The Only Rule of Startup Success You Really Need to Follow
At Play Labs @ MIT, one of the central messages that I try to impart on our startup teams is that while there are many books that can inspire and inform us about the startup journey, at its heart, the startup journey is like an adventure — an unpredictable one!
I like to explain further that the best metaphor for the startup adventure may be an Indiana Jones film (the best ones being, of course, Raiders of the Lost Ark and Indiana Jones and the Last Crusade).
As an entrepreneur, you will find yourself going through the stages of the hero’s journey, following the clues to unexpected places, recruiting fellow adventurers, all the while dodging unsavory characters, overcoming obstacles and if you are successful, finally finding the treasure!
Shouldn’t I be spending more time teaching entrepreneurs how to create marketing plans, interview customers to find product/market fit, reviewing term sheets, teaching lean methodology, sales training, etc., rather than spending all my time talking about “adventures” and “treasure hunting”?
It turns out that information about “specific techniques” to use at every stage of the startup process is not that hard to find in today’s connected world. But in my 20+ years of founding and investing in startups, I find that usually the success of a startup happens when it transitions from one stage to the next.
How does this transition happen? Often it comes from an insight or connection — a “clue”. These “clues” usually come from an unexpected meeting with an investor, customer, prospect, advisor, or from a synthesis of market information that you are taking in. Just as surely as clues guide Indy towards the treasure in his films, these insights are the “clues” on our startup Treasure Hunt: they guide us to the next big feature or customer or product or investor or partner.
Here are the top 5 reasons why “following the clues” may just be the most important technique in growing your startup:
1) The Map is Revealed Over Time; Rarely All at Once!
In an Indiana Jones film, wouldn’t it be nice for Indy if the clues were laid out all at once on a map at the beginning of the film? All he would have to do is to go to the final “X” and pick up the treasure (the “Ark of the Covenant”)!
Of course it never works this way — for one thing it wouldn’t make for a very interesting story! Usually there is one clue that, if followed … leads to… another clue! This second clue, then, leads to another clue, which (eventually!) leads to the treasure. Some clues need to be figure out or interpreted, while some are leading us down a wrong path, while others are obvious.
Many startups I’ve seen start off with one idea, but then end up pivoting to another product or service, related to the first one, and it’s this second concept which leads to the eventual success of the company. This was true in many startups in popular startup lore, like Microsoft or Slack, and I found it was just as true in the startups that I have invested in.
But where does the insight come from to go in this second direction?
Let’s look at the example of Discord, which started off as a game company. After their initial game didn’t take off as expected, Jason Citron, the founder, had the insight that the communication/chat system they had created for the game would be popular for hardcore gamers and others. Why this particular pivot and not, say, building another game?
There is no formula which will guarantee a successful pivot — you have to rely on the hunches of the founders and their understanding of the market — which is why a “startup clue” is subjective and requires both an external event and internal insight. Jason put the new app (called Discord) out there and it started to pick up steam with hardcore gamers, gaining tremendous month-over-month organic growth. I actually had lunch with Jason when the organic growth was just starting to validate the new direction; I remember wondering why he chose this particular pivot — it was of course based on the experience and insight of the team as hard core gamers to recognize that what they’d built would work without the game. The best clues are personalized — i don’t know if another entrepreneur in the same spot would have gone in the same direction. This is why “clues” are subjective.
2) Savory and Unsavory characters.
In the films, while some characters are clearly trying to help Indy, and some (like the Nazis) are clearly trying to hinder him, there are always some whose motivations are far more complex. They might seem like they are there to help Indy on his quest at first, but it turns out they have their own agenda and are often working against him to pursue it.
In your startup journey, you will come across an interesting cadre of people, each of whom will present themselves as indispensable for your startup journey. While we all need mentors, it’s a complex process to sift through the array of consultants, advisors, angels, VC’s who all say they have your interests at heart.
In truth, all of them are also busy trying to advance their own interests. Some may impress you with the name of a super successful company they were with. However, just because they worked at or were associated with successful company X is no guarantee that they can really work in your particular situation. Were they the architects of the company’s success or just hangers-on on a successful journey?
An early stage startup is a special kind of beast, and you should have some idea of why someone is an advisor and what you hope to get out of them (and vice-versa): will it be investor intros? Will it be prospects or sales calls? Is their name there simply to beef up your investor deck? Are they experts in a field where you will need to call on their expertise?
