Startup Therapy Podcast

Episode #134

Ryan Rutan: Welcome back to the episode of the startup therapy podcast. This is Ryan Rutan joined as always by Wil Schroder, my friend, the founder and Ceo of startups dot com

Wil Schroter: will

Ryan Rutan: we love to talk features and benefits and all of the wonderful magical things that are swiss Army startup knife can do. But realistically speaking, how many things do we actually have to get right and how many things should be focused on any given time to have a successful startup.

Wil Schroter: We're lucky if we can be good at one, we can actually be good at one thing. We have hit the ball out of the park. Exactly. I mean, it's, it's funny because we see this Ryan in pitch decks, right? People get so fired up. But their idea, right? And all the things that this thing can be great at, so they're like, and then we can solve this problem, but wait, there's more this problem, this problem, this problem. And it's like, dude, the chances are in this world, in this life that you're going to be the best at one thing, but it's really small not to mention if no one cares about the thing that you're supposed to be the best at. Yeah, the features aren't gonna save you. Yeah, they don't. And

Ryan Rutan: I think that's the huge misconception, right? There's this creative value that you're creating in the user's mind or the investor's mind or whoever it is. You're trying to convince that they're like, if I just keep piling on enough stuff. Eventually it'll look good, right? I'll magically hit upon that one magical feature that everybody was hoping, I would say. And it's just not the case, right? It just ends up being noise that distracts them from understanding that clear core value. Now you may have gotten that wrong, right? You may not have nailed it right from the beginning, but you have to stick to one thing and be really good at it before you start to pile on a bunch of other stuff or it just becomes noise and the signal gets lost.

Wil Schroter: Alright, so before we get into this next topic, I just want to let you know what we talk about here is like 1% of the conversation, you know, really this conversation is going on all day long online at groups dot startups dot com Where Ryan and I pretty much talk endlessly with founders about every one of these topics. So if by the end of this discussion, you like the topic and you want to dig into it a little bit more with Ryan and I just had two groups dot startups dot com and we'll pick it up from there. Well, I also don't think, you know, and we'll talk through this. I think the cost of not being focused on that one thing is so damn high and we don't have a lot of luxury to do it. So I think what we can talk about today, we can talk about how important is singular focus, right? And we say important, we're gonna, we need to nail this one home, it's important, you know, we can't emphasize it enough,

Ryan Rutan: we can emphasize it so much that we've already done an episode on singular focus. So if if you don't hear it in this episode enough just go back, go back a couple. Yeah, this is going to be a repeating theme focuses. It's absolutely critical. Exactly.

Wil Schroter: I think we should talk a little bit about um how we're allocating resources because I think it really blows us up right in the misallocation because we we were doing all this stuff and then then the the what I'd love to see us, you know, kind of digging some more is um do we even have the luxury Of doing more than one thing? We

Ryan Rutan: don't I always, I always picture this, like when I, when I hear, when I hear founders start to tell me about, and we're building this and we're building this and we're building this, we're building this, I get this visual of them trying to push like six bowling balls up a downhill slip and slide, right? It's just, it's comical, right? Because you can just see they have no traction in any one of them. Um they're floundering constantly and they just can't make any progress because it's it's hard to do one thing, right? Even mediocre, right, let alone to get it absolutely right and and win at it. Um and the minute you add 23456, whatever it is, you're, you're kind of, you know, writing your epitaph at that point,

Wil Schroter: it's a big issue where I see it. Uh, we run a workshop around pitch deck, uh, you know, issues and so founders come to us and every week and then they say, hey here here issues that we have with our pitch deck, you know, there's things I'm trying to work on and often we don't make it past the first slide, which is of course the problem statement it says, and we say, look, what problem do you solve? And here's what ends up happening. And it's, you know, everybody's doing this for the first time. So it's, you know, no surprise that the people don't have the problem issue or the problem addressed. And the way they say it is, we solved this problem, but we also solve this problem, this problem and this problem. And it's like, okay, well, step back of those problems if you only had one to choose from, which would you choose? Like, oh, well I don't really, I hadn't really thought it like that because whatever your primary problem is if you can't solve that problem, the rest of them don't matter. And, and we get stuck all the time on that one. You know what I mean? Yeah, for sure. Now

