Four unSEXY Startup Lessons

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Last Friday I attended the unSEXY conference, a one-day conference hosted by 500 Startups focused on the unsexy topics of distribution and money makin’ for startups. You can see the conference slides here.

I thought I’d briefly summarize four key lessons for startups. While they aren’t all non-obvious, it’s good reminders for every business builder out there.

Lesson #1. Customer service is an unfair competitive advantage for startups

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Ranjith Kumaran (of PunchTab and formerly YouSendIt) talked about how authenticity translates to LTV, and how great customer service directly contributed to winning deals over and competition. We saw this lesson at my company Connected as well – it makes a huge difference to the customer when the founders of the company are replying to your emails and implementing your feature requests overnight.

While big successful companies worry about how to minimize customer support costs, Ranjith as well as others including Patrick Collison from Stripe talk about how non-scalable customer service can be the delightful point of differentation which makes your deal happen.

Lesson #2. ‘Gerbil’ your startup to success

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On the heels of Paul Graham’s essay Do Things That Don’t Scale, Patrick Collison from Stripe talked about what they called “gerbiling”- the ruthlessly unscalable activities Stripe did which worked fantastically well for the team. They wrote custom code for customers, set up PagerDuty to staff their chat room at 3AM if a customer logged in, and used a human in lieu of a payment fraud detection algorithm because it’s expensive and hard to write an algorithm which can beat a human. These are all activities which many large companies would consider a near-impossible waste of time.

But for an early startup, it makes a lot of sense. Why focus on the expensive task of building a scalable solution when you’re focused on growth and survival? Activities to build scale are non-productive for growing your business, and are only useful when there’s a real opportunity cost on your time.

Lesson #3. Distribution is everyone’s job

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Growth, as always, is a huge topic in the unsexy parts of making a company. As Rashmi Sinha of Slideshare aptly put it, stop looking for a superhero growth hacker to solve your problems. In addition to Rashmi’s talk, there were some great sessions on this topic from many speakers including Richard White (Uservoice), Alex Moore (Baydin), and Michael Mandal (CompStak) which I’d encourage you to check out.

The takeaway from all of this is that growth is a hard and messy problem which is not necessarily just a product or marketing problem. In fact, there are a LOT of examples of great growth channels for an early-stage startup to reach the scale it needs to survive. These examples include:

  • Press – CompStak empowering every employee to pitch the press
  • SEO – SlideShare extracting slideshow text into the page for SEO
  • BizDev – HelloSign/HelloFax getting distribution deals into Gmail
  • BizDev – Baydin’s early distribution success from feature in Chrome Web Store
  • App Stores – Evernote coming in early and fast to Apple App Store
  • .. the list goes on

Many of these examples include growth channels which aren’t classic examples of viral. The lesson learned here is that early startups need to encourage everyone to be thinking about growth, and not just make it a product-virality problem.

Lesson #4. Startup serendipity is one part luck, and three parts hustle

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I love hearing startup retrospectives on how they achieved success because it invariably goes something like, “I happened to meet this guy at (random event), and we got to chatting … and that’s how I got my (funding / press article / partnership)!”

This story replays itself over and over again for how startups get funding, get acquired, make deals, and so forth. People who listen to this often scratch their heads and think, how can I possibly make my company a success when it’s all luck?

The reality is, these chance moments of serendipity are lucky, but also manufactured. Founders who get out there and get in the right place at the right time are increasing the likelihood that they’ll meet someone who can change the trajectory of their business forever. A lot of these startup founders are the people who are deeply passionate and talking about their startups non-stop.

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