The rise of Facebook has cast a large spotlight on social functionality in the last few years. Social graph and Feed are becoming relatively common parlance, at least in the Valley, and increasingly there's a feeling that everything has to be social or that everything is inherently social. I share the excitement but not the conclusion. My cofounders and I started aardvark, despite great jobs at Google and elsewhere, because new APIs to social networks suddenly allowed us to create functionality we'd always dreamed of. I think Social is a sea change. But, I see Social as only one of three complimentary axes of value along which you can satisfy users. The other two axes are Identity and Personalization. Social may be an evolution of identity and personalization. But, your product or service might be well served by devoting resources along either of the other axes at the cost of underemphasizing Social.
My cofounders and I started a company in July 2007 very deliberately before we’d decided what product to build. We had a problem that we wanted to solve -- that it was too hard to make and carry out every day decisions using the web. But we were not committed to a particular solution. In fact, our CTO had compelled us to put off choosing an idea until 2008. Having the right set of cofounders, with whom I had a deep history and highly complimentary skills, was the most important factor in our success. But that commitment to not pick an idea for five months, no matter how alluring those early products were, was ultimately the second most important factor and represents a criticial principle for other startups to follow.If you are going to be doing a startup for an average of four years if you are unsuccessful and eight years if you are successful, it makes sense to devote six months to deciding what to do in the first place. If you go with whatever comes to you first, unless you are very lucky, you will likely waste far more than half a year before you can pivot to success. More often, you’ll run out of money and morale and end up in the dead pool. When you don’t have any way of knowing whether one idea is way better or way worse than the ideas that will come later, it helps to burn some early concepts to establish a baseline. But it’s incredibly frustrating to be an entrepreneur and come up with one idea after the next only to have people not use them. It’s also very discomforting to not even have a name for your startup. So, when October 2007 came around we adopted the catchy but temporary name “Launching September”, committing ourselves to coming out with something by a year later (ultimately the month an end-to-end Aardvark went live). But it’s better to spend a month on an idea than a year. It’s also essential that you restrict yourself to the kind of products that you could reasonably prototype (i.e., no critical low-latency component and not highly visual and not for enterprise). At Launching September (later to become Aardvark), we would fake functionality with people on the backend and see if our early users -- many who didn’t know they were using a faked prototype -- kept coming back. When users don’t click through on an invite, they wouldn’t want your value proposition even if you’d built it. Aardvark was the sixth idea that we tried out. But, we didn’t just stop at being user-driven in selecting an idea. After we committed to the Vark, we spent nine months doing wizard of Oz testing. In the last months, before we switched over to an automated system, we had eight people pretending to be the system (though real users answered questions). In every interaction, a person would be classifying queries, routing questions, and managing conversations. By the time we turned Aardvark on, we’d had tens of thousands of sessions from which to learn how the system should be built. That end result, informed by actual usage, was materially different from where we would have ended up had we gone off into a garage with the concept and emerged with an implementation three quarters of a year later. Even once we had an end-to-end system up and running and didn’t have to involve humans on the back-end, we continued to test the vast majority of features manually before they were engineered. We built a tool so that a team member could put users through alternate flows and experiences. After each test, our designers would email anyone who had experienced the experiment. Over the lifetime of the company, we consistently enjoyed more than a 50% response rate on those emails. Moreover, the quality and quantity of feedback improved as users became less likely to be friends or family of people working at the company. At the end of the day, being user driven is a tax. I’d estimate that we moved about half as quickly as if we’d just gone with our gut consistently. In return, we dramatically reduced the chance that we would make wildly wrong bets and have to double back, abandoning large periods of work. Ultimately, investors gave money as much for our process as for our team and concept. Being truly user-driven also created a much better environment for our engineers, who got to work on features that had been vetted prior to beginning development. Finally, our process let us avoid the tantalizing product concept ratholes that could have used up years of our collective energy and time to no avail.
Throughout the '70s, '80s, and '90s there was a pretty clear path to prosperity for someone who had had the benefit of a great education. If you started working at a big bank after college and put in a couple decades, you had a good chance of amassing enough money by your mid forties that your family would never have to worry about money again. I don’t think that money is the most important thing in life and I don’t think that most people think money is the most important thing in life but it’s legitimately a priority for lots of people. For such people, in my admittedly oversimplified depiction, banking was a high-probability route to amass somewhere between ten to one hundred million dollars (in today's dollars) before the age of fifty.
