Make Sure
You Get Your Story Straight
The
way you describe your company to the outside world is absolutely critical.
Investors and customers aren't interested in your formula or financial
analysis--they want to be able to connect emotionally and intellectually to
what you're selling them.
No ever
invested in a new business because of a number. It’s always about the story.
Telling that story quickly and effectively in a way that creates a connection- ideally
intellectually, but always emotionally - is the key to success. Well-drawn and
clearly demonstrated analogies are among the most powerful tools in this
process.
Of
course, it’s also easy to lard it up and overdo it so you end up not “selling”
anything. We see this high concept idea every day in the movie business where
each new pitch is the next Top Gun with a twist or an animated
version of To Kill A Mockingbird.
Buzzwords,
brands and tech jargon are other tools we use as comparative shorthand for more
complicated explanations. They can certainly save some time, but they can also
lead you and your listeners pretty far afield quite quickly. They aren’t a
substitute for actually thinking through and clearly understanding what the
underlying processes and mechanisms are that you expect to drive your business
and why and how they work. As a leader, it’s especially important to understand
that your words matter and have consequences. If you’re impatient, flippant or
just not careful and considered in your language, it’s very easy to lose
credibility with the world in general and especially with your team, customers
and investors.
Not too
long ago, everywhere you went you’d hear why some early startup was the new
“Uber of….” whatever and why this NUber was just as likely to succeed. This
pitch quickly became a tired tale and eventually turned into a bad joke
because the alleged parallels in so many cases made no sense at
all. One size, one approach and one methodology NEVER fits all.
Interestingly
enough, at the moment, while he tries to pick up the pieces of a totally busted
IPO, the CEO of Uber is telling everyone who’s still willing to listen that
Uber’s the next Amazon, which is just another unfortunate example of trying to
pile on to someone else’s story and their success. Who wouldn’t want to be
sitting in Jeff B’s shoes these days? But it’s becoming clearer and clearer
that there’s only one Amazon and Uber isn’t even close to ever being No. 2.
Uber may have built and mastered some impressive tech around logistics and
geography, but real businesses are still required to eventually make real
profits and Uber isn’t in the same universe as any of the main platform guys
who are continuing to print money.
So, if
the Amazon analogy won’t cut it, how about latching on to another buzzword or
two to try to make your case? In the recent S-1s for both Uber and Lyft, the
pair constantly alluded to the idea of “network effects” and how their business
models so aggressively and effectively exploited the exponential “flywheel”
benefits of building larger and larger two-sided networks. These claims turned
out to be mostly BS and maybe the market actually figured this out as well
along with the non-economics of their basic business models.
The
truth is that there are NO clear network effects at all in the ridesharing
business. In fact, the larger the network of drivers grows beyond a certain
level that assures their ready-and-rapid availability to the riders, the less
money each driver makes. That means the more likely they are to either quit or
become a dual driver for the competition as well. The gig economy is nothing
but poison for the giggers, even if it takes them a little while to figure that
out and bail. Most workers in the gig economy leave within a year. And if life
wasn’t tough enough for the drivers, the National Labor Relations Board just
ruled that they are independent contractors and not employees, which doesn’t
bode well for all the pending lawsuits seeking better wages and benefits.
In
addition, there’s a tipping point after which the potential improvement in
driver response time (because there’s a driver waiting on every block) actually
adds no value to the end user’s experience although it does dramatically
increase congestion and pollution. Frankly, we all need at least a little time
to get our acts together before the driver shows up.
Similarly,
the more users there are for a particular service, the more demand there will
be for a ride in crunch times, the more likely that there will be surge
pricing, and the less attractive the overall experience becomes for each user.
As with so many things, saying doesn’t make it so. Getting bigger isn’t
necessarily the same as getting better - especially for the little folks.
Another
phrase that’s fraught with peril - especially for startups - is “product/market
fit”. The idea that there comes a day when all the planets magically align, the
dogs are all eating the dogfood, and all is right with the world because you’re
achieved product/market fit is a fleeting fantasy because it suggests that
you’ve reached a plateau where you can take a break, catch your breath and
prepare for the next marathon. You should only be so lucky. As our politicians
regularly show us, it’s almost always too soon to declare victory.
The
truth is that it’s a dangerous illusion and a temporary respite at best because
the customers never sleep, and their demands never cease to grow larger and
larger. It’s a “What have you done for me lately? world. Your customers’
expectations, desires and requirements are perpetually progressive, and the changes never end.
This means that the product or service dimensions and even the size, scope and
characteristics of the market are in constant flux and continual need of
enhancement, improvement and change.
The
present has never been a more temporary state. There’s no finish line when
you’re building a new business and, of course, the competition is always
running right behind you and very happy to take advantage of any breaks in your
momentum. So, while it’s always important to briefly celebrate the milestones
and the team’s successes - large and small - you can’t take your eye off the
ball or your foot off the accelerator and relax. Finding product/market fit is
fine, but it’s only a step in the journey and a waystation along the path.
Bottom
line: None of us has the luxury of Humpty Dumpty, who said to Alice: “When I
use a word, it means just what I choose it to mean - neither more nor less.” In
our lives and businesses, words usually have pretty clear meanings and often
serious consequences. Be very careful what words you use because you may be
eating them some day.