This article is the third of a 6-part series that addresses common growing pains and challenges that startups encounter, and offers advice on how to bypass these hurdles while keeping your team and customers top of mind.
A few weeks ago, I presented to a group of CEOs of companies with early-stage funding rounds. I was asked to speak about what it’s like to run a hyper-growth company. Standing in front of the group, I had a flashback moment. It was a mere two years ago that we were a team of about 20 with just a handful of customers and a great technology. We were confronted by all the same challenges, questions, and fears that face an early stage startup. At the same time, we were driven by a conviction–a gut instinct–that we were onto something really big. Over the last two years that instinct has proven to be true as we’ve caught a disruptive “wave” in the market and have been thrown into corresponding hyper-growth. Talking to the group, several key questions emerged. Where did our original idea come from? How did we go from the idea to catching a market-validated wave? And how have we been able to continue riding this wave?
The elephant in the room
Sometimes the biggest, most complex problems are sitting right in front of us–the elephant in the room. Steve Jobs said “People don’t know what they want until you show it to them.” I think it’s actually worse than that. People tend to ignore major pain-points they’ve been living with for a long time; they either get conditioned to compensate for them or create Band-Aid fixes. These are usually the biggest, most complex, and most profitable issues to solve. If you know a particular market space intimately, you’re better positioned to know where to find those elephant problems, and solve for them. Mark Twain famously said, “Write what you know.”Similarly, you should build a company around something you know intimately.
I don’t want to over romanticize the inspiration, the “eureka moment” that pushes an entrepreneur to go all in trying to resolve a problem. Unless you’re extremely lucky or an absolute genius, that moment is usually predicated by years of pursuit, pain, and potentially failed attempts to find a solution. In our case, it was 20 years in the enterprise planning space that inspired Michael Gould to start Anaplan. He saw the elephant in the room that he wanted to solve for and spent four years literally working out of a barn behind his house developing a new architecture.
Assessing the strength of the wave
Next comes testing the disruptive value of your solution–whether or not the market is ready for it. That was entirely our focus in our first year in the market. Until we had paying customers (I’m talking real ones and not friends or companies in our VC portfolio) under contract and referenceable, we didn’t completely know the disruptive value of our product. However, we knew we had found resonance in the market when it became clear that we barely had to explain the problems we were resolving. You know you’ve hit the jackpot when your customers can articulate your value proposition better than you can.
Timing is probably the most important ingredient of disruption. This is where gut instinct and opportunism comes in. Catching a wave of disruption can be a confluence of many factors from product readiness to market readiness to a number of other one-off events. For instance, have there been technological changes that your product takes advantage of and that fuel a compelling before and after story? For Anaplan, it was the move to 64-bit memory; we simply couldn’t have been disruptive until that tipping point. We had a problem that we wanted to solve but the technology wasn’t yet available to solve it. It was truly the determining factor for us catching our wave.
Riding a disruptive wave
At this point, it is time to paddle really hard and fully catch that wave. This requires scaling fast and staying focused. The challenge? Everyone will have an opinion about your product and your go-to-market strategy. Listen to what your customers are really telling you and don’t worry about making business decisions that don’t follow standard patterns. If you’ve got a disruptive product that is solving a massive problem, it probably requires a non-standard go-to-market strategy.
The hardest part may be simply standing and letting the wave take you. Through this process, make sure your rapidly growing company stays myopically focused on keeping the elephant on the wave. Scale your initial team with people (including board and advisors) who embrace your culture and share the size of your vision. Stick even more closely to listening to your true north–your customers. They truly know the actual size and complexity of the problem you are solving. As such, they are critical to keeping you honest about where you are at and where you should take your technology next. In the meantime, enjoy the ride. Wikiquote. “Steve Jobs.” Accessed November 15, 2014. http://en.wikiquote.org/wiki/Steve_Jobs