Going Beyond “Make Something People Want”

Going Beyond “Make Something People Want”

In the opening lecture “Challenge of the Future” of his Stanford class, Peter Thiel argues the fundamental challenge of a startup is to simultaneously answer three questions correctly:

 

  • For the startup, the answer to what is valuable? drives the market.
  • For the investor, size of the opportunity or the investment potential.
  • For the customer, the problem solved.

The answer to what is missing? drives the idea for the startup, product for the investor, and solution for the customer.

Finally, the answer to what can I do? or rather, what can we do? drives team, execution and satisfaction respectively:

Let’s enrich this framework.

Paul Graham claims the fundamental challenge in a technology startup is to Make Something People Want. This is a thoughtful, simple, intention-revealing and specific action statement. It tells founders to do something. It is also incomplete (likely for brevity), because it lacks uncertainty and tension that comes from constraints. The challenge for the typical startup is to make something people want with very little time and money.

Make Something is about the team executing on an idea to solve a problem by building a product:

The methods to make something are fairly well understood: deliver a simple solution early, iterate fast. I will write about the agile/lean topics later.

Part of what People Want is about a simple solution to an overlooked problem that actually needs to be solved.

Startup-worthy problem seems to be

  • hard+schleppy+unsexy (therefore, overlooked)
  • and frequent+urgent (therefore, needs to be solved).

The solution for the startup-worthy problem is demanded by the market:

“Focus on the problem” approach, however, seems less than exhaustive. People seem to want other things than solutions to problems (pinterest, instagram)

People Want >> Make Something

Knowing what people want is harder than making something. Why? I can think of three reasons:

1. Understanding what people want is hard for the typical startup founder (harder if product targets enterprise). Customers don’t say what they want or don’t want directly. A twenty-something, somewhat introverted CS major guy did not yet acquire a wide enough range of human experience and emotional maturity to penetrate what isn’t being said.

2. Accepting what people don’t want is hard for the typical startup founder. Customers say what they don’t want. Founders ignore and rationalize the feedback. Founders confuse stubbornness with persistence, their ideas/product with their identity, or both.

3. Understanding what people want is hard. The real reason is probably a combination of all three. I will explore the last one.

Let’s start with the people. They are customers.

Customers form the startup’s market, and demand the product.

  • people ≠ persons
  • people = customers

A customer is defined by a pattern of demand, as an instance of customers.
Therefore,

  • customer ≠ a person
  • customer = persona
  • customer = a demand pattern that reached critical mass

Now we can tie it back to market:

  • demand = public spread of a private want
  • market = a private want shared by a critical mass

Notice we are circling around the want. The central complexity is cracking the want.

  • want = lack of something desirable and/or essential
  • want = a need component + a desire component

For needs, I will use Steven Reiss’ framework of 16 common needs deeply rooted in human nature:

Ordering and grouping reveals three clusters:

About Person

  • Eating
  • Physical Activity
  • Independence
  • Honor
  • Tranquility
  • Romance (includes beauty and aesthetics)

About Things

  • Curiosity
  • Saving (collecting/accumulating things of value)
  • Order (organizing, structuring things)

About Other People

  • Family
  • Social contact
  • Acceptance
  • Status
  • Power
  • Idealism
  • Vengeance

That’s the need component.

Now, let’s focus on the desire component. It seems to have three distinct parts:

  • 1. A seeking drive that is neutral, independent of the object of desire (you desire something feverishly, then go on and desire something else the same way)
  • 2. A learned, mimicked and virally spreading part (you want that? I want it too)
  • 3. An addictive, self-reinforcing reward part tied to intrinsic feeling combinations (facebook: wonder + lust = voyeurism, vitality + self-importance + lust = narcissism)

Putting it together, and reordering:

  • want = need + desire
  • want = 16 needs + addictive reward + mimetic/viral desire + neutral seeking drive

The question what is valuable? is from customer’s viewpoint in relation to themselves.

The answer is a story: underlying psychological drivers, the needs, cause people to share a private want. This want defines the demand and drives the potential market for your startup, and the investment potential for your angel/VC.

Sometimes customers are aware of an obstacle, manifested as a problem. If you want to make something they want, you better root for them. Therefore, their problem becomes your enemy, and defines your marketing personality.

The answer to what is missing? is defined from customer’ point in relation to what else is there. The other stuff drives what we learn to desire. The underlying psychological driver for the answer is the desire.

The underlying psychological challenge for the startup is to do ordinary things under extraordinary situations: courage.

