Dull thoughts in a sharp world.

In recent conversations amongst founders at RentWiki.com, we’re have prioritized our goals and visions.  One of our main goals is to provide maximum value to both renters and property owners and reach product/market fit as quickly as possible.  Product/market fit as defined by Marc Andreesen…

Product/market fit means being in a good market with a product that can satisfy that market.

You can always feel when product/market fit isn’t happening. The customers aren’t quite getting value out of the product, word of mouth isn’t spreading, usage isn’t growing that fast, press reviews are kind of “blah”, the sales cycle takes too long, and lots of deals never close.

And you can always feel product/market fit when it’s happening. The customers are buying the product just as fast as you can make it — or usage is growing just as fast as you can add more servers. Money from customers is piling up in your company checking account. You’re hiring sales and customer support staff as fast as you can. Reporters are calling because they’ve heard about your hot new thing and they want to talk to you about it. You start getting entrepreneur of the year awards from Harvard Business School. Investment bankers are staking out your house. You could eat free for a year at Buck’s.

To do so, we have placed a high priority in shortening our feedback loop, listening to clients and customers, pushing quick iterations, and being laser focused on this goal.  We do not get into the featuritis game or the beautiful product game, because none of those have any significant impact on our two key drivers… listings and content.  What are the sacrifices?  Our focus places items such as integration with Open ID, Facebook Connect, Social Apps, I-phone apps, and the like as secondary items to providing value to renters and clients.

Why should these items be secondary?

In order to successful launch and utilize these tools, companies need the time, resources, and strategy to do so.  Every second we spend not focusing on our content and listing, is a second not providing substantial value to the consumer.  I often cite the analogy of vitamins vs aspirin (vitamins supplement health, aspirin solves pain), and being the first with an i-phone app or integrating XYZ widget does not solve dire pain.  And the pain is not content fragmentation or portability of content, but it is the existence of the content online.  As we approach our product/market fit, we can reallocate resources to play the feature game.

Why should these items not be secondary?

In our particular industry, we are in a bit of a branding battle as part of our sales strategy.  It seems that our competition is in a foot race to see who will be crowned the next king of social media.  Though this means nothing to the renter, which subsequently should mean nothing to property owners, it is a reality we have to face.  Value is not enough to shorten a long sales cycle.  Though content is still king, if we developed the magic twitter-flickr-digg-facebook-youtube one click integration, we’d be seen as providing more meat to renters.

That being said, we are getting request from renters to develop an i-phone apps, integrate with Facebook Connect and Open ID, and provide more syndication of fragmented content.  We have those features slated in our development schedule.  Will we be the first?  Probably not, but I’m not convinced that a renter knows or cares who’s first.  Let’s take some classic examples:

Netscape — Internet Explorer

Ofoto — Flickr

AltaVista — Google

Napster — iTunes

Next post I will cover the advantages and disadvantages of being a first-mover vs. a fast follower.  But long story short, we believe focus will drive a better core product, more robust content, and more listings.  And a combination of those three drives our magic one click button… value.

A tweet from Tony Hsieh got me thinking about how poker skills directly translate into entrepreneurial skills.  There is a valid argument that no poker experience is applicable to business.  In fact, most poker players are poor entrepreneurs because of their propensity to gamble, risk-seeking attitude.  But if you are a great poker player, here are the skills that make you an incredibly dangerous (as in great) entrepreneur:  

5)  Understand when to gather more information to make a decision

Average poker players consistently make wrong assumptions too early.  They extrapolate too much information from limited data, making large logical jumps.  However, great poker players understand when they have too little information to make a sound assumption.  They wait an additional card to bluff, fold for another opportunity, and are patient before defining another players strategy.  Great poker players even call a hand, known they lost, just to confirm a hypothesis and gather more information.  When starting a company, it is important to not make great assumptions on the marketplace, competition, or business model, but gather enough information to formate a sound hypothesis. 

4)  Consistently make correct decisions

Similar to any business decision, great poker players are able to consistently make correct decisions, sometimes on limited information.  Bad poker players tend to make couple of bad decisions that cripple them.  Sure they get lucky once in a while, but the players that are able to consistently make correct decisions put themselves in the right positions to win.  

3)  Capitalize on large advantages, and not small ones

A classic example of great poker play is folding when opportunities are available and focus their efforts on a few players. When there is a large advantage, great poker players are able to capitalize.  When you start a company, as your develop your model and explore your marketplace, you’ll consistently find opportunities you can explore.  But great entrepreneurs focus and win the big battles. 

2)  Understand the macroeconomics of the game

Poker is not about risk. In fact, most great poker players are boring and super risk-adverse.  It is because they understand the long-term, macroeconomics of the game, analyzing each decision as if they were forced to make it millions of times.  You want to take calculated risks, but take risks that will not debilitate your company. 

