams could wonder if the founder is moving out, or if the founder is doing something else, so you have to really clarify what this step means.
The true test of the preparation and the way communication has been handled is the response of internal and external stakeholders. The decision of the CEO should ideally not come as a shock to everyone. Paras had been handling new products for a long time, while Sparsh managed VWO and PushCrew, and hence clients and internal teams were more or less ready, and not majorly impacted when the announcement was made.
You have to prepare the company early on about your interests. And that happens if you’re completely honest with them and with yourself. If you’re pretending all the time to enjoy a job, or being involved in things when you shouldn’t be, that’s when it becomes difficult. I didn’t want to sacrifice my personal interests for what was right for the company and I didn’t want to give up on the company to pursue my personal interests. So striking a balance meant that I had to create time for myself, while ensuring that things continued to grow, and become better.
Being bootstrapped can prove to be a double edged sword for a CEO aiming to step down
The fact that Wingify is not VC-funded was a plus for Paras when he decided to change roles. But he believes it can go either ways. If you’re a CEO who wants to change roles, it is surely a difficult conversation to have with an investor you’re answerable to. On the other hand, if you’re a CEO who has an investor holding majority in the company, you’re really doing a job that you can quit. The VC would then be responsible to hire a new CEO. However, if you’ve built a bootstrapped company, you are not answerable to anyone, but you also can’t simply quit.
With the change of roles, comes the necessity to cultivate new skills, and aspire for new goals.
When a CEO turns Chairman, it becomes necessary for him/her to not get into execution. They need to consciously let go, and start deferring decisions in the matter of execution to the CEO. They must refrain from getting into the thick of things on a daily basis.
A Chairman needs to have the CEO’s back, and that’s a skill that needs to be cultivated. Secondly, proactive mentorship needs to be cultivated, but again it’s related to not getting into execution. You need to figure out how to ensure that your team gets mentored from a distance. You see them making mistakes but you are ready to intervene only if you think the mistakes could be fatal.
There are three areas on which Paras wishes to focus with this new role — future-looking strategy, finance, and leadership building. He is very clear that in his new role he needs to look at long term strategy in the 2 years+ range; while the CEO focuses on the next 1–2 years, and the leadership team concentrates on the execution of quarterly goals.
As Chairman, I want to think on a much more broader level — say on what’s the future of marketing, what’s the future of SaaS, and 5–10 years out where things could move.
On the financial side, even though we have budgets, I want to ensure that we are doing sufficient investment in sales and marketing, and in R&D. I want to work on the broad key metrics, not get into details, but define a framework of what is the range of metrics we can play with. For e.g. what amount of revenue should go into marketing. I also want to ensure that our leadership team is strengthened every quarter or so. This means constantly mentoring existing leadership but at the same time, also be on the lookout for new leaders who can bring better experience into our company.
Paras took a giant leap of faith, but his decision was based on the success of multiple trials, learnings from similar experiences of others, and most of all, his honesty to himself. In retrospect, he would have liked to have more conversations with others who had done what he did, but even the few he had helped a lot. He realised that what he was feeling was not unique, and what he was planning to do was okay, and had been done before.
One of the primary aims of this article is to provide important insights to entrepreneurs who might be on the verge of taking similar decisions. If you’d like to know more about Paras’s experience or have any questions for him, please reach out to him on email.
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I have previously written about cognitive biases and how to avoid them. In this post, I want to focus specifically on biases that impact product designers, product managers and startup founders. This post is based on a talk that I gave in Bengaluru at a product conference. So this post will contain slides interspersed with my commentary.
What’s a cognitive bias?
There are multiple definitions floating around the Internet, but I like the following one the most.
Cognitive bias is a systematic error in perception due to the environment that one is embedded into.
The word systematic is important here because it suggests that such kind of errors aren’t due to randomness. It’s not like you get biased because you’re careless or you forgot something. Bias occurs because your environment literally shapes the data that you get to observe. Imagine a cognitive bias to be like being born wearing rose tinted glasses, not ever knowing that these glasses colour your entire world pink and then fighting with everyone who disagrees with you.
If you consider yourself intelligent, know that being intelligent has very little to do with cognitive biases. In fact, intelligence makes it worse because your sharp intellect works on biased data to derive erroneous conclusions, but you don’t doubt your conclusions because you’re confident of your intelligence.
For example, humans for many thousands of years believed that the Earth was the center of the universe, and the sun and rest of the planets revolved around it.