Ryan Rutan: it's, it's a huge issue. And the other thing we see happen, there's people jump straight into the benefits and the solutions, right? They don't really focus on the problem and how people experience it, right? And I think that's really important if you have to truly understand how people are experiencing the problem and and how they're currently solving it, which is often just to do nothing or there's some status quo solution. Um, and instead of just looking at how do we supplant that, how do we change that behavior? They start to just throw spaghetti at the wall right there, just like, well, one of these things has to be the magic bullet that kills the werewolf, right? And it just isn't right, You gotta stay focused, you gotta get really clear on what the origin of the problem is, what the cost of the problem is that the magnitude of the problem is, and then have a single solution that focuses on eliminating as much or all of that problem as possible. Um, and you don't need to get beyond that because to your point, if you haven't figured that piece out, the rest of it, sort of doesn't matter. Right, right? You've got an analogy you like to use, I won't share it, I'll let you drop it later, but I think it's so in this case,

Wil Schroter: let's talk about our Henry ford analogy. Yes, I think it's so ever so, uh, what we talked to founders about, imagine you're Henry ford and you're introducing the first, uh, you know, gas powered car to your audience, to the world and you get up there and you're pitching you say, by the way, I've got now, internal combustion engine that will power a car unlike horsepower, right? It's not literally horsepower. And we'll be able to have all these features with this thing. Not only will it change transportation, it'll offer you heated seats someday, it will offer you a reconditioning off you a stereo, etcetera. It's like, whoa, whoa, whoa, hold on, hold on. You just said that you're gonna change transportation, you're literally gonna take people off of horses and put them in a car. Who gives a sh it about heated seats, right? Like,

Ryan Rutan: you know, for what it's worth horses do provide a heated seat. I just want to throw that out there.

Wil Schroter: So look, if somebody's out to buy a car, right? The first thing they're going to say is I need a car to get places, right? I didn't have anywhere to go. Like right now in covid a car is the last thing on my mind, right? I'm not like, I don't need to go anywhere, but I'd love some heated seats. That makes sense. I'm

Ryan Rutan: just gonna go hang out in the garage and warm up my backside. Sounds great.

Wil Schroter: So we all have to figure out when we're thinking about what problem to solve? What is the main thing that people are going to look for, right, and how do we be bad ass at it, Right? So again, in this case if we're thinking, well, you know, we want to get into this, this, this one business, let's take slack. For example, you know, the communications tool that that many people use. Not everybody's familiar with. Um, but it's a, it's an online chat tool that a lot of businesses use, uh, in order to, to communicate all day if slack work for us. Yeah, we live off it. So yeah. Um, but if slack were to say, look, yeah, we want to change the way people communicate throughout the day. We want to take them off of email and put them in the chat, but we also want to be able to have them be able to make phone calls and we don't want them to be able to do image sharing and we want to do all this step back. If I don't give a ship about using chat all day. It doesn't matter if you, if you've got image sharing, right? But

Ryan Rutan: it's got a jiffy integration, will we need it if

Wil Schroter: you're, if you're not the best at doing it like pretty much every other chat program is not. I also don't care. So I think two things are happening here. I think we as founders because we're often entering new markets and we got all fired up at all the things that this can do. I think what we need to zoom out and focus on is okay. What is, what are the things that are features, their benefits there? They're nice to haves or maybe they just come down the road later. They're super important, but there later. But what's the one thing that if we're going to establish our beachhead in our market, if we get this thing right, we've definitely got some room to add features right now, What is the one thing? And I think that's so commonly overlooked? It's almost comical.

Ryan Rutan: It is we have a we have a really great illustration right now on on this very very thing, right? We've got mail chimp announcing their $12 billion dollar acquisition by into it. And so they didn't try to do a whole lot and they've been around for a long time. So if there was anybody that wanted to just stick around long enough to have feature bloat beyond reason, male chimp would be a great example. And yet they haven't, they stayed really close to home, They said, look, we're just going to make it really easy to build an email list and then to send emails to them on a serial basis and they didn't try to do a whole lot more than that. And they just did a really good job of nailing down, you know, starting with with secondary markets, you know, smaller businesses, people that didn't have access to big enterprise level tools back in the day when the only way to send like massive cereal emails on an ongoing basis, we're through, you know, big enterprise tools and they said, we're just going to serve that market. And they eventually grew out of that and began serving plenty enterprise clients as well. But they didn't try to do too much, right? They didn't turn into a marketing suite, they didn't turn into an analytics platform, right? They give you enough analytics, they tell you what happened to your email and not a must, right? It's just what you need and not more. Um, and they bootstrapped that thing to a $12 billion Internet because it's one of the

Wil Schroter: greatest success.

