Tuesday, June 05, 2007

Startup 101: The Platform Game

I have been advising a few startups over the past few months and thought it might be useful to share some startup advice in a series I will call "Startup 101".

The ability to identify a new trend early, turn on a dime, and capitalize on a market shift is what distinguishes a startup from a large company. A lot of what startups do is not actually new, but rather something old for a new platform. For example, NetDynamics/WebLogic/Kiva were appdev/deployment for Java/Internet, ActiveGrid was appdev/deployment for LAMP, MySpace is BBS for the web, Skype is phone for the Internet, Salesforce is CRM for SaaS, etc.

The latest in vogue platform is Facebook's F8 platform, which is a supercool way for startups to deliver social features without having to build a social network. Kudos to iLike, which as one of the early adopters of the Facebook F8 platform has massively increased their number of users (850K new users in less than a week). iLike retained the ability to respond aggressively to market shifts even after years of survival mode through the .com bust. Following is a quote from Ali Partovi, iLike's CEO:

"Our President, Hadi Partovi (my twin brother) took very little time to decide this was a huge strategic priority. That was a month ago. We re-prioritized everything else, and started moving our people off other projects onto this. First two or three people, then a few more, and by the end it was a huge group of engineers pulling back-to-back all-nighters for a week-long sprint to the launch." [BlogForward Q&A with iLike on Facebook]

I have worked at startups that were able to move quickly to capitalize on shifts, and others that were not. Looking back, it is interesting to try to figure out the difference. Following are four characteristics that prevent a platform shift at a startup:

  • Age - One factor is the age of engineers. Younger engineers are much more willing (and often eager) to get yanked off of a project and put onto something new and interesting. Older engineers not so much, so before hiring them, make sure that older engineers have benefited from a sudden platform shift in the past and are amenable to having there tasks changed quickly.

  • Cultural Origin - People "fresh off the boat" from countries such as Russia and Israel with a culture of deep technical talent have a very high level of NIH and do not like to rely on unproven, emerging technology. Yes, Windows/Java/LAMP/Flash/JavaScript/Silverlight/F8 is new and has a lot of bugs. No, it is not as functional as the existing, proven technology platform. The reality is there is a bigger opportunity for a startup to deliver _less_ functionality on a new platform then _more_ functionality on the old platform. IBM is already delivering a ton of functionality on the old platform! So definitely hire smart technical people from other countries, just make sure they are somewhat acclimated to Silicon Valley startup culture.

  • Zig Zag Management - You can only change the platform once or twice if the age and cultural origin factors are not in play. After that, management loses all credibility and engineers just throw new initiatives under the bus. If your company is stuck on a deadend platform and is unable to zig or zag to a new platform, you are left with only two choices: package up what you have and try to flip the company or do a full restart to get to the new platform.

  • MBA Management - If a decision to support the emerging platform is made after a SWOT analysis, meetings with analysts, a series of management and board offsites, all day company alignment meetings, and customer focus groups, you will be lucky if you beat IBM to market, let alone startup competitors. This technique can only be successful when solving a new problem like SOX compliance. Shipping CRM for SaaS a year after Salesforce has launched is a nonstarter - another CRM opportunity did not open up until SugarCRM offered CRM for open source.

    Change is good. Very rarely do startups execute on a business plan from start to finish. Particularly with the accelerating pace of innovation of the past few years, the best of startups are agile and can capitalize on, rather than simply react to, platform shifts.

    fumanchu said...

    So, your advice to startups is: be racist and ageist in your hiring policies?

    Peter Yared said...

    No, please reread what I wrote. My advice to startups is to make sure that people are amenable to platform shifts before hiring them into a startup, and to definitely take culture and age into account. The examples I listed (Russian and Israeli) are cultural, not racist, and are examples of societies that produce top-notch technical talent that are also extremely conservative about technology choices. So it is important to make sure that engineering candidates from those societies have acclimated somewhat to Silicon Valley culture, or you will spend months and months arguing (fir example) whether the web browser is a valid platform for a spreadsheet while NumSum and Zoho are off making one. The older people get, the less they like abrupt change, what can I tell you, that's a fact of life, and it applies to me as well in my mid-thirties vs. my twenties. There has been quite a lot of chatter in the blogosphere lately about how VC's are funding entrepreneurs based on age. This is not a universal rule, so you have to make sure you hire the older folks that thrive on the constantly changing environment of a startup. Dave Winer and Adam Bosworth are at the forefront of every platform shift.

    Nichole said...

    Change is constant and we can't change that. What we can do is cope with the change. Do the good change and ignore the bad once. Isn't this a good advice?

    Good luck,
    Insulation Gable Wall