We believed that because what we saw up in the sky was the Sun rotating. It was an obvious conclusion — it didn’t occur to us that there are many (in fact, infinite) ways to explain an observation and what we see depends on how we see it.
Now the geocentricism belief seems laughable, but have sympathy because you’re likely to be under similar illusions in various different contexts. We rarely perceive reality as is.
There are two more examples of cognitive biases. One is of a trusting chicken that’s happiest just before it’s slaughtered.
Another one is a cartoon on how our environment shapes what we hope for, and hence our conclusions.
Environment of a product manager / designer / founder
Since environment shapes reality, to understand what biases product managers face, we need to see what constitutes their environment. There are many aspects to it, but I’ve tried listing a few.
I find the implicit goals more interesting because those are the ones that nobody talks about. If you’ve ever worked in a company, you’ll know that they are there for sure, but it’s something that nobody would openly admit. And that’s what makes them dangerous. Because nobody even admits these implicit goals, the reality that gets shaped by them is pretty biased.
With all the context about cognitive biases and product manager’s goals, we’re ready to dive into product-specific biases. Note that when I say product manager, I really mean any professional tasked with building products.
Cognitive bias #1: confirmation bias during user interviews
One of the main sources of input to products is customer interviews. And this is what happens during these conversations.
First, we ask loaded questions such as: “do you like this feature?” or “would you pick feature A or feature B?”. This puts the customer in a corner and she will say something. If you are having a one to one conversation with someone and ask them whether they like kangaroos or rhinos, they will give you some answer, even if they have never remotely thought about it.
People, including customers, are story tellers. Product folks often forget about it during interviews. One book that I highly recommend is The Mom Test by @robfitz.
By the way, confirmation bias comes up not just during interviews. It also happens when we research online: we see competitors launching features that we personally wanted to launch, we keep discovering AI / ML startups because we’re so excited about the idea or if we are in love with flat design, we see it everywhere.
Cognitive bias #2: efficiency bias for keeping engineers busy
This is a common bias because it pains to see teams sitting idle. Not just their managers, people themselves feel guilty if they’re not working.
Being constantly busy works in a world where humans manufacture identical widgets, but for products that get built over time (software!), this urge to constantly add something new actually backfires. The drive for engineers to be busy leads to complicated products with unneeded features that slow down or complicate an otherwise usable product.
But this bias is special because even if you’ve identified it, the question remains: how would you convince your manager that you’re creating value by not working.
Cognitive bias #3: customer development bias that neglects moats
I’ve previously written about moats and what they are (in the article titled: how to create legal monopolies). I recommend reading that post, but if you’re short on time, know that moats are product or business features that make it hard for your customers to switch to a competitor. Moats are the only way a business can make profits over a long period of time (otherwise competitors drive profits to zero in an industry). Warren Buffet only buys businesses with moats.
Because moats make it difficult for customers to switch, you’d never hear customers asking you to build them.
This is one of the mistakes I realize we made at VWO. We were so customer driven that we forgot that, in addition to creating customer value, we needed to build stuff that’d lock that value from being taken away by competitors.
Cognitive bias #4: selection bias that only selects for vocal customers
Most customers are busy living their lives, and your request for feedback or getting on a call is something they’d have to do at the expense of sipping a coffee after a hard day at work or scrolling through their Instagram or finishing their deadline driven project. People really are not very interested in talking with a business.
Try to remember your own experience filling in feedback after having dinner at a restaurant. Do you fill it seriously? Under what circumstances are you likely to provide feedback: a) when they seriously fucked up something; b) when everything was OK; c) when you’ve been blown away. Most of the customer experiences fall into (b) category while most of the feedback comes from (a) or (c) category. This biased selection of customers who give feedback leads to biased conclusions that lead to over-engineered, complex products.
Cognitive bias #5: complexity bias that reduces simplicity
Have you ever wondered why user interfaces go from simple to complex?
Every couple of years, a new software claims to revolutionize simplicity. Products like iPhone, Salesforce, Slack, Mailchimp, VWO: all were actually simple to begin with. But with time, they became more and more complicated. Why?
As you can see, when a new product manager / designer / founder starts with a product, she is interested in talking to all customers. All conversations are new to them. Over time, as her understanding gets better, she seeks out customers with evolved needs. She starts building ‘advanced features’ because ‘basic features’ are done. What happens in all this is that the product becomes complicated, and nobody in the company understands what it is like to use the product for the first time.
Cognitive bias #6: beauty bias that leads to bad design
To a man with a hammer, everything looks like a nail. Similarly, to a designer, everything looks like a design problem.