Ryan Rutan: Yeah. And it's happening now.

Wil Schroter: Here's the funny thing of rent. They were bought by intuit a company that's never been able to do anything else well, but taxes and I, and I would argue they don't do it that well, but that's, you know, there, but they've done that one thing and they built this incredible juggernaut that can buy a male chimp by just doing that one thing. Now let's take a look at those. Yes, we have to be the best at the one thing or, you know, we have to focus on the one thing. But let's talk about the cost that comes with actually trying to do anything. But one thing, right? So, so in your mind, when you, when you talk to start to talk to a founder and they say, hey, I want to try all these things, what's the first thing that's going through your head?

Ryan Rutan: I go back to that visual analogy that I dropped it at the top of the episode, right, Which is that they're just trying to push bowling balls up a slip and slide. It just does a lot of, a lot of them, right? Um, it's painful. It's costly, you know, just you just end up not accomplishing much of anything. And when you really dig into it, the motivations for these things are, you know, kind of focused around a couple of things. The main one that I see is insecurity around the product that they're building, Right? And so it's, it's interesting, but it really does boil down to that. In most cases, they're afraid that there's not enough resonance in that singular problem and singular solution. So they start to kind of try to skim coat it with a bunch of other stuff that is just a protective layer, right? And little do they know what they're actually protecting themselves from is progress right? Getting anything done, having anybody understand they're offering because that's the other part that we didn't really talk about. But when you start to fractionalized your focus, you're also fractional. Izing everyone else's focus and ability to understand what the hell it is you're trying to do, right? The minute I'm up to like feature five or six people are zoned out or they've forgotten the most important thing that I'm supposed to be doing, which hopefully I lead with, maybe I didn't, maybe not even clear on that yet, but we see people just absolutely start to distract the hell out of their audiences by dropping a whole bunch of non sequitur features and benefits. That's right. Just not important to the core problem, right? There are other reasons this happens, right? And sometimes it's just uncertainty of what's going to work and that's okay. But the path to figuring that out is sequential, not parallel. When you try to do things in parallel, you just end up not getting any understandings whatsoever right. You don't end up figuring out what works and what doesn't we have some other really nice examples too of places where people started with a singular focus and then branched out and then eventually kind of come back and the example I'm thinking of most clearly in my mind is base camp 37 signals. Um you know, when they started with a very simple project management tool and then they branched off into things like chat communication, um, file storage and all of these other tools that ended up ultimately not serving their market in the way that they hoped and they pared it back to just base camp, which instantly was where they started, so that the right instincts. Um, and then they branched out and then they retracted back to that original pure platform that they were really good at. That was the one thing that they absolutely nailed and they eventually realized that and kind of regressed back to that state. Well, there's a

Wil Schroter: reason though, right? There's a reason because at some point they were saying, look, we only have so many resources, we only have so many bets, you know, we can make as soon as we say this all the time, the moment we take a bet and we say, let's split the bets, We now lower our probability that either bet will work right? 100%. We're in a business where we can't hedge, we can't say let's build this feature, this feature in this feature and maybe one of them will work. We're lucky enough with the minimal resources that we often have that will get one of the best even, right? Because because we have to talk about, it's not as simple as just like playing cards down on the table. Right? In this case to build a quality product that the market accepts, understands or adopts can take anywhere from 3 to 5 years to get it right now. Now people will say, well, no, that's not true. Like you can launch a product in year one and it will get a take rate. Yes, you can get people to be interested in the product to build a good product. It takes lots and lots and lots of reps on a singular focus you name. Nearly any company that's gone public, you know, using that as a long timeline. And it's always because they had one thing that they did really right. You know, you've got dropbox and box right? Having done one thing really. Right. Have they tried to do other things? Sure. And they had a ton of resources take stripe, right, stripes got in all these different things that they're trying to get into. But at the end of the day, all that friggin matters is they process credit cards really,

Ryan Rutan: Really well. They turned 16 digits into money in your account. That's what matters. Is incredible.

