Get rich or die iteratin'
Don't be an old corporation
Broken feedback loops
In my previous article, I introduced a character called the "non-Socratic intern" to emphasize how futile it is for startups to try and predict client behavior and make long-term market projections. As a startup, you begin your entrepreneurial journey with zero clients, an incomplete product, and a set of hypotheses that you are willing to test. The only thing missing is a critical mind that is open to feedback from the market.
In this article, I will not dig into the details of iteration methods for sales, marketing, and product development, but instead explain the importance of having an iterative mindset. Without one, you run the risk of being shredded by your competitors in the blink of an eye.
As an entrepreneur, you may face competition from larger startups and even big corporations. However, you can outperform them in certain segments of the market, and your main advantage is your feedback loop and quality of the iteration process.
Neo-banking
If you have a company, you probably have personal and business bank accounts, and it's likely you're a client of a traditional, old-fashioned bank. If so, you may have spent endless hours talking to incompetent call centres trying to validate a payment, connect to your outdated portal, or download an archaic mobile app. If it never happened to you then you are either very young or extremely lucky. Or you just don’t have a bank account but then I wonder what’s your business about and I actually prefer you not telling me.
Every tech-savvy (or not) client of these banks is fed up with the service, but their complaints fall on deaf ears, and no improvements are made. In other words, the feedback loop is broken, and consumer criticism is ignored. This is the temporary luxury of monopolistic situations, until a Black Swan event occurs. For retail banks, those Black Swans may be neobanks. In the last decade, a myriad of online banking applications appeared, competing on the best client support, exchange rates, low fees, and technological features of their products.
However, instead of improving their services and creating more tech-friendly platforms, old and traditional banks tried to lobby against their new competitors to kick them out of the market, they can never take a loss properly. Once these new banks finally got legal agreements to operate, the old-fashioned monsters of the market decided to invest in user-friendly and consumer-centric software that actually served their end-users, the ones paying them.
Had you told anyone a decade ago that the biggest retail banks would shake on their foundations because of fresh online, mobile actors, they would have laughed at you and thought you were nothing but a libertarian dreamer. This is because they did not understand that any entity operating on a broken feedback loop is bound to face serious negative consequences at some point in the future, no matter how big and giant they are. The ultimate examples are governments, but let's not get out of the scope of this article.
Get rich or die iteratin’
As I've stated several times in this blog, I'm speaking to the founder who operates on a tiny budget, the bootstrapped brothers, the soldiers of the shadows who don't post their latest $1M pre-seed round out of a PowerPoint on LinkedIn. If you're reading this, it's likely that your cash flow and runway are limited. However, your hierarchical and operational constraints are almost null: you need nobody's permission to pivot overnight and iterate.
Throughout my journey, I've met too many founders who build long-term and even mid-term plans for selling their products while consciously ignoring the first clients' feedback on their first advertisements or soft launch. This is an inverse application of the bias: "I like it, so it's true." In this case, it's more like "I don't like it, so they are wrong."
Too many founders think of their product launch like an album release, blaming the public for being too ignorant of such a great piece of art. Your company is not a band that can sustain itself by doing underground concerts: your clients are the ones giving you the necessary and sometimes sufficient pieces of data for iterating.
Iteration is not just a method, it's a mindset. Every aspect of startup life provides valuable information that can be used to improve your product. Start small, gather data, test hypotheses, and be happy to be wrong. It's important to adopt a scientific approach and test your hypotheses using data. The more mistakes you make, the closer you are to achieving product-market fit. A good iteration process is almost as important as the underlying hypothesis-testing method you use. It's important to avoid being biased by your beliefs and to interpret data objectively.
Your pre-launch market knowledge can be useful for writing hypotheses, but data interpretation should be based on the revenue or product usage generated from a given ads campaign or feature deployment.
Blatant honesty, with yourself and with any stakeholder
Some of you, dear readers, may operate under the supervision of board members, investors, and advisors, some of whom may come from a corporate background where they operate on broken feedback loops or on no feedback loop at all. Some of these profiles, especially professional board members and VC "investors," may not understand the market from a small business founder's scope. The last decade and its absurd period of growth at all costs is quite symbolic of these antagonistic effects, where startups act like they have the profits and treasuries of the best Fortune 500 companies.
In the worst cases, these profiles may come from backgrounds where the form prevails over the substance, and they may ask you to be more traditional in your communication, wait before deploying a feature as it sounds too risky, or consider your unconventional ad campaign too unorthodox. They have always worked in an environment where they had no skin-in-the-game, and their entities were big enough to enjoy monopolistic situations or to get the best out of a reputation built centuries before. In a word: they felt important while they were just random operators and thought their great work was the reason for the company's results. In all probability, for some working in big corps, their companies' results would have been the same had you replaced them with a donkey.
At the end of the day, for some founders, these profiles are the ones writing the checks, and you may feel like your survival depends on them. Let me be very straight: if your company is growing, and your guts and iterations tell you that you are right, my answer to external tips from people who work less than ten minutes a month on your company and know nothing about the market is very simple: F*** them, and be free to make your own mistakes as it’s your only early privilege as a founder.
Iterate on data, not on beliefs.
Get customer feedback, from day zero.
The only crime is to make the same mistake twice : trial and error process is your best weapon.
Ignore most tips, especially from ex-investment bankers or MBA graduates. EDIT : I now believe MBAs are the most dangerous. MBA is a degree that sucks out every bit of street-smartness out of an individual and makes him the opposite of an entrepreneur.
If you think it’s a big deal, just think that one day, you’ll end up as cosmic dust.
Keep the faith
Voss