I’ve written about this bias much more extensively in another post (titled: when beautiful things are badly designed). The core idea is that the designers care about their taste and worldview much more than the customers’. Designers — usually inspired by Apple — like shiny and minimalist user interfaces when customers (especially enterprise ones) may actually want lots of options.
This over-interpretation by designers happens all the time.
No man’s an island and, as a corollary, no startup is truly unique. Media oversells us the virtue of breakthrough ideas. Journalists are paid to highlighting what’s new and noteworthy. Imagine the number of clicks an article would get if it was titled: ‘Here’s the nth example of a Chinese firm copying what’s working in the West’.
To catch our attention, publications run stories that celebrate innovations.
The invention of the airplane was definitely a breakthrough moment for humanity and the Wright brothers deserve all the fame they got. But economically they didn’t do as well as the Boeings and Airbuses of the world. Wright brothers knew it themselves that they’re never going to make money from what they were doing. In a conversation with their biographer, Orville Wright said:
“If we had been interested in invention with the idea of profit, we most assuredly would have tried something in which the chances for success were brighter. You see, we did not expect in the beginning to go beyond gliding”
Startup success is like solving a multi variable equation
There’s nothing inherently bad with pursuing truly innovative ideas. What’s bad is pursuing that path with the intent of making money. (There’s a reason why librarians make more money than scientists). If you’re a tinkerer or an explorer, go ahead and innovate to your heart’s glee. But if you’re a startup founder, you’re in the business of making money and being innovative might work against your objectives.
Visualize startups solving a multi variable equation and the solution to this equation is a fast growing business.
In the model above, I’ve condensed many factors into a few variables but in reality there’s so much more that has to go right for a startup that it shouldn’t be surprising that most startups fail. For a startup to succeed, metaphorical stars have to align perfectly.
And the more variables you tweak, the more likely you are to fail in solving the entire equation. This is because all these variables are dependent on each other. Startup success is like a jigsaw puzzle where one missing piece spoils the joy and two or more missing pieces is a horror.
The problem with innovation and what copying solves
When you’re innovating, you’re juggling with most of the balls in the air. If you were one the Wright brothers, your problem space is somewhat known: people really do want to travel. But everything else is unknown. You have no idea of product’s efficacy (will people fear being up in the air?), you have no idea about unit economics (can we make it profitable?), you have no idea of distribution channels (how to profitably reach to customers who most need air travel?), you have no idea of competitive advantage (what benefits should we focus on to compete with cars and railways?).
It doesn’t matter whether you get most of the answers right, because if there’s one wrong answer, you may burn all your funding or patience before seeing any commercial success.
So, why not simply copy instead? Tell me.
Copying is wonderful because it gives you evidence and clues that a solution to the startup multi variable equation exists. It allows you to let other entrepreneurs make mistakes in solving the equation and saves you time and effort.
I recommend reading the original article but the gist is in this line: “Today’s lions are the descendants of copycats.”
Successful copycats are smart
When I started VWO, it wasn’t the first web A/B testing tool (Google Website Optimizer was, VWO’s differentiation was in making A/B testing easy). Then, when I started PushCrew, it wasn’t the first web push notifications tool (OneSignal and Roost were there in the market, PushCrew’s differentiation was focus on midmarket). In contrast, whenever I tried innovating, coming up with breakthrough products they failed (read through the postmortem of our ‘innovative’ products here and here).
We all know iPhone wasn’t the first smart phone, neither was Google the first search engine, nor Facebook the first social network.
Of course, you know that being first in the market means little if you’re in the wrong market (you knew that right?). But what’s important to note is that copying alone doesn’t guarantee success. There are smart copycats and then there are dumb ones (tip: you want to be the former).
Smart copycats know the value of timing in the market. As a market evolves, you want to enter into it early when it’s nascent and growing. Enter the search market today by copying Google, and you’re going to be crushed. This lesson was learned by Cuil that raised $33m in 2008 to compete in search market and failed miserably. As Peter Thiel says: Be the last to monopolize the market. I’ll add my caveat: also don’t be the first to innovate.
When you’re copying, you can’t do surface level copying — you have to commit yourself to understand why a new and emerging category is growing like wildfire and what you can do to beat existing players in your discovered market. Having a strong differentiation over existing players is important, but my fear is that differentiation is a highly misunderstood word. Just because Google differentiated from AltaVista through their PageRank algorithm, it doesn’t mean that differentiation can only happen via technology. In Facebook’s case, differentiation was done by limiting signups to the Harvard campus only.