Wil Schroter: And in every one of those cases, even when they have exponential resources, which again, we don't, they still say focused and, and the reason is if we start taking are very minor resources and we start placing those bets on things that are features benefits aren't necessarily the core core product, which by the way again, Takes 1 to 3, 5 years to refine. We're essentially taking away from that core product. Right? I'll give an example Ryan right now, we're working on founder groups. Right? And you know, we've had this product in market for less than a year. We have a pretty reasonable amount of resources at startups dot com. We also have a lot of products, we have launched truck and clarity and all this stuff. Right. Um, but we know that unless we get the core product that is founder groups, right? It won't matter if we add a feature to biz plan, It won't matter if we add a feature to fungible, right? We need all hands on deck just to get this one product right. And it could take us years to get it right. If we start pulling stuff off and we say, you know, biz plan could use a couple extra features here or fungible, could use a couple extra features here. What we're specifically doing is we're taking that, that that resources away from the success of founder groups and that's the biggest mistake we could make is not maintaining the resource focus. You know, by the way, I just want to mention if what we're talking about today sounds like the kind of discussion you wish you were having more often you actually can, you know, we're online all day every day working through exactly these types of topics with founders, just like you. So any question you would have or maybe some problem you just want to work through. We're here and we love this stuff and we're easy to find, you know, head over to groups dot startups dot com. And let's just start talking

Ryan Rutan: right? And and that's that is the cost right? In in in this case it's it's that, you know, taking a finite resource pool and having to cut it and this is something that we go over in in minute detail. Um, every time we make one of these decisions and and you know, founders listening, you should be doing the same thing because there is a cost to that. You're gonna have a finite resource pool, the amount that you slice that is going to absolutely reduce your ability to be successful in anyone any one category. So anytime we're thinking about shifting focus, we know it comes at the cost. It's not just simply a matter of, oh we'll just add another dev or another marketing person or another three customer service people, whatever it is. Right? Yeah, you can do that. Maybe if you have the resources for it, we generally don't write and started playing and you just don't, you don't have the ability to say hello, we have this really cool new thing we want to do and of course we have the money to back it and support it and build it and you don't, that's that's the that is the challenge. And so it's trying to accomplish a hell of a lot with not very much is our constant battle. And so in order to be successful with that limiting the number of fronts that you're fighting on is the first step towards success. You just cannot say, I'm going to try all these different things and see what works like use a silly analogy here. How often do you hear somebody saying, you know, we're going to start a new restaurant. I'm not entirely sure that the money is gonna be. So we're gonna have chinese mexican italian some hamburgers a little bit of thai food. Um we'd like some fun in there, right? Like who does that? And yet I hear founders come to me and if I were to just translate that into restaurants speak, that's exactly what they're describing to me, right, they're gonna try to do all of this stuff, right? And they don't understand that there's a massive cost and again two things happen there. One you get really confused about what you're building and everybody from the outside looking is going, what is this place like? I don't know what to do here. I don't understand what their value proposition is.

Wil Schroter: Let's talk through that. I think you you learned something really important which is uh you and I have this new idea right? And we're super excited about getting into the market a year goes by and here is the problem. You and I have been thinking about this nonstop for at least a year, probably longer. And so in our mind, what's missing or more features, what we forget about is that everyone else has never even heard of this product.

Ryan Rutan: They've had zero seconds of thought on this. There's no context, there's no understanding and you're producing it to them from the first time, starting with the tip of the tail right? Like wow, we've got this brand new, Crazy cool feature, we want to add to this thing. Wait, what's the thing again, you don't worry about that, let me tell you about this benefit or feature, let me confuse the ship out of you before I tell you what this thing actually does.

Wil Schroter: Um I love your food analogy because it reminds me of opening up a pizzeria, right? And and we're gonna deliver pizza and in our minds we've been delivering pizza for a year, everyone loves it, right? And like, okay, time to bring in breadsticks or calzones or whatever else, you know, on the menu. All delicious by the way. Um and and we're like, okay, well we are, we won't be able to focus as much on either making great pizza, delivering great pizza. No one is going to order our pizza right? That's now shitty because our breadsticks are so good like and it's going to take us a long, long, long time with absolute focus in order to unseat all the other pizza places around town, right? That alone if we did nothing but focus on that would make us a great company. The breadsticks and calzones are going to get us there. That's what you get to do when you've already become a national chain, like a Donatos or anything else like that. Right? Until then you've got to do is make good pizza man, and that's it, that's it.

