Taking off the rose colored glasses

On Danielle Morrill’s suggestion I’ve been reading a book called The Happiness Hypothesis. The author, Jonathan Haidt combines ancient philosophy (including my personal favorite, Stoicism) with modern social and psychological research to paint a picture of a happy life that I find really compelling. What struck me however is how applicable a lot of what he says about the mind is to startups.

The thing that stuck out the most is a passage where he describes how bias works. He talks about a study in which pairs of research subjects are given a real legal case to read. One is assigned to play the defendant and one is assigned to be the plaintiff, and they are given real money to negotiate with. He says:

When both players knew which role each was to play from the start, each read the case materials differently, made different guesses about what settlement the judge in the real case had imposed, and argued in a biased way. More than a quarter of all pairs failed to reach an agreement.

However, when players didn’t know which role they were to play until after they had read all the materials, they became much more reasonable and only 6 percent of pairs failed to settle.

What he’s saying here is that when players knew their roles in advance, they genuinely read the information differently and came to different conclusions about what a reasonable outcome from the case was. This reminds me of how people evaluate their own startup ideas. Here’s how it works:

1. They come up with an idea

2. They get very excited about it

3. They avoid doing real research on competitors.

4. If they happen to come across information that indicates that there might be problems with their idea they dismiss it immediately.

5. If they come across ANY positive sign that what they’re working on might be valuable they get incredibly excited about it, and cite it as a reason why their idea will work.

6. They think that their blind insistence that their idea is The Next Big Thing is why their vision will come to reality

Conversations with these people tend to have a very similar script.

Founder: “We allow companies to view their support requests from customers as threads and then post those threads publicly to avoid answering the same questions over and over again.”

Me: “What about Zendesk? Doesn’t that do the same thing?”

Founder: “Yes, but Zendesk only allows you to submit requests as text. We’re going to allow customers to submit videos of themselves describing the problem. I read an article in TechCrunch last week that said video is the future of online communication, and we’re super passionate about videos so that’s why we think we can win.”

There are a few problems with this approach.

Blind insistence that you’re right is not vision, it’s dangerous

If your goal is to spin all facts that come your way in a positive light for your startup you’ll very quickly find yourself removed from reality. Doing so is deadly. It’s lonely out there. And it’s very hard to make money in a fantasy.

Jason Fried wrote an article a few days ago where he talks about the advice that Jeff Bezos gave to his team recently. His key takeaway was that people who are right a lot, change their minds often. In the Hacker News comments on the article someone shared this quote:

As Keynes said, “When my information changes, I alter my conclusions. What do you do, sir?”

I think that abiding by that quote is a critical part of creating a successful startup. When you’re in love with your idea it’s very easy to stay in a bubble and disregard or rationalize information that you don’t want to hear. Most of the time you don’t even realize you’re doing it.

For me, a large part of my growth process over the last year has been to try and get rid of the tendency to explain away flaws in my plans without giving them deeper thought. Starting to get over that tendency has really helped me move more quickly and adapt the product that I’m building to real customer needs.

Don’t get me wrong, it’s great to be excited about your idea. But you should be excited about it for the right reasons, and interested in exploring why it’s exciting.

Which brings me to my next point:

It’s not about different features, it’s about different understanding

The founder we discussed above who is making a Zendesk competitor is making a critical mistake: he assumes that different features automatically means a better product. The reality is that it’s very easy to take a product and change around its features or add new ones. Doing so is like saying, “Look I just made a better house! I took all of the windows and replaced them with doors. That way people can get in and out of it more quickly.”

Clearly this is not an example of a better house.

The way to build a better house is to do this: understand how a specific group of people are currently using houses, understand how the way current houses are built is not conducive to the way that specific group wants to use them, find ways to build the house that satisfies those needs.

If you want to build a Zendesk competitor, the solution is not to go and add video ticketing to their list of features and try to get on TechCrunch. The solution is:

1. Understand Zendesk completely. Do this by talking to people who use Zendesk, both companies and customers

2. Understand Zendesk’s current competition

3. Figure out how customers and companies use Zendesk to interact with eachother.

4. Then find a specific set of companies that has a specific type of interaction that Zendesk doesn’t do well.

5. Then build a product that helps them to do it more easily.

Most people skip right to step 5 in this process. That’s why the products they come up with generally don’t do things better than Zendesk. There’s a reason why on the Y-Combinator application one of the questions is: What do you understand about your business that other companies in it just don’t get?

If you have competition (which if you’re building something with an existing market you will) then this is the key question to building your business. If you can nail that, the features will come and so will the customers. Without it you’re sunk.

But the funny thing is, you can’t see any of this unless you take those goddamn glasses off.

I have a startup called Firefly. If you’re interested in doing better customer support I’d love to talk to you about it some time.

25 Oct 2012, 5:32pm | 3 comments


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