When to roll in the Trojan Horse
I've been speaking about Trojan Horses a lot this week. And, I mean this in the Greek mythological sense and not the computer virus sense.
I mean it to represent a beachhead strategy when it comes to launching a new product. It would have been hard for Facebook to have taken on mySpace directly, but by building a site for University students first, establishing a strong position, and then branching out, they were able to do just that.
The same with regional services like Thrillist and Daily Candy. It's easier to launch a service one city at a time, building up critical mass in each, before hopping to a new town and starting over.
This is a time-honored style of business development; get your systems down on either a small scale or with a specific focus and then expand. It’s been used in all sort of industries, and has propelled some merchants into areas one would have never suspected. At one point Sears, yes that Sears, was the largest seller of homes in the United States. How? Systems.
By developing the finest system of procurement, delivery, and financing of any merchant, Sears was able to build, sell, and deliver more houses to more people than ever before. Step back from your business and find out what your good at, really good at, and then apply those lessons and systems to a comparable product.
We've used this tactic at Snooth in the past and intend on using it more in the future. We used our position in wine (Snooth) to leverage our hop into Spirits (TheSpir.it) and are about to do it again with a hop into another new vertical. It's a powerful way to get a leveraged start, and one that you should consider.
Take the time to assess your systems. Find out what you’re good at, and at the same time what you could be better at. Leverage your assets and work on your weakness to make expanding your business an extension of your existing business. This sort of natural growth not only creates incredible economies of scale but imbues your new venture with unstoppable momentum.
Fighting the Attrition
"Come writers and critics
Who prophesize with your pen
And keep your eyes wide
The chance won't come again
And don't speak too soon
For the wheel's still in spin
And there's no tellin' who
That it's namin'.
For the loser now
Will be later to win
For the times they are a-changin'."
- Bob Dylan
Do the maths. If the average American holds a job between 3 and 5 years at a time, with those between 18 and 38 (most of the people I work with fall in this range) having the shortest duration, then how do you build a culture when 1/3 of your workforce is leaving each year?
There are 24 people in the office as I write this, up from 5 in May 2009. Following the logic above, that means every 45 days someone will leave, and we'd have to hire at that rate just to hold steady. However, we are growing, and expect to have 40 people here by the end of 2011, so in addition to the 8, we'd need to hire 16 more people. 24 people - that's one every 2 weeks.
It takes us 40 hours on average to find a candidate we want to hire, and then 3-6 months for them to reach maximum efficiency here. HR quickly becomes a major role and although Operations does most of the work, it clearly touches on each and every employee here.
Although it may not seem like it when you are sifting through 1,000 resumes, HR (I mean it in its broadest sense, to include training, morale, hiring etc) is one of the most scalable things I can focus on here. While the CEO may get the glory, the success a company achieves is built on the hard work of the folks who come in daily and move the ball forward inch by inch. As Steve Jobs was known to say: “A players hire A players; B players hire C players”. Investing the time to hire the best, and then work with them so they stick around pays dividends.
I wrote this today as one of Snooth's editors, Carly Wray, is leaving us to work on a script optioned by a tv network. We'll miss her, and are sad to see her go. And, although I work hard to keep people here, when someone's dream takes them in a different direction, there's nothing to do, but to wish them luck. Good luck Carly, we're rooting for you.
Copying your competition is pointless
I used to sail Laser IIs while at University and one thing the Captain of the squad told me was that if you are being shadowed by someone from the other team, the easiest way to leave them behind was to throw in as many tacks as possible.
Its totally counter-intuitive, tacking slows the boat down and unnecessary tacking is the last thing you'd think you'd want to do to stay in front. But, and this part stuck with me, if you are being followed by a shadow, someone that will mirror your every move, the more moves you throw out the harder you become to replicate, and slowly your opponent will lose ground.
Its the same with chess. You can't win a game by copying your opponent, you are always a move behind.
In business these rules apply even more directly.
If I were to create a site that mirrored Facebook's functionality no one would join (there are switching costs to leaving Facebook, and a mere replica cannot not overcome those). If we copied everything we could see about a competitor, we'd not succeed - there are too many hidden points of differentiation to replicate any company or service accurately. While it may be possible to copy the design ethic, or the start time, or the customer service policy of any specific company, its impossible to replicate the culture, the team, the goodwill or any of the other less tangible attributes.
For better or worse, the CEO of a company needs to carve out their own niche, follow their passion, and trust that their original instincts and business plan made sense. Its why the Blue Ocean Strategy is so popular.