Ryan Rutan: That is your job, right? You don't need to to sweeten the deal with all of these other ancillary features. Um if your mission is pizza right now, if you wanted to start a breadstick shop maybe that'll work. I don't know, I'm thinking through it, it feels it feels like a long shot to me, but it's not your core feature, but if it is then fine focus on your breadsticks. But again, don't start offering pizza, don't start offering, you know, cinnamon sticks or whatever the hell else you're going to do, focus on the breadsticks, right? You have to um Alright, I think we've tortured the food analogy enough and I haven't had lunch yet, so if we can move on anything else, one

Wil Schroter: more example comes to mind because it goes back to the simplicity of it. Yeah, years ago um I'm in san Francisco with a buddy of mine and uh a guy named Derrick Ray, you remember Derek and uh and Derek showing me this new dating app right? Called Tinder. And he and he's like uh what what what was was funny funny about it is it was like beta at the time and our friend Sean rad had started the company like months prior and uh he's like look look what Shawn is doing, he's got this dating app, he's like it's hard to explain because dating apps were so complicated back then. He's like, it's hard to explain, but all Sean did was make it, so you could swipe left or right and just look at pictures all day, he's like, it's super stupid and I can't stop swiping,

Ryan Rutan: so

Wil Schroter: it's unbelievable right? And so Shawn's company to his credit man uh goes on to become a $10 billion company based on one simple mechanic. Right now, at the time, dating had gotten really complicated, right? You had everything from match dot com to um E harmony where they were trying to come up with with all these heuristics around how dating would work, right? And and Sean comes in with the caveman approach, right? Which, which just at the end of the day, people will look at photos and and and and they make, you know, choices based on that. So he said, I'm just gonna do a swipe left, swipe right, Which again, even at the time seemed like the most caveman away way to approach dating and it was almost laughable, but it was addictive and that's all it took. Now Sean went on to to release tons of features. Tinder went on to release tons of features, right? No one cares. And when I say no one cares, they did make a lot of money, They've got subscriptions and all this cool stuff, but at the end of the day, and I talked to Sean, you know, a couple of years later about it and I was like, dude, like how is it this symbol? He's like, I don't know, but we just focused on that and

Ryan Rutan: that that's one of their features became like a meme and a trope right, Like swiping left and swiping right became a thing, right? We use it to analogize all sorts of other things. Now none of the other features did right? They didn't and for a good reason, they didn't matter. They were irrelevant. And to your point yet they're they're in there. Maybe I don't, I've actually never, never used it. I have seen somebody swiped right and left, but that was before my time, after my time.

Wil Schroter: The point is the problem he wasn't solving wasn't dating. It was the mechanics of exploring, dating and finding in finding a mate. But all he did was zero in on that. And that's all it took. Now for a lot of us we're we're building something new. Like Sean was already in a space that was well defined dating was well defined. He had a better mechanic, but well defined. A lot of us though, we're not doing that, we're not going into a very explicit market with a, like a huge, you know, customer base that's already been kind of defined there. A lot of times. We're going into a market that's never had a customer like ours that's never had a product like ours that's never had anything to do with what we're doing and what we fail to to contemplate is that we have to condition a market right? In conditioning a market means absolute repetition of a single thing that works for a very, very long time, right? And it takes years upon, years upon years of conditioning people to understand a single mechanic as an example, What else does Paypal do other than be able to transfer money back and forth? I don't know, hammer me

Ryan Rutan: incessantly with business loan offers that I'm never going to take. But yeah, but

Wil Schroter: I mean, look, man, I don't know. It doesn't matter,

Ryan Rutan: Does't matter 20 years later.

Wil Schroter: Right. And, and that's coming from Elon musk and peter thiel, for God's sake. Right. Guys who could probably figure out a couple other business models doesn't matter. They got one thing, right, right. And they were good to go. And I think if, if we look at every major success of every major startup, well, constantly come back to the same same mechanic, which is, wow. They did one thing right, for a very long time and eventually that one. And I think that's just fascinating as a, as a support of focus everything from when we go to have our pitch deck, how we go to market. Yeah,

