Lucas Carlson's Blog, page 7

The #1 Fatal Flaw in Most Startup Ideas

Have you heard of the one where you throw an entrepreneur off a 50 story building? His investor checks in with him at every floor to see how things are going. “49th floor, everything’s great … 48th floor, great view … 47th floor, gaining great speed … 46th floor, couldn’t be better …”

There is a fatal flaw that exists in most startup ideas. It is so common that even seasoned entrepreneurs often miss it. Three close friends of mine are currently doing startups that have this fatal flaw and haven’t realized it yet. They are close friends and all three of them are smarter than me. But they are doomed to either pivot or fail, and just don’t know it yet.

Pop Quiz

Before I tell you the flaw, let’s test your instinct for the flaw. Here are two similar startup ideas, which one is better and why? Which startup would you build?

A service to help people come up with ideas for proposing to their partner.

A service to help people help come up with ideas for getting their partner to propose to them.

I use this example because I actually had the idea long ago to start company #1 as a side project. When I proposed to my wife, I spent months planning the event, which included tricking her into believing that a trip to Rome was just a business trip.

I figured that many people would like to maximize the effect of their proposal (big or small) and would be happy to pay to use a service to help them do so.

What is the Flaw?

The fatal flaw is solving a problem people don’t know they have.

Great startups solve problems people know they have.

Company #1′s logical flaw is that very people who need the most help proposing to their significant other are the ones who don’t know they have a problem. They will probably just turn over in bed one morning and ask their partner to marry them.

With Company #2, people who have the problem (need to get their partner to propose) know they have the problem. They are likely actively looking for solutions to this problem.

Why a Flaw?

First empirically. Name 3 startups who’s services you pay for right now. For example:

MailChimp
DigitalOcean
HootSuite

Do they solve problems you know you have or you don’t know you have?

MailChimp – I know I need a mailing list
DigitalOcean – I know I need cheap fast cloud server
HootSuite – I know I need to collaborate on social media

In fact, can you think of any startup that is doing great that solves a problem people don’t know they have?

No? Me either. Why? If people don’t know they have a problem, they don’t look for your solution. If people don’t look for your solution, you need to spend 100x more on sales and marketing to raise awareness for your startup, which means you are spending too much money and are going to fail.

It is a fatal flaw. These ideas will either die slowly or quickly, but there is no lipstick for this pig.

How This Applied to Me

I had tons of terrible ideas before I started AppFog (originally called PHP Fog). I made every mistake in the book. But when I started PHP Fog, all I did was put a landing page up one night with a slogan (Heroku for PHP) and an email capture form. I stuck the link on Hacker News and in the morning I had 800 people signed up. Two weeks later I had thousands of people signed up… and I hadn’t done any further promotion.

AppFog was the first idea I ever had that solved a problem people knew they had. They wanted Heroku… for PHP. There was demand before there was even a product to fill that demand.

Why Entrepreneurs Often Solve the Wrong Problems

So why are entrepreneurs so often are attracted to the wrong kinds of ideas like moths to a flame. There are a few common reasons. These are justifications we tell ourselves for why our fatally flawed ideas are great:

We think the technology alone is too good and it trumps the crappy business model (common problem for programmers and technologists/futurists)
We are attracted to ideas that we think have never been solved before (often it is actually a very bad sign if nobody is making money doing what you are trying to do)
We believe that solving problems people know they have is boring
We justify solving problems people don’t know they have by thinking they are a bigger opportunity because it will make people’s lives that much better when they discover your service and realize they had a problem

These things (usually some combination of all four) make it really hard to realize just how bad an idea is.

How to Identify if You Have the Fatal Flaw

To identify if you suffer from this fatal flaw, all you have to do is answer this one simple question:

What’s the story of how the person that pays you money discovered your startup?

Let’s apply this question to the Pop Quiz…

A guy is deeply and madly in love with his girlfriend and wants to propose. He takes her to dinner and hands her a ring.

Oh wait, this guy isn’t going to look for my service. Crap. Let me try again.

A guy is deeply and madly in love with his girlfriend and wants to propose. He doesn’t want anything corny, so he turns to her one morning and hands her a ring.

Oh wait, this guy isn’t going to look for my service either. Crap.

