Strategy Blog: Post

Kevin Vigneault - Project Manager :

A few years ago, Nina Wanat moved to California. After working as a screenwriter and attending law school, she figured out what she really wanted to do was attend culinary school. Nina decided to start a blog called Sweet Napa to, as she put it, "remember all that I was learning -- everything from preventing exploding pies to shaping chocolate dolphins."

It turns out this blog was more important to her upcoming business strategy than she most likely realized at the time. When she later conceived of her business idea to sell high-end candy bars ($5 a piece), her blog became the testing grounds for various recipes she was coming up with. She created prototypes for orange, whiskey, coffee , banana, and coconut flavored candy bars and solicited feedback from her readers to gauge their interest. Her transparency not only helped her see what worked and what didn't -- it also attracted a loyal base of readers. These people would become her first group of paying customers when she later launched her candy bar business at BonBonBar.com.

Here are three lessons we can learn from Nina:

1. Be public about your product ideas. Don't develop products in isolation and then solicit feedback only after you've invested hundreds or thousands of hours developing a production-ready product.
2. Business strategies should be focused, but not product-specific. If your business is contingent upon the success of a single product, your chances of success are much lower.
3. Try out lots of ideas, but be selective about what you actually release to production. After trying all those candy bar recipes, BonBonBar had two candy bars available at launch (they have four now).

Kevin Vigneault - Project Manager :

At Refresh DC a couple nights ago, Sean Greene from LaunchBox Digital gave a piece of advice I first heard in business school and have caught a few times since. It's that when starting a new venture, you can't strive for incremental improvement; rather, you must aim for dramatic innovation.

To illustrate what this means, let's use the example of DVDs vs. Blu-ray discs. DVDs were a huge innovation that changed the way people interacted with their video playback devices; no more rewinding tapes at the end movies or fast-forwarding for five minutes to get to a particular part. Recently, Blu-ray discs have incrementally improved upon DVDs. With greater storage capacity, they can deliver full-length movies at a higher resolution. But they don't change how we watch a movie, they just make the experience a little better. Here are a few more:

• Nintendo Wii vs. Playstation 3
• Netflix vs. Blockbuster Online
• Twitter vs. Pownce

In those four examples, it's probably better to have been the innovator than the incremental improver. But, does a new company have to dramatically innovate to be massively successful? Think about these companies:

• Firefox - There were a ton of browsers before Firefox came around in late 2004. It's now used by about 18% of the market, but it didn't fundamentally change what a web browser was. To many who were hungry for something besides Internet Explorer though, it represented a better option.
• Facebook - Facebook serves the same basic purpose as a host of other sites, including MySpace and Friendster, which are both well-trafficked and older than Facebook. Users possibly looking for something less cluttered than MySpace or cooler and newer than Friendster flocked to Facebook.
• Digg - Slashdot was around in the late nineties. Digg launched seven years later. The big change was simply the lack of any editorial oversight as to what made it on the front page; not exactly Earth shattering innovation, yet they get about 20 million unique visitors per month.

From this small list of examples, it appears at least possible to be hugely successful by incrementally improving an existing product. But is there any potential downside to striving for dramatic innovation? Well yes; you can burn yourself out trying to come up with the "game changing" idea before you even get started. Sometimes, you need to get your feet wet before the really good ideas start to flow.

So, you shouldn't necessarily reject the idea of getting into a market that already has some competition, even if you don't (yet) have the game changing idea. You can compete if you have specific expertise in an area, passion for that industry, and a good team. Sean provided another piece of advice, which is that there's a lot of money to be made by hitting singles (profitable businesses), instead of trying to slug home runs (billion dollar acquisitions). And to hit these singles, you don't necessarily need to change the whole game.

Brian Wynne Williams - CEO & Co-Founder :

Over the weekend, I watched the very powerful special on Martin Luther King, Jr. In telling the story of Dr. King’s life and his early civil rights work, the special described Rosa Parks‘ historic decision on December 1, 1955, to refuse to give up her seat on a city bus in Montgomery, Alabama.  This decision was a pivotal spark in the civil rights movement.