There are so many bullshitters out there that you need to spend time with people to see how much value they really provide.The best thing to do is to get to know them over time and see how they make decisions before committing to them in the long term.
3) The biggest clue may be the little voice
Sometimes listening to the “little voice” is the best way to navigate and follow the clues in the startup journey. Steven Spielberg has said that he tells his kids to follow the dreams that “come in whispers”, while the world is yelling at us and we have to learn to tune it out in order to hear this “little voice”.
This can be difficult in a place like Silicon Valley, where all the latest buzz is around X (you name X — mobile games, virtual reality, artificial intelligence, machine learning, block chain/ICO/cryptocurrency), etc.)
We are subjected to a constant barrage of articles of company XYZ raising $10 million for X, wile we might be struggling to raise even $1 million for Y. this can be disheartening. There is also the the common “wisdom” in the Valley of fail fast, pivot quickly. Should you give up your idea to pursue what’s hot at the moment?
Maybe. But it’s also good to follow your instincts, your hunches and remember the reason you departed on this adventure in the first place. If the little voice is telling you to pivot, then great. However, If the “loud voice” (i.e. everyone else) is saying “pivot” and the little voice is telling you to stay true to what you started, that’s when you need to listen to the little voice.
As an example, in 2012–2013 there was a run-up in bitcoin (prior to the current run-up!) from $100 to $1200 and suddenly everyone wanted to jump into crypto. Then, as bitcoin crashed from $1000 back to $300, suddenly the crypto market funding dried up for all but the most dedicated.
Those who really believed in crypto-currency kept going, despite what the market was saying, and those that weren’t that dedicated to the space shifted (to VR/AI or other startups).
Then, suddenly, as crypto became popular again this year (as bitcoin rose to $5000+ per bitcoin), suddenly everyone wanted to jump in again. While I personally am a big believer in cryptocurrency, there will undoubtedly be another crash at some point, which will shake out the current crop of block chain pretenders. Your “little voice” can be the clue that you follow when there is deafening noise on the marketplace. It takes a certain kind of courage to follow it.
4) Some “clues” come with unexpected feelings and synchronicity — pay attention!
Now I’m going to delve into areas that science doesn’t fully understand. Sometimes we meet or hear about a company or person, and we get a funny feeling inside. We can’t explain it logically, but our intuition tells us there is “something” there.
Carl Jung defined a synchronicity as a “meaningful coincidence” or as an “a-causal connecting principle” — where two things seem related in our mind in a meaningful way, but there is no “obvious, logical, causal” way for the connection to exist. A simple form of synchronicity might be that you think of a friend that you haven’t thought about in a while but then they call you that day or the next day wanting to talk to you.
I call these little events as special types of “clues” — or “glitches in the quantum matrix”. They are glitches where we get an insight into some possible future event that may be important to us. This happened to me again and again before I started to look into quantum physics and realized that there was a consistency to what they were saying and what some of the mystics are saying about time and the past and the future.
In one interpretation of quantum physics, there are many possible futures with different probabilities, sending you back information in a probability wave. As we move froward from the present into the future, consciously paying attention to these possible futures is what moves you in one direction. Fred Alan Wolf, a quantum physicist, in his book Parallel Worlds, tells us that “our minds are time machines, able to sense the flow of possibility waves from the past and the future.”
How does this work in the startup world? I often tell the story of how I had “funny feelings” about a particularly company the first time I’d heard of them, and then over time, they ended up being super-important to my startup.
True clues based on synchronicity and funny feelings aren’t wishful thinking like, “oh Facebook is huge and they will buy us”– that’s just Silicon Valley cliché and not real intuition and not “messages from the quantum foam” that is the future.In genuine cases of intuition, for it to be a “clue”, the funny feeling usually accompanies a person or company that you have never heard of before.
For example, when we were looking to find a name for our document company, I happened to be in Ann Arbor, Michigan visiting my parents and drove by a building that had the name of a company on it, “Arbortext”. I had a funny feeling about it; it was odd that I had driven by the building many times but never noticed it before.