A guy is deeply and madly in love with his girlfriend and wants to propose. He doesn’t want anything corny, he wants something unique and special. So he thinks about their relationship and what it means to him to figure out how to come up with just the right proposal. He googles around for ideas but doesn’t want to copy anything, he wants to be original.

This guy (a small fraction of the male population) is the most likely to look for my service, but is the least likely to get value from it or pay for it since he already has the initiative to do it on his own.

Conclusion

Think very hard about the premise of your startup. If you discover it is fatally flawed, have courage. Don’t throw everything away. You probably have a seed of a great idea within your currently flawed idea. Often all it takes is a slight change of direction or focus.

Next week, we will be interviewing Jive’s founder, Dave Hersh in our podcast interview series. Dave had to go through three separate flawed (yet still profitable) ideas in the first 8 years (!!!) of Jive’s history before he stumbled on the idea that would take his company to an IPO.

The 2 Biggest Lessons Learned from My First Start-up

After my company was acquired a year ago by a large Fortune 150, I have spent a lot of time thinking about what made this different from my other ideas.

Before I started AppFog, I had tried dozens of terrible ideas that all failed miserably. I had bought a website that sold WordPress plugins. I had built a competitor to Flippa.com. I had created a wedding registry website. On the surface, these ideas all seemed good at the time. So what made AppFog different is a question I have asked myself a lot over the years.

I can sum up the difference with two simple points:

1. I had customers before I had written any code

The point in time I realized this was different was the morning after I had the idea for AppFog. That night, I had setup a landing page with 3 sentences (you can still find it on the wayback archive). I put the link on Hacker News and the next morning I had 800 people signed up for the service. Two weeks later the list had 2,000 people. By the time I had finished the MVP, I had 4,000 people waiting for it.

I didn’t have to beg people to check it out. I didn’t have to setup viral loops. I didn’t have to advertise. The idea solved a hair-on-fire problem. People were actively looking for a solution, and AppFog simply did what people needed. AppFog was a painkiller, not a vitamin.

2. I was my own ideal customer

Unlike the other ideas I had over the years, this time I knew how to get in front of my ideal customer. Because I was my own ideal customer. I just had to submit to the places I read everyday: Hacker News, Reddit, etc.

In contrast, I had never been a “part” of the WordPress plugin community. I had no idea where they hung out or where they got their news. I didn’t know where wedding vendors got their news. I was not my own ideal customer, so I was a fish out of water and because of that, I had no idea how to reach my audience.

Authors have the same problem as entrepreneurs with this some times. They often don’t know how to reach their audience and engage with them. A few weeks ago, I reviewed a startup fiction novel called Uncommon Stock by Eliot Peper and published by Brad Feld and FG Press.

This week, I had the honor of interviewing Eliot directly. Click here to watch the 49 min video podcast. We talked about that ways that writing a book is similar to starting a company as well as his writing process and much more.

If you would like to head an audio version instead of a video version, you can subscribe to the podcast in iTunes. I hope you enjoy, please let me know if you think I should continue this video podcasting series and if you find it enjoyable.

Craftsman Interview with Author Eliot Peper

Eliot Peper is an entrepreneur, an investor, an advisor… and now an author of startup fiction. His first book, Uncommon Stock (published by Brad Feld’s new publishing company FG Press) at its surface seems like an uncommon next step for most entrepreneurs.

However if you treat a novel like a startup, you can understand the decision better.

Here is just the audio podcast for those who are interested in listening on iTunes (subscribe):

This week, I spend some time interviewing Eliot around a few topics:

How is writing a novel like doing a startup?

What can entrepreneurs learn from authors and vise-versa?

How does an author promote and do marketing for his work?

Are you a plotter or a pantser?

What writing apps do you use?

Who inspires you?

You were originally going to self-publish?

What attracted you to self-publishing?

Was it hard to decide between FG Press and self-publishing?

Was it harder than you expected to write the book?

What do you like best about writing?

What’s next for you?

Leave any questions you have for Eliot in the comments.

Craftsman Interview with Chris Tacy

This week is a special treat. We are interviewing one of my startup mentors and close personal friends, Chris Tacy. He is not only a brilliant strategist, but he has had 4 successful start experiences in a row with 4 successful exits and no (major) failures. A rare occurrence in startups. He has some surprising advice to share, so find out his secrets.