One of the people recounting the Rosa Parks story was Juanita Abernathy, wife of Rev. Ralph Abernathy, a prominent activist who worked with Dr. King throughout his life, including partnering with him to organize the Montgomery Bus Boycott.  Mrs. Abernathy made two comments that I found particularly relevant in understanding the “spark” that can inspire huge groups of people to take action and change their behavior.  The first had to do with authenticity.

“Had we planned it, it wouldn’t have worked.  It was spontaneous.”

People have an instinctual sense of what is real and what is staged, and can’t help but be uninspired by contrived situations.  On the contrary, authentic, impulsive, passionate action can be incredibly inspiring.  At a time when such actions can now be shared, broadcasted, announced, and discussed by millions in real-time, the power of spontaneous authenticity has never been greater.

Her second comment—perhaps a more important one—had to do with timing.

“The community was worn out.”

She described that the community of people who rallied around Rosa Parks’ brave act was ready.  December 1, 1955, certainly wasn’t the first time someone had refused to give up her seat, so what made that act on that day so special?  All the other smaller things that primmed the community to be yearning for something to rally around.

Jackson recently argued that a community is grown, not built.  I might argue that it needs to be found first.  For your message to get out, catch on, and have lasting power, you need to start with a great message, then deliver it at the right time to a community that’s ready to be inspired.

Brian Wynne Williams - CEO & Co-Founder :

One of the sessions I enjoyed at SXSW this year was Jason Fried‘s talk on Stuff We’ve Learned at 37signals.  As expected, Jason stressed simplicity, efficiency, and sustainability (in the form of fee-based software).  He talked about not planning too far ahead, and being flexible as your business evolves.  It reminded me of a challenge a lot of entrepreneurs seem to have: maintaining a rigid focus on a clear vision for their business while at the same time being nimble enough to react to the market and course-correct as needed.

Continue reading "Mixing a Clear Vision with Agility"

Brian Wynne Williams - CEO & Co-Founder :

In August of 2005, Seth called me and asked if we’d help build Squidoo, which we were proud to do.  More than two years after the beta launch, the site continues to grow, and now has over 300,000 pages of user-generated content, with 1,000 more being added every day.  In last week’s SquidUpdate, Seth noted that Squidoo gets nearly 6 million unique visitors per month, and roughly 12 million unique visits.  Raising money for charity was one of original goals of the site, and they’ve done that to the tune of more than $100,000.

My favorite line from the post:

“And here’s a neat tidbit: We’re profitable. We haven’t raised any VC money, and now we shouldn’t ever have to.”

By not raising venture capital, he goes on to say, Squidoo can remain attentive to their users instead of worrying about “meeting quarterly earnings targets.” It’s also forced them to run lean and stay focused.  Squidoo pulled together enough funding early-on to hire a small dedicated team and some outside experts (like Viget) to quickly launch the business.  The focus was always to get to a point of profitablity so that the business could sustain itself—not to just grow for the sake of growth.

Seth’s approach is different than a lot entrepreneurs take in the web space, especially given the renewed excitement about funding web start-ups.  Venture capital is sometimes necessary, but for many web-bases businesses, it’s just not needed.

Raising VC can often help businesses compete more effectively in a competitive space.  When Squidoo got started, there was no real competition, and they’re now “three to five times bigger” than any others.  Google’s announcement of Knol, as Seth points out, is a sincere form of flattery (though Mike thinks Knol is more Wikipedia than Squidoo).  Will Google’s participation in the space really be a boost for everyone, including Squidoo?  Or, will there be a sense in the long-run be that had Squidoo raised VC, they could be been better positioned to compete with the likes of Knol?

Only time will tell.  In the meantime, it’s refreshing to see (and be a part of) a business that’s bucking two trends in the online world: growing without VC, and turning a profit in a relatively short period of time with user-generated content.  Congrats to Seth and the team.