I used it as a “clue” — here was a company doing XML that named their company after their college town, so I followed the clue and we named our company after our college town, CambridgeDocs (short for Cambridge Documents). Following the thread left by this clue, I contacted them, and then over a period of time, they became our largest customer and got us into into some of the largest enterprises in the world (and ended up making an offer to acquire us to boot!).
5) Connecting the dots to find the larger pattern.
Sometimes, these clues are like dots in a pattern that only reveals itself over longer periods of time. Like in Indy’s Treasure Hunts, the overall picture is only revealed after following the clues.
In another example, when I was part of the early team at Tapjoy, I recall seeing an email about a Japanese company that I had never heard of, DeNA, which had a mobile product called Mobage-town. This was before DeNA or GREE were well-known names in Silicon Valley.
For some reason, that name “Mobage-town” stuck in my head, in that funny way that clues do. A few years later, when I was running Gameview studios and we were looking for an acquirer or investor, I remembered that funny feeling. Despite already being in advanced discussions with US-based acquirers and investors, I decided to follow that clue and contacted them, even though “logically” I was told Japanese companies take too long to make decisions, and we were too far along with the other companies to start a discussion with them, so I would be wasting my time. To make a long story short, our other options fell through, but DeNA ended up being the one that acquired us!
The larger pattern that emerges from following our intuition is about “connecting the dots” over our entire careers. The best startups are those whose founders lives and careers contribute to the startup and vice versa. In the case of Indy, his father (played by Sean Connery) had been following the clues to find the “Holy Grail” in his “grail diary” for his entire life; and thus Indy’s quest was intertwined with his father’s. Sometimes there are clues which seem unrelated, but if you follow the thread of each one you might find a larger pattern emerging years, or even decades later.
In a vivid example of this, there was a young man who was attending a college in Oregon when he decided to drop a few classes. As he walked along the edge of campus, a flyer caught his eye. He went up to look more closely at it, and it was for a Calligraphy class. He decided to take that class and learned all about fonts, serifs, spacing and fell in love with the artistry of calligraphy.
Now it might seem that this was an “aside” to his career, but years later, when that young man, Steve Jobs, was creating the Macintosh computer, he insisted that multiple fonts be included in the first version of Mac, partly because of his experience with the Calligraphy class. If it wasn’t for a young Steve following the clues to that class, I might be typing this and you might be reading on courier on a green screen!
The “clues” are really forms of intuition — and they are an essential part of most successful business person’s decision making. Whether we call it gut feelings, hunches, or pattern matching, it’s important to learn to trust ourselves, and the way to do that is by noticing and following the “clues”. Sometimes things that seem unrelated to our careers actually influence us in mysterious ways into the complex tapestry of our career. As Steve Jobs said, “you can’t connect the dots looking forward — you have to connect them looking backwards.”
This aspect of entrepreneurship and VC investing is rarely talked about but more important than you would think. In fact, as everyone tries to create models and step-by-step procedures to follow for successfully “teaching entrepreneurship”, keep in mind that all of these models are usually invented after the fact to justify why someone was successful. If it was as easy as following steps 1,2,3 to startup success then everyone would have a successful startup! (Here’s a hint: most startups aren’t successful!)
Don’t forget that Indy, a veteran treasure hunter, in trying to “teach the methodology of archaeology” to his students, says: “we don’t follow maps to buried treasure, and X never, ever marks the spot!”. That’s what Indy the teacher says. But, on that same day, Indy the adventurer is drawn into an adventure to follow the clues to find the Holy Grail.
While Indy is fictional, the number of entrepreneurs who succeeded by following their hunches and intuition isn’t.
So if you are looking for the “secret rule” of entrepreneurship, it is this: To find the treasure … follow the clues!
About the Author: Riz Virk is a successful entrepreneur, investor, film producer and video game pioneer. Startups he has co-founded or invested in include Tapjoy, Gameview, Telltale, Discord, Sliver.tv, CambridgeDocs, and Funzio. His video games, including Tap Fish and Penny Dreadful: Demimonde have been downloaded tens of millions of times. He is also the bestselling author of Zen Entrepreneurship and just released his new book, Treasure Hunt: Follow Your Inner Clues to Find True Success. He is a graduate of MIT and Stanford, and currently runs Play Labs @ MIT, a startup accelerator. Learn more at his website, www.zenentrepreneur.com