Here is just the audio podcast for those who are interested in listening on iTunes (subscribe):

The Obstacle is the Way: A Craftsman Book Review

Ryan Holiday’s new book, The Obstacle is the Way ($3.99 eBook) is a life philosophy non-fiction book from someone I greatly admire. Ryan Holiday is the guy behind Tucker Max and the head of marketing for American Apparel. You may or may not like Tucker Max or American Apparel ads, but you have probably heard about them both, which means he gets results. In fact, Ryan’s previous book, Trust Me, I’m Lying was an expose of modern marketing techniques. If you remember the Paul Graham Sexism Scandal just a few months ago, Ryan Holiday predicted it in his “Trust Me, I’m Lying” book. He explained why that kind of thing not only happens, but will continue to happen. It is a fascinating read and made me a huge fan of Ryan in the process.

About the Book

At 224 pages long, this book is over before you know it. The book is about Ryan’s take on modern Stoicism. It is full of fantastic and timeless advice that helps you get perspective on things. Although the advice is generic, all of it applies strongly to anyone who strives to move from just a startup founder to becoming a Craftsman Founder:

To perceive what others see as negative, as something to be approached rationally, clearly, and, most important, as an opportunity—not as something to fear or bemoan.

A startup founder faces many obstacles:

They run out of money
Have trouble raising venture capital
Have trouble growing
Have to layoff staff
…and many other trials

It often feels impossible on first blush. A Craftsman Founder relishes in these problems because to one who takes startups as a craft, there will always be another startup where you can take the lessons learned and apply them and get better. Every challenge, no matter how hair raising, is just an opportunity to learn. And often learning requires you to try many times. So you want to be challenged.

Too often we react emotionally, get despondent, and lose our perspective. All that does is turn bad things into really bad things … Focus on the moment, not the monsters that may or may not be up ahead.

Buddhists call this “making a problem out of a problem” or putting a head on a head. Eckhart Tolle says “The greater part of human pain is unnecessary. It is self-created as long as the unobserved mind runs your life.”

Being present and aware of the here and now is critical to the survival of any entrepreneur. While others flail and thrash, you must execute cooly and coldly towards the vision you know to be true.

George Clooney spent his first years in Hollywood getting rejected at auditions. He wanted the producers and directors to like him, but they didn’t and it hurt and he blamed the system for not seeing how good he was.

If you have ever tried to raise money from venture capitalists, you know EXACTLY how George Clooney felt.

You don’t convince people by challenging their longest and most firmly held opinions. You find common ground and work from there. Or you look for leverage to make them listen.

This is a much more eloquent way to sum up my recent blog post about startup marketing.

Admiral David Porter, who was with Lincoln in his last days, described it as though Lincoln “seemed to think only that he had an unpleasant duty to perform” and set himself to “perform it as smoothly as possible.”

This also rings true to anyone who has had to do startup layoffs or letting someone go.

Certain things in life will cut you open like a knife. When that happens—at that exposing moment—the world gets a glimpse of what’s truly inside you. So what will be revealed when you’re sliced open by tension and pressure? Iron? Or air? Or bullshit?

Startups will cut you open like a knife. They will bleed you to the core. A Craftsman Founder is driven by this, it is their motivation. They want to see what they are made of. They want to show themselves what they are made of. There are very few occupations that provide this kind of self-evaluation. Often people find it in other ways like skiing off mountains and surfing 30 foot waves. Startup founders get to find out what they are made of as part of their day job.

Conclusion

I give it 5 out of 5 stars. Ryan Holiday has written a manual for surviving startup life. For thriving. This passage really sums up the point of the book to me.

The goal is:

Not: I’m okay with this.

Not: I think I feel good about this.

But: I feel great about it. Because if it happened, then it was meant to happen, and I am glad that it did when it did. I am meant to make the best of it.

If you aren’t scared to death as a startup founder, then you are missing out on something unique and special. The point is not to be fearless. It is to do your best when you don’t know what the right thing to do is. It is to face all of your fears and insecurities and do it anyways.

You do not “conquer” your fear. You embrace it. You let it power you. It is your rocket fuel. You use fear as a compass to guide you. You feel great about being scared to death and still executing anyhow.