Ryan Rutan: no, it's absolutely true. I mean just, you can run through kind of a list of startups that we all, we all know. Um, and their pitch boils down to a single line. Right. It's something absolutely beautiful. Twilio was, was fantastic. Right? We've boiled the entire complexity of telephoning down into six api calls, right. I don't need to know anything else that's magic right there and that's all they're trying to do now, Twilio has started to do some other things. We'll see how that goes. But they have the luxury of doing that now because they absolutely kicked ass on that core value proposition. They did it. Everything you need to do in telephone E six ap I calls done right? Super simple. Um, look at, look at Tinder, right? They've, they've, they've taken the complex algorithms of, of dating and relationships and for better for worse, boiled it down to a single digit, that single digit being your thumb, right? Just that's all you need. Um, and it works for that very reason, right? There's an elegance and simplicity to it. That's easy to understand and clearly addresses a problem with a very simple solution. Right? And, and the list goes on, right. Paypal is another great example. Ebay is a great example. There's so many of these companies out there where when you get down to what they do, it's a single line, right? You don't need more than that. It fits it fits on the side of a pencil and that you don't need more than that. And that is the beauty of it. That's part of why it works because they were crystal clear and everybody else could understand the, the clarity of what they were trying to do and that is not to be taken for granted. Um, you know, I always love when, when a founder call starts with, okay, uh, what we're trying to do is pretty complicated. So, you know, sit back like this is gonna go, well, wait to hear this, right? Complicated is bad. And you know what, I don't think a lot of founders believe that I think the more complicated they make the problem sound, the more complicated than technologically sophisticated the solution is the better this is going to be maybe behind the scenes. But if you can't present it to me in a movie trailer style pitch, I don't care. You're never gonna have my attention long enough to get me to the point where I understand or care about it.

Wil Schroter: Well, imagine this though. Imagine whether it's complicated or not. We take, you know, we take the one thing that, that we're going to focus on. Exactly. And we assume that that's what we're, because that's what we're focused on. We're gonna be the best at it. Right? This is where things blow up. I'll give an example of a product that we own right. That I, that I can explain this first hand. Um, years and years and years ago we bought a company called Launch rock dot com. Some you may be familiar with it, chances are statistically you probably launched your company at it at some point We did right now at the time when we bought it and this is got 67 years ago, um, building a web page, like a launch page was kind of hard to do, right? It was complicated. You need to learn some code, et cetera. Um, and there was some competitors coming out, you know, Wix squarespace, what have you, right, But still kind of the way we did, it was fairly unique.

Ryan Rutan: Super easy.

Wil Schroter: Okay. And the reason lawn truck was so successful for so long, despite a million other options to do this exact thing. It is interesting that one thing, right? It was just where the place where a startup launches their landing page to get there early customers before they launch. Right. Honestly not a brilliant mechanic. Right? When we talk about complexity, the least amount expected, but here's why it won because In startups minds, it became synonymous with launching your startup right? In 2012, when we launched, we used launch truck. It was long before we own the company, We used lawn truck because everyone was using lawn truck because the team there had had inst and she hated this concept that if this is what you're going to do this is the response. It's the same way Ryan that right now you mentioned Twilio, we mentioned stripe, they become synonymous with doing that. One thing which takes me to my next point. We are so lucky and fortunate in this game, if we're able to be the best at one thing that we should put all of our focus on being the best at one thing and if somehow by, you know, whatever level of consequence, we actually get to a point where we are the best at that Ryan, we're recording this on zoom right now because the zoom is the best at what they do, right? Yeah. All the services we use are just happen to be the best at what they do, You know, rare. That is, here's the assumption. The assumption is I built this newfangled thing that nobody has used before. Right? It's a new entrant to the market. And therefore because it's new and novel, it must be the best. In some cases, we say it's the only not true. Here's where this blows up and I really want to dig into this with you being new to the market, makes you the first, but doesn't make you the best correct. Being the best is when lots of people are doing something and they always pick you. That's the best.