Similarly, you can differentiate by taking the same idea and tweaking one variable in the startup success equation. Perhaps explore the same idea in a slightly different market, or introduce it at a different price point, or reach the growing market via a new distribution channel. Instagram’s copying of Snapchat stories is a perfect example of successful copying. They copied a feature that teens on Snapchat loved and exposed it to their audience (many of whom had never used it before). Bringing a great feature to millions of users is indeed creating new positive value in the world. Entrepreneurs see the act as copying, users see it as their life becoming better.
On the subject of copying, Instagram’s VP of product said: “this is how the tech industry works”. If a billion dollar company is shameless about copying, why you — my dear entrepreneur — are hell bent on innovating?
To make how to copy clearer, let me quote Prof. Oded Shenker from the HBR article that I linked above.
“Good imitators don’t wait; they actively search for ideas worth copying. And they often look far from their industry or home country. They also don’t just copy an idea, they come up with a cheaper or better — increasingly it’s cheaper and better — mousetrap. They disrupt the innovator, whose costs are higher by a third, on average, and who’s still sinking investments into the innovation while the imitators are building an offering based on the market reaction to it.”
Don’t be afraid of copying, you can’t copy perfectly anyway
Copying is definitely not the most positive word that our society uses to describe human actions, so when we’re copying, we always try to differentiate in some way. If your neighbor buys a new BMW, you’ll probably buy an Audi (or the same BMW, but a better variant).
So my recommendation to you would be to copy unashamedly. (I’m not a lawyer, so make sure you’re not violating any patents or copyrights.) Rest assured that in the process of copying, you’ll inevitably add your own personality and you’ll use your life and work experience — you can’t help but make the copied product uniquely yours.
Perfect copies don’t exist. And in fact, perfect innovation also doesn’t exist. Everything new is built on top of something existing. All I’m urging you to do is lower your thresholds of originality.
Tips on finding copyable ideas
My advice on how to find new startup ideas in 1 tweet: copy a business that’s growing (such that a portion of new customers come to you) or discover a business in an established industry that you can improve by 2x or more (such that existing ones switch to you).
When you’re copying, don’t look for which company got funding (VCs take multiple bets for few successes, so their average bet is usually wrong). To get good ideas, look for companies that are growing like wildfire in terms of customers or users. For B2B, you can go to 3rd party review sites (like G2Crowd or TrustRadius) and see which ones are getting lots of reviews (pay attention to negative reviews). You can go to LinkedIn and see which company is hiring a lot. You can check out Inc 5000 and go through the list of fastest growing companies. For B2C, you can check out AppAnie or SensorTower (they list top grossing apps). Don’t rely on company acquisitions (most of them fail) or new feature announcements (you don’t know whether they’ll work). You have to take the customer view and notice patterns of what they like or dislike.
Summing it up
To be successful, copy what’s already successful in a nascent market and tweak it just so slightly that you’re differentiated in some meaningful way. (And, yes, you can send me your dollars of gratitude if you succeed following my advice).
That’s all folks!
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One of the major findings in last 50 years has been what people had suspected all along: human thinking and judgment often isn’t rational. By this, I mean given a situation where someone has to make a decision, she will often take a decision that “leaps” to her immediately rather taking than a decision that incorporates the structure of the problem, data available immediately and the data that should be collected. In many cases, intuition and reasoning arrive at the same decision so it isn’t an issue. But, stating the obvious, in many other cases, intuition leads to a worse decision in retrospect. How often have you said to yourself: why did I NOT think of it earlier?
This flaw in our decision making is worrisome because our intuition can be “hacked” by others to make us behave in ways that aren’t in our favor. This motivated framing and packaging of information happens all the time in the real world. From Tinder to LinkedIn profiles to what’s written on yogurt. What’s left out is often more important than what’s communicated. As a quick illustration, if there were two yogurts brands on the shelves: one says “80% fat-free” and the other one says “20% fat added”, which one will you pick? When a sales manager proposes discount at the month end to boost sales and tells you that “revenue today is better than revenue tomorrow”, do second and third order consequences of discounts on your company’s reputation jump to your mind? What if the sales manager had framed his proposal as: “giving discounts will destroy our reputation as a company that’s confident about its products, but we will absolutely increase revenue. Are we ok with that?”.