Buy the book. Read it frequently, when times are good and especially when times feel bad. When the world feels like it is against you, pick up this book and find inspiration to power on.

Who Are Your Main Competitors?

When I was a teenager, I had a mentor that was like a father figure to me. One day, he taught me that often simple questions hide ulterior motives. Like asking: what do you do for a living?

In typical geeky teenage naiveté, I asked Tom how could such a simple question hide anything meaningful. He told me that many people have the bad habit of instantly judging others by their current career. They make assumptions like:

How much money do you make
How smart are you
How accomplished are you
Where you stand on the social ladder
Whether you are worth talking to
Etc.

If you have ever tried to raise money from angel investors or VCs, you have been asked this simple sounding question: Who are your main competitors?

This is a fascinating question, because the way that most entrepreneurs answer it is the opposite of what an investor wants to hear.

First Answer: We Have No Competitors

Entrepreneurs love to say this, but it is about the worst thing you can say to an investor.

The entrepreneur thinks: I have built something so unique and valuable that nobody has ever thought of before. It will take years for any big company to catch up. I am so far ahead of the market and that gives me a first-mover advantage.

The investor thinks: this person falls into one of 3 buckets…

Has not done his homework and does not know the market
Picked a market so small that nobody could ever make much money
Is too early to market… think of how many failed YouTubes there were before YouTube

Either way, this is a huge red flag to an investor and should never be used as an answer to this question.

Second Answer: There Are a Couple Small Startups Like Us, But We’re The Best

This is the second most loved answer by entrepreneurs, but it is also usually bad.

The entrepreneur thinks: I am able to move faster than big companies and I am the leader in my peer group of startups, so I’m not the only one who has figured this out, but I am the best of those that have figured this out.

The investor thinks: this person falls into one of 3 buckets…

Could be interesting, but the whole space is unproven with adds more risk to an already risky investment
Picked a market so small that nobody could ever make much money
Is too early to market… think of how many failed YouTubes there were before YouTube

Sometimes investors will believe in a trend or a potential market enough that they are willing to risk a small bet to see where it goes. However, most of the time this answer is just as bad as the first answer.

Third Answer: Here Are A Couple Big Companies and a Couple Small Companies

When you give a list of competitors, you should always start with the biggest most impressive company that competes in your space.

Why?

It shows who you aspire to be when you grow up. You aren’t just playing for mouse nuts, you are aiming your sights at the big fat cats. VCs want to swing for the fences and invest early in the next big fat cat. They want you to think big.
Most big companies are inefficient and slow to change, so if they are making a lot of money in a space already, one can believe that an startup competitor might eat their lunch if they build a better mouse trap.
It shows you have done your research when you are able to explain how others make money in the space and why you think you have a competitive advantage over them.

Conclusion

I once read (I can’t remember where) that one famous investor always liked to ask “What if your biggest competitor launched this same exact thing tomorrow? Wouldn’t they just crush you?”

He always hoped someone would just say: “Bring it on, if Google launches this tomorrow, we are going to eat their lunch and here is why” and lead into competitive differentiators. But usually most entrepreneurs shrug or change the subject because they don’t know what to say.

Entrepreneurs fear that if their idea is already being executed by big companies, that it is not unique and disruptive enough. In reality, most of the biggest opportunities for startups happen when you take a unique spin on an crufty old way of doing business. When Richard Branson picks the next Virgin company, that is exactly what he looks for. He saw major airlines mistreating their customers and started his own airline with better customer service. He specifically looks for opportunities to take on large incumbents who are fat and complacent and slow to change.

Don’t be scared of big competitors, let them fuel you. Use their weaknesses as your strength.

Uncommon Stock: Book Review

Eliot Peper’s new book, Uncommon Stock ($4.99 eBook) is a startup novel published by Brad Feld’s new publishing company FG Press. Anyone associated with a startup, or interested in starting a company, or who knows someone in a startup would find it fun and entertaining.

About the Book

At 242 pages long with 69 chapters, each chapter is only about 3.5 pages which makes it feel like a quick and easy read. It is not great literature, but it is fun and full of excellent advice and quotes. For example, here is a consistent theme throughout the book:

Most startups fail because their teams implode, not because their products sucked.

