Mistakes, I’ve made a few: what I’ve learned in the first year of my startup
WHEN I started to write this startup diary nearly a year ago, one of the main topics that quickly emerged was our newsletter strategy. In thinking very carefully about how to avoid making the common mistake of building a software product that nobody wants to use, I came across the strategy of using a newsletter to validate your potential customer base. You can read all about the planning and thinking that went into that decision in the early articles in this series.
Now, a year later, it’s time to review the newsletter and perform a retrospective analysis of the decisions that went into its execution. Some of these decisions were good, and some were bad.
We’re building an event-management platform that not only serves the needs of technical conference organisers, but also speakers and sponsors. Since there’s very little in the way of software tools out there for speakers, that’s where we’ve decided to start. Our hypothesis is that there is unsatisfied need among speakers for better ways to manage their interactions with conferences.
I came by this idea because I am a conference speaker, and in the very best business tradition, I’m ‘scratching my own itch’. I had good subjective evidence that the need existed – I was spending too much time on event paperwork, research, planning, and communication. I would exchange an average of about 20 emails with each conference, all about the same things: photos, biography, talk details, diet preferences or needs, and that’s before you get to critical stuff like when your presentation needs to be submitted.
But just because something annoys you does not mean there’s a business there. A gap in the market does not mean there’s a market in the gap, to quote an old saw. I needed to find a way to validate the hypothesis.
I launched a newsletter for technology conference speakers to do this. If I saw reasonable and fast pickup, and sustained interest, then it would validate that speakers are relatively underserved. It would also let me build a community and reach out to that community to get ideas for making speakers lives better.
I didn’t want to start yet another marketing newsletter trying to flog something, so I deliberately chose to make the content high value and focused on speakers needs, and keep our branding and messaging very much in the background. The newsletter had to provide actual value to readers, and advertising, in general, does not do that.
And it was a success! By January this year we had reached 500 subscribers and established a good weekly production process run by our marketing team. On the back of that success I decided to double down and invest in getting a substantial number of subscribers in 2018.
Based on the feedback we were getting, we knew the content worked, so we could tick that box and be happy that our content was going to be useful to many more people. I’ve always considered the newsletter to be our first product, and I’m very proud of what we’ve created and sustained. Even though we don’t charge for the newsletter, readers still have to decide to subscribe and they have to decide to read, so we still have to ‘sell’. Just because something is free in monetary terms does not mean it is free in terms of people’s attention – which is in very short supply these days.
Our promotion up to that point had been pretty ad hoc, mostly using our networks. We decided to start a structured promotional campaign on LinkedIn, reaching out to speakers, engaging them in conversation, and seeing what they though of our little newsletter. This turned out to be very effective, and as we’ve refined our process, very predictable and repeatable.
As of today, we’re at 3,113 subscribers, and averaging about 400 new subscribers a month. Since launch we’ve had 463 readers unsubscribe, and if we average that out, that’s about 40 unsubscribes a month, so we have a net growth of 360 subscribers month. This is pretty constant, so we’ll reach 5000 subscribers by year end if we just continue as we are. Our open rate this week is 14pc and our lifetime average is 16pc. The industry benchmark, according to Mailchimp, our email delivery provider, is 10pc, so that’s great validation for our content.
This is wonderful, and something to celebrate – a successful product. At the start of the year this was already clear.
I got excited, and made a terrible mistake. One of the things you have to do as CEO is set goals for your team. The business has to grow and you have to make that happen. It’s no good setting goals that are easy to reach. That’s demotivating as there’s no challenge. Complacency is extremely dangerous in any business and usually fatal in a startup.
Startups, by definition, are not making any money (yet), and thus every activity ‘burns’ money that will eventually run out. You have to get to the next milestone to survive and the only way to do that is to be very careful how you spend the finite amount of money left in the bank. It’s not good enough just to have growing user numbers: investors also look at your financial discipline. As much as possible, every penny should go towards growth.
I’ve read a lot of business books (most of them are bad), and listened to a lot of business advice (some of it relevant), and thought a lot about strategy (not all of it fantasising) and when it comes to goals, the best approach is to set ones that stretch your team, are very ambitious, but not impossible. This makes the stakes real, forces your team to be inventive and moves the business forward. The goals have to be credible. I’m sure you’ve also seen the old acronym that goals should be SMART: Specific, Measurable, Achievable, Relevant, Time-bound.
Startups are supposed to be innovate and push boundaries, but it’s a mistake to push the boundaries on everything. A more effective strategy is to choose one or two things where you think you can do better, and focus your innovation energies. Doing new things is really hard, and you’ll make lots of mistakes. For everything else, just follow normal business techniques that have been proven to deliver over many years.
Despite knowing all this about goals, and despite having practiced reasonably good goal-setting in previous management roles, I got very excited about the potential of the newsletter and set a silly, unachievable goal: 40,000 subscribers by year end.
Unachievable goals are just as demotivating as easy goals and I should have known that. Why did I do it?
There are two levels of lesson here, and both are important. At the lower level, I saw that one repeatable promotional strategy could deliver predictable growth and I reasoned that the application of more such strategies would easily give us sufficient growth to meet the target. I was excited about how easy this seemed.
What was the mistake? While executing all of these new strategies was certainly going to take us a long way to meeting the goal, it would have taken the efforts of the entire company to operate them.
In addition to the newsletter, we had the small matter of building and launching a Minimum Viable Product (MVP), and starting private customer trials. I foolishly forgot that we couldn’t do all the cool things we wanted to. Just because you can execute a plan, does not mean that you will have to resources to do so. Just because something is a good idea, does mean it is possible.
On reflection, this happens a lot in startups – founders are, by definition, optimistic, and that is a necessary attribute. But at the same time, you can’t let your excitement blind you to the reality of limited resources. You always have to ask what is the most effective thing to spend money and time on, and adjust your entire strategy and goals to account for that. Startups are hard.
The higher level lesson is more important. Startup founders should not make decisions alone.
At that point in the companies history I did not have co-founder (I do now, thankfully). I did not have advisers (I do now, also wonderful), nor had I built up the team sufficiently for them to question my madness. Yes, at the end of the day, you will have to simply make the call – listen to everyone, but still decide anyway. But you do need help.
The problem is that it is very easy to rationalise any decision. Just go read my earlier articles on the newsletter strategy. (They’re all very convincing.)
Decision-making in a low information environment is a difficult and dangerous game and even when you know about mistakes, and have avoided them before, it does not mean you won’t make them again if you are blinded by enthusiasm. All criticism of your idea has a valid kernel – use it to make better decisions.