1)  Trust your intuition

In the end, you’ll have limited information, tough competition, and need a great deal of luck.  So sometimes, you’ll just have to trust your intuition and go for it.

Had the fortunate opportunity to speak at the Harvard Business School Entrepreneurship Conference yesterday with some smart entrepreneurships in front of even smarter b-school students.

Though the panel lacked the color of our personal stories, I think we covered some interesting points.  Here were some of the questions and answers (both said and unsaid bc some of these were random notes I took on a piece of paper):

1)  How do you decide if an idea is a good one?

The problem with identifying a good idea, is that most people associate the idea with a product or service.  The issue is that your idea for a product is going change dozens if not hundreds of times.

There is really three things that I think about:  The problem, the marketplace, and the feasibility

1)    You are solving a real problem with real pain.  Classic example is aspirin vs vitamins?  Vitamins suppliment health, aspiring solves pain.  Know that not only do your customers want your product, but NEED your product and are willing to pay for it.

2)    The marketplace is booming.  A growing marketplace can carry an average product.  12 year olds could have made money in real estate in 2001 and did.

3)    Third, it is feasible to solve the problem.  Everyone wants a beer that makes your smarter.  Can you overcome a cold start, can you distribute the product, can you build product.

These are three key components I would look at.

How should you think about ideas in areas that you don’t have significant industry background in?

This puts you at a disadvantage.  But I do not place much emphasis on having work experience in the industry as ensuring you have a strong passion for the sector and consumer.   I moved 4 times in 3 years… so I don’t know advertising, but I know what it is to move and look for a place to live.

And this is where recruitment is so vital.  I prefer startup teams of 3 to 4 people, a CEO sales guy, technologist, and a product guy or gale.  So if you are the CEO sales part, find the product person the product.

How do you know when it’s time to take an idea and convert it into a business?

Great ideas form over long periods of time, evolving from multiple feedback loops and iterations.  Rarely a snap moment of “holy shit, I have a great idea!”.  Often you’re trying to solve a problem and your initial solution is stupid.  It’s more about whether the market is ready for your problem to be solved.

Also, you have to reach a personal tippping point where you are willing to dedicate the next 1, 2, even 5 years to this problem.

Additional Tidbits

Be temporarily mentally insane.

Mentally insane… you’ll need to be incredibly passionate to the point where you are borderline insane.  You’ll have to hunt down customers, literally stalk clients, and after 100 vc’s say know, you’ll need to be delusional enough to believe the next one will say yes.

Temporarity…Far too often, entrepreneurship hold on to their initial hypothesis too long, not recognizing that they may be wrong.  Markets are surprisingly efficient and sometimes products are not received as expected.  So fairly early and often to get feedback.

Overall, had a great and met a ton of smart people.  Got to chat with the CEO of Pandora, founder of Internet Real Estate Group, and co-founder of Sam Adams Brewery.  The entrepreneurial environment at the HBS conference was energizing.

Here is an old video from Web 2.0 Expo in NY, but I think it’s worth mentioning again. Gary is a very insightful, cares about what he says, and a great presenter.

My favorite quotes include:

“You can lose just as much money being happy as hell… clap that up cuz it’s the real s&*t.”

“You collect smurfs? Smurf it up.”

“We’re building businesses here. This isn’t about parties.”

“Legacy is better than currency.”

I’ve always believed that a bit of hard work and grit can get you to most places.  This is especially true in business, where you can be very successful if you are not born with superior intellect… ie, Donald Trump. But I have always believed that you cannot reach the pinnacle without being born with loads of talent.  Athleticism in professionals sports is a classic example, you can be good, but you can never be Jordan, Kobe, or Lebron without being born that way.  But the question is, do those same principles apply in business or entrepreneurship?  Can you reach the pinnacle and become the next Bill Gates, Warren Buffet, or Sergey Brim without incredible intellectual capactiy?

Anycase, I do know this, no matter how hard I practiced when I was younger, I could have never been this good at guitar at such an early age.

2)  You’re going to run out of cash

That or you have an impossible exit because you took in too much.  And if you are not profitable yet and are not running out of cash, you are not pushing 110% just to survive.  You perform the best when you’re back is against the wall and I think this constant state of “surviving” one of the keys to success.

3)  You’ll get frustrated

Want and accept all challenges you face… and have lots of fun failing.  It’s actually quite comical to stop and say, “Holy shit that was stupid of me” or “A 13 year old boy from Vietnam could have design that better”.  Call it positive reinforcement of bad behavior in exchange for keeping your personal sanity.