I love it. So true. People often are consumed with worry about externalities: funding and customers and revenue. They rarely spend a second thought looking inside at themselves and their team. At one point in the book, the protagonist walks out furious in her first business negotiation. Then her advisor asked her this simple question:

What would you think of a CEO who walked out on a critical negotiation with a key employee because she got angry?

Beautiful. And anybody who has ever tried to do fundraising can instantly sympathize with this part of the book:

I’ve been cranking away at this fundraising effort for three months now with nothing to show for it. I know it can take time. I’m sure my expectations were somewhat out of touch with reality. But that doesn’t help. Everyone wants to talk, buy me a coffee, and hear our story. Everybody has friends they think might be interested. But nobody’s willing to make a goddamn decision! I follow up and within a couple of weeks most people just drop off the map.

But my favorite passage from the entire book was when the advisor was explaining to Mara about his great failure, how his company blew up and what it meant to him:

“Mara, it’s not an easy life. It breaks you down, builds you up again, and crushes you flat. Great works require great sacrifice. It can be addicting as all hell and I can’t imagine anything more satisfying. But you’ll be able to count the grey hairs and the age lines. And the holes. You’ll be able to count the holes you’ve dug yourself into. Don’t forget there are people out there who will help, who will extend a hand to pull you up. You just have to let them. That’s the hardest part, especially for entrepreneurs.”

I’ll finish with a simple choice quote that has some deep truth in it.

Hold on to that fear. That’s an important feeling. That fear is part of what will drive you to figure your shit out.

Uncommon Stock is loads of fun and I highly recommend it. If you have never started a company before, it gives you an authentic taste of what its like. If you have started a company before, it is fun to go along for someone else’s roller coaster for a change.

About the Publishing Model

If you have been following this blog, you know that I am also writing a startup novel to accompany the Craftsman Founder Manifesto. So far I have been thinking of self-publishing, but the FG Press model is interesting. They split the profit 50/50 (instead of traditional 10-15% royalties) and use a lot more gorilla marketing methods than traditional publishing houses. I have been talking with Eliot about his book and his experiences with Brad, and it is awesome what they have accomplished for a first-time novelist, hitting #8 in its category with $0 on marketing.

This is definitely a new publishing model to watch. As the entire publishing industry is in turmoil with self-published earnings growing and niche genres (like startup novels) taking off, something has got to give. The author earning report speaks clearly to the changing times:

The eye-popper here is that indie authors are outselling the Big Five. That’s the entire Big Five. Combined. Indie and small-press books account for half of the e-book sales in the most popular and bestselling genres on Amazon.

So while 34% of the revenue goes to the Big Five and pays authors 10-15% of that, a whopping 39% of the revenue goes to indies who collect 70% of the revenue.

That’s not to say it is easy to get rich writing books. The rules of self-publishing are much different than the rules of traditional publishing. For example, in traditional publishing, you need to find an agent and pitch your book to a ton of busy publishers and if you get lucky they might put some marketing money behind you. But usually they save most of their marketing money for Dan Brown and Steven King.

In self-publishing, it is up to you to do all the marketing and build your audience. And most indie publishers can’t live on their own earnings until after they published about 10 books. That can take years of struggle. In fact, the life of an independent self-published author has many parallels to the life of a startup entrepreneur. You have to find product-market fit, you have to know your audience, you have to build something valuable with a unique value proposition. And if you keep writing books people want to buy and publish them regularly, you can even keep track of that almost like a recurring revenue SaaS business.

Conclusion

I give it 4 out of 5 stars. Given that it is Eliot’s first novel, there is still room for improvement in the writing style. The conflict between Mara and her main opponent was not as strong as it could have been. But overall it is terrific fun and the first chapter of the sequel (included as an epilogue) seems like he is setting up his second book to be a real nail-biter.

Buy the book. Now, before you forget. It is a fun read and you will learn a lot. And get ready for more, because startup fiction is a new genre that Eliot is pioneering and I will soon be joining.

When to Give Up

Startups chew you up and spit you out. When things get tough, it is tempting pack up your bags and just say: “oh well, I gave it my best.”

It is often hard to objectively know when to give up. For example, what would you tell my friend below?

A Common Startup Story

Recently a friend wanted my candid advice on whether to continue struggling with his startup. His idea was to combine Apple AirDrop’s file sharing functionality with Facebook’s social networking functionality to create a social file sharing service.