Finally, let’s add the fourth dimension, the psyche, to the Peter Thiel + Paul Graham framework:

Enough theory. Let’s predict:

  • To make something people want notice hard+schleppy+unsexy+frequent+urgent problems, and publicly spreading private wants that are about to hit a critical mass.
  • For publicly spreading private wants, notice combinations of 16 core need (status, power and curiosity) that
    • yield an addictive reward (acceptance of + instant influence over masses, endless wonder) and
    • became ok to borrow from each other (twitter)
  • The more of 16 needs your product covers, the more people want it (facebook)
  • The fewer of 16 needs your product covers, the more it needs to solve a hard+schleppy+unsexy+frequent+urgent problem (dropbox)
  • The fewer of the 7 social needs about people your product covers, the more need for building viral mechanisms into product (dropbox)
  • The 3 needs about things make the product addictive (pinterest)
  • The 7 social needs about people are over-served
  • Combining under-served needs opens big markets (airbnb: independence + idealism + curiosity)
  • Vengeance (e.g. shame wrongdoing judges) is under-served

Note: This is not my creation, it’s this dude’s. But it’s a brilliant way to think about and build products. The original post doesn’t seem to be online anymore. Hence this repost.

Money as an Instrument of Change

I’ve been out of action since my last post here which was way back in 2014. There have been a lot of reasons for that which I won’t bore you with. I’m back now and will try to be more regular. I have also accumulated a lot more gyaan (and some white hair) in the last 3 years which I’d be happy to share now, because if you really have to listen to gyaan from random strangers on the interwebs, why not mine?

Starting off with the one thing which has influenced my worldview the most in the last year – it’s a talk by Chamath Palihapitiya – Money as an Instrument of Change. Until now, my primary focus has been to get to Fuck You Money – but this made me realize that that’s only the first step. The end game is primarily this – and I couldn’t have articulated it better.

2014: The Year That Was

Keeping in line with my yearly tradition (2013 and 2012), here’s my annual review of my life – where I look back on what happened, what changed and reflect on my life. I’m about a month late, but better late than never. 2014 was the 26th year of my life, and it’s probably been the best yet. It’s also been the most hectic, which explains why I haven’t been able to pen this down yet. There’s been just too much going on – on both the work and the personal front, mostly the former.

Work

I’m still working at hike, which is now the biggest Indian mobile app. We hit 15 million users around the beginning of 2014, and 35 million users by August. We’re much bigger now, and much much bigger than any other app made in India. I’ve now completed two years here, which is one more than I originally planned for, and looks like I’m going to be here for the near future.

We’ve seen really good growth this year in all our metrics, on the back of possibly the most successful app marketing campaign this year, which catapulted us to #1 on the app stores again, and helped us achieve escape velocity to some extent. We also raised our biggest round of funding yet – $65 million from Tiger Global and BSB.

I’m working primarily on growth and product, while dabbling in a lot of other stuff. It’s been a great learning experience so far, and it’s exposed me to a lot of smart people, inside and outside the company. The aim is to become the first Indian app with more than a 100 million users soon, and bring all of India online. We’ll be making some big moves this year; watch out!

Life

Work has been taking almost all of my attention, and life has kinda taken a backseat. Not that I’m complaining. It’s been really exciting for the most part, and I’m trying to make it even more so. I’ve grown a lot this year, in terms of learning and personal development, both at work and generally.

I ended 2014 with a 10 day long Vipassana course, which ended up giving me some perspective. Great experience, but mostly because of the time it afforded me for some deep reflection (more than the meditation – could hardly do that well because of my borderline ADHD).

Caught up on my reading this year, but still not much as I should’ve. Books have become harder to read, because of my deteriorating attention span, but I still managed around 30+ good ones mostly in marathon runs over the weekends. Also saw a ton of movies and TV shows (discovered a cool hack which allows me to view it faster without any loss in absorption – watching most of these at between 1.5 to 2X these days). Feels weird, but try it out, it works. Pushes you to focus on the movie and better than skipping parts.

My brother got married to the love of his life, and so did a lot of other friends. One thing I don’t understand is why the fuck everyone is in such a rush. Even juniors have started getting married now, and I’m pretty sure they’ve no clue what they’re doing.

Travel

I started the year with a trip to Rishikesh for a couple days. Hung out with some new friends at some Osho thingy, and tried bungee jumping. Twice. Best adrenaline rush I ever had. Need to make this a regular thing. Next up, travelled to Kashmir with some office friends, some time in March. Gulmarg, Sonmarg, Pahalgam etc. Tried my hand at skiing (the basic tourist kind – need to get better at that), but came down a 8 mile stretch in a snow cycle (much easier than skiing) instead. Had a lot of fun, first time there. Got completely swamped with work post that – lots going on on that front.