Such framing effects are extremely common in daily life and business. The issue isn’t that intuition is bad. It serves us extremely well in everyday situations. When the stakes are low, you wouldn’t want to “reason” which ice cream to eat (I do that, but then I’m finicky about ice-creams). My concern is that we only know stakes in retrospect. Oh-shit moments happen when we use our intuition on seemingly low stakes that turn out to be consequential.
This is the dangerous Catch-22 situation: to decide to reason carefully, you often need to know the stakes (is it worth so much “thinking”?) but you only get a good estimate of stakes when you reason (our intuitive estimate for stakes could be wrong and we wouldn’t even know). It’s when a rider thinks that because it’s a short ride to the office, not wearing a helmet is OK.
As the founder of a 200+ people company (Wingify), this topic is important to me because a seemingly inconsequential decision that I make through intuition could have major second-order effects that didn’t occur to me. With each such mistake, my intuition gets better (so does yours) but I would prefer to minimize such mistakes. What if a second order effect becomes an existential threat to the company? As an example, once I made a seemingly inconsequential decision of removing sugary drinks (Coke and Pepsi) from the company’s canteen. To my surprise, people took it to be a cost-cutting measure rather than health-related reason. I thought I was taking a simple decision that was in the benefit of the team. But it never occurred to me that it the same action could lead to multiple different (and all valid) interpretations.
Now I know that “experience” in business is an accumulation of mistakes that a person has used to expand his/her “circle of available information”. With reflection on mistakes, what leaps to the mind could be readily expanded, so experienced people make better decisions. Without reflection, you’ll repeat the mistakes. Each mistake is an opportunity to train the intuition. (This is one of the reasons I write. It forces me to reflect on my experiences.)
Hack #1: Avoid making decisions under time pressure
Our ability to detect and correct an error in judgment significantly worsens when we’re deciding under pressure. Only in very rare cases, there isn’t a choice to take more time to decide. Even in a road accident, it would be wise to think for a while before reacting. At work, this limitation of time on decision making is usually self-inflicted. Vacuous statements such as “we must have a decision by the end of this 30-minute meeting” or “speed is all that matters” actively works against good decision making. I know these statements are vacuous because I used to use them, until I started reflecting and asking why a meeting should end with a decision when none is apparent. There’s no wisdom in taking a fast decision that proves to be inaccurate.
In his 2016 shareholders letter, Jeff Bezos had a contrary advice to what I mention:
Some decisions are consequential and irreversible or nearly irreversible — one-way doors — and these decisions must be made methodically, carefully, slowly, with great deliberation and consultation. If you walk through and don’t like what you see on the other side, you can’t get back to where you were before. We can call these Type 1 decisions. But most decisions aren’t like that — they are changeable, reversible — they’re two-way doors. If you’ve made a suboptimal Type 2 decision, you don’t have to live with the consequences for that long. You can reopen the door and go back through. Type 2 decisions can and should be made quickly by high judgment individuals or small groups.
Of course, this works for him. He has assimilated tens and hundreds of mental models into his intuition over last 20+ years of running Amazon. So what leaps to him intuitively will be very different from (and probably a superset of) what leaps to you. (A meta-lesson here is that always think in which contexts a business advice will fail. Yes, the irony of this advice isn’t lost on me.)
At work, because consequences of your decisions are unknown upfront, a good “hack” to know when not to take decisions under time pressure is when you are in a role that impacts many other humans. A CEO’s action has multiplicative effect on employees, customers, and shareholders. A software engineer’s action impacts all customers (security loopholes are usually introduced by seemingly innocent changes). A salesperson, on the other hand, can do limited damage (if you ensure contracts are vetted by a paranoid lawyer).
Hack #2: Avoid making decisions when you are cognitively involved in a different task
Research shows that performance on puzzle style tasks reduces if participants are asked to keep some numbers in their head while they’re solving the puzzle. This problem compounds at work because people who have the highest capacity to cause a damage through a bad decision (CEOs, VPs, top managers) are usually the ones that get pulled into most meetings. If you have ever been in a meeting with an agenda that matters to you (and not because your boss asked you to be there), you know how mentally taxing they could be. Inevitably, the hangover of an unresolved problem from one meeting goes with you to another meeting and you do worse in both meetings.
For anyone who earns their living applying brains to problems, cognitive bandwidth becomes the limiting factor for value creation. What matters isn’t how many emails you reply or how many lines of code you write. What matters instead is the quality of your thinking and decisions.
