How Teams Can Outperform Using the Startup Ops Pyramid

After aligning around its vision, your team might play the following mad libs exercise to construct its pillars:

“Our vision is to [insert Team Vision], by [Pillar #1], [Pillar #2], and [Pillar #3].”

You can have any number of pillars, but I’ve always found three to be the magic number, as it’s symmetric and easy for people to digest and recall.

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Did I Make a Mistake Selling My Social-Media Darling to Yahoo?

At its height, Del.icio.us was the toast of budding social sites known as Web 2.0, had millions of users, and served as a direct inspiration for sites like Reddit and Pinterest. Schachter talked to Intelligencer about his decision sell Del.icio.us to Yahoo in 2005 — and how it felt to watch as the company was mismanaged and sold off to a series of buyers before being permanently shut down in 2017.

In the late ’90s, I started a site called Memepool, and people would email me links. At 20,000 links, it got unwieldy. I’d copy and paste the URL into a text file on my Unix box, and then make a Unix comment mark — which is a hash — and a terse note, just a word or two. So, like, “# wifi.” A friend would ask, “Have you heard about this new Wi-Fi thing?” and I’d be like, “Yeah, I’ve been collecting stuff.” I would get the 15 links I had collected about Wi-Fi and paste them into a message.

Del.icio.us was a way to save things while wandering across the web with low cognitive overhead. You could save and tag. Tags were something I invented, they weren’t a thing before that. Instead of carefully organizing your bookmark folder, you added a word or two. And you could see what other people were working on, and share and contribute with them as well.

.. People say VC is pattern matching, and we were so far out of the pattern that no one could really evaluate us. We got one or two term sheets, but they were small.
.. Companies make you sign a “no shop” before they give you an actual offer, saying you won’t take their offer and turn around to a competitor and try to get a higher price.
.. We went with Yahoo partially because it was the first company to make a real offer, but also because it had already started a major push into Web 2.0. It had already acquired Flickr; it had acquired Upcoming — it felt like it was trying to make a big change in what it did.
.. There was also the technical consideration. The access to a search-engine indexer tech was super exciting. We were getting crushed by the traffic. We had like 30 or 40 machines in the data center, and we were adding to it every time we could. Yahoo told us, “We have a bunch of tech we could bring to bear.”
.. Negotiating with Yahoo was very awkward because it would disappear for days. It turns out it may have been negotiating with Facebook at the same time. Yahoo led with a number and a bunch of terms, and then the lawyers went back and forth on terms and payouts, but the initial sale price never changed.
.. The price of the acquisition was reported in the press at the time as $30 million … I’m fairly sure that “$30 million” is just journalist code for “We have no information; here’s our guess.” That’s the published number, and it’s a wild guess. The actual number is under NDA. It probably doesn’t matter now, since Yahoo isn’t even really a company, but it was definitely less than $30 million.
.. The money was good, but if I had joined tech and risen through the ranks the normal way, it probably could have been about the same.
.. I’ve since become an angel investor, and I’ve done just shy of 200 investments. And when founders sell, they wanna go out and celebrate. As often as not, they’re weird and awkward anyway, so it’s not like … I think a lot of time that selling is not the victory it seems. It takes away all of your forward momentum. Do you take building a product and being vibrant and known and trade that for cash? It may be the intellectually correct thing to do, to ensure your financial stability going onward, but it’s not emotionally rewarding in the same way.
.. Once we were acquired, Yahoo helped us on the tech side, but not as much as it said it would. I think this is common for acquisitions. Before you’re acquired, you’re an important visionary. Afterward, you’re a crazy person who just wants to burn money.
Any decision was an endless discussion. I remember once, we had to present to a senior vice-president. We had a 105-slide deck prepared, and we didn’t get past the second slide because they ratholed about one fucking slide. It was a miserable environment.
.. It took a year for reality to set in. If you wanted to get hardware, you went to the “hardware request committee” with your proposal. They assumed that engineers liked spending money for no reason, so you’d have to go back and present again in two weeks. So there’s a month gone.
.. On top of that, leadership had no vision or mission, so they couldn’t evaluate any decision. Upper management wasn’t taking risks, and everyone else was just optimizing to not get yelled at or stay at work late. My contract was that I had to stay for two-and-a-half years. At the end of my time at Yahoo, I woke up screaming a few times. It was a grind and super demoralizing.
I don’t regret selling to Yahoo. But I do wanna know where it could have gone if I hadn’t sold at that point. Could it have been Pinterest or Facebook? Probably not Facebook. But clearly, the urge to collect is a broader thing than I satisfied with my product. What we had built was pretty narrow; it could have been broader and bigger. And I am frustrated about what happened with Del.icio.us at Yahoo. Yahoo Answers ended up being this huge thing, and the engineering team was doing both, and they ended up de-staffing Del.icio.us in favor of Yahoo Answers. Del.icio.us had, like, one engineer.

There’s a saying: “You can be rich or be king.” You can sell your company for as much as possible, or you can be in charge. Though maybe neither is entirely possible. When I founded my second company, we had seven people, and we still argued over what to do and how to do it. I was CEO and I still didn’t get my way.

Product-Market Fit: To get good startup ideas, look for anomalies

Product Market Fit:

Here’s a gizmo. Wonder if anyone wants it

A classical example of market-product fit is how Sony’s founder Akio Morita created Walkman. He observed teenagers lug heavy boomboxes with them to beaches and realized many places where music is needed are not convenient for a heavy music device. So he asked his engineers to create a version of the boombox that can be carried along.

.. If people aren’t aware of their compensatory behavior, the job of the entrepreneur becomes that of an observer. Look around you and ask: What seems odd? What shouldn’t be happening but is happening? What’s happening but shouldn’t be happening?

Compensatory behavior implies that users know that their existing behavior is compensatory (and suboptimal) to a better solution out there. But that isn’t the case. If users are aware that their behavior is compensatory to something else, they’d go and get something else. This is why you can’t simply survey people and ask “what are your compensatory behaviors”.

.. Once you find these anomalies, then look for the “why” behind such behaviors. Why are people doing this? If it was easier/legal/cheaper/faster, will others do it too? You don’t have to copy customers behaviors and offer it as a solution. Rather you have to understand underlying motivations and design a solution for supporting those motivations.

.. Some examples to make you think about market-product fit:

  • What are people doing in spite of governments not allowing it? Avoiding taxes, buying drugs, speaking freely. What are motivations for those behaviors? How would you address those motivations in a legal manner?
  • What is everyone annoyed by but people still do it anyway? Talking on the phone at movies, long queues at the grocery, not getting enough likes. Why are they doing that?
    Is there a better way?
  • What do your neighbors do that you find surprising? Early morning running,
    multiple locks in-house, not paying enough to maids. Why is it surprising? Are you, not them, an anomaly?
  • What are your friends or cousins obsessed about (that you don’t understand) Trying new bars, photos of their kids, posting good wishes on Facebook. Why are they doing it?
    Is there a better way of accomplishing the same desire?

.. What shouldn’t be happening but people are doing anyway?

 

Market-product fit:

Oh my. Never seen anyione wear a metallic hat before. What’s going on.