The next trip was directly in August I think. Trekked in Triund, and spent a couple days at Dharamsala. Good experience, but realized I’m growing old. Met some interesting people. Need to ramp up the exercise bit and stay in peak physical condition. Also traveled to Goa with the hike team and did whatever everyone usually does in Goa.

Following that was a work trip – flew to New York for a work related conference, and also caught up with some old college friends (almost every single one of them is in Amreeka, and working now). Good times. Next up, the trip I’d awaited most.

SILICON VALLEY, bitches!

Flew to San Francisco, to visit some of the best startups & internet companies and meet some of the best growth and product teams in the world. Met the people who had led the growth teams at LinkedIn, Twitter, Facebook, Paypal, Dropbox and many other startups. A very enlightening experience, for reasons I can’t reveal just yet. Finally went skydiving too in Santa Clara. That one minute of freefall was the single best one minute of my life yet. That’s about it on the travel front, made a couple more small trips around North India.

Learnings & Goals

One of the biggest things I’ve improved on is the ability to work in a team, and lead one. I’ve mostly been a solo player yet, but that’s changing. Trying to learn how to play well with others. Other than that, one of my biggest learnings in the last year has been humility. I’ve met a lot of really smart people, and that gives you a lot of perspective. On the other hand, I don’t value raw intelligence as much as I used to. Some people who I regarded highly (almost as gods), once I actually interacted with them, I’m now not at all in awe of them, even though I respect them.

Another thing I’ve come to realize again and again: time is the most valuable resource you have. No point wasting it doing things that don’t matter or with people you don’t like.

In 2015, the goal is to find a couple hobbies outside work, play more, spend more time with my family and close friends, work smarter, be more efficient, cut out more bullshit – things and people that don’t matter, read more, travel more, figure out the meaning of life, do things I’ve never done before, and just generally – live more.

To end with, these are the 5 articles I’d share with you this year. These have shaped my thinking more than anything else I’ve read.

2013: The Year That Was

Time for the mandatory year-end post; reflecting on the past year, how my life has changed and how I plan to make my existence on this planet meaningful in the coming years, making that proverbial dent in the universe. I tried it before last year (2012: The Year That Was), and it really helps me make sense of my life and put it in context.

2013 has been one of the most eventful years of my life so far. It’s been more than 2 years since I moved to Delhi. Loving the “living alone” part of it a lot. I’ve never been more free and I have no social obligations/responsibilities here.

Work…

The year started on a very good note. It’d been a few months since I started working on hike. In January, I finally got the chance to implement one of my ideas, which turned out to be the best work I’d done in my 24 years on this planet. We saw explosive growth in the month of February, which made us the fastest growing Indian startup and one of the fastest growing internet startups globally.

We’ve been working on improving the product ever since, and have been able to mostly outwit the competition except for one big Goliath which we’ll crush, soon. 2014 is going to be the year of PURE PWNAGE. India is going to witness a massive mobile internet revolution in the coming years, and we’re going to be the ones leading it. Exciting times!

I’m now heading Growth at hike, and a few other initiatives, while dabbling in a lot of other stuff as well. The aim is to become the best “growth” guy in India, and soon the world.

For the most part, I’m never bored on this front, which always seemed like a near impossibility.

Life…

Life has been pretty exciting in the last year. My social life has mostly gone for a toss since I moved to Delhi, so this is mostly driven by work for now. I’ve made a few really good friends, but I’ve been trying to do most things solo, and I’ve liked doing that so far.

I’ve been able to travel only sparingly in 2013, which is not what I was expecting. There has been too much going on on the work front, but I don’t really regret it that much. We’re doing awesome shit. Explored most of Delhi in the last year. Went on a trip to Rishikesh in May with the hike team, and it was a lot of fun. Went on a trip across North India (Kulu – Manali – Kasol) with a friend in June. Kasol was awesome. Great experiences. *wink wink* Tried paragliding in Bir Billing. Awesome. I’ll likely complete a paragliding professional course and get an instructor certification sometime this year. Went to the NH7 weekender in Delhi — overrated. Went to NPC13 in Bangalore. Met and chatted with Nandan Nilekani and a lot of other people I really respect in person. Loved it.

Life

Around the second half of December, I also went for a Vipassana course (inspired by Ben Casnocha). For those who don’t know, it’s one of the best and most efficient forms of meditation, free of all religious bullshit, and most of its underlying concepts are backed by science. For 10 days, you’ve to be completely silent, and just meditate. For those of us who suffer from borderline ADHD (apparently), it’s hard to sit still, focus and meditate, but it does give a lot of time for reflection. If you’re grappling with existentialism / absurdism, it might just help you figure out what you truly want to do in life. I’ll write more about my Vipassana experience soon.