It all started as a side project to scratch his own itch. He had never thought much about business side of things. But on a whim, he decided to apply to a local startup accelerator. To his surprise, he got in!

What was once just a hobby turned into a full time job. With the validation of getting into the accelerator, he decided to quit his paying day job and make his way into startup land.

His first impression was thrill and terror. He thought: “wow, now I have a lot more time to build something great.” With the spotlight of the accelerator, he was mentioned in a few major publications like LifeHacker and GigaOm. He was even put on a top 10 list of startups to watch in 2014. With all this attention, his user base grew quickly to over 6,000 users.

But the accelerator finished and the spotlight moved away. User growth stalled, and after looking at his metrics more closely, he noticed that almost none of the users ever came back after signing up.

He had been working on the idea with no pay for nearly a year. Though he tried to raise a small round of funding (mainly to pay himself enough to keep the lights on), the deal fell apart at the last minute. He hasn’t found interest from any other investors. He was running out of emergency savings and running out of options.

What should he do?

Common Advice

My friend had asked a few other people for advice before he came to me. But he was very confused because the advice he received was conflicting and anecdotal.

Give up and get a day job, like many people would in this situation

Pivot, like Kevin Systrom and Mike Krieger did with Instagram (formerly Burbn)

Keep going, live in your parents basement, like Ev Williams did with Blogger

Take everything learned and try again

Even with all this advice, he was confused. It all felt conflicting and he couldn’t figure out what to do.

Craftsman Framework

When you think of startups like other crafts, like building chairs, it gives you a different perspective on things. It gives you a framework for action. Each one of the pieces of advice my friend was given individually and out of context was good general advice on its own. But my friend wasn’t given a framework for synthesizing action from the advice.

Give up?

Would you expect a novice chair builder to make a beautiful solid chair on his first try? Certainly not. A failed company is not a mark of a terrible founder. Failure is necessary on the path of entrepreneurship. It is how you learn.

So should he give up? Does a novice chair craftsman give up trying after screwing up his first chair? Sometimes. But only if he finds out that he actually hates building chairs.

Pivot?

After screwing up a chair is there something else you can make out of it? A stool perhaps? A ladder? When you are learning to build chairs, it is going to take a long while before you build a perfect one. But you are likely to find yourself with a great stool earlier on. Can you re-focus your efforts and find someone who needs to buy a stool instead?

So should he pivot? Sometimes. But only if he finds a new way to sell what he already has. Try a new audience, a new target customer.

Keep at it?

He could keep carving away at that screwed up chair until it works. He could be determined and relentless, but it will cost him. He will have to make a lot of sacrifices to make that chair work.

So should he keep at it? Sometimes. But only if he absolutely can’t ever imagine living without fixing that one chair.

Try again?

Finally, it is almost always easier to build a new chair than to fix a broken one. If you think you have something great and have tried a few different markets already, it is usually time to start your next chair. Reclaim every asset you can for your next startup. If you like the team, keep it together. If you like some of the technology, don’t just trash it. Never throw away a broken chair out of frustration.

Conclusion

If you ask 10 experienced entrepreneurs for advice, you are likely to get 10 different and conflicting pieces of advice. All of it will be good advice on its own, but your job is to figure out how to synthesize action from all the noise.

When you finally “get it right” whether in startups or in chair building, you know without a shadow of a doubt. There is not a single bone in your body that doesn’t ring with affirmation that you are finally on to something big. If you haven’t experienced that feeling of “getting it right” yet, don’t worry. It takes time. Be patient with yourself. You are on a journey, it is a marathon, not a sprint.

Hone your skills. Learn as much as you can along the way. Luck is what happens when preparation meets opportunity. Failures are the best opportunities to prepare for success.

“Success is moving from one failure to another with no loss of enthusiasm.” ~ Sir Winston Churchill

How to Get Word of Mouth for Your Startup

My wife was six months pregnant when I quit my job to start my first company. How did she ever let me do it? I don’t think I will ever really understand. But today, my son is 3.5 years old (when do you stop counting half years?) and talking all the time. In fact, he talks so much, it is sometimes hard to get him to stop.

The other day, he was yelling his head off because he wanted nanny (his word for “candy” of course). He had been crying for what seemed like forever. Nothing I tried worked.

