• The new critical success factors: Creativity and Innovation

    The world of entrepreneurship today is very different than it was in 1999.  The cost and time related to developing web applications are both much lower today than they were years ago.  That’s not to mention that entrepreneurship has grown considerably in popularity.  Starting a company now is a lot cooler than it used to be.  And people are getting involved at much younger ages.

    The net effect of all this is that the world of entrepreneurship is much more competitive than it used to be.  So the natural question is: how can you be successful in such a tough competitive environment?  Let’s examine some of the differences between critical success factors ten years ago and today.

    Ten years ago, succeeding in entrepreneurship was about:
    • Executing on the business plan you laid out.
    • Getting to a product before you ran out of money. (This sounds funny, but it really is true.  The amount of time and money it took to get to a 1.0 ten years ago was non-trivial.  A lot of companies never made it out of product development.)
    • Getting on the radar of an interesting acquirer (before or after you have earned revenue/profit)
    Today, success is about:
    • Solving a problem that people actually care about.
    • Winning the war of adoption (which in strong part is driven by usability).
    • Adopting a business model that makes sense.  (Acquirers care about the fundamentals of businesses more today than in the past.)

    Of course, the above is an over-simplification.  But the core observations still make intuitive sense.  Getting a 1.0 product out the door is not the differentiator anymore.  There is a lot of competition on the internet today.  Getting a product out the door without a business or distribution model is about as good as not having built one in the first place.

    So the more experience I have in building a company in today’s world, the more firmly I believe that creativity and innovation are really the core competencies required to build a successful business.  It’s about building something novel and valuable.  And doing so in a way that is delightful and easy to use.  There are choices for nearly every kind of web application today.  Being the easiest to use and to share with other users is critical to success.

    But I don’t feel like most companies take this as seriously as they need to.  More to come on this soon…
  • Nice guys (people) don’t always finish last…

    I think every american high school male, at some point, has a jaded ‘nice guys finish last’ phase.  It’s 2 parts sulking and 1 part being bitter that the world is not fair.  I was no exception.  I remember how sure I was that there was a correlation between being a jerk and having success in social situations (and with women).   I wasn’t the only person who was sure of this, either.  Just about every friend I had in High School complained about the same thing.  Except for those, of course, who weren’t ‘nice guys.’

    Fast forward several years later, and I find myself thinking about how those teenage experiences shaped some of my later thinking.  From movies to books to pop culture icons, I found that there was this very consistent theme out there about ‘finishing last’ if you’re a good person.  The people who are successful in movies, books, and TV are typically those people who ‘do whatever it takes’ with blatant disregard for the wellbeing of others. (Think Lex Luthor)

    I’m not sure how much of my thinking from younger years stuck around, and how much of this was just reinforcement from media, but I guess I always did subscribe to the ‘nice people finish last’ way of thinking (albeit, latently) until recently.

    I have recently come to think that, in many industries, being a nice person really is a competitive advantage.  While I find some successful people generally unfavorable, I’m not so sure that’s the rule.  I was thinking about this particularly in the realm of Venture Capital.

    VC is a fascinating space.  It’s a space that is made out to be cut-throat and dominated by ‘sharks.’  While I do understand that the valuation incentives in Venture Capital can be complex, I am starting to get the feeling that it’s a space where nice people actually finish first.

    I’ve had the pleasure of meeting and working with a number of great Venture Capitalists over the last 5 years, and I’ve found myself to be really surprised.  As I think back on our decision making process for choosing capital partners, I find that we focused primarily on fit.  At the end of the day, all money is green, isn’t it?  Everyone who was going to help us with the capital part of the equation was going to bring money to the table just the same.

    Yes, it’s true that each VC has a different ‘brand reputation’ and some are known for having stronger networks and more of an ability to contribute strategically to businesses than others.  But what I have found is that most companies end up talking to competitors within the same ‘tier’ of investors.  Within a tier, it seems that most VCs are comparable in terms of networks, reach, and reputation.

    And more importantly, I have found that no amount of brand reputation was significant enough for us to overlook the feeling of ‘fit.’  At the end of the day, we chose partners who were comfortable working with for the long-haul.  People we thought we could trust and rely on in times that were good or bad were the ones that stood out.  And perhaps most importantly, we wanted to work with people that we truly believed had our best interests at heart.

    And we think we got really lucky.  As I think about some of the really stand-out personalities we’ve had the opportunity to work with, I realize that we probably did get lucky.  But I also think that we’ve managed to build a great business so far, so I’d like to think that our investors will do pretty well also.  If they were ‘not-so-nice’ people that don’t care about the wellbeing of others, they would have missed out on a fantastic investment opportunity.  (If I can say so myself.)

    So, my thinking has really evolved on the subject of ‘being nice’ and ‘doing well’ in life.  I am not so sure anymore that nice people finish last.  I think that, over the long-term, being a really good person can be a competitive advantage.

    That’s a heartening thought…