Cheap Thoughts

I have used Instacart a few times and love it.  They've built a great product and I expect to see their business and others like it grow exponentially in the coming years.  With that said I have decided not to use their product (at least for the time being).  

I stopped using Instacart because it wasn't solving a real problem in my life.  I convinced myself that I had too much on my plate to bother going to the grocery store, but in the process realized that I was actually missing out on much more.  To be clear, my argument is not that Instacart and other on-demand services cannot be hugely beneficial.  My mother raised five sons and I am sure she would have happily paid a premium to have groceries delivered as she tried to balance everything running a family demands.  (As a side not I really don't know how mom's do what they do.  As I've gotten older I have started to appreciate what mom's everywhere sacrifice for their children, they are literally superheroes).  Some other obvious scenarios include persons who are snowed in or sick, elderly people who can't drive, or someone living with a disability.  The list could obviously go on, but it would not include me.    

Much of Instacart's initial traction came from/continues to come from catering to tech workers in San Francisco, New York and the like.  I am going to generalize here by saying that the demographics of these workers are males and females, under the age of 32 and single (or at least not married with kids). I  fall into this bucket.  Somehow we have all convinced ourselves that our lives/responsibilities are too great to find time to go to the  grocery store.  I told myself that ultimately Instacart would allow me to spend more time working.  That's bullshit.  Again, I am in my mid-twenties, no wife, no children and no real responsibilities outside of the office. Not only do I have time, but I think it's important that we all find time to get out there.  Does anybody love waiting in line at the grocery store? No.  But when we begin to cut those experiences out of our life what are we left with?  What is life without real human interaction?  Better yet where will real human interaction com from if all we do is shuffle between the office and our apartment?  Talk about living in a bubble.

How can we form comprehensive views of society if we don't actually experience it firsthand?  We can't work at the intersection of the humanities and technology if we don't experience the world around us.  Perhaps an even more troubling consequence of the "shut-in economy" is it effects on our ability to build great new companies.  By removing ourselves from the world we become less sensitive to the problems around us and the problems that need to be solved!  And if we don't experience those problems how can entrepreneurs build great new companies to solve them?  You'd just end up with a bunch of really smart/driven people optimizing processes they and everyone else in their bubble are dealing with. 

In general I think I have done a poor job of evaluating the tradeoffs of using these new services.  Someone to do your shopping, deliver your food, do you laundry, etc.  The gains in convenience are obviously immense, but you also run the risk of losing touch with reality.  In conclusion, I want to post a link to this scene in Goodwill Hunting, which has been on my mind the whole time I was trying to formulate this thesis. 

I'm going out to Colorado with a buddy of mine to do some skiing in February, we just finalized our accommodations and the sharing economy has really come in handy.  Rather than paying a few hundred dollars per night at a hotel we're staying in someone's basement via Airbnb for roughly 40% of the cost.  I have been following Airbnb closely over the past few years and recommended them to friends and family on numerous occasions, but this is my first time using them.  We also decided to try Relay Rides as opposed to Hertz, Enterprise, etc. for our car rental, which if you're not familiar is like Airbnb for cars. Both of these companies have saved us several hundred dollars, but more than that they have changed how I travel altogether.  These idea's would have seemed utterly outrageous five years ago, but this trip was an "ah-ha moment" for me and one which made me realize how much potential those "utterly outrageous" ideas can have.

The quality of our trip is now in the hands of individuals not companies (for the most part).  The variety of options available to us when making our accommodations has increased dramatically and the costs have come down significantly.  Furthermore, the economic value is now going directly to a person as opposed to a company (again for the most part).  If you would have asked me five years ago what would have to take place for the Hilton's and Alamo's of the world to have their business model threatened I would not have had an answer for you.  When you start to estimate how much money companies like Airbnb and Relay Rides are costing incumbents it really makes you appreciate the nature of innovation. 

I think sometimes we all tend to underestimate how much companies like Airbnb and RelayRides are affecting the world around us.  I urge everyone to take a step back every once in a while and appreciate the progress being made right in front of us.  

For the past year, everyone in our office has been trying to solve a difficult, but important problem our business is facing.  How do we educate and engage with our clients so that they are armed with the tools and understanding necessary to use our software effectively with their clients?  Catchy phrases like engagement and customer success were tossed around, we have simplified the software and adjusted our on-boarding process.  Nothing was working.

One of our engineers was listening to our problem at lunch and said that we should treat our clients like a franchise, much like opening up a McDonald's or Subway.  Everybody at the table went silent for a few seconds, then we realized that was the perfect way to frame our problem.  When someone opens up a McDonald's they are given exactly what they need to run a successful operation.  Everything from what vendors they work with and how to cook the food to how to talk to customers and take orders. I'm sure the exact level of detail McDonald's goes into to ensure a consistent experience for all customers around the world is astounding, but you get the point.  And while the franchisee is given all of the tools needed to run a successful operation the new owner still has to hire the right people, treat their customers fairly and execute a business strategy.  The stores are given a recipe for success, but some follow it better than others.  What's beautiful about the franchise model is that it is also very repeatable and we love repeatable.  

We have to go into the same amount of detail, educating our clients and giving them the resources necessary for them to succeed.  Unfortunately, our industry is incredibly complex there is no looking for a silver bullet is a waste of time.  We have to go well beyond the traditional support and training that we are accustomed to providing.  Ultimately we're going to have to teach them how to train their clients on the software, what to say, who to work with, etc.  If done successfully then we will not only have solved our initial set of problems but will have also created a small army of evangelists who are able to speak to the strengths of our software like they were one of our employees.  And just like MsDonalds some of our clients will execute better than others, leading to a better experience for their clients.