Ryan Rutan: Right? That's facebook versus Friendster versus Myspace versus anybody else that no longer exists, Right? Yes, yeah, yeah. No, it's, it's absolutely true. Right? And then we have, we have some pretty interesting examples of this overtime, you know, launch rocks a great one. Um, we can pull more out of the hat if we want to, but I think that, you know, it's to your point, it's, there's a reason that we're talking about zoom, right? And we're not talking about, let's say google hangouts or meat or whatever they're calling it this week to try to get us to use it and that's google guys. You want to talk about a company with plenty of resource that literally prints money. Um That's them and they can't beat. Yeah, I mean like the acquisition of Skype that almost worked guys um except that you you ruined what Skype used to do well um so that's the point. That is the point, right? So they wasn't their focus, they bought it from that point, it went straight downhill. Um but that's there's a reason that we're talking about zoom and we're not talking about any of these others because they are the de facto choice now. Of course those other companies do have some market share, right? Um but google meet isn't making google any money at all, I'm sure somewhere on the back and there's a deep data play there where they're using my chats to market stuff to me, I'm sure. Right, great. Um but it's not the same thing as collecting money upfront like zoom is doing right now and zoom is running away with the market and everybody's talking about it and there's a huge power in that, right? They didn't try to do a bunch of other things, They didn't try to integrate document solutions, they didn't try to integrate uh you know, white boarding and all of these other features from the beginning. Uh they nailed down, let's give people a really good stable audio video platform for synchronous communication, Right? With the ability record. That's, it

Wil Schroter: didn't, it works, it works

Ryan Rutan: really well, right? It keeps working over and over and over again. How many podcast platforms have we tried will

Wil Schroter: all of them

Ryan Rutan: one of the work, that's why we're on zoom.

Wil Schroter: But if we were to zoom out as founders and we're gonna say, we'll ship, that's actually kind of got me thinking like, okay, so yeah, I've got this roadmap of all these features, but, but let me step back and say, are we the best at what we actually do? Or by the way, are we the only because being the only has a short shelf life was the only for a minute and, and that it wasn't, um, we have to step back and say if we're going to apply resources to anything other than being the best at the one thing that we're trying to be the best at, it's a dangerous decision. So long truck could have gone on doing 100 other things. They only stuck with one thing and honestly it still gets used a ton for years and years later. Honestly, long past the point where lawn truck should be launching as many pages as it does. It's still launching, I'm glad to say because we own it, but it does that one thing so incredibly well. And I think that alone, um buys us a ton, but if we step back and we say, well, you know, um, everybody's using our product already in the market, you know, all we need now is 10 more features like the problem is by the time we're off building all those other features, Ryan, someone else is working on the best thing in the market. Right? And that's, that's, that's what kills us. That's where our eyes off the ball.

Ryan Rutan: Yeah. And we see this happen a lot, right? The more features to get out of this, I mean we've seen companies ruin their products or at least over complicate them to the point where people start to switch to simpler solutions. Um, let me give you just a silly analogy when, when we first came to Guatemala, I wanted a relatively rugged cars. We knew we wanted an suv wanted something with good clearance and all that. Um, I sought out the last year that land rover made an all mechanical discovery because I wanted something that if it broke, it was because a piece of metal was in the wrong place, right? Not because some fancy electronic system or fuel injected, whatever else had gone awry. I wanted something I knew I could depend on and beat the hell out of. Um, and the reality is Okay, land rover doesn't have a great reputation for reliability anyways, but it was significantly better back in the late 90s and so that's what I bought and I love that car because of its simplicity and because it does a couple things well it keeps going no matter what you run into or drive through and when it does need to be fixed, it's very, very simple to figure out what's wrong. Even a car idiot like myself can generally figure out like, oh well the clutch just hit the floor, the clutches out, right. Nothing more complicated than that. And we see this happen routinely where companies will get to a point base camp. Now, you know, arguably they didn't ruin their project management software. They just realized that all of these other components that they added on weren't adding significant value. Right? And I think that we need to be really careful when we have this discussion around what significant value is adding little bits of a creative value is great. But you also have to consider what it does to the overall user experience and what they determined at the end was all these other things that we've added didn't add as much value as base camp itself. And I think that's a great rubric and I don't think that's usually what we do. We think about as well. We added this feature and added 5% more. Well, does that matter, did you really need that? Right? If your core product is 100% of value, adding a new one, takes it to 105, why will you settle for that? Right? If we built all of this value around the core product and that's what we're hanging our hats on then why isn't that the standard for anything else that we build? Right? And sometimes there's, well there's just not that much value in that solution, Right. Exactly. So why are you building it?

Wil Schroter: What I love is the longevity and in the moat, if you will, the defense ability that comes around being the best at something, you know, we mentioned uh into it earlier in this, in this episode Into its still making tax planning software from like when was the first time that that that that TurboTax came out like in 1950.