“Hugh, calm down. Eat your dinner and then you can have candy.”

“Hugh, look at me, just eat your dinner.”

“Please be quiet, be a good boy, and then you can have candy.”

Nothing seemed to work until I discovered an incredibly effective trick to get him to calm down. If you don’t have kids, you might gasp at what I did. But if you do have kids, you are going to totally understand.

“Hugh, do you want candy?”

Silence. Nod

Sweet golden silence. I finally had his attention. In one brief moment, it all stopped.

“Hugh, you will get candy if you just sit down and have dinner.”

And he sat down and ate dinner.

What Does This Have To Do With Word of Mouth?

Many people think that “viral content” or “word-of-mouth” is just pure luck. And sometimes it is. But word-of-mouth can be engineered, and smart founders know this. You don’t create word-of-mouth by telling people about your product or its features.

“Customer, calm down. Use my product because it has 5X more RAM.”

“Customer, look at me. Just click on my banner ad and use my product.”

“Customer, please be quiet, be a good customer, you should try my product.”

None of these messages spread through word-of-mouth. Ever. Yet people still keep saying them.

The conversion rates of this kind of traditional marketing are terrible. Usually less than 1%. But because everyone else is only getting 1% conversion, this is accepted as status quo. If you get 1.2% conversion, you are heralded as a marketing genius. This game is based on volume, not quality.

Because the traditional marketing techniques are so terrible, most startup founders don’t even try. But there is a better way. You need to engage in an authentic dialogue about something that your customers really really want.

“Customer, do you want candy?”

For example, in my day job, I am Chief Innovation Officer for CenturyLink. I am in charge of developer interactions. Instead of trying to engage developers in a discussion about all the benefits of CenturyLink Cloud, giving an endless tiring string of “Have you seen this feature yet?” or “You should really try us out”… instead I blog about Docker.

Why Docker? Because Docker is an awesome new programming DevOps tool. It is possibly the best DevOps tool to have emerged in two decades. It also happens to be the hottest trend in the developer and DevOps community today. Everyone wants to know more about Docker.

“Developer, do you want Docker?”

Silence. Nod

“Developer, let me show you how to use Docker. By the way, when you need to run Docker in production, why not try it on CenturyLink Cloud?”

Customers are not children. I am not suggesting you treat people like children. But we all are distracted by a ton of information and data ever day. How do you stand out in a world full of noise? By giving people something they really want already, and only incidentally weaving in what you are trying to sell.

Conclusion

The #1 killer of startups is lack of awareness. The only thing worse than doing traditional marketing for your startup is to do no marketing at all and leaving it to chance. Unfortunately, this is the standard most startups end up taking.

Instead, engage in an authentic discussion with your customer base about things that are immediately relevant to them–about things they want to know about. Pick things they are actively searching for information about. Focus less time talking about your feature releases and more time talking about problems and their solutions. When you provide valuable information, that spreads.

How do you pick what to talk about? By picking whatever you are obsessed with lately. What information do you seek out every day? What topics and links do you click when you see them on Hacker News or Techmeme?

If you want to learn more about this, read “Contagious: Why Things Catch On” by Jonah Berger.

Podcast Interview with Lucas Carlson

This week I was interviewed by Fred Williams of the popular Breaking Biz Podcast.

Here were the topics we covered:

Passion does not pay the bills (tip #25 of tips for aspiring entrepreneurs)
Why is money the worst motivator for anyone starting their own company?
I remember discussing a business idea with someone in 2009 when I lived in Australia and they told me I might have to sign an NDA which felt a little strange and I know you feel quite strongly about people being so secretive when they have a business idea
What are the dangers with falling in love with a business idea too quickly? (tip #14 of things to stop doing as a startup founder)
Let’s say you have a modest startup, new business etc- how do you get people talking about you if you can’t spend any real money on marketing? (tip #15 of things to stop doing as a startup founder)
As someone who has built and sold a company, can you tell our listeners the difference between a problem and an urgent problem?  (tip #15 of tips for aspiring entrepreneurs)
Let’s get unsexy and talk about unit cost. What is unit cost and why does every business owner need to know their unit cost? (tip #25 of things to stop doing as a startup founder)

Listen now to the podcast and tell me what you think.