Also started gymming in October, but due to an erratic travel schedule, and being the lazy fuck that I am, I haven’t been able to continue since the last 2 months. That’ll change. I used to think exercising is just a waste of time, but I did find that it makes me more efficient. I do cycle occasionally, need to do that a lot more.

Got into casual flings with a couple of girls this year, but didn’t have much time to work on those. They ended just as quickly as they started, and I don’t really regret them. Good while they lasted.

2014…

World domination – I’ve been planning to work on some of my own startup ideas since a long time. I’ve tried my hand at some small ideas while in college, but it’s about time to work on something big.

For now, I feel quite content working on something which will potentially become one of the biggest players in the Indian internet/mobile space in the next couple of years and eventually the biggest Indian product startup. The eventual goal is obviously much bigger. WORLD DOMINATION, madafakas!

Once we’ve made sure that’s the way it’s going to play out, and once I’ve hit the fuck-you money point, I’ll likely venture out on my own. I have to. That seems to be at least another year away though.

Getting my shit together – In the last year, I could feel retardation creeping into my brain; the feeling that I’m becoming more stupid with every passing day becoming more and more intense. It felt as if I’d stopped using it altogether and my learning curve has been much lower than my expectations. I’m getting pushed farther away from true genius. I’ve learned a lot in the last year, more than most people I know of, but then I also have much higher standards of personal growth than most people I know of.

I’ll start exercising regularly, and possibly even meditate as much as I can (at least 20 minutes a day; but it’s extremely hard to focus). I’m aiming to learn a ton of new stuff this year, more than I’ve learnt in the last 20. I’ve never had anyone I could call a mentor, ever in my life. Now, I think I do. That helps.

Experiences, not things“The things you own end up owning you“

In the last year, I’ve transitioned to a very minimalistic lifestyle. I have drastically reduced the number of materially possessions I have. I can pack everything I own in a bag and move wherever I want to in a day if I want to. “Don’t have anything in your life you can’t walk away from”

Travel more – I’ll be travelling a lot more this year. I’ve hardly explored the world in my life so far, and I need to get every country off my list before I die. That’s another reason I need to get to fuck-you money as soon as possible. I plan to do at least one small trip every month, and a big one every quarter. Kasol again, Ladakh, and two backpacking trips across Nepal and Bhutan for sure. Most likely Goa too. I need to explore all of India in the next 2 years. Bungee jumping, sky diving, scuba diving, <insert other cool shit>, solo trips and much more.

I also really want to go to Burning Man and TomorrowLand. US and Europe. It might be a massive hit to my pocket, so let’s see how that goes.

Read more – I read. A lot. Mostly non-fiction, biographies of people that inspire me. In the last year, I’ve hardly read 20 books. This year, I’m aiming for one a week, more than 50 in all. Reading awesome stuff makes me happier than most other things. I’ll also watch more movies – the really good ones, at least one every two days. It helps me unwind, and it’s about time I crossed the complete IMDB Top 250 off my list. I’m currently at 92/250.

Live more – Most people don’t live, they just exist. I will start living life to the fullest. No fear. Go big or go home. Going big requires a mix of hard work, luck, and genius. But sometimes it’s just a numbers game. I’ll be taking more shots. I’ll be experimenting a lot more; trying to find my true calling. I suspect there will be many.

Most people won’t. I will.

“The two most important days in your life are the day you are born and the day you find out why.”

I finally know the “why”, I think. It’s time to go big or go home. Soon.

Most people work in jobs they hate, to buy things they don’t need, to impress people they don’t like. I never will.

2014. The year of not giving a fuck about any of the shit that doesn’t matter, and betting everything on the stuff that does.

Snapchat’s Biggest Mistake: Rejecting Facebook’s $3 Billion Offer?

Context: Facebook recently tried to acquire Snapchat, the latest teenage app craze which is experiencing explosive growth for $3 billion. That’s roughly thrice the $1 billion prize tag for which it acquired Instagram last year (which had roughly 30M users then, and has since grown to more than 150M users).

Snapchat declined the offer, and is apparently trying to raise more money at a higher valuation (Tencent, the Chinese giant is trying to invest $200M at a $4 billion valuation)

There has been a massive debate on whether Snapchat should’ve sold out to Facebook or not.

My 2 cents: It should have. Here’s why.