Ryan Rutan: How

Wil Schroter: are they this big of a company on a product that is so dated. It's like when I say it's not the best, it's probably not the best, but they've been at the top of their game, so to speak, as far as marketing and distribution there so long that they're still big enough to be buying, you know, mail chimp, which is a far more innovative company. What's interesting to me is with our focus right around saying we want to be the best at something. It also gives us a long term roadmap to be defensible. Right? It is very, very, very hard to be a new entrant in the market and beat somebody who's not only in statues in statuary, but has been the best for so long. Right? There are so many people that tried to create a craigslist killer, right? But they were the best at one. So yeah, there are so many dead bodies around that, that business model, right? Um there are so many companies and and we're using craigslist into it, whatever that have just been the best at what they do again. And I'm using best in kind of quotes in this case for so long that they're almost incontestable. That's who we wanna be. If we're building a company Ryan, that's who we wanna be. I wanna be the company that decades from now, even if we're shitty, I hope we're not, but we cannot be unseated because we are the best for so long, right? Like that to me, like that's the golden goose, you know what I mean? Yeah, for sure.

Ryan Rutan: I mean, this is what we should be striving for. And again, that comes from this like irrevocable and and hardheaded, desire to just be good at that one thing, right? Because I think the other thing that happens, um you know, I talked about insecurity at the early stage, which is, you know, nobody's, you know, unless I unless I put all these all these accessories on my baby, nobody's gonna think my baby is cute. So I'm just gonna, I'm gonna put every every cute thing I can think of on my baby and then it'll be a good baby. Um instead of just focusing on raising a happy, healthy child, right? So, you know, I won't torture this analogy either, but it doesn't hurt your baby.

Wil Schroter: Try

Ryan Rutan: not to the no promises the key here though, is that focus right? And and the minute we stop focusing on that and we start to get off path and and we start to try to build features around it. Features are not your mode, right? Features are never going to be your mode to your point, right? You may have the nicest feeling heated seat in the world if the tires fall off your car, people are not going to buy it right unless you're a jaguar. Um, so the key takeaways here are that at the early early stages we need to be really hyper focused around how we're describing our business and then we need to go and build against that myopic focus as the business starts to grow. Sure Features may come along, people will demand and want other things. We need to carefully evaluate those and make sure that they add significant value before we pursue them, particularly if we are not already the best at our core business and if it doesn't add as much value as that core. Right? So when we think of these things, they need to represent significant nearly matching value to that that whatever that original problem that we're trying to solve is, if it doesn't, it's probably not worth pursuing everyone right? It just isn't worth doing because it's going to take your eye off the actual prize which is building that moat around the core value, which leads to that long term defense ability for these companies, like intuit like stripe, like Paypal. Um, and at the, at the later stages when we get down, down the road, right? The, the desire to then branch off can also start to take us out of that market leading position, right? We stopped being known for that one thing and we start being known by some people for this and some people for that and some people for this and some people with that. Right? Um, so for example, like the turbo tax one didn't hit home with me because I was always a quickbooks user. Right? So I knew into it for a very different reason early on. Um, not quite as I've never used TurboTax. I should probably try it at some point. Um, my taxes never seemed to be in turbo mode. Um, but you know, they do a lot of things right into. It has a whole bunch of different businesses that they run. Um, and it's sure it's stable. It's a big business, hard to unseat at this point, but they're not known for being like pure magic at anything other than like you said, that tax piece,

Wil Schroter: what I would say for all the founders listening, take a step back, take a look at the road map, Take a look at what is actually important, what is going to drive the business, take a look at the pitch deck. What will investors care about? If nothing else? If we had to pare it down to that one thing that we're going to be known for, that's where we're going to see ourselves on I. P. O Day because we did that one thing, right? All that matters is focused. All that matters is the resources to get there. That's all we can do from this point going forward. Alright, so that was fun. But let's actually keep this conversation going. You've heard what we think about this, but you know, Ryan and I would really like to hear what you think and we're online, like all day long, pretty much talking about every startup topic you could think of from fundraising, the customer acquisition to just really had to get all of this crazy startup stuff out of your head and there's tons of other founders just like you, they're weighing in on these topics so you'll get a chance to just hang out and meet some really smart founders were also super, super easy to find you head over to groups dot startups dot com and let Ryan and I hear what's on your mind, let's get to know each other a little bit and let's just start having more of these conversations

Copyright © 2024 LLC. All rights reserved.