For me, this was also a case study in collaboration.  It was not the sales or support team who framed the problem correctly, it was an engineer who looked at it from a different perspective.

Most companies are open minded enough to see how technology can improve their internal efficiency (i.e. "I can see the value in this").  What's much more difficult is getting them to recognize that the introduction of new technology is not the end of the story, in fact its only the beginning.  The new technology will also require them to rearrange their internal processes if they want to realize the full benefits of your product.

It's my experience that the struggle of getting companies to understand and adopt these new processes is a much more difficult sell that convincing them that they need your product.  You are likely to encounter a company full of people who are not willing or do not see the value in rebuilding the inner-workings of their organization to accommodate your new and untested product.  In some cases the people who will be responsible for maintenance of the product were not present during the sales process leaving their questions and concerns unanswered.  In others they rejected it outright, but were overruled by the decision maker and are now left to learn about a something they dislike.  

There are a number of different approaches to help get new customers comfortable with all of the changes they are dealing with including; transparency during the sales process about your products capabilities and limitations, readily available support resources, training, and a roadmap for the customer to be able to grasp the progress they've made.  Failure at this stage leads to the most troublesome issue facing software companies today, a high churn rate.  As a result  the on-boarding process for a new client is one of the 3 most important thing companies must do to realize hockey stick growth.  

The more I think about it the more I believe creating an environment of open and transparent communication is the best things a company can do to create a great culture.  It puts everybody on the same page, eliminates friction and gives each and every employee an ownership mentality.  At Employee Navigator the two biggest changes I helped implement were:

• Comprehensive companywide monthly reports highlighting everything from revenue, churn and development stats.
• A requirement that all meetings with more than 3 employees are recorded, and those notes are subsequently posted on an internal dashboard for everyone in the company to see.  This apply's to everyone, management, sales, support, engineering, etc.

Because we didn't implement these changes until recently there is the added barrier of educating employees on why these things are important and making the notes something that is second nature.  

Ultimately I believe that internal friction results in product friction and creates a poor experience for customers.  The only way to curb that (aside from having an awesome product) is to get everyone on the same page, working from the same information, which enables them to make consistent companywide decisions.

We had our first users conference last week in Washington DC, with over 100 people attending from 28 states.  For some, they spent more to travel & attend the conference than they do to use our system each year.  A few things I learned:

• Team camaraderie matters.  I was astounded by how many people came up to me over the course of the two day conference just to comment on how impressed they were with our team.  One person said it looked like “one big family.”  These people can now sleep easy knowing they can trust their business partners to move in the right direction.  Furthermore, friction within a company ultimately injects friction into the end product and puts us at a competitive disadvantage.  My takeaway, engineer your team with the same dedication that you engineer your product.
• Transparency matters.  Make sure your customers understand your product roadmap, financial situation, and business plan (at least at a 30,000 foot level).  Once they get where you’re going you can actually enlist their help to get you there, assuming they believe in what your doing.  
• Listen for themes.  It’s easy to get distracted by 100 people telling you what the would like to see your product do.  The key is to look for themes, and remember that it’s also your job to build the things your users don’t know they need yet.  Our themes included; better training, flexibility, scalability and speed of deployment. 
• Find out what you’re doing wrong.  This is the best opportunity possible to talk face to face with users about where your product is coming up short.  

My advice, as soon as you think you’re ready for your first users conference, do it.  The last two days we’re some of the most productive for everyone on our team, especially the engineers who aren’t in front of customers and prospects every day.   

A quick search on Amazon for “books on leadership” returns over 112,000 results.  What qualities constitute great leadership will be an ongoing debate for for generations to come, because great leadership takes on many shapes and sizes.  In many ways it’s like being asked, what’s the best move in chess?  There is no best move, there is only the best move in a a given situation.   With that said I want to share with you a story about corporate leadership that I experienced not too long ago, which highlights what types of decisions a great leader should be expected to make.  

I work at a startup attempting to navigate the chaos that is the United States healthcare industry, and am fortunate enough to be working with one of the most morally outstanding CEO’s out there.  Obviously as a young company every bit of revenue counts, not to mention a long term commitment from one of the most successful insurance brokers in Washington DC .  When one of our existing clients got wind that their competitor was to being working with us our CEO received a call letting him know about some questionable business practices and alerted him to the fact that this large potential client regularly used very unsavory sales tactics.  

It would have been very easy to for our CEO to overlook these expressed concerns as competitively motivated, but that’s not how he operates.  He quickly made a call to the President of this new potential client and was very clear with our expectations for anyone he gets into bed with.  If he ever got wind they they were leveraging our platform in a predatory manner against any of our clients we would terminate their license on the spot.  Obviously, they we not thrilled to learn we added an immediate termination clause into their license, and would have been well within their rights to decide not to enter into a long term relationship with a young company, who clearly had a conflicting value systems.  That didn't happen.

I happy to report that in the months since this episode there have been no complaints from either side of the isle and all parties loving our software.  Our CEO knew that the potential revenue from one customer would not make or break the company’s future but having clients who believe you don’t have their best interests in mind would.  That is true leadership.  It means looking past short term gains because as Warren Buffett puts it, “it takes 20 years to build a reputation and five minutes to ruin it.”