4)  The emotional rollercoaster will beat you

Yes.  Think about how frustrated you get when your computer crashes.  Now replace the word “computer” with your life, lots of personal money, and years of work.  Stay incredibly focused on your vision and goals, but celebrate the small successes.

5)  You’ll get excited about something else

If you are an entrepreneur, you probably like solving inefficiencies.  Coming up with ideas to solve problems is fun… you have the limitless potential and the lack of constraints of your imagination.  Actually executing and putting in the sweat equity is not as exciting.  Worst of all, the scientologist is in the details.

6)  But it probably won’t be the competition

This is my favorite.  I hear this phrase at least once a week, “I have a great idea, but I do not want to tell anyone just yet.”  My friend Ryan Johnson (smart consultant at McKinsey) and I say if you cannot tell your idea to someone, then it’s a bad business idea.  If your only competitive advantage is the idea itself, then it is not defensible and probably not even feasible.  Tell as many smart people as possible and get their feedback.  Imitation is the highest form of flattery.

And yes, startups are hard, boring, include lots of data entry, hours of staring at a monitor, headaches, backaches, hair loss, and my personal favorite, the ultimate game killer.  But no matter how hard it may be, the joy of seeing your child grow up is like nothing in this world.

As I reflect all that was 2008, everyone always asks the questions, “what are your new years resolutions?” and “what were the greatest and worst parts of 08?”.   Here are mine:

Greatest moments of 2008

1)  Spending an entire year in San Francisco - Naturally a transient individual, I’ve always been in a constant state of change, moving from city to city looking for a better situation.  After living in Scottsdale, Arizona for almost 3 years years after graduating, of which I despised the latter half, I found a place I can call home.  For me, it’s not the vast nightlife, abundance of young professionals, or big city lights, but the opportunity to meet interesting and real people who care about solving real problems. 

2)  Raising funding for RentWiki.com –  Though there are definitely drawbacks to taking in capital from outside investors, I would consider it a highlight for 08.  Investing a large portion of my own money and working without salary for over 3 years has been strenuous.  It is welcomed relief to be able to focus my efforts on what I am working on and not worry about how to pay utilities bills.  

Worst Moments of 2008

1)  Lack of life experiences -  @GregorMacdonald: When you’re young, the most important thing is to have experiences. Though I moved into a new city, I spent much of my time either working, thinking about work, stressing about work, or drinking. Strange combination, but I think the first three led to the latter.  On a run on the last day in ‘08 along Baker Beach, a good friend of my Rahmin Sarabi and I talked about this tweet…how we’ve been very focused on certain business experiences.  Though worthwhile in progressing down a specific track, more knowledge, experiences, and skillsets can help you diversity and make you a better businessperson and entrepreneur.   We’re talking about taking an art class, design class, or even a improv comedy class.  

2)  Leaving LiveByCampus and my old partners – At the time, I thought that leaving LiveByCampus to work on RentWiki.com full-time was the only option… told by multiple advisors that working on too many projects leads to failure.  So I dived into RW, not allocating the time necessary to help transition LiveByCampus to be self-sustaining.  

Goals for 2009 

1)  Stay uber focused – It is incredibly easy to get sidetracked on features, ideas, peripheral services, and the ten thousand new sites and social media outlets that emerge a day.  Though it is beneficial for us to understand social media trends, there are more pertinent tasks that need to be completed first, such as improving consumer outreach and improving the product. 

2)  Experience More… A Lot More. – Though this seems obvious, we are all stuck in a state of inertia.  You get comfortable eating at the same restaurants, hanging out with the same people, running the same route, whatever.  But my goal is to challenge myself to step out of the box everyday.  

3)  Stop the “Grass is Always Greener” Mentality.  - I’m getting much better at losing that nagging, “grass is always greener” mentality.  Everyone spends their lives saying this, “I cannot wait till ____” phrase whether it’s a better job, relationship, or living situation.  I am starting to enjoy every moment I have and will to continue to throughout 2009.

Great animation video on Current:

In 1969, a 14-year-old Beatle fanatic named Jerry Levitan, armed with a reel-to-reel tape deck, snuck into John Lennon’s hotel room in Toronto and convinced John to do an interview. This was in the midst of Lennon’s “bed-in” phase, during which John and Yoko were staying in hotel beds in an effort to promote peace. 38 years later, Jerry has produced a film about it. Using the original interview recording as the soundtrack, director Josh Raskin has woven a visual narrative which tenderly romances Lennon’s every word in a cascading flood of multipronged animation. Raskin marries traditional pen sketches by James Braithwaite with digital illustration by Alex Kurina, resulting in a spell-binding vessel for Lennon’s boundless wit, and timeless message.

View the video here.