A hack that I use at work is blocking a chunk of time for myself in the calendar to just think. I don’t check emails or attend any meetings during that time. Paul Graham calls this maker hours and it has worked wonderfully for me (I was inspired by Cal Newport’s Deep Work to adopt this technique). On top of this, I also actively try to just attend only one important meeting per day. I’m not a fan of jam-packed schedule because I know I’ll not be able to add the value that’s expected of me after the first meeting (and nobody gives me brownie points for just showing up and doing nothing in a meeting).
Hack #3: Don’t make decisions in the evening if you are a “morning person” (and vice versa)
Different people feel fresh at different times of the day. Some are night owls, but I’m a morning person and know that I can’t function effectively in the evening. Know when do you feel most productive and block that time for yourself. This is why my makers hours are in the morning from 10:30am to 2pm and avoid doing work after 7pm. One of the rookie mistakes I did as a young CEO was to schedule day-long meetings with an extensive agenda. It was a big mistake because all the brainstorming happened in the morning when I (and many other people) felt energetic but when it came to making decisions, it would be evening and I wouldn’t realize that this meant taking decisions that came from a tired mind (and they’re not necessarily good ones). If only had I questioned good-ol-advice on meetings and understood when it works and when it doesn’t.
Hack #4: Watch out if you are happy about a decision
This one is counter-intuitive but research indicates that happy people take worse decisions. The reason for this isn’t that happy people have reduced cognitive capacity, but that they are not able to detect errors in their intuition (and because they’re not able to detect such errors, their cognition doesn’t get a chance to correct such errors). This error occurs simply because we avoid sadness and in decisions where the success of the decision is important to us, we latch on to any positive evidence that leaps to us (while the negative evidence doesn’t even get registered). Entrepreneurs need to be careful of this because they so desperately want to succeed is that they over-interpret the evidence in their favor. If you send an email to 100 people and one responds positively, your attention automatically focuses on what good things the respondent says and not on the fact that 99 people chose to not reply. The absence of data is a data point to interpret.
Being cynical about the decisions that are obvious helps us search for ways something could go wrong (how it is successful comes automatically if we’re vested in the decision). It’s an extremely difficult hack to apply because it is our ego that gets attacked by this style of thinking. What helps me is to list down everything about a decision that’s making me happy and then actively force myself to write all the reasons the same thing could fail and make me unhappy. (Just thinking doesn’t cut it as I start justifying why failures wouldn’t happen, for me, I have to write). After writing the pros and cons, I don’t act immediately but rather wait to cognitively get involved with something else. When I revisit, I see the same list from a fresh pair of eyes and am able to interpret more objectively than before (like a non-interested party).
This hack also works for new ideas that I come across. If I get excited about an idea, I Google “ vs ” or “ criticism”, and Google autocompletes with opposite perspectives that my excited-self wouldn’t get to know. (See for example, “blockchain criticism” or “universal basic income criticism“).
Watch out for your happiness, especially when you want something to desperately succeed.. Who said thinking better is easy, anyway.
Hack #5: Train yourself to think statistically
Statistical thinking is taxing, so it doesn’t come to us intuitively. Humans overweight low and high probabilities, and completely ignore very low and very high probabilities. Even doctors fall prey to non-statistical thinking. Consider this simple situation (that can very well happen in the real world).
Approximately 1% of women aged 40–50 have breast cancer. 80% of mammograms detect breast cancer when it is there (and therefore 20% miss it). 9.6% of mammograms detect breast cancer when it’s not there (and therefore 90.4% correctly return a negative result).
You take a mammogram and it comes out as positive. What is the probability that you have cancer?
Before reading on, say out loud what’s your gut feeling. Thought? Now close your eyes and reason for a bit, and then decide. What’s your answer now?
The average answer for physicians who are responsible for guiding patients is close to 75%. What’s your answer? (The actual answer in this case to how likely that you have cancer if the test comes out positive is less than 10%. Surprised?).
I recommend getting familiar with Bayes style of thinking as such thinking will help you take better decisions in a variety of situations:
Sales of a product increasing, should you hire more salespeople? (Here, knowledge of fluctuations and difference between correlation and causation helps)
The customer satisfaction score average came out to be 80%. Is that a cause for celebration?(Here, what helps is the knowledge that averages destroy information about the distribution)
90% of people who start a business fail within 2–3 years. Should you take the risk? (Here, what helps is taking 90% as a Bayesian prior but then incorporating evidence about factors for failure and then deciding what factors work for you and what factors against you.)
I’d love to know your hacks for avoiding cognitive biases
What hacks do you use to avoid cognitive biases? I'll RT interesting hacks and link to in my article.