No Social Graph Lock-in

On the web, you could have a significant network lock-in once you gained critical mass. No one can replace Facebook on the web very easily because no one on the web can create your social graph for you again with no effort from you, and once you have all your friends on Facebook, you’re not going to make much of an effort to recreate it again unless there is something very compelling.

On mobile, for the new breed of messaging and social apps, the phone book is the social graph. This not only reduces the barrier to entry significantly, but also kind of nullifies the advantages that used to come with network effects. Once your app has had some initial traction, for every new user that comes in, the app will automatically connect him with friends on his phone book who is already using the app.

No History

For you as a user to go back to a social network/app, you need either one of two things there.
1. Friends (your friends should be on the network) so you’d think twice before moving away from it.
2. History (you should have a lot of content on the network) so there is a shifting cost if you decide to move on.

On Snapchat, you have neither. If you do decide to move on to a new popular app, you’ll find your friends there because the new app will likely leverage your phone book to quickly create a social graph for you.

And because the ephemerality of the app – self destructing messages – is its key defining feature, it cannot have a history.

Without these two, it becomes much easier for any user to ditch Snapchat for the next cool app than it is to ditch something like Facebook into which a user’s whole identity and network is tied in.

Snapchat is trying to create history for its users, adding some stickiness to its app, with features like Snapchat Stories, but it might never work because the reason its core audience loves Snapchat is because they don’t want to deal with the pressure of maintaining a social history.

Fickle-Minded Teens

Teens are too fickle-minded and their behavior too capricious. You never know what they’ll like next. Right now, it seems to be exploding, ephemeral messaging (Snapchat), but just some months ago, it was a persistent image-focused social network with a social feedback mechanism (Instagram), and before that, Twitter and Facebook.

The rate of disruption in the mobile space is really fast because of reasons I already mentioned (no social graph lock-in, fickle-minded teens who make it hard to predict what the next big thing is). Just a year ago, no one could’ve seen Snapchat coming and possibly displacing Facebook/Instagram as the ‘cool’ private messaging app for teenagers. 6 months from now, who’s to say that Snapchat won’t be replaced by some completely new app?

Tencent’s Pony Ma put it across perfectly when he said: “I’m facing a crisis in this industry. Young people, the things they like on the Internet, increasingly I don’t understand it. This is my biggest worry.”

And it’s not just Pony Ma, it’s just incredibly difficult to understand what the next big thing will be in the hotly contested mobile social/messaging space. If I had to bet, I’d wager that Snapchat is likely not going to be the one to bring the next big product innovation which clicks with the teens.

Snapchat is peaking?

In hindsight, it seems to be clear that Instagram saw a massive growth spurt right after it sold out to Facebook, and if it had just held out a bit more, it could possibly have had a much higher valuation.

Snapchat is apparently at 5M monthly active users (or 26M depending on who you believe), so there is still room for growth. But most of the potential growth has already been factored into the $3B offer from Facebook.

Snapchat may or may not have peaked, but at a $4B valuation in less than 2 years, with no other information at my disposal, I’d hazard the guess that it possibly has.

By rejecting Facebook’s $3 billion bid, Snapchat has effectively positioned itself for an IPO some years down the line. There are hardly many other players who would be able to pony up more than what Facebook offered – possibly Google, Apple, Microsoft, Amazon (or Line or Tencent). My perception is that Snapchat’s founders (who’ve partially cashed out and hence have no pressure to make some immediate money) and its VCs are not going to settle for a valuation less than $5-6 billion now, and if they do get the rumored Tencent $200M investment at a $4B valuation, they’re not going to settle for anything less than a $15-$20 billion IPO after 2-3 years.

To go public, it’ll have to demonstrate significant revenue potential by then, assuming it’ll still be as hot as it is now.

That’s quite unlikely given that most ways in which it could potentially monetize would destroy the very reason why its users love Snapchat – extremely private, ephemeral messaging. Instagram has seen a massive backlash following its bid to monetize, with corporate accounts being bashed by its loyal users. Snapchat’s user base will likely revolt even more.

High levels of engagement don’t always mean that it’ll be monetized with the same level of success. The very reason for the former might be the reason why the latter may never work out. And given that Snapchat has no real lock-in (social graph or history), if users do get pissed, there isn’t much of an exit barrier for them; they could very well move on to some other app which in a bid to grow aggressively, wouldn’t be monetizing then.

Having said that, it’s very likely that Snapchat’s founders have some strategy in mind, and have definitely thought about all of this.

When Facebook declined Yahoo’s $1B offer back in 2006, it turned some heads, but it turned out to be the right call. For reasons I’ve mentioned above, I believe that Snapchat made the wrong call by rejecting Facebook’s generous offer.

I may be wrong.