Had the dot com era never happened, a generation of ambitious and competitive individuals in banking would have continued contentedly on their pursuit of an eight figure bank account. But human beings are terrifyingly subject to upgrading or downgrading their aspirations depending on how people are doing around them. Fascinating studies show, for example, that people are happier when earning much less money if they are doing relatively better than their peers. By the late nineties, when the population online had grown to over a hundred million, the financial markets became willing to bet on the biggest sites becoming big businesses. Many web destinations went public for enormous valuations and their founders became incredibly rich. So when relativistic financial professionals saw people in their twenties becoming billionaires en masse around 1999 they upped their ambitions by an order of magnitude.
While a banker might accumulate ten million dollars of wealth with a reasonable success rate over a thirty-year slog in banking, it is incredibly unlikely that the same banker could make a billion dollars of wealth in ten to twenty years. To even have a chance, that individual would have to ratchet up the risks they took. But in chasing that much richer payout, the associated probability of massive losses (not just for the individual but for the firm) went way up. And when the first big risky bet went sour, the only choices available were to shamefully bow out of the race or to double down or to attempt a fraudulent cover up. Given the personalities involved it’s not surprising that many chose the latter option. Given the example of the Internet, it's not surprising that people had an easier time believing that involving computers completely changed what was possible or sane.Greed, suboptimal regulation, and lack of internal controls at big financial institutions certainly played big parts in the global financial collapse that started in late 2007. But if the individuals involved in finance had had more reasonable ambitions they wouldn't have been driven to act so irrationally. The risks they took in retrospect don't seem to make sense because the additional happiness one gets from getting more wealth than you can spend is pretty small for most people. That additional pleasure pales in comparison to the pain of personal or vocational failure resulting when a big risky bet goes horribly wrong. But, when one is chasing something hugely challenging, it's often difficult to asses the accurate probabilities of success and failure. A healthy disregard for the impossible underpins most great human acts. But more of a spotlight on the thousands of entrepreneurs that stumbled for every dot com billionaire that emerged in the late nineties would have gone far to prevent a generation from thinking that it was realistic to go so impossibly far in so little time.
I’ve been meaning to start a blog for a while, but now that I’m going back to work at Google, I feel like the daily commuting time might actually keep me writing. So, without further ado, welcome to my first post: Why Posterous? I figure it’s appropriate to start with a topic as meta as this. Also, on the heels of selling Aardvark to Google, Posterous provides a good opening to talk about one of the things that I think made Vark successful.
The Internet is a place where network effects dominate. Whether a business is algorithm based (e.g., Google), or content based (e.g., Youtube), or activity based (e.g., Facebook), or commerce based (e.g., eBay) – more visitors means a higher quality experience. That means the site that has a traffic lead tends to build on that lead. Once a powerful incumbent exists, a new entrant has to be much better along some critical dimension to change people’s habits.
In the past, I tended to think that many opportunities existed to create new websites in categories where no incumbent existed if one picked carefully and executed well. But when the time came to actually start a new Internet business in 2007, I concluded that the web itself had become saturated. Excluding the most fanatical digerati, people do not visit more than a half dozen distinct websites on a regular basis. In the last five years, I can only count one website that has entered my normal rotation (Facebook). Youtube rotated in but rotated back out, as have many other sites. Twitter is on the verge of earning itself a spot. So it seemed foolhardy to think that I might build a new destination site. Instead, my cofounders and I decided to build something that could be accessed from the places where people already spend their time online. The idea was that we should add value to people’s existing habits not try to change them.
Aardvark was the sixth idea that we tried, following a string of failed prototypes (see my comment below). But all our ideas were subject to the restriction that they could not be a destination site. Any candidate idea had to be useful from within some other online application. Aardvark is designed to be a contact that is accessible from anywhere that contacts go (email, phone, IM…). It wasn’t until we were about eighteen months into the company that we finally built a full-fledged website. That seemed pretty remarkable for a *web* company but I think it will increasingly be there norm.
Companies that build their business on the back of SEO, or on iPhone, or as a Facebook application are all part of what I see as a new world order on the web. If you can get people on masse to type the name of your site into their browser bar, you will probably be worth billions but you need to be a braver entrepreneur than I to chase that prize. But you’ll start to see more and more companies like Zynga build enormous value in symbiosis rather than competition with the major online brands.
So, in choosing a blogging platform, it just made sense to use Posterous. The whole idea of the site is that I never have to go the website and can push content from any major web application to be accessed on all the major third party applications. That means I can blog when I don’t have convenient access to the Internet (like from a shuttle bus) and I can support fellow entrepreneurs who are moving to build value on the shoulders of the big sites in this